PIAKO COUNTY LOANS.

Matamata Record, Volume XVI, Issue 1443, 20 July 1933, Page 7

PIAKO COUNTY LOANS.

CONVERSION DISCUSSED. No Action at Present. ■h\*. : '•. V '■■■■■ • . . • . I ; t , The effect of the conversion of the Piako County Council’s loans in acf cordance with recent legislation has been investigated closely during the ■ l past month by Crs. W. C. Kennedy and W. R. Lowry and Mr. P. Gilchrist, senior, solicitor, of Te Aroha.

Reporting on this matter at Monday’s meeting of the council, Crs. .Kennedy and recommended .that it be left over in the meantime.

The total amount of loans affected was £327,000, said Cr. Kennedy. Of this, £BO,OOO was- State Advances Joans, at 31 per cent., on which jthe saving would be only £IOO. Regarding £231,000 of ordinary loans there would be a saving of £IOOO by conversion. However, it would be -necessary to find £12,000 by way of premiums to the deben-ture-holders for breach of contract. The only feasible way of providing this would be by extending the period of the debentures.

“ We came to the conclusion that the matter of conversion be left over,” added Cr. Kennedy. “We have until 1935 in which to make application to the Loans Board for conversion. We do not know what will take place in the next two years. The Government may change its mind, and reduce all interest to, .say, 41 per cent., and wipe out the f legislation. In the mean-

time we should let this matter stand over.” Cr. Lowry: It seems a pity that we cannot take advantage of the conversion. What I am concerned’ abouc is that we have £156,000 of loans at 6 per cent. By not converting we are losing 11s per cent. The cost of the conversion is the stumbling block. We had no idea that it would cost us £12,000. It is a risky thing to touch at the present time. It might be possible *o group some loans and convert, for instance, the Hungahunga group. The Hungahunga loan is of £40,000 at 6 per cent. I would like the solicitor to look into this.

The clerk said one point on which the Loans Board insisted was that the sinking fund under this new provision must be sufficient for the repayment of the loan.

No action was taken in the meantime.