NEW ZEALAND LOAN AND MERCANTILE AGENCY CO.

New Zealand Herald, Volume XXV, Issue 9064, 26 May 1888, Page 6

NEW ZEALAND LOAN AND MERCANTILE AGENCY CO.

SPECIAL MEETING. [from our own correspondent.] London, April 21. The meeting of the New Zealand Loan and Mercantile Agency Company took place on A-pril 13 at the Cannon-street Hotel, Mr. Vlundella, M.P., chairman of the company, presiding. The chairman stated that the present prospects of trade in the colonies ,vere more hopeful than they had been foi jome time past. Their advices from Aus ;ralia showed a very considerable improve nent in every class of business, and especiallj n their mercantile and agency business, With regard to New Zealand there was a steady improvement, and aL though their policy had been one oi iontraction rather than of expansion, there was an undoubted upward movement in the colony, and he was glad to hear that the Grovernment receipts were coming in better bhan was expected. If they were to avail themselves of the improved state of trade they must make preparation to meet the expansion of the company's business, especiallj in Australia. This might be done in twe ways—first, by taking advantage of such facilities as the Australasian banks were ready to afford them, and secondly, by availing themselves of their credit, improve their mercantile and agency business, and conduct it very profitably. But he did not think they would be acting like prudent and businesslike men if they followed either of those plans. If they availed themselves of banking facilities they would have to do it at colonial rates, which were high; while trading upon borrowed capital was not only costly and hazardous, but contrary to all the canons oi 3ound finance. It might be said that they could call up some of their existing capital. But that would be suicidal, because Tor every shilling they called up they would have tc cut off a similar amount of debentures, and the debentures were the source which fed their mercantile business. Moreover, ii they were to double their existing capital by making calls upon their shareholders they would diminish the profits which were at present divided amongst the latter, and that bhey did not wish to do. They had, therefore, come to the conclusion that they ought to trade on their own capital, to be independent of any extraneous aid, and free from the risk and expense of colonial finance. The returns of their mercantile business now amounted to three millions a year, and were steadily increasing. Their wool sales were the largest iu the world, and their rlirect sales in London, which now exceeded 00,000 bales a year, were being steadily encroached upon by their local sales to direct importers. The colonial sales of wool amounted last year to 70,000 bales, and they expected a considerable increase this year. But the expansion of their mercantile business was not the only justification for the policy they submitted. There were other large considerations. Not only did they desire to conduct their business upon sound principles, but they thought the time had come and the opportunity was afforded for placinc their _ company in the very first rank ol colonial institutions. They had now nearly 24 years' experience, and they had capital paid up and reserve fund of £624,000. Therefore they thought their credit ought to be as good as that of any similar institution in this or any other country, and the directors felt that they could only place it in the position it ought to occupy by making their paid-up capital a larger proportion than at present as compared with their indebtedness. It might be asked how they could afford to _ give the shareholders what were equivalent to 6 per cent, preference shares, and get profit by it for the benefit of the ordinary shareholders. The answer was very simple. He admitted that they would have preferred to have issued 5-per-cent. preference shares pure and simple; but, under the articles of association, there was some difficulty about it, so they were advised to put the scheme in its present form. The half million they proposed to issue at first would entail a dividend of £30,000. But they had three millions wortli of debentures, and if they could only reduce them a half per cent, that would make £15,000 a year difference, and so the half million would cost three per cent, instead of the 6 they paid at the present time. They had paid 15 per cent, for thirteen years, and their shares stood at 4in the market. They ought to stand at 6 or 7, as he believed they soon would if the resolutions were adopted. Mr. Mundella concluded by moving that the capital of the company be increased by the sum of £1,000,000, in 40,000 new shares of £25 each, of which 20.000 shares should be issued at once; that the 20,000 shares be allotted upon the terms that the sum of £210s be made payable, and bo paid on each share, and in other respects in accordance with the provisions of regulation 30 of the Company's Articles of Association; that in conf ormitv with the provisions of regulation 10, of tlie Company's Articles of Association, the balance of £22 10s remaining after payment of £2 10s per share on the said 20,000 shares, or any part of such balance, may be received one month thereafter, and bear interest at the rate of 5 per cent, per annum in priority of dividend, and free of income tax; that the directors be empowered to issue the remaining 20,000 shares at such time or times, and upon such terms as they may think best. Mr. Bristow, as an old shareholder and one intimately connected with the colony of New Zealand since 1851. seconded the motion. The chairman had stated that wool was passing through their hands to the gigantic total of 100,000 bales a year, besides various colonial products of very large value. He thought that business was of the best kind because it was agency business, for the transaction of which the company received a commission, and as they entered into no mercantile ventures on their own account they minimised the risk in the prosecution of the agency business. Moreover, although the title of the company was the New Zealand Loan and Mercantile Agency Company yet fully 60 per cent, of their business was done in Australia, where it was ever growing and rapidly extending. Mr. Larkworthy explained with reference to the 20,000 shares which were being held over, that if the first 20,000 iseued should go to a premium, the directors might issue the remainder to pay a lower rate of interest than 5 per cent, on £22 10s. They had still a very important part of their debenture issue current at sper cent., which they would be glad to see exchanged by their debentureholders for shares of this ".character. Such exchange, if carried out, would enable them to issue perpetual debentures at a lower rate of interest than that now payable on a large amount of their existing terminable bonds. If m the issue of the first moiety of 20,000 shares now authorised, there was not a sufficient amount te satisfy all applications in that respect, the remaining 20,000 shares would be utilised for that purpose. The resolutions were then carried unanimously.