THE AUCKLAND GAS COMPANY.

Auckland Star, Volume XXVIII, Issue 76, 2 April 1897, Page 4

THE AUCKLAND GAS COMPANY.

(To the Editor.)

Sib,—lt is much to be. regretted thabbo few shareholders took parb ia the meeting of the above company held on Tuesday last. Had the shareholders realised the true significance of the resolutions to bo then submitted, I think more would have attended or mora care weald hato been exercised in the ueo of their proxies. As it was, the meeting appeared to be composed mainly of holders of partly paid shares. Tha Dosition ia this:—ln 1884 more capital being required it was decided at a mesbing of shareholders, acting on the suggestion of the directors, to increase the capisal of the Company by the issue of 35.000 now share 3of £5 each, part of these shares to be offered to the existing shareholders,, the amount to bo called up as required, the balance (fully paid) to be offered to the public by tender. It ia admittedly siob quite clear aC the presenb time what the motive of the directors was in proposing Shis double schomo, but undoubtedly they were either acting in the interest of the Company aa a whole or of thoso shareholders who proposed to avail thomselveeof the new issue; to suppose the latter is, however, to cast a slur upon fcho directors which 1 am certain would be unmerited. And yet tho shareholders baking up the new issue were to have them aba premium of £2 10s per chare of £5, when tho value of the £5 share iv opsn market was £10 10s. At first sight ib would appear as if this was practically a preaenb to the shareholders. Is it not, however, rational to conclude that the directors merely wished to make certain of the required capital by having two strings to tbair bow ? So thab should they at any time be unable io raise the money required by selling tally paid up shares at . a remunerative price, they could fall back upon calls on the partly paid shares, the holders of those shares having meanwhile been amply compensatod for thoir supporb by tho privilege oi' being allowed to invest their money on much better terms than tha buyers of the fully paid shares. Tho day is, however, long gone by when there could bo any doubDof soiling tho fully paid shares aba very handsome profit, thoir value being nearly £15. To raise money by calls on the unpaid share? means if the present dividend is maintained raising money afe 10 pf»r cent. To raise money by disposing of fuily paid shares means raising money at aboub five per cent. It is uurely, therefore, too much to expect the company to allow itself to be victimised feo such nn extent in the interest of a section of tha shareholders. Moreover as a great part of the company's bnsinesß admittedly yields only fa"vo per cenb. profit) it is manifest that to pay more than that for money is to say the least distinctly bad finance. Unless the company has cheap mouoy it cannot supply cheap gas, and unless ib supplies cheap gas its days are numbered ; I only brush thab this ie nob the beginning of the esd. A far simpler method would be to raise money by debentures; Gas Company's debentures of 5 par cenb. would readily sell at above par, and would moreover be subscribed chiefly by the Company's own shareholders.

—I am, etc.,

John Dawson,

Queen-street, April 2nd, 1597.