DOMINION CEMENT CASE

Dominion, Volume 11, Issue 268, 1 August 1918, Page 7

DOMINION CEMENT CASE

THE PETITION FOR INVESTIGATION WAR BLAMED FOR LOSS OF - CAPITAL Uy Tek'erniih.—l'ross Association. Auckland, July .11. The, petition to have tin) Dominion Portland Cement l'uni).>:ui.y, limited, lit voluntary lifjuitlulinii, tunipuisoiily \v(iiiu>l lip, was further heard at Llit! Supreme Court to-day. Mr. J. J.'. Campbell, who appeared for the lute directors, muini-d his address. Mr. Campbell read an allidavil by JJ. B. Williams, chairman of directors, from .lanuary,..lSl.li, to November, 11)17. Mr. Williams declared that iho payments to (I. Wiustone, jim., into which the petitioners desired inquiry, consisted of \efunds of large cash advances by him and trilling payments to cover expense ho had incurred in the company's interests. The iilfidavif denied that the debenturcholders had agreed not to foreclose if the shareholders took up 424,01)1} of the new debenture issue. Mr. Williams asserted'thai:Hie petitioners were offered a full investigation of (he company'.-: records, and he undertook that if Mich investigations showed that the petition for compulsory 'winding up was justified, limy wouldagree to the filing of the new petition. This offer Ihe petitioners refused. ■■Mr. Campbell said that i:i view of wluir had been alleged, ho wanted to draw -particular- atfenlion to this Ktolcuienf. Mr. Campbell read two affidavits by .Mr. Gerard and .-portion, of n . third. Mr. (jierard specifically denied that the liquidation of the company was duo to action by the debenture-holders. At that lime the coinuany. owing to competition, could not sell its cement except at a loss, and interest charges amounted to .LTili a day. It was faced with increases in cos!, increases it could not puss op to the consumer. It,had no (■ash in hand, with which to carry .on until conditions improved. The only available money was about „C1(I,()!)(1. due on the last issue of debentures, and as this would have been wholly lost if it were called up, it was resolved to go into immediate liquidation for Ihe purpose, of avoiding further losses. Mr. (,-ierard considered the company's loss of capital was due mainly to Iho war. Tho directors believed they were justified in erecting a large and iip-to-ikue plant, .. They;-, engaged Americfii experts to instal Ihfi-Vplnnt and the estimates of these experts, on which they relied, were eventually much exceeded owing to the war. Tho demand f-ir cement fell 31) to 50 per cent., and Ihere were difficulties and del?ys in getting labour and material. "]merest accumulated, the prices of commodities rose, and the progress of work was hindered by ileuds and storms, which did thousands of pounds' Vorth of damage, particularly to the electrical plant. The directors, continued Mr. Campbell, were blamed for '.he loss of tho share capital, but he wished to point out that they had put altogether ,-t122,£7.) into tho company, including J.M1,(IOO lepresenling ordinary and preference shares. They had been carrying the whole concern on their ba"!;s for years. They had never accepted the directors' fee's,.and hid paid their own travelling expenses. '.IlisHonour: It would bo correct to say they lost some of (heir own money, amongst that of shareholders. Mr. Campbell read an affidavit by Mr. A'ernon H. Jttcd, the first chairman of directors, setting out the causes of the. failure in much the same terms as those 'Itsed'byMr. Gerard. He also mentioned the "refusal of the Whansarei Borough Council, after the formation oi'_ J:he company, to proceed with Ihe "Wairua Palls, electrical power scheme, thus compelling the company to put in a plant of its own—a course for which the directors weie now greatly blamed by the petitioners. On-behalf of the debenture-holders, Mr. M.'Myers said that ho was not actively opposing the petition. Any suggestion against I lie good faith of his clients could absolutely be broken 'down. The debenture-holders numbered fourteen; awl i.t no time did more than four act as directors. Of the fourteen debenture-holders, four were not shareholders. They tuok up debentures as an investment, and later, in-order to protect the money they 'had put in jn the first' place, they had made advances of large sums. The debenture-holders had hot made a penny profit out of the purchase of the assets or out of the amalgamation scheme. Tho debentureholders, had provided a total of ,£250.000 for the company's business. ■ After they had. purchased the assets they amalgamated with 'two other companies, and were given 285,000 shares, which Mr. Mvors contended were not worth their par value. Tho debenture-holders had paid back the holders of partially sobscribed .E3G.091) debenture issue, with nu additional G per cent. If the allottees of the J::ifi,l!00 debenture issue preferred, the debenture-holders were willing to give them shares in ihe amalgamated company instead of cash. Counsel said Ihe .petitioners would not obtain anything, under a compulsory liquidation which would not be nbtarcd under the voluntary liquidation. He submitted alternatives to an order for compulsory winding up, and in conclusion said the sole object was to save ihe debentureholders further useless expenditure. The case was again adjourned..