FARMERS’ MEAT CO.

Hawera Star, Volume XLVIII, 24 September 1924, Page 6

FARMERS’ MEAT CO.

UNABLE TO CARRY ON

AMALGAMATION PROPOSALS

ABANDONED

An extraordinary general meeting of shareholders of the Taranaki Farmers’

Meat Company was held at the Workers’ Social Hall, New Plymouth, yesterday morning, for the purpose of considering proposals for the disposal of the company’s works at Smart Road. There was a large attendance, Mr. J. S. Connett, chairman of directors, presiding. ; Mr. Connett, in addressing the meeting, said : “Mention was made at the

last annual meeting of the proposals under consideration for the amalgamation of the Taranaki and Patea Companies, which among other things provided that we would freeze down there this season, and Patea would dismantle and do all their freezing here in future.

We were not ready in December to operate at Smart. Road, and in order to save working . costs here readily

agreed to freeze at Patea in order to reduce overhead charges, which, with the short season and scarcity of stock which was expected, would have been unquestionably high. In a works such as ours a turnover of 60,000 sheep and lambs is almost as cheap to handle as half that quantity, while the overhead charges per head are cut in half, and of course decrease with increased. output. Our willingness to freeze at Patea was practical evidence of our approval of the amalgamation scheme, a subject I will deal with later.

“The first difficulty which presented itself at the commencement of operations was finance. Stock had to be paid for as soon after purchase as possigle. The bank naturally could only advance 75 per cent, of the uncalled capital, but even that represented only a month’s purchases. Arrangements were made to obtain advances on store warrants against stocks on hand. As the values obtainable were based on prices on an erratic and falling London markeb, it meant that extreme care had to be exercised to keep within overdraft limits, and be able to pay freight on shipments out of drafts discounted, particularly about April, when values w T ere so low at Home that store warrant advances on the goods shipped was almost equal to the c.i.f.e. advances against the documents. However, on only one occasion -was there an undue delay in paying clients, and this would have been avoided had we been able to obtain all the allotments of space to ship our meat when we desired.”

Continuing, Mr. Connett said they had hoped to have had for the benefit of the meeting an audited statement of accounts, but the auditor felt that, in the limited time, any statement would only be of a partial nature.

and therefore a stateemnt had been drawn up by the secretary, and would, he had no doubt, be readily accepted by the shareholders. This showed a loss on trading account of £8206, and the overhead expenses, had amounted to £13,182, including interest, etc., £IO,OOO. In addition, payments amounting to £8750 had been made in reduction of principal in connection with the pfirchase of the works. “Our experience this past season,” proceeded Mr. Conentt, “confirms the opinion of the directors formed earliei in the year, when amalgamation with Patea was that the stock available in Taranaki does not warrant the three works. With, this fact in view it was endeavoured to bring off an amalgamation with the southern company. As I have already mentioned, our company arranged to freeze at Patea last season, at the end of which they were to commence and dismantle their works, and transfer any necessary plant, to Smart Road. The Patea directors had first of all to obtain the consent of their shareholders t-o the proposals suggested, and with this end in view held the first exti’aordinary general meeting of their members in March, when the matter was discussed. The feeling in South Tarauaki was that endeavours should be * made to recapitalise the local company and retain the works there, and with this object in view they made a canvass more oi less unsuccessfully. Your board felt that unless an amalgamation was brought about with the goodwill of the South Taranaki 'people, no good purpose could be served. The southern stock was most necessary to warrant the price to be paid for closing up Patea, and as it appeared that neither the stock nor the practical support would be forthcoming, it was imperative that this company should discontinue negotiations. , Accordingly on June 20 your directors decided as under:

That the Pate a Company be informed that in the opinion of this J company the delay that has taken place in coming to a decision on the amalgamation proposals submitted foi their consideration lias largely prejudiced the position and rendered impossible the carrying out of the scheme in time for next season’s operations. This board is therefore reluctantly compelled to notify Patea of an abandonment of the proposals. “As a last, resource it was deeidcu to get in touch with Messrs Thomas Borthwick and Sons, Ltd., with the object of freezing for them at Smart Road, giving them, of course, preferential freezing rates. Mr. iNcwton King interviewed Borthwick*? in London, and they in turn discussed the matter with their JSew Zealand manager, who was also in London, after Mr. King left. The proposition did not appeal to them, thinking' probably that if the works were of any use to them they might as well buy them straight out and have full control. Your directors, after reviewing the experiences of last season and visualising the prospects for the future, decided to represent the position to the bank, with a desire to finalise matters at an early date to save further interest charges and payments of principal and give prospective purchasers an opportunity to get in before the new season started. The result of this was the wire received from the bank suggesting this meeting.' “It is quite apparent that the continuation of the works is not warranted ; its resuscitation proved the farmers’ loss of faith in it; and therefore, for the sake of those townspeople who did so much towards its re-establishment, your directors are anxious to get the works opened by some other concern as early as possible. “The object of this meeting is to bring off such disposal of the works in order to enable operations to commence soon, and further to endeavour to conserve, if possible, the uncalled capital, namely, £3 per share on 9710 shares in the company. How far this can be successful depends on the bank, who, no doubt, are anxious to do their best for contributing shareholders. “According to our memorandum of association, your directors have power -to dispose of the works, but are anxious to get the feelings of shareholders on the object stated in the convening notice. Given the consent of this meeti ing your directors will complete negoti- ; ations for the sale as early as can be j arranged, and the company will go into l voluntary liquidation in the ordinarv

course. Should such consent be withheld by this meeting, it will be left to the bank to complete the windingup, and this in your directors’ opinion is the less desirable of the two courses. The position simpiy resolves itself into this: From the substance of the report put before you, you will have realised that exporters are not prepared to operate here and thus x’elieve us of trading difficulties This position is brought about by the fact that stock available in the province is not sufficient to keep the three works going. This was one of the objects we had in view in trying to consolidate the co-operative interests and cut out one of the three works, leaving the two remaining to carry on more effectively and satisfactorily. Competition has also been very keen indeed, and this has meant us being forced into this trading proposition. We had to pay prices which we felt were not really justified, but we wanted to try and maintain our connection in the hope that when the amalgamation took place we would have that connection, and also be able to secure a larger output for the coming season. In reference to our own position, we have insufficient finance to carry on. With the loss made we have only a. small proportion of the preference issue, and it is on that the bank finances. Although the directors had power to- negotiate. a sale, if. possible, and finalise the whole thing, they would like shareholders to understand the position and express their opinion. He then moved: ' , “That this meeting' of shareholders approves of the proposal to dispose of the company’s works qn such terms as the directors think fit.” Mr A. W. Budge seconded the motion. STUCK SCARCE; MARKET DULL. .Mr Aewton King said there was very little he could add to what Mr 0011uett had said. Me had put the case very clearly before the meeting. it was a wretched state of affairs, but it was tne unanimous opinion of the direc-c-ors that it would be impossible to carry on for any longer period. The money was not available, and apart from that—and which was worse—the stuck was not at present in this, district to warrant the works going along. There had been a tremendous shortage this last season,, as compared with 1921 and 1922. The quantities of sheep had gone 'down wholesale, and in dealing with small quantities the overhead charges were increased out of all proportion. Mr. O. E. Bellringer said he had bean undergoing a sort of, education in regard to the meat trade. They had Bad reports -which made it appear that- it was possible the works could be carried on. It was suggested that there was a very considerable increase in the stock and that the company would be able to get sufficient-to carry on; but they had not started anything in. connection with the works before they discovered there was-a great shortage and that stock was extremely scarce. Again, the buyers for proprietary concerns had to get stock almost at any price, with the result that the directors found it was almost impossible to carry on under a consigning policy. He went into, the tiling on the definite understanding that there was to be no more trading, but they were forced to open accounts. Another thing that had crushed them was the overhead charges, which amounted, as the chairman had said, to about- £13,000, £IO,OOO of which was interest. It was impossible to carry on with the stock available. The overhead expenses were altogether too heavy. Apart from that, they had not the finance. The amount of money raised was altogether inadequate to carry on the business on the same lines as those adopted by other firms in Taranaki. ' -They had some £49,000, and of that £20,000 had gone in interest and loss upon trading accounts, and this year, if they carried on, • another £15,000 of the £49,000 would he earmarked, leaving only about £14,000 to] finance upon and to carry on the business; and this, of course, was impossible. He had gone into'the thing very carefully and regretted exceedingly that it was not possible for them to carry on the works, and therefore they should endeavour to get somebody else to do so. They had been very anxious to get the amalgamation with Patea, although the suggestion did not in the first place come from .them. The time was coming when they would have to make arrangements for the new season and to postpone would have tied their hands. Mr Bellringer then referred to the negotiations which had been carried on with Messrs Borthwick and Sons b" Mr King while he was at Home, but naturally, he supposed, they were not going to' have anything to do with the works, they would prefer to run them themselves. As far as the px’pposals for purchase were concerned, the directors had lie idea who the bank was negotiating with. They knew no more in this connection than the shareholders did, but he put it to them that there was only one thing to do. They were in the hands of the‘bank, of course, and would have to make tne very best terms possible. If they did not do it voluntarily, then it was only a question of time when they would be compelled .to do so. *

In reply to Mr Gordon Fraser, the chairman said the hank had full power ,ovcr 'the uncalled capital, hut, person ally, lie believed they would be able to satisfy the bank without calling up the remaining £2 pe,r share on uncalled capital. In reply to Mr Honeyfiekl, who suggested, seeing that the freezing had to be done at Patea, and now the amalgamation proposals were not being proceeded with, that Patea should pay a portion of the interest charges of the company, the chairman jaiid they had good terms from Patea, whose chau-ges were much below the rates ruling at other works. They would have lost much more had they run their own works. . The motion authorising the directors to dispose of the works was then put and carried unanimously, and the meeting terminated.