LOANS REPAYMENT

Evening Post, Volume CXXV, Issue 92, 20 April 1938, Page 6

LOANS REPAYMENT

'DIFFICULTY FORESEEN

EFFECT OF LEGISLATION

Difficulty in meeting loans totalling £340,000, which fall due in London next year, is foreseen by the New Plymouth Harbour Board, chiefly because of legislation passed in the past few years, states the New Plymouth correspondent of the "New Zealand Herald." The sinking funds amount to about £200.000, but tney have been placed in, investments that are not now all r.eadily convertible into cash.

The largest loan of £275,000 carried interest at 4£ per cent., with 1 per cent, sinking fund, the chairman of the board, Mr. C. E. Bellringer, explained. A £64,000 redemption loan was raised at a difficult time, and the rate of interest was 6£ per-cent, which with the exchange meant about 8 per cent, in New Zealand money. The sinking fund charge on this loan was 1J per cent.

The chairman said it had been hoped to pay off a considerable portion of these loans from the sinking funds, but the mortgage relief legislation had interfered with the board's plans. About £100,000 of the sinking funds had been invested in farm lands, and it had been arranged for this to be repaid on the maturity of the board's loans, but the Mortgage Relief Commissions had extended the term of some of the mortgages to 25 years.'

The board could not default, which would be exceedingly serious, said Mr. Bellringer. There were at the moment two courses that might be followed. One was to refloat the loans in London at a higher rate of interest than in New Zealand. The alternative was to raise a loan in New Zealand and remit it to London, but the exchange in that'case!'■ would absorb a considerable amount of the sinking funds. To pay off the £340,000 in London would require £424,000 in New Zealand money!

With the unsettled state of the world it was impossible to forecast what the condition of the London money,market would be a year hence.