GAS DEBENTURES

Auckland Star, Volume LXXIII, Issue 45, 23 February 1942, Page 6

GAS DEBENTURES

< DIRECTORS' ACTION

CHAIRMAN SUPPORTED

/ Strong criticism of the methods Jof the directors in dealing with debenture stock, which was recently the subject of a retrospective reduction in interest from 5 per cent to 3i per cent free of interest, was voiced by Mr. Alex. Harris at the annual meeting of the Auckland Gas Company to-day. Mr. Harris expressed dissatisfaction with the explanation of the chairman. Mr. V. J. learner, and contended that the debenture holders >had made an unwarranted sacrifice. No shareholder was aware that legislation had been passed authorising the company to reduce the interest until months later. A circular 'advising the shareholders of the move dated September 15 last was not received until three days later. The directors could have taken the alternative offered under the legisI lation and returned shares in lieu of the debentures.

Debentures were selling freely at nearly par before the announcement about reduced interest and after the announcement buyers were offering £89. On the evening of September 18 there was a sale at £89, three days after the circulars were printed, but not issued, to the shareholders.

"It would be interesting to know what sales took place and by whom in those three days," added Mr. Harris. . The directors were in duty bound to redeem all debentures at a premium of 2 per cent, as provided in the deed of trust. That was the only honourable course for them to take. He moved an amendment to the motion that the report and balance-sheet be adopted, that the report be referred back to the directors for further consideration. Mr. J. Barnhill seconded.

In reply, Mr. Larner said the directors throughout had acted in accordance with the legislation. They had referred the question of reducing interest on the debentures to the company's solicitors, who advised on September 2 that it was not known whether the bill had passed both Houses. To have taken the alternative suggested by Mr. Harris would have involved the shareholders in serious loss. He resented Mr. Harris' insinuations regarding the redemption of debentures. Every effort had been made to secure information and advise the shareholders. It would be impossible for the debentures to be redeemed at £102. Mr. Harris rose to reply, but his right to speak further was disallowed by the chairman. Shock to Debenture-holders Mr. N. R. W. Thomas considered the chairman's reply was satisfactory, although he agreed that the reduction in interest had come as a shock to the debenture-holders. If the Stock Exchange had been advised of the legislation, Mr. Harris' remarks would have been unnecessary. The amendment was lost, as also was a further motion by Mr. Harris that the directors be instructed to prepare a table showing debentures that had been redeemed since August, 1940, and that it be made available to all stockholders and that the names of transferees and transferors and the prices obtained also be noted. The chairman said any shareholder could have the information sought by Mr. Harris.