TRUST COMPANIES

Manawatu Standard, Volume LIV, Issue 303, 20 November 1934, Page 7

TRUST COMPANIES

RECONSTRUCTION SCHEME. OUTLINE TO INQUIRY. OPPOSITION BY COUNSEL. (United Press Association—By Electric Telegraph.—Copyright.) SYDNEY, Nov. 19. Presenting a new scheme for the reconstruction of the Trust companies Dr. Louat, for the British National Trust, Ltd., and the British National Investment Trust, Ltd., told the Commissioner (Mr Justice Halse Rogers) that it was proposed to eliminate all the smaller companies and re-allocate their assets to the main companies. Certain companies must be retained, said Dr. Louat, and the British National Trust was one of them. It occupied a position of importance in relation to the tw-o main companies, the Southern British National Trust and the Investment Executive Trust. Three courses could be adopted. (1) All the companies could be wound up. (2) Debenture capital could be converted into share capital. (3) Methods of control could be changed. It was the third course that he advocated. If this course were adopted the gross rents of the trust building could be managed by a board of independent directors and it could be built up into a going concern. On the elimination of the subsidiary companies the trust organisation would consist of the Investment Executive Trust, the Southern British National Trust, and the British National Trust. It was proposed that the articles of the Investment Executive' Trust and the Southern British National Trust be altered to provide for boards of seven directors, of whom two would be elected by shareholders and five by deben-ture-holders. The inclusion of two shareholders as directors was entirely calculated to serve the interests of de-benture-holders, in that it enabled them to retain the assistance of McArthur and Alcorn in a deliberative capacity. He pointed out that the provision for five directors forming a quorum would ensure a majority of de-benture-holders as directors of all meetings. In regard to the British National Trust, it was submitted that there be a board of six directors, two of whom would be appointed by shareholders and two each by debentureholders of the Southern British National Trust and the Investment Executive Trust. Four directors would constitute a quorum. The last section of the plan was suggested with a view to strengthening the financial structure. A new mortgage should be raised to replace the existing mortgage on the trust building at a substantially lower rate of interest. The Commissioner remarked that it might be advisable to get what was possible by nursing the assets rather than running the risk of losing everything. If debenture-holders .approved of the scheme he could do nothing but recommend it. Perhaps the scheme could be modified a little.

OPPOSITION VOICED. Mr Monahan, who is assisting the Commissioner, said he had considered Dr. Louat’s scheme, but it was fundamentally opposed to the views of the Crown. The Crown could not countenance any scheme that did not allow for the restitution of money to the deben-ture-holders. It would be mockery for any scheme to allow McArthur and Alcorn to take out £IOO,OOO, and he would not associate himself with any scheme that acquiesced to such a state of affairs. Replying to the Commissioner s suggestion that the scheme could possibly be modified a little, Mr Monahan said: “If the scheme is modified Dr Louat will lose all interest in it. All these moves are being made to cover up your previous findings and to put the matter in a new garb. Personally I do not think ’here is the slightest hope of the public contributing any further monev to these companies.” Mr' Pitt, K.C., said he represented 326 debenture-holders whose subscriptions to the companies were nearly £74,000. Mr Swan, of New Zealand, had handed him a proposal which ho would put before debenture-holders in New Zealand. The scheme was similar to that put forward by Dr Louat, suggesting control by deben-ture-holders, although there were certain differences respecting detail. He suggested that he should be allowed time to confer with Dr Louat to try to reconcile the differences. The Commissioner said that any scheme would have to be feasible, otherwise it would be idle to put it forward. A statement should be prepared showing the debenture-holders’ financial advantage under any particular scheme. _ The Commissioner recalled W. C. B. Hewitt regarding rents from the trust building. Hewitt said they were about £SOO a month. The building was not fully let, as difficulty was being encountered .because of the uncertainty regarding the future of the companies. When prospective tenants realised there would be continuity of occupation the remainder of the building would probably soon be let. The Commissioner said that before a value of £300,000 could be placed on the building rents would have to aggregate about £16,000. _ _ Before adjourning the Commissioner asked that both Mr Pitt’s and Dr Louat’s schemes should be submitted to Mr Hill, an accountant, for a report to the Commissioner. The Commissioner said he would receive counsel in his chambers if they wished to adopt a suggestion for thrashing the matter out there. The inquiry was adjourned until Friday.