AUCKLAND GAS COMPANY.

New Zealand Herald, Volume XXXIV, Issue 10404, 31 March 1897, Page 5

AUCKLAND GAS COMPANY.

EXTRAORDINARY MEETING. An extraordinary meeting of shareholders in the Auckland Gas Company was held yesday. Mr. J. H. Upton presided, and there was a large attendance. The meeting was called for the purpose of considering the advisability of rescinding certain resolutions passed on August 6, 18S4, and relating to the disposal of shares, and of passing the folloivinK:-"That the directors be and they are hereby empowered to sell by tender as fully paid-up shares, all shares in the company which are undisposed of; but until the 13,743 shares already issued and partly paidup are fully paid-up, they shall only sell shares concurrently with making a call on the said 13,743 shares, and that the number of shares to be sold from time to time shall be limited to a number, which shall be estimated to produce a sum about equal in amount to the sum calculi) teil to arise from a owl on the aforesaid 13,743 share?." And, 'That when n : . shares heretofore disppsed of have been full; lulled up in accordance with the preceding ijuoliUion No. 2, the directors shall dispose bi ' »'nder of the remainder of the new shares : 'o company as fully paid-up shares, in s> ■ imbersand at such times ua the directoi . 'i,iy think fit." Of proxies there had been received for the proposals 8305 shares; against 208. At the outset a letter was read from Mr. H. B. Morton in support of one of the resolutions of August, ISB-S, viz.: " That the directors make calls on the new shares from time to time as the affairs of thn company require additional capital, a proportionate part of the premium being paid with each call." He desired to vote against the propositions formulated by the Board.

The Chairman said Mr. Morton must have misread the propositions. The Board proposed to do exactly as he suggested. Proceeding, tlie Chairman said he dared say tbat some .nightask, "Whydoes the Gas Company at the present rime require a larger amountof capital f It was very simple. Business had increased to such an extent that necessary additions to the plant must be made, increased stock must be provided of everything the company kept; while pipes which had heretofore beeu found large enough to distribute the gas were now becoming too small here and there, and had to be replaced. Tliope were the full, complete, only, and sufficient reasons why more capital was required. It all arose out of the satisfactory development of the company's business. A similar, state of things existed in 1884, when a large number ot now shares were issued. Of those shares loft there were now in the hands of the Board. 757. The directors could have sold these. In fact there were three sources for which they might have derived the capital required. They had tho 757 shares, they had the uncalled capital, or they could have asked consent to issue a portion, or the whole of the 20,000 new shares .emaining. For the purposes he had _ named, certainly £25,000 would bo required, and no one could say that that would be sufficient. It would be sufficient for the present time. Still, as lie had said a largo amount of capital was required, and in any event the Board would have called the shareholders together and told them what tho programme was. In 1884, he went on, money was very much higher, certainly 50 per cent., than it was now. One effect of this was that there had been an enormous rise io. the value (if gas stock. The rise enabled tho company to acquire one of the most valuable things it could have, viz., premium capital—capital that did not bear interest or pay dividend. This premium capital was the life blood of a gas company. Auckland was a town constantly growing; people in the suburbs were ever demanding it enpply of gas, and the policy of the company had beeu to supply it, even if they sa,w but 5 per cent, on the outlay, trusting to future developments. It would be a most severe blow to tho company, or to any company, if they did not thus keep paco with the demand. He had spoken of premium capital which enabled this. Now, if the Board had made calls the premium capital would have gone wholly into the pocketfi of holders of new shares. On the other hand, if ouly sales of fully paid up shares were innde the premtiirni capital would lie wholly used in the company's service, and the holdors of new shares would receive ho Advantage, After a great deal of consideration, the Board did not think either of these courses alone would be borne out by the history of the company, or would be equitable. They had examined with great care what had been done by the 1884 Board and found that then calls had been made on the unpaid shares, and also sold shares, leaving the 757, of which lpid upoken on hand. The preeent Boircl after most careful consideration came to the conclusion to recommend to the shareholders to follow the same course as in 1884. Only the present Board proposed to do it systematically, mid for what capital was required, half to be derived from calls and the other half from the sale of shares. The effect of that would be that a certain amount of premium capital jould be in the handa of the company. And not only would that enable the company to extend operations in an easy, profitable, and satisfactory manner, but it would make the investment in Auckland gas stock shares more solid. The general effect of proposed rescinding tlie 18S4 resolutions would be to prepare the way for their reinstatement in a more orderly form. The shareholders were being asked to provide a certain amountof premium capital ; this enabled them to stifle competition, at the same time doing justly by the consumers. What had been the reason of the enormous increase in the business of the Company in the last four or Pve years ? The price of gas had been lowered, and business had sprung under them, showing how completely the public demand was being answered. They thus made it extremely difficult for another company to come in and take their place. No electric light could rival the incandescent lamps the Company had put into the Free Library and 750 houses in Auckland. They did not fear, but that was becuise they were on a safe footing; but that safe footing required cheap capital if they were to give the public cheup gas and maintain their dividends. So long as tlie company hud an adequate proportion of cheap premium capital ihey could do this. A gas company was not an ordinary trading concern that could sell its product at any price it chose to ask. It was an institution that enjoyed privileges from the public, and those privileges required consideration. The Uliuirman then moved the rescinding of three of the 1884 resolutions, of which notice had been given. Professor Brown seconded.

Mr. E. HifSKKTH said he did not wish to do anything inimical to the interests of the company. He represented paid-up shares and unpaid, and why should the hitter be passed, ovor as it were and new shares issued, (Hear, hear.) Why should not the holders of the unpaicl-np shares be given the opportunity to become entitled to the same benefits as the paid-up shareholders ? Mr. R. PiOKMEUE said the scheme the directors had in view appeared most feasible and helpful. Mr. Dawson urged that the interests of the company alone should be studied. He suggested that the money could be raieed more cheaply than suggested; they should be able to raise money by debentures at considerably less than 5 per cent. The company had a reserve fund, and their £10,000 could be much better employed in their own business than in yielding, as it did, not 3J per cent. Mr. T. MoLaoiilan had sufficient confidence in the directors to think that, taking the whole of the circumstances into consideration, what they proposod was best. SS Mr, Alexander said that in 1881 the company hv.l made a contract with the new sharehd-.ers, who expected the capital to be called up. Mr. Patterson did not see how they could have anything fairer than what was proposed by the directors. The Rev. Mr. Larkins said there would be a fair call ou the unpaid shares. Mr. Allen said if the whole call was made it would realise £46,000. Mr. G. A. Buttle felt that the company had entered into an agreement in 18&1 to call up the unpaid capital. It was quite possible a shareholder might take proceedings to compel the Board to make the call. Mr, Keesing agreed with Mr. Buttle. In answer to a question The Chairman oaid the immediate sum required was £15,000, and a further sum of £10,000 would be required within the next 12 months. Then as the business continued more capital would be required. After 3ome further discussion, Mr. A. Kidd moved that the capital required be taken from the unpaid capital of the shares. Mr. Alexander seconded, and Mr. W. A. Thompson supported the.amendment. Mr. Kiwi said he held that every issne of shares reduced the capital of the company, and depreciated the shares. The Chairman said when other shares had been sold, the price had gone up. Passing on, he replied to the arguments, and again laid stress upon the fact that the Board proposed to do systematically what had been done iu 1834. "As to debentures, he Would be very sorry to see a load of debt around the neck of the company. (Hear, hear.) On being put to the vote, Mr. R.IDDS amendment was lost by 24 to 13. The Chairman's motion was then agreed to.

He then proposed the resolution given above, "That the directors be empowered to sell by tender eharea in the eompaoyi" ■ This wu abjo agreed to,. .m .':.:..;. f* ;

The Chairman then proposed the remaining proposition as given above, viz., when all shares heretofore disposed of, etc., and suggested that the number of shares mfeht be limited to 5000, GOOO, or 10,000. Mr. KIDD proposed that the resolution be jo ameuded that the authority be to issue 5000.

This was agreed to. The CHAIRMAN, however, intimated that the proposition would be withdrawn: it really did not matter whether it was passed or not. The proposition was then withdrawn. This concluded the busiuess, which lasted over two hours.