Sovereign plans gain support

Press, 12 October 1985, Page 21

Sovereign plans gain support

By

NEVIN TOPP

in Greymouth

Although the first annual meeting of Sovereign Gold Mines, Lid (in receivership), was held in the Brian Bora room of the King’s Hotel, Greymouth, there was none of the “blood on the floor” associated with the violent Irish King. The reconstruction proposals put to the meeting were not opposed by two original directors of Sovereign, Messrs P. A. HydeHarris and K. C. Hunt, or a third director, Mr J. A. Bennett

The chairman of Sovereign, Mr Stephen Smith, told the meeting that a large number of proxies in favour of Messrs HydeHarris and Hunt had been declared invalid by the scrutineers from the national accounting firm, Coopers and Lybrand (after independent legal advice had been taken). The meeting was also told that Mr Stephen Smith held proxies totalling 1,880,400, and another director, Mr Raymond Smith, 212,500. Mr Hyde-Harris had proxies totalling 21,000, Mr Hunt 27,000, and Mr Bennett 5000. The total shareholding of the company was said to be 13,706,500 shares.

Mr Stephen Smith said that, as shareholders would already know, the receivers had reported a small loss of $1154 in the first quarter However, although the final figures for the second quarter had not yet been completed, the receivers had indicated a substantial loss of $70,000 before depreciation and amortisation. There were three reasons for increased loss, he said. ® A reduction in the amount of gold recovered at a time when the New Zealand dollar had strengthened against the United States dollar.

• Maintenance of plant was required, which had previously been deferred.

• Some of the activities of the company had been temporarily postponed because of preparations for the annual meeting, which had also caused a return to a higher level of receivers’ costs.

The proposals to reduce the par value of ordinary Sovereign shares and options from 25c to sc, matters considered crucial to the whole reconstruction proposals, were passed without questions or dissent. On the resolution of buying the shares of Westside Traders, Ltd, the West Coast retail holding company, of which Mr Stephen Smith is chairman, for $1,626,000 in Sovereign’s shares and options, a shareholder, Mr Jim Bushby, asked whether the Sovereign directors had obtained an independent valuation and if so, when had it been done.

Mr Stephen Smith said that such a valuation had been completed within the last two weeks by a national firm of chartered accountants. No objection was made to changing the name of the company to Prime West Corporation, Ltd. The directors were closely questioned on what qualities were being sought in the two additional directors to be appointed to the board.

A shareholder, Mr Robert Back, asked for an assurance from the directors that they would seek directors who had a good record in public companies. He also expressed concern that the directors had not proceeded with seeking out such directors, considering that one of the Sovereign directors (Mr Raymond Smith) had told the meeting that the Westside directors had had “no public company experience, full stop. Mr Stephen Smith said that the directors had held informal discussions with people to see if they were

interested in joining the new board, but these people would give no commitment until the receivership was lifted Westside’s solicitor, Mr David Renwick, said that no assurance could be given that the directors would have public company experience, particularly if directors of this category did not want to join the new board. But, shareholders would have the opportunity to boot the two appointed directors off the board at the next annual meeting if they felt that the two were not doing their job, he said. A shareholder threatened to make sure that the two additional directors would not be re-elected at the next annual meeting if the company was not back in profit, and the comment drew some support from other shareholders. Mr Raymond Smith told the meeting that the intention of the company was to retain the growth in employment on the West Coast “Those of you who think that the West Coast is a backwater are wrong,” he said Mr Raymond Smith also listed the involvement that Westside Traders, Ltd, had on the West Coast, with its

five retail firms, involved in electrical appliances, furniture, and furnishings, plus property development, and that one of the firms also ran its own in-house, hirepurchase system, which held receivables of just under S2M. Westside traders was experiencing buoyant trading at present, but there were indications of a downturn early next year. Westside was expecting a profit or more than $500,000 in the year to March 31, 1986, he said. Messrs Stephen Smith, Raymond Smith, and Roy Anderson were re-elected directors of Sovereign, having been appointed earlier this year. The meeting was told that Messrs HydeHarris, Hunt and Bennett had signed undertakings to resign once the motion on the appointment of directors was passed. The new board of Sovereign will be hoping that holding the first annual meeting in the Brian Bora room was a good omen, since the princes descended from the Irish King (9411014), the O’Briens, subsequently became one of the chief dynastic families of that country.