INTEREST ON LOANS

Ashburton Guardian, Volume 53, Issue 255, 9 August 1933, Page 7

INTEREST ON LOANS

PAYMENTS IN LONDON. BOARD AND GOVERNMENT. (Per Press Association). INVERCARGILL, August 8. Whether interest on the hoard’s London loans should be paid in New . Zealand currency or in sterling was again discussed at to-day’s meeting of the Southland Electric Power Board. At a special meeting of the board previously it had been decided to give the Government an assurance to pay interest in sterling on the. next payment in September, but to-day notice of motion was'given to rescind that resolution. The board also decided that it could not give an assurance, as requested by the Government, to refrain from legal action in London. The board issued a statement in which it said the Government had given an undertaking in London that the board’s test case would be abandoned, and had asked the board to agree to that course, failing which the Government would bring down legislation to compel the board to pay its interest in London in sterling. ‘‘The Government has bluffed the board,” said Mr W. McChesney. It s a political move.” Mr T. Golden said that the board did not want a test case. It was conl tent with the Broken Hill case. Since the Broken Hill case Australian credit had improved. “It seems that Mr Forbes has been in some difficulty in London,” said the chairman, Ml’ W. Hinchey. “Mr Forbes has been in touch with Mi* Coates, and when leaving London on lie wanted an assurance that the test case would not come on, and that the, Auckland business would be settled. Mr Coates sent telegrams to the Auckland Transport Board and ourselves. Mr Allum (chairman of the Auckland Transport Board) had gone to Wellington, and he told me they had to climb down. I think this is entire y due to the London position.” “There seems to be something behind the scenes,” remarked Mr W. M. Norman. “Wo would win the case, but it seems that if we went ahead they would put on a quota,” Mr E. K. Sim said.his sympathy was with tho Government. He advocated payment in New Zealand currency within the law, but not if they would embarrass the Government. He admired Mr Coates for the way he had stood up to it. , AUCKLAND TRANSPORT BOARD PAYMENT TO BE IN STERLING | AUCKLAND, August S. The Auckland Transport Board decided to-day, with reference to the payment of interest on the debenture,s of the original tramway loan of £1,250,000 domiciled in London, to pay m sterling without prejudice, and on the undersanding that arrangements will be made for bondholders to meet the board. A special meeting of the board in committee was held yesterday, when the board was in direct telephonic communication with Mr Coates. Each member was provided with an earphone to enable him to listen in when Mr Coates in Wellington was speaking, and members also had an opportunity of putting direct questions to him. To-day, the board adapted the report of its committee’s deliberations, which said: “It has been represented: (1) That the' best financial authorities available to New Zealand considered that there were grounds for discussion, but strongly urged that interest should be paid in sterling immediately to enable Auckland City renewals to be dealt with; (2) that the Government would fully authorise and protect the board; (3) that the Government would legislate to auti .orise the board to convert the lean; (4) that -the City Council ap-proved-of the board’s assuming direct responsibility by converting the loan; and . (5) that payment in sterling would restore Auckland City Council loans to the Stock Exchange list,” _ - , The board, therefore, decided to meet the last payment in sterling without prejudice, and it empowered the chairman (Mr J. A. C. Allum) to act immediately. Statement by the Chairman. v The chairman, said information had been received from London ito the effect that the best financial authority available to New Zealand for an opinion considers that there are grounds for discussion, but he strongly urges that interest should be paid in sterling immediately, to enable Auckland City Council renewal loans to- be dealt with, after which discussions can bo continued. The board bad, therefore, decided in committee to recommend that the last of the interest be paid in sterling without prejudice to its rights. “Payment is made,” added the chairman, “on .the understand ; ng that facilities will be given for the board to discuss the matter with representatives of the bondholders, with the object of arriving at arrangements which will be mutually acceptable. The Government has indicated its willingness to legislate • to empower the board to act in the matter and has promised every facility and its full support in the negotiations. The result of all that has taken place is that the board pays interest in sterling without losing its rights, and leaves -the way open for an arrangement which will be acceptable to the bondholders and the board, and, further, all loan issues of the Auckland City Council are restored to the London Stock Exchange list. “The position _taken up by financial authorities in England is-entirely wrong and indefensible, but we have to accept it,” added the chairman. “The board offered facilities to these people to litigate and we even offered to place the spni involved on deposit in London, but this offer was rejected in terms which I will call extraordinary.”