CONVERSION SCHEME

Manawatu Standard, Volume LIV, Issue 88, 13 March 1934, Page 8

CONVERSION SCHEME

POWER BOARD LOANS. NEARLY £IOO,OOO INVOLVED. “The' board's Now Zealand loans amount to £98,900 and the premiums on conversion amount to £1,666 10s 4d, making a total of £100,566 10s 4d. To ;be deducted from this amount is the sum of £IO,OOI 3s 2d held by the Public Trustee as sinking funds on loans from that office and £ls 7s 2d cash payable on conversion. This leaves £90,552 to bo converted. The term of conversion is for .a period of 28 years at 4J per cent., repayable by annual redemptions from sinking fund.” This statement was made by the managing-secretary (Mr K. IV. Eglinton) at the meeting of the ManawatuOroua Power Board yesterday in .placing before the board a condensation of the proposals for the conversion of its loans domiciled in New Zealand.

In a comparative statement of annual charges the managing-secretary said that previously those charges wero £5394 2s 6d for interest and £1272 for sinking fund, making a total of £6,666 2s od. Under the reduction of 20 per cent, the interest was £4360, and the sinking fund £1272, making a total of £5632. With the conversion scheme in operation the interest would be £3,847 6s 3d and the sinking fund £1,585, making a total of £5,432 6s 3d. ‘Commencing in 1935,” added tiie managing-secretary, “debentures will be paid off each year from the sinking fund, the board’s annual payment to this being £1585, the amount increasing each year•by the board paying into the sinking fund each year 4 per cent, on the amount of the debentures paid off.' In this way the board saves J per cent., as the interest on debentures if not paid off would bo 4J per cent, and during the whole term this will amount to a saving of £2,489. The whole loan will be paid off in 1962.”

“It seems that we would be quite justified in adopting this conversion scheme,” commented Air M. A. Eliott, in moving that that course be taken. He added that it would secure a low and reasonable rate of interest for the next 28 years, even if the actual saving was not large. Similar observations were made by tho chairftian (Mr C. G. C. Dernier), in seconding the motion.

Mr P. G. Guy: Does that mean that we will have to take more out of the revenue for sinking funds? The managing-secretary: Yes, but less for interest. It balances.

It was pointed out that apart from the stability in rates of interest the conversion operations represented, 011 the present basis, a saving of £2OO per annum during the next 28 years. The motion was carried.