The Press FRIDAY, SEPTEMBER 3, 1971. The Union Steam Ship Company

Press, Volume CXI, Issue 32702, 3 September 1971, Page 14

The Press FRIDAY, SEPTEMBER 3, 1971. The Union Steam Ship Company

All parties to the Union Steam Ship Company takeover must be relieved that agreement has been reached, at last, on the details. It is almost exactly 12 months since Thomas Nationwide Transport, Ltd, announced that it was negotiating to buy the company. Interviewed in Auckland a few days after that announcement, the managing director of T.N.T. (Mr P. N. Abeles) said that a principle to be adhered to in the negotiations was that a substantial New Zealand interest should be allowed in the re-formed company. But the intervention of Mr R. A. Owens, who attempted to raise capital in New Zealand for a rival bid, delayed the negotiations, and it was not until April 5 that the New Zealand Government approved the T.N.T. bid “ in principle For the last five months a group of New Zealand companies and businessmen, led by the managing director of N.Z. Forest Products (Sir Reginald Smvthe) has been attempting to raise capital to take up the half-share in the Union Company offered by T.N.T. Their target was $6 million a sum which until recently would have been raised easily by the same companies. But this year’s credit squeeze, probably the tightest in a generation, has left even the country’s biggest companies with reduced liquidity and restricted access to lending institutions. Since April money has become progressively tighter, and the long delay in completing the arrangements for New Zealand participation has probably been brought about by the Government’s reluctance to provide or guarantee an increased proportion of the $6 million required.

Although chauvinists may deplore the 50 per cent Australian shareholding in the re-formed Union Company, they should realise that the Tasman Sea is not a New Zealand lake and that Australian business interests and unionists might have been less than enthusiastic in their reception of a wholly New Zealand-owned company. The New Zealand Government’s reluctance to commit taxpayers’ funds is understandable: not only would a Government shareholding be an investment of dubious profitability, but it might put the Government in an invidious position in the event of labour disputes or of decisions having to be made on the curtailment or extension of services. The bridging finance to be provided by the Government will at least limit the period of direct financial involvement by the State.

The decision of the Seamen’s Union not to subscribe for shares, even financed by the Government “on the most favourable terms “available”, will be regretted by many New Zealanders. The union’s belated discovery that its rules did not permit such an investment may be interpreted as a diplomatic refusal; union spokesmen had earlier spoken enthusiastically of taking a substantial shareholding in a company in which the Government held the majority of the shares. Evidently the union’s officials consider they have little chance of influencing, through a union shareholding, the decisions of a company in which the Government has only a temporary financial Interest

The New Zealand companies which have subscribed capital, much of it borrowed money, to the venture are to be congratulated on their enterprise. None of them can expect to earn as much on this investment as they would have earned by reinvesting the money in their own expansion. All of them, it must be conceded, are investing in the Union Company because they need the services the company can provide—services which will be equally available to their competitors, and from which all New Zealanders will benefit. Mr Abeles, too, has earned the thanks of New Zealanders for his willingness over 12 months to admit New Zealand interests into partnership. A less patient entrepreneur would have broken off negotiations months ago.