Financing Bay Power Loan; Difficult Negotiations

Northern Advocate, 19 July 1938, Page 11

Financing Bay Power Loan; Difficult Negotiations

IN A REPORT TRAVERSING WHAT HAD BEEN DONE IN AN ENDEAVOUR TO RAISE THE LOAN FOR THE CARRYING OUT OF THE BAY OF ISLANDS ELECTRIC POWER BOARD’S SCHEME, THE CHAIRMAN, AT THE MEETING ON SATURDAY. GAVE THE FULL HISTORY OF NEGOTIATIONS. WHICH HAD ENDED, FOR THE TIME BEING, IN THE STATE ADVANCES OFFICE GRANTING £40.000.

The impossibility of raising funds at the rate of 3i per cent, stipulated by the Local Government Loans Board was shown in that section of the report dealing with the visit of Mr Bissct and the engineer to Wellington.

Writing to the State Advances Corporation, the chairman had set out the requirements of the board for the first financial year—namely. £20,000 on September 30. £20,000 on December 31, and £20,000 on March 31. 1939.

No Money Available at 31 p.c. ' | The chairman said that he and Mr Mandeno had been authorised to go to I Wellington and interview the various | lending institutions and the Minister |of Finance, with a view to raising a j portion of the loan. He would like to | congratulate Mr Mandeno on the very ; thorough manner in which he approached every financial institution in j Wellington. The reply, in practically ! every case, was that they had no funds | available, by which was meant that j there was none at 31 per cent. They j had several interviews with the Hon. W. Nash, who was sympathetic and almost gave an assurance that, in view lot the fact that the ordinary lending j institutions would not find the money, j the Government would finance the scheme - . Minister’s Promise. Up to the time they left Wellington they were unable to get a definite assurance. though they pressed hard for it, but the Minister promised to let them have something definite before the next meeting of the bgard. Up to Friday, no message was received from Mr Nash, and he (Mr Bisset) sent an urgent telegram to the Minister stating that he was anxiously waiting an assurance regarding finance. Mr Bisset said he had done his level best to dodge the trip to Wellington, because the position from his own point of view was absolutely clear. They had applied to a number of lending institutions and the Minister knew perfectly well that they would not advance money at the 3-i per cent, stipulated by the Loans Board. The Minister had made a statement that the Government would not see any essential scheme held up for want of finance, and that the Power Board’s scheme was essential was shown by the carrying of the loan by nearly four to one. In view of this, should it have been necessary for the engineer and himself to go to Wellington? “Tried to Side-Track." . The Minister had gone back on what he said and had tried to side-track. On wiring the Minister that unless something definite was received from him. he (Mr Bisset) and Mr Mandeno would go to Wellington, the Minister sent a telegram stating that it seemed unnecessary to go to Wellington, and that no further information could be given at present. "I wired," said Mr Bisset, "that, failing an assurance regarding financing, I would be in Wellington on Monday” The Minister replied; “Pleased to see you, but unless all arrangements for local body finance are finalised, I will not be able to give you any further information than by my letter.” Provision of £40,000. A reply had now been received to Friday’s telegram from the Minister, stating that provision had been made for the State Advances Corporation to complete arrangements for £40,000, by way of loan. Mr Thompson: That is satisfactory. The chairman: The board asked for £60,000. Mr Ellery: How far will the loan take us? Mr Mandeno said the result was fairly satisfactory. In addition to the £40.000, they would have the £SOOO already authorised. Having had the undertaking from the Minister, they could draw on the bank by hypothei eating the debentures. | Mr Ellery: At what interest? I Mr Mandeno: Four and a-half per | cent. We will be entitled to proceed j with our programme in excess of £40,000.

Mr Peace; Tenders should be called right, away, and if we are stuck for finance we can hypothecate with the bank. Assistance From Bank. The chairman; It is inconsistent with the Loan Board's stipulation that we should pay the bank 41 per cent., but to get the work started we, should not refuse to pay that rate. Mr Peace: Could we induce the State Fire Insurance Office to increase the £SOOO to £10,000? Mr Mandeno: No chance, and all insurances nu:t be placed with the office. Mr Bradley: We have £45.000 in sight, and should act boldly. If it came to a show-down, the Minister would help. I am in favour of accepting the Government's offer and making a definite start. The chairman is to be complimented on the result of his trip to Wellington. Mr Bradley moved that the Government’s offer of £40,000 through (he Stale Advances Office be accepted, and also the £SOOO from the State Fire Office, and that the secretary be instructed to take the necessary steps to finalise the transaction. The motion was seconded by Mr Ellery and carried. Current Year's Needs. Mr Mandeno: There is no likelihood of £60.000 being spent this year, and the expenditure will probably not exceed £40.000. Though we have a lengthy programme, provision will be made when ordering so that the payments will bo spread as much as possible. The secretary: If we lift Ihe money and place il in the bank, it will save interest on overdraft.