A £340,000 LOAN

Dominion, Volume 16, Issue 119, 5 February 1923, Page 8

A £340,000 LOAN

FOR CITY COUNCIL TO PAY OFF ANTECEDENT LIABILITY SUCCESSFUL FLOTATION News was received by the Mayor on Saturday morning that the loan of £340,000 required by the City Council for tho purpose of paying off the city’s antecedent liability, outstanding as! nt March 31, 1922, has been raised in London. The rate of interest is 5$ per cent., and the price of issue is £99 per cent-. The loan has a currency of twenty years. The new legislation placed on the Statute Book -required that the antecedent liability should be wiped off before the end of the present financial year, and tho successful floating of the loan has relieved the city from a. situation which, if prolonged, would have caused a good deal of anxiety. Detailing the negotiations to a reporter, the Mayor (Mr. R. A. Wright, M.P.) stated that the loan had been floated, through the Union Bank of Australia. Thei brokers quoted at intervals 5 per cent, at 96, 5J per cent, at 98, and 5} per cent, at par, with the chance of a premium. After going carefully into the matter, the Mayor asked the bank to telegraph to the brokers inquiring if the money could not be secured at 5J per cent, at 99. This was agreed to, with the result as stated above.

“There can be no doubt,” said Mr. Wright, “that this is .in excellent proposition for tho citv. The interest on our bank overdraft has been 7 per cent, until just recently, when 'it was reduced to 61 per cent. When allowance is made for discount and flotation expenses, the interest on the present loan will nob amount to much more than 5J per cent. We have now to provide, f oi course, a. sinking- fupd of 1 per cent. With this addition to tho 51 per cent., we are almost in the same position as we were carrying on with a bank overdraft, but, of course, we shall be getting the benefit of the 1 per cent, sinking fund, year by year to extinguish’ the loan. ' W e are therefore practically 1 per cent, better off than" we were. The raising of the £340,000 loan on such satisfactory terms will clear up our financial situation, and place our civic. affairs on a much sounder foundation. I am extremely pleased at tho result of our negotiations. I think we have done ver> well, and that the citizens have every reason to be satisfied with fixe transaction.” Mr. Wright also stated that the brokers, in floating the loan, informed subscribers that no interest would be allowed on the deposit money (5 per cent.) until the balance was paid at thv end of March, which means * aubstantial saving to the city.