MUNICIPAL GAS WORKS.

Dominion, Volume 1, Issue 281, 20 August 1908, Page 7

MUNICIPAL GAS WORKS.

\ -* —«: CORPORATION AND THE COMPANY. MR. D. j. NATHAN ON THE POSITION. SOME PLAIN SPEAKING. In his address to the shareholders of tha Wellington Gas Company called together yesterday for the purpose of discussing matters relating to the raising of fresh capital, tho Chairman of the Company, Mr. D. J. Nathan, took occasion to review the negotia. tions which had taken placfe between tli6 City Council and..the Company's Directors for tho purchase, by the Corporation, of the Company's business. Mr.'•? Natha- stated that at- the annual meeting held, in February last, it was pointed out that owing tc the-increaso in : the business of tho Compan;! it would become necessary for .the. share holders "to authorise the raising of frosl capital; He had anticipated that thej would havo'been summoned earlier, but th< City Council had, since then, opened negotiations for tho purchase, by amicable ar« > .rangements, of the ;undertaking, and it was i deemed desirable not to increase the capital j so long as there was auy reasonable prospect of a purchase being arranged. -i A Protest. "In passing," remarked Mr. Nathan, "I desire to . emphasise the uncertainty to • which .this-,Cojnpauy has been exposed for many .years ,bp. various suggestions that tha City Council. Should absorb the Company, Iu 1900, steps had to be taken to protest against the ,omission from the consolidation of the Municipal Corporations Acts, that was passed in that year, of the clause in tha prior Act preventing a municipal body from erecting gisworks where a company was exwithout first obtaining a special Act. Joint aotion of the gas companies resulted in tho section being reinserted, so that at proSent'cdfapanies are secured against a depreciation, of their property by any threat to install' opposition municipal works. In 1904, tho Wellington City Council promoted a Bill to enable the city to acquire tho gasworks, but tho Company, was successful in resisting the compulsory powers. Tho directors, then approaoked the Mayor, pointing out that any. general pow;ers'6f purchase, without a limitation of.'time,- were a menace to the Company, of ' such a nature, as tended to prevent it -from;.putting fresh capital into tha : works'^.'frithdetrimental effect to the public, and inqu'iriiig whether the Council waa prepared to purchase; but no steps wero taken by the Corporation to do so. overtures by the Council. 1 "In March of this year, the Mayor wrote stating that the Council desired to purchase tho undertaking as a whole, emphasising' powers that it claimed to have, to purchase, compulsorily, that portion ot the undertaking which was in the old Melrose Borough. The Company's directors replied that they had no authority to sell, but if a fihn and suitable offer was made, they would Bhbmit tho same to the shareholders. In tho middle of May, the Town Clerk suggested as a basis that the . Bhares should bo purchased by "the City at; an increase of G per cent, on tho theii ; niarketj price; At tho beginning of June' the,_ directors replied that such a price-rwhich'miglili- be estimated as £21 per £10-paid' share, and £10 10s. per £5-paid share—was quito 'insufficient, and offered, if acceptable to tho-Council, to submit. proposals for sale to t .the shareholders on the capitalisation of tlie prorpujcj'fpr's profit.. ' r rha was .kept open £or : a. month; and it was' agreed to permit an expert'accountant to. examine the books and satisfy; himself 'ihat .the sfigrircß submitted were'justified.'.This proposal'would,' if ac-cepted,-have enabled! the .-.Company to have been liquidated, and £26 jjer share returned for each fully-paid shared '■ No reply was received till tho end of the; period, when a request was.mado i that a gas expert should be permitted to visit the works, with a view to reporting thereon. • ,The .directors finally Replied, pointing out .that the proposal was iiot based on the vahio of "tho works, but on tho value of tho. undertaking as a going iirofit-making concern, and that owing to tho necessity of the Company having'to raiso fresh capital without delay, the offer could not be kept open. . Proposed Legislation. ■ "The directors, feeling that the proposal to purchaso the undertaking was not-lively tc eventuato on terms that they could recommend, had now decided to _ask 1 the shareholders to provido fresh capital without delay." It is; however, probable I that the ;Com-Igany-will-M subject;to further attacks' at & ,later, period, sis, on a i;emit from tho : ■Wellington Council, the Municipal Conference, recently submitted to the.Governmeht proposals that legislation l should be passed.- enabling municipal councils to compulsorily 'buy up gas. undertakings within their districts.;/ The directors,'however, had no fears as to the position. ' They felt : confident that Parliament would not permit any spoliation of the khareholders of gas compares, 'and therefore had ovcry confidenco in submitting the proposals fjir-.tlic raising of further share capital to tho members or tho Company."

Future Policy. • Some discussion eventuated at'abater_stago of the proceediiigSj as to the future policy of tliG directors with regard to the inatter., Mr. Fitzgerald wished to be informed Aether the directors' wore prepared to continuo tho negotiations-for. the sale.of the undertaking to tho City Council. " The Chairman replied that tho Company had 110 such intention. It was, of course, open to the City Council to ..reopen negotiations with tho Company. That was anothei matter. - Mr. Beauchamp suggested that if the Council approached tho Company with terms of purchaso of a sufficiently favourable nature to justify the directors placing them bef6r6Tthd.§har|holders,'it w-ouid be for theilat •ier-w-HftrfdS.' - s '•• -• iDr., Knight urged .a firm policy with- re. gard : to'the matter. ' They should nail tlieii colours to tho mast, Tho Chairman: "The City Council-can do nothing without legislative power, and when they obtain it they will have to go to the ratepayers. Wo havo had : this< matter before us since 1900, and I think: it oan be looked upon as dead. Wo are not ansibus to sell to the Corporation unless we can feet an:'excocdingly tempting offer. -If.'rou ask me whether we are approaching the City Council, I say, No. Do we wish to sell to the' CouncilP I again say, No." — • Thero was no further discussion.. "

THE MAYOR'S STATEMENT. QUESTION OF RETICULATING RICHTS. , '■ MR;' T. F. MARTIN'S OPINION. • Ask'ei''for; ihe'Council's side of ths_ question of."tho'"acquisition of tho Wellington Gas Company's ■business, his Worship tho Mayor (Hon, T. W, Hislop) said tho Council oould not take over the works ou'tlio basis of tho Gas Company's offer, but what had x been overlooked, was that the last, offer made ' by, the Council returned a greater' profit to tlie; shareholders than hail been represented. 316 had looked about fof.'a satisfactory basis "Oipvhicji. further off6rs to ; purchase'iliight bo made,' not 'on. the commercial value of the ■'\voi;ks as tliey stood, but providing for expansion'and its,cost, and had a .littlo whilo ago appointed; an expert-to''osainiud tho. works thoroughly and report to the Council.'; It would take him ovor a month to do so, and nothing further could be done until that report;,was.. received. ftiwwed >in the terms of tho acquisition was,.tho.important question of tho extent of t the privileges held by the Gas Company;' It ivas a very important question whethor or not the Company; bteld.'the- right to bring its mams from Miramar (the site of tho new -works)--through—the-old Melrose-district to

the old area of Wellington' City. That was a question which had' not as yet been tested, though he''had informed the chairman of the Company (Mr. Nathan) that the Council was prepared to k do so at" iiny time. "• The Council bad-been advised by counsel of high standing' that' no such right was hold by the Company, an opinion offered by tho City Solicitor,'and whioh •he personally agreed with. .V: . . •

The Council was hoping that the law would be amended this year in the direction of giving municipalities power compulsorily to tako over the business and plant of gas companies, but the Government did not seem to get ahead .with it, though they approved of tho principle. .. . Mr. Hislop . stated that he had written to Mr. Nathan yesterday, morning with regard to the proposed acquisition,' regretting that ho had-.- only_ received .the . opinion re r forred to since his return ■ from Auckland, but that ; opinion-.', (Mr.' T.' F. Martin's) ] strengthened tho' Council's contention th'n t - the Company.had-no right to bring its mains from Miramar into 1 the City through the old Melrose borough"'.area./ . .