FORESTRY CONCERN

Dominion, Volume 29, Issue 216, 9 June 1936, Page 6

FORESTRY CONCERN

Balance of Values Between Bonds and Shares DIRECTORS’ SOLUTION / Dominion Special Service. Auckland, June 8. Iu the course of a statement the chairman of New Zealand Forest Products Limited (Mr. D. Henry) says important decisions of a far-reaching character were made at the first meeting of the full board of New Zealand Forest Products Limited, which was held at Auckland last week. All the New Zealand and Australian directors were present. The task with which the board was immediately faced was threefold—namely; to find a.fair and proper method of maintaining the balance of values as between the forestry bond, which now disappears, and the shares in this company issued to take the place of the bonds; secondly, to devise and implement a plan for cutting and marketing the forests and for realising the asset in a satisfactory way, for the benefit of shareholders, and, thirdly, to provide the very considerable sum required to finance the large timber industry (probably lumber pulping and sawmilling) which such a plan must necessarily establish. After fittings extending over several days and conferences with allied interests the board believes it has found a way of dealing in practical fashion with all three problems. Under the New Zealand law, however, it is necessary before any further step be taken that the decisions of the directors be placed as recommendations before the Bondholders’ Incorporation Commission, and the permission of that body obtained to give effect to them. “It is not possible to publish the details of our plans regarding marketing and finance until we have had au opportunity of placing the same before the commission,” says the chairman in his statement. “All shareholders, however, will be anxious to know in what manner it is proposed to provide for the increment in the share (or bond) values. Obviously a bond purchased in 1925, which has been associated with ten years of forest growth, is worth more than a bond purchased last year, the trees in respect of which have just been planted. It is apparent that when the forestry bonds are converted into this company’s shares there must be some differentiation as between the successive bond issues. It has been resolved, subject to the approval of the commission, to accept as a basis for an adjustment of this increment the average of the annual measurement of sample plots in the company’s plantations, which together with the ascertained value at the appropriate time of a cubic foot of timber will constitute the monetary value of the increment for each share. This adjustment will be made at a point of time which will be not later than 1940.”