AMALGAMATION OF PAPER MILLS.

Mataura Ensign, Issue 1416, 26 November 1904, Page 4

AMALGAMATION OF PAPER MILLS.

The shareholders of the Riverhead Paper Mills Company have adopted resolutions approving of the amalgamation of the business with that of the Otago Mills and the Mataura Mills, thus forming a combination of all the paper mills in New Zealand. Mr Elliot, chairman of the Riverhead Company, explained that some time ago a more or less friendly understanding was arrived at with the othe.t paper makers, and as a result a tariff of prices was arranged and a deposit of £2OO was made by each company, which sum would be forfeited in case of a breach. There are, however, al sorts of ways of evading an agreement without breaking it in so definite a manner as to incur this penalty, and as time went on we found that indirec advantages were being given to buyers, although it was impossible to sheei home any charge we might make against one or olier of the mills. We had to make serious complaints to our jcompeiitors on this score, while they on th air part were not backward in bringing similar charges against m. Eventually the position became acute, and we felt that matters could not last as they were. We therefore entered ■into negotiations for separate spheres of trade, or, failing that, of making a pool of the output of the three mills. There were objections, however, which we felt were valid to each of the-e proposals, and at last it was evident to all concerned that ama'gamation was the only way of escape from a straight out fight for existence. After some negotiations Mr Mitchell, proprietor of the Otago Mills, and Mr Culling;, of the Mataura Mills, came te Auckland, and agreed to an amalgamation on the basis of shares pro rata to the earning power of each mill. The capital of the Mataura mill was £40,000; the Otago Mill, £30,000; and the Riverhead mill, £15,000 —the Riverhead being the lowest for its earning capacity. The average earnings for the past three years for these mills are as follow Ma aura, £3,895; Otago, £2,843; Riverhead, £2,186 making an annual total profit of £8,924. It is proposed to form a new company, with a capital of £IOO,OOO, in £1 shares, to take over the whole of the properties, plant, and water rights, and allot shares to each proprietary as follow : —Mataura, willi its capital of £40,000, 35,000 shares; Otago, with its capital of £30,000, 25,000 shares ; Riverhead, with its capital of £15,000, 20,000 shares making in all 80,000 shares. The stocks and book debts are to be taken over at a universal price, and are to be paid for in shares. These will probablyamount to £17,000, of which the Riverhead Companv should not get less than £4,000. This will leave about 3,000 unissued or reserve shares, but until stocks have been taken at each mill no definite statement can be made on this pointe i For the 15,000 existing shares in ths Riverhead Company the shareholder, will receive 24,000 shares in the new company paid up to £1 each.—O.D. Times.