Develop. Finance Loan To O’Brien

Press, Volume CVII, Issue 31502, 17 October 1967, Page 22

Develop. Finance Loan To O’Brien

M. O’Brien and Company, Ltd, the Christchurch footwear manufacturer, has been granted a $160,000 loan from the Development Finance Corporation of New Zealand as part of the $490,000 fund raising scheme to finance the new factory at Shirley, the chairman (Mr M. F. O’Brien) told the annual meeting yesterday.

The loan is conditional on the company obtaining a $150,000 first mortgage and making a convertible note issue of at least $lBO,OOO.

“Negotiations for the first mortgage have reached an advanced stage and full details of the note issue will be announced as soon as the mortgage is finalised,” he said. Convertible 1972 The notes, which would be offered first to shareholders, would be convertible in 1972. The new factory would enable production to he doubled from 200,000 pairs to more than 400,000 pairs of shoes a year in the next few years. The absorption of Denver Footwear Ltd, taken over in August, into the new factory at the end of next year would give an immediate increase of 75,000 pairs. If there was no further downward trend in the economy the joint production of

the two companies could well be near 300,000 pairs early in 1969, said Mr O’Brien. Substantial Rise . Apart from the capital required for the new factory, the plant and machinery now owned or leased by the group would, with small expense, be sufficient for a substantial increase in production. Excluding the tremendous potential for export there was ample room for the rapid expansion of an efficient manufacturer. Many retailers, reducing stocks to improve liquidity, were leaning heavily on warehouses and this had meant that the group had had to carry increased stocks of footwear in Auckland and in Christchurch, said Mr O’Brien. Although public spending on footwear was only slightly down many retailers were reducing stocks substantially, knowing that they could obtain their immediate requirements from warehouses.

The footwear industry would no doubt feel the effects of some reduction in consumer demand but this did not necessarily mean that it would be shared equally by the 129 registered footwear manufacturers. O’Brien was endeavouring to maintain its present level of production. In fact, the recent acquisition of Denver increased the share of the market and gave rapid entry into the women’s fashion and casual shoe field, as well as girls’ school and party shoes. The company was gradually gaining entry into export fields. Exports to Australia could be substantial within the next year if preliminary talks were successful. Infants’ Shoes The group expected to capture an increasing proportion of the infants’ shoes market which had been traditionally supplied from overseas. “It is clear that there is a great future for the footwear industry in New Zealand and it is our intention to endeavour to obtain an increasing share of the market,” Mr O’Brien said.