LOAN CONVERSION

Ashburton Guardian, Volume 61, Issue 181, 15 May 1941, Page 3

LOAN CONVERSION

THE GOVERNMENT'S PLAN.

EXPLANATION BY MINISTER. (P.A.) WELLINGTON, May 14. Tho conversion of Government loans totalling £21,000,000 of debt domiciled in New Zealand is to be attempted in the near future, according to an- announcement by the Minister for Finance (the Hon. W. Nash). In an interview to-day Mr Nash said the offer to convert was addressed to holders of the following Government securities: Three per cent, stock and debentures maturing on July 15 this year; 3J per cent, stock and debentures maturing on November 15 this year; and 3J per cent, and 4 per cent, stock maturing on March 15, 1043. These holders were invited to apply forthwith, and in any case not later than June 14, for the conversion of their holdings in any or all of these loans into now 3J per cent, stock, maturing in 1957-60, at the rate of £lO3 of new stock for every £I.OO of old stock surrendered, or alternatively into shorter-dated 3 per cent, stock maturing in 1946-48 at par. Applications for conversion, said Mr Nash, were required now, but would take effect in respect of each of the three loans as follows: Three per cent. July 15, 1941, on July 15, 1941; 3J per cent., November 15, 1941, on August 15, 1941 ; 3J and 4 per cent., March 15, 1943, on September 15, 1941. Concession Offered. Interest on the old loans, said Mr Nash, would of course he paid up to these conversion dates, and interest on the new loans would commence from those dates. The Minister explained that the first mentioned date was the final maturity date of the loan, while in the case of the other two loans formal notice had been given of intention to repay them on August 15, and September respectively. This meant that if the offer of conversion was not accepted by June 14, the holder would be repaid in cash, with interest to date of settlement. . -> Mr Nash added that a valuable concession was being offered to those ac-j cepting conversion, whereby they could stipulate that the whole or any portion of the new conversion stock should be available at par for payment of death duties in an estate in the event of death occurring before the .joan matured. The return to investors from the new securities, allowing for the premium, was £3 9s 3d per cent, in the case of the longer dated issue, and 3 per cent, from the short dated securities. These terms were practically the same as the national development loan now on the market.

“Clearing) the Decks.” “Taking all relevant factors into consideration,” continued the Minister, “the Government felt .that the conversion terms were and fair, and it is confidently anticipated that holders of the securities affected will accept the offer, and so ensure the success of what is one of the largest conversion operations ever undertaken in the Dominion.” Mr Nash added that success in these operations # would clear tho decks ol maturing debt for the probable duration of the Avar, and would ho a material factor in securing the financial stability which Avas so essential a factor in a sustained Avar effort. Mr Nash urged all holders of stock affected to give the matter of conversion urgent consideration, and added that conversion did not involve any cash applications for investment. Such investments, hoAvevor, Avere invited for the national development loan., which Avonld remain open lor subscriptions to 3£,per cent., 1950-59 issue, at £97 5s per cent. This gave a return of £3 9s 3d per rent, to investors, the same as the longer dated conversion offer. The short-dated 3 per cent, national development issue, however, had been withdrawn.

Replying to a question as to the likelihood of another war loan, Mr Nlash stated that preparatory work for the financial programme for the year, for both the war and the ordinary Budget, was now in hand. There was no doubt but that a war loan would be necessary, and it would be issued as soon as a review of requirements and resources generally had been completed. He could say, however, that the war loan for this financial year would he purely voluntary.