PURCHASE BY ARGENTINA

Evening Post, Volume CXXIII, Issue 29, 4 February 1937, Page 16

PURCHASE BY ARGENTINA

INTEREST IN BRITAIN

British capital invested in Argentine railways is estimated at some £280,000,000, so that both the terms and the implications of the Argentine Government's proposed purchase of the British-owned Cordoba Central Railway Company are of wide interest (remarks "The Financial Times"). Approximately £10,000,000 is the purchase price, whereof £8,800,000 is to be in State Guaranteed Sterling Railway bonds, £700,000 in cash, and the balance a sum in valuation of stores on hand, which stood at £414,800 in the balance-sheet as at last June. In connection with these proposals, Buenos Aires envisages a Government policy towards total State acquisition of the national railway system. That is going considerably beyond the present situation.

As regards the Cordoba transaction, the board's non-committal announcement leaves its three classes of stockholders unenlightened. Representing over £20,000,000 capital, in £8,000,000 first debentures, £6,300.000 income debentures, and £6,000,000 consolidated stock, their revised positions in what will amount to a new "holding" regime will no doubt be speedily elucidated. LONG NEGOTIATIONS.

The transaction in prospect has been under discussion and preparation for a long time, so that a well-weighed balance should have been struck. At a recent meeting the chairman, Lord Farrer, announced a considerably improved earning position. Additional assurance that stockholders' interests should have been stoutly championed in what has evidently been a hard bargain lies in their strong representation on the British-Argentine Railway Committee formed at Buenos Aires last June.

The larger question of further State purchases to follow, though an ultimate possibility, is likely to remain academic for the present. It should not be overlooked, as it certainly has not been in the terms, that the Cordoba system is, by its position as a link Detween existing State lines and Buenos Aires, a particularly desirable acquisition. The special claims of British-owned railways on the Argentine national economy were recently commented on by Sir Follett Holt as being specifically recognised by the Government. It is equally well aware of the low return, averaging below 4 per cent, for the last thirty years on all Argentine railway capital that has been forthcoming for their services. The closeness and cordiality of general Anglo-Argentine relations, no less than the Republic's rising fortunes and past credit record, are prime considerations in assessing the equity of the present transaction and its bearing on the larger issues involved,.