Creditors Reject Offer By O’Brien

Press, Volume CIX, Issue 31976, 1 May 1969, Page 18

Creditors Reject Offer By O’Brien

Creditors of M. O’Brien and Company, Ltd, the Christchurch footwear maker for which last year a receiver-manager was appointed, yesterday rejected a proposal by the directors that most of the $120,000 debt should be settled by the issue of convertible notes.

The meeting of creditors decided that more information was required—particularly on the company’s results since February—and that a decision should be left until September when the final accounts for the year will have been prepared.

A committee of four of the four, Mr G. N. Bowron, said creditors was established atiast evening that, as far as the meeting, but one of the he knew they would not be

making any specific proposals. “The ball is still in the directors’ court,” Mr Bowron said, “but the two parties have a common interest in reaching a solution.” The creditors rejected the proposal in spite of a strong recommendation by the receiver for the bank (Mr H. Beattie) that they should show practical confidence in the present board and general manager (Mr P. Carter). SURPRISED The chairman of O'Brien (Mr C. C. Holland) said after the meeting, which the creditors decided to hold in committee, that some had appeared surprised by the company’s proposal. It was unusual, he said, for creditors to be offered a tangible proposal of this nature. The board’s recomendation was that debts of less than 8100 should be paid in cash; debts of more than $lOO should be reduced by cash payment to multiples of $lOO, and these should be taken up in convertible notes, with interest at 5 per cent and the right to exchange them for cash, or for shares at par on a one for one basis in five years. The proposal was to have come into force when the re-ceiver-manager was withdrawn. Both the bank and Mr Beattie expect this to be soon. THREE REASONS _ Asked why he thought his fellow creditors had turned down the O’Brien offer, Mr Bowron, a joint managingdirector of G. L. Bowron and Company, Ltd, suggested three reasons.

Creditors felt that financing the company was a matter for the shareholders, n'Ot themselves, he said. Furthermore, most creditors had had an unhappy debt experience over the last year. There was a feeling, too, that the O’Brien board’s refusal to accept liability for the debts of Denver Footwear, a subsidiary no longer producing, did not inspire confidence among creditors.