CITY GAS.

Evening Post, Volume LXXVI, Issue 43, 19 August 1908, Page 7

CITY GAS.

COMPANY AND COUNCIL.

THE POSITION TO DATE. BY THE CHAIRMAN) OF THE COMPANY. The proposal of tho City Council to purchase the Wellington Gas Company's property -was considered at a meeting ■of the company to-day, called for the, purpose of increasing the capital of the company. The chairman (Mr. D. J. Nathan), in the course of bis speech, remarked that he had anticipated that shareholders would have been summoned before this, but the City Council opened negotiations for the purchase by amicable arrangements, of the company s undertaking, and jt was deemed desirable not to increase the capital so long as there was any reasonable prospect of a purchase being arranged. He emphasised the uncertainty to which the company had been exposed for many years by various suggestions that the City Council should absorb the company. In 1900 steps had to be taken to protest against the omission from the Consolidation of the Municipal Corporations Act that was passed^, that year of the clause existing in the prior Act preventing a municipal body ivom erecting gasworks where a company was existing without first obtaining a special Act. Joint action of the gas companies resulted in the section being re-inserted, so that at present companies are secured against a depreciation of their property by the threat to instal opposition municipal works, m 1904 the Wellington City Council /promoted a Bill to enable the city to acquire the gasworks, but the company was successful in resisting the compulsory powers, and then the board approached the Mayor, pointing out that any general powers of purchase without a 'limitation of time were a menace to the company of such a nature as tended to prevent the company from putting fresh capital into the works, with detrimental effect to the public, and enquiring whether the council was prepared to purchase, but no steps were taken by the corporation' to do so. THE COUNCIL'S DESIRE. In March of this year the Mayor ■wrote stating that the council desired to purchase the undertaking as a whole, and emphasising powers that it claimed to have to purchase compulsorily that portion of the undertaking that was in the pld Melrose Borough. The directors replied that they had no authority to .sell, but if a firm and suitable offer were made they would submit the same to the shareholders. In the middle of May the Town Clerk suggested as a, basis that the shares should be purchased by the city at an increase of 0 per cent, on the then market price. At the beginning of June the director replied that such a price— which mighti be estimated as £21 per £10-paid share, and £10 10s per £5-paid share— was quite insufficient, and offered, if acceptable to the council, to submit proposals for sale to the shareholders calculated on the capitalisation of the previous year's profits, and left the offer open for a month, and agreed to permit an expert accountant to examine the books and- satisfy himself that the figures submitted were justified. This proposal would, if accepted, have enabled tba company to have been liquidated and £25 per share returned for each fully paid share. No reply was received till -the end of the period, when a request was made that a gas expert should be permitted to visit the works wiiib. a view to reporting thereon. The directtors finally "replied pointing out thai the proposal was not based on the value of the works, but on the value of the undertaking as a going, profhVmakinGC concern, and that owing to the need of the company to raise fresh capital without delay the offer could not be kept open. The directors, feeling that the proposal to purchase the undertaking was not likely to eventuate on terms that they could recommend, had decided to ask the shareholders to provide fresh capital without delay. "POSSIBLE FURTHER ATTACKS." It was, however, probable that the -company would be subje'et to further attacks at a later period, as, on a remit from the Wellington Council, the Municipal Conference had submitted to the Government proposals that legislation should be passed enabling municipal councils to compulsorily hoy up x gas undertakings within their districts. The directors, however, had not any fears as to the position, feeling confident that Parliament would not permit any spoliation of the shareholders of gas companies, and therefore had every confidence in submitting tho proposals for the raising of further share capital to the members of the company. NO DESIRE TO SELL. A a subsequent stage of the meeting Mr. Fitzgerald asked whether the company intended continuing the negotiations with the City Council? The chairman eaid tho company had no intention of opening up negotiations with the council. If, however",' 'the council approached tho company, that would be another matter. They could not prevent the council doing that. Shortly, the company did not wish any- | thing of the kind. Mr. Beauohamp considered that a posii tion might be reached when overtures I from the council would be made and be of euch a favourable character as to justify the directors going to the share-, i holders and leaving it for them to decide. Dr. Knight hoped the directors would nail their colours to the mast in regard to this matter. The chairman : The City Council can do nothing without legislative power, and when they obtain it then they will I have to go to the citizens. We have had this matter before us since 1900, and 1 think we can look upon it as dead. We are not anxious to sell to the corporation unless we get an exceedingly tempting offer. If you ask me : Are we approaching the City Council, I answer, No; if you ask me do we want to sell the company's business to the council, then I again say — No? The matter then closed.