VOTES DIVIDED.

Auckland Star, Volume LXVII, Issue 103, 2 May 1936, Page 12

VOTES DIVIDED.

DEBENTURE-HOLDERS.

REALISATION OF ASSETS. INVESTMENT TRUST PROPERTY (By Telegraph.—Fress Association.) WELLINGTON, Friday. The meeting of debenture-holders in the Investment Executive Trust of New Zealand,, Ltd., was concluded to-day after further discussion of the sale by the Public Trustee, Mr. E. 0. Hales, of shares in the Trustees, Executors and Agency Company of New Zealand, Ltd., Dunedin, in the course of the liquidation of the assets of the Investment Executive Trust. A vote of thanks was accorded the Public Trustee. In explaining the action taken regarding the disposal of some of the assets, the Public Trustee said in the course of yesterday's discussion- that the carrying on of the liquidator's legal duties had in no way been to the disadvantage of the debenture-holders, nor had anything occurred to justify the prediction that liquidation would mean the sale of the assets at an enormous loss. The realisations effected, together with the income in hand, had enabled payment of the, recent dividend of 2/ in the pound to debenture-holders. The amount required to provide this dividend was £50,727 1/7.

Sydney Building's Future. The results of the ballots on the resolutions before the meeting were announced to-day. Resolution No. 2, "That the meeting views with apprehension the possibility of the sale of the Trust Building in Sydney at less than the reserve price fixed by the Court, and requests the Public Trustee forthwith to communicate with the Public Trustee of New South Wales, urging him, on behalf of the Investment Executive Trust debenture-holders, to withhold the Trust Building from sale at less than the reserve price fixed by the Court," was carried. The other three resolutions were carried on the value, but not on the numbers. The Public Trustee said that, in view of the fact that one resolution was carried, consideration would be giveji to the suggestions made.

The resolutions lost were numbers one, three and four. The first read: "That as the existing legislation for the liquidation of the assets of the company was passed without obtaining any expression of opinion from debentureholders, this meeting declares that the realisation and sale of the assets of the company is not in the best interests of the debenture-holders, against which course this meeting emphatically protests."

The third was to the effect that, as previous endeavours by debentureholders to have effect given to their wishes had been rendered fruitless through difficulties of finance, the meeting request the Public Trustee to settle, in consultation with a committee of the debenture-holders, a scheme of arrangement whereby such object would be carried out, by the preservation of the assets for the benefit of the debentureholders.

The fourth resolution was that the costs of the meeting and.any further costs involved in the carrying out of ,the resolutions be borne by the company, Results of the Voting.

i The results of the voting was:—No. 1: For, 12(5, value £217,001; against, 168, value , £208,342. No. 2: For, 215, value £275,821; against, 82/ value £147,552. No. 3: For, 125, value £214,011; against, 100, value £205,002. No. 4: For, 121, value £211,031; against, 100, value £205,552. Mr. Norman Levy moved to-day that in view of the fact that the "second resolution had been carried by a majoritv in numbers and. in value, "the meeting appoint two, three or four representatives, preferably Wellington residents, to approach, the Government for a Parliamentary Committee to inquire into the whole matter.

A Debenture-holder: Why only Wei lington residents?

The resolution was ruled out of order. The Public Trustee pointed out that the fact that Sterling Investments, Limited, had exercised its votes did not affect the poll. Mr* -I. Paul, of Duncdin, said they had lost what they were striving for on numbers, but had gained it on value. "The numbers who defeated us," he said, "were people outside of the room, people who had not heard the case." 'He could not see why the Public Trustee would not welcome the co-operation of a reasonable committee appointed by the debenture-holders to assist him in the liquidation. The debenture-holders had opposed compulsory liquidation from the beginning, but the people who had defeated them were not there to hear the argument. He did not agree with Mr. Levy that they had achieved their object. The unfortunate part about it was that the liquidator was the Public Trustee. In saying this he was not being discourteous. The Public Trustee, with a smile: I agree with you.

"An .Unfortunate Position." Mr. Paul: I say that sympathetically, sir. You have an uncomfortable and unfortunate position, and that was proved yesterday. An advisory committee, continued Mr, Paul, would to a certain extent lelieve the Public Trustee of a certain amount of responsibility. The result of the meeting, he added, had not been satisfactory.

t When Mr. Paul had spoken of ' political processes," said the Public liustee, he supposed he had meant in regard to the eales o/ shares.

Mi. Paul said that lie had made no suggestion of politics when referring to the sale of shares, but what he "had meant to say was that there had been a series of occurrences in the course of the liquidation of the company, and that there was a hint of the political. Mr. M. V. Bates said he wished t,o put it on record that his offer of 50 per cent more than was obtained by the Public Trustee was still open. His interests were still prepared to buy the shares. Mr. C. J. Playne said that the number of shares concerned was not 45,000 as stated, but 3845. It was made out that this was such a big holding that it would affect the control of the' company, but the company itself had power to increase control, and if it had exercised that power the control would have been influenced.

The Value of Shares. Whether Mr. Bates had made the offer or not, said Mr. Playne, there was no possibility of his nominee getting on the register of the, company. The value of the shares was fairly constant, ranging from £3 3/ to £3 5/ and a sale at £3 10/ would have been good. The. sum of £3 10/5 meant free of /.brokerage charges, and therefore £3 16/5 to tlie debenture holder,3. Mr. Bates had at no

time made an offer. He did make ail inquiry, but it was after the time when Mr. Bates must have , known that the shares had already been sold. Uis inquiry in September was not an offer. Mr.'Bates: I told you'l had a buyer. Mr. Playne: That was not aii offer. Mr. Bates: In my opinion the Public Trustee's action was indefensible. •Mr. Playne said that it was a very simple thing to come along after the shares were sold and say that f>o per cent more could have been obtained. Why not say 100 per cent? When the Public Trustee sold, many investors were pressing for a dividend on the amount of their capital; and the sale enabled him to secure funds. Mr. J. W. S. McArthur had said that the holding of these shares would enable the company to control £4,500,000 worth of assets. Mr. McArthur: So they do. Mr. Playne said that these were tfuist assets, and Mr. McArthur endeavoured to control them. How would that benefit the company?

Mr. McArthur: That was our business. Mi-. Playne said there was no point iti keeping the shares if they were not likely to rise in value. The Public Trustee had sold and was enabled to •ret more than the ordinary value. It had been done in the interests of the debenture-holders. The Public Trustee said that the meeting, as far as any resolution was concerned, was closed.

Possible Loss Involved? Mr. Levy said that resolution No. 2 had been carried. He submitted that this resolution involved a possible loss. The building had a potential interestearning capacity which would be worth £215,000 to the debenture-holders. That building niij;lit yet be sold,, but he was sure it would be sold at a value below what it deserved. There was an opportunity, in co-operation with the liquidator in Sydney, to assist in the preservation of the building by extending the mortg(fge from £100,000 to The amount necessary to equate the lowest price they could negotiate for. He believed it could be negotiated for today at £200,000, or even less.

In that case, went on Mr. Levy, there were two alternatives: (1) They could hold the building, and get the necessary alterations made to the ground floor; (2) they could form a company and distribute the shares in that company in ratio to their holding and sell it to that company, and enable it to wind up the whole matter. If the building were free from the pressure of a forced realisation it could be made to produce something like 5 per cent 011 £200,000. He pleaded with the Public Trustee to regard their wishes. Mr. Richards stressed the improved rentals which could be obtained by the completion of the alterations to the ground floor.

The Public Trustee: As you have passed a resolution in connection with that building your representations will be properly attended to.

A Debenture-holder: Assuming the value of the building to be £273,000, how much are we likely to get in interest?

The Public Trustee: I cannot give you that, but you can work it out for yourselves.

A debenture-holder said that while he did not agree that Mr. Bates did not make, an offer for the shares, it had been said that if Mr. Bates had got the shares he would not have been allowed on the register of the company. What were the grounds for that? / "Jumping To Conclusions." Mr. Playne: Because the trustee company were watching very carefully. Tt was obvious that none of Mr. Bates' nominees woftld get on the register. Mr. Bates: You are jumping to conclusions.

Mr. Playne: Reasonable conclusions. Mr. Pates: Quite unreasonable. Mr. Playne: If there was a definite offer, what was the amount?

Mr. Hammond: We arc eßgaged in a stupid argument. Somebody puts up a seller and asks: "Are you willing to sell?" There is no otter, unless there is a price attached to it. It was 110 use trying to jam the Public Trustco into a corner when all that was. offered to him was a weak attempt to get some information. The Piiblic Trustee said that he was pleased that the second resolution 'had been passed. ITe wquld communicate with the Public Trustee in Sydney and ask him to place this matter before the Court, which would give him plenty of notice, so thfit be could appear and make any recommendations. Mr. Paul proposed a vote of thanks to the Public Trustee. The brightest spot in the proceedings, lie said, had been the Public Trustee's assurance that lie would do his utmost to preserve for the debenture-hodlers the fullest j interest and value in the building. I

The motion was carried with acclamation and the Public Trustee thanked the meeting for the appreciation shown him.