LOANS IN LONDON

Evening Post, Volume CXV, Issue 93, 21 April 1933, Page 14

LOANS IN LONDON

CONVERSION PROSPECTS

THE P. AND O. SCHEME

(From "The Post's" Representative.) LONDON, February 23, Three conversion schemes are announced this week, one being on behalf of Australia, the second for the City of Johannesburg, aud | the third by the Peninsular and Oriental Steam Navigation Company. The New South Wales 4 per cent, stock was due to be redeemed on July 1 of this year. Holders are now offered the opportunity of converting into i per cent, registered stock, 1955-1970, of the Commonwealth of Australia. Conversion is to take place at par. This is the last of the early maturities which the Australian Government has to clear out of the way before she can approach the problem which lies beyond, namely, the conversion of a large amount of other outstanding issues to a lower interest basis. The P. and O. Company is proposing to pay off out ~of its own liquid resources £1,000,000 of debentures. At the same time, it is making a conversion offer to holuers of £6,000,000 of 5% per cent, and 5 per cent, debenture stocks, dated 1930----40. ' The new'stocfc to be created is £6,000,000 ! i\k per cent, debenture stock, which is to .be issued at par.'.Stockholders are offered I four possible choices. They may demand 1 cash repayment on May 23 on the full I amount of their-'- holdings; 6£, receive a definite allotment of 85 per cent, of their present holdings in tlie new stock; or, they may apply for a lesser percentage and receive a definite allotment; or they may apply up to 100 .per cent., the odd 15 per cent, to be allotted if stock is available. , CONFIDENCE IN THE FUTURE. An attraction of the new stock will be' that a regular statutory sinking fund of 1 per cent, will be attached;1 also, those who make ,comparisons in industrial finance will notice that the P. and O. stockholders are asked to take 4% per cent., whereas a recent big industrial issue was offered on a 4 per cent.' basis. The circular issued to' shareholders contains a statement of the confidence of the board in the future of the company, and there should be little doubt that this conversion scheme, _ which will lead to substantial savings in fixed charges, will receive strong support from the stockholders. Holders of £743,960 of Johannesburg, Municipality 4 per cent, etock due on October 1 next, and £1,724,665 of 4 per cent, stock due on April 1, 1934. are given the opportunity of exchanging their stock, but only; up. to'a total of £I,ooo,ooo,'into a new 4 per cent, stock at par. AUSTRALIA'S POSITION. Mr. Stanley Brace,,the Australian Minister in London, explained in a public speech how conversion operations, by reducing the cost of meeting Australia's external debt, would also increase her capacity to purchase British goods. He pointed out .that Australia had obligations in this country of £43,000,000, on which she was paying 6% aud 6 per cent., while altogether there wore £54,000,000 of loans costing more than 5 per cent., which the Government have an option to redeem at any time on three months' notice. To Australia the cost is fully 20 per cent, greater even than these rates indicate, owing to the depreciation of her currency.