THE TAUPIRI SAWMILL COMPANY.

New Zealand Herald, Volume XXXIX, Issue 11953, 30 April 1902, Page 3

THE TAUPIRI SAWMILL COMPANY.

INTERVIEW WITH MR. W. R. HOLMES/ i

A Herald representative called upon Mr. W. R. Holmes yesterday at his office, Shortlandstreet, to ascertain his views on the effects on company \ flotation of the Companies Act, 1901, and with special reference to the Taupiri Sawmill Company, which is now before tho public for subscription, and of which ho is one of the joint secretaries.

" Did you experience any difficulty in preparing your prospectus under the new Act 1" asked our representative.

"Yes," replied Mr. Holmes, "more than I imagined, and the solicitors also found their work at first both awkward and trying."

" What were the trying points ?" "No prospectus could be issued until it had been signed by the proposed directors, and the proposed directors had agreed, in writing, to act as directors. The objects of the company had to be set-forth, and the signatures of those who would sign the memorandum of association had to be attached to tho j draft prospectus. The prospectus had then to be filed with the registrar of joint stock companies, and accepted by him before it could be printed and issued to the public. : The penalty for any breach of the Act iii this respect is very severe, so that promoters must get a prospectus printed in order to show to some investors, whoso signatures are indispensable, anil at the same time run the risk of a prospectus by any chance being irregularly issued and accept tho consequences that follow. It would have simplified matters if a proposed prospectus could lie issued (even a limited number of them) to those most likely to become shareholders and enable the promoters to comply with the letter of the Act. Besides, the inclusion of all this legal matter in the prospectus is misleading. Many people thought it an entirely row proposed company, whereas it is forming a well-established business into a limited company. Others, again, say they prefer the old style of electing directors at first meeting, quito forgetting that tho names appearing in the prospectus are proposed directors, and it is open to any shareholder to nominate a gentleman for the Board."

" Why did you make the qualification for a director so low (50 shares) '(" " I am very glad you asked that question. Tho Act provides that every director must purchase his qualification for cash. Now, the vendors hold 10,000 shares between them, and yet they are obliged to buy their qualification the same as the public. We therefor© made it a low one, otherwise we would have made the qualification of a director 500 shares and got them subscribed just as readily as 50. The low qualification is also \iiiisleading, and by those who don't know) is taken as an indication of tho siguators' opinion on the merits of the investment."

"Can you give me some opinion on the light in which the public view the new prospectus '.'"

"Well, they could not at first understand it, and many of them don't understand it yet, but those who do are more than satisfied with the extraordinary, and, in some particulars (to my mind) unnecessary, precautions taken to protect them. In fact, the Act in some respects treats the public as children. The public have been so long used to look on a prospectus as a means of extracting money from the public and at tho same time 'disguising its destination as far as possible, that they are still looking and trying to find ' where the unmentioned ones' (or ' first robbers,' as they are sometimes called) come in. It takes them a little time to realise that everything is disclosed, and there is nothing more to Iwrn further than what appears in the prospectus. Those who have realised this are investing without fear or hesitation." "I see from the reports of Messrs. Monk and Bramley that the bushes are excellent in quality and quantity, but how are the values of bushes estimated ?"

" Many things have to be considered in arriving at the value of a ' forest—(l) The demand for a particular kind of timber; (2) the quantity and quality of the timber; (3) the natural facilities for getting it to the mill; (4) proximity to markets; (5) cost of freight or haulage to seaport or market ; (6) and the price at which you can profitably sell and compete successfully with other mills. The Taupiri bushes are valued at £20,000 as standing timber. The Governnienfc selling price for those • -forests would not bo less than od per 100 ft (i.e., £25,000). The Government recently sold a large block of kahikatea and other mixed bush up north for 6d per 100 ft cash, and the purchasers are quite satisfied 'with their bargain, and can clearly see their way to make it pay handsomely, although this forest, unlike the Taupiri forest, is not on a main railway line, nor in the centre of a large, dairying district, nor is it within 70 miles by rail of the largest city in New Zealand, in which » very large local trade in kahikatea and rimu is being done. The Taupiri forests are only valued at i3d per 100 ft. The actual price to be paid for them is lid per 100 ft, or, say, £5000 in all. This sum will bo paid by deposits on account, periodically, each deposit giving the company the right to cut a stated number of acres, so that we do not pay for timber until we want it. Now, the auditor (Mr. Morrison) certifies that the profits at present being earned arc more than 2s 6d per 100 ft. Ixit reckoning at 2s 6d per 100 ft on 100,000,000 ft, it gives the net profit in sight, at present prices, at £125,000 ; and it must be remembered that the company is earning considerably more than that rate, and since the prospectus was printed there has been a hardening all round ill timber prices, and there is almost certain to be a rise in prices. Besides, in the Waikato district the dairying , industry is expanding with surprising force. Thirty-two thousand pounds' worth of land for dairying purposes was sold the other day close to Taupiri, and the whole of the Waikato butter-box trade must go to the Taupiri Company, on account ot its position and its magnificent forests." " Do you think the new timber company formed in Wellington will affect your mill?" " I don't know much about the proposed new company, but judging from the telegraphic report which appeared in th.i Hekald, and from some inquiries made, I do not see how the Wellington Company can possibly affect us. They have first to lay down +0 miles of tramline in order to get to the nearest railway, and their forests, I understand, arc principally totara and matai. Ours are principally kahikatea and rimu." "How do the local millers view your proposed company?"

"They are surprised to learn the extent and quality of the forests, and could hardly credit the statements made on this head, but the reports by two such men as Messrs. Richard Monk and It. G. Bramiey effectually tied that point. They know we have a gt.od 'show,' and they do not appear to grudge us our good fortune, and have treated us in a manner that leaves nothing to be desired. Of course, there was the usual crop of Jeremiads, or interested persons (call them what you like), who said Port Waikato wap not navigable, that we could not get vessels to go there, and that wo could not insure a cargo from the river. Captains Smith, of the Kanieri, and Bollons, of the Government steamer Hinemoa, have certified as to the navigation of the Waikato, and we have re ctived reliable and authentic estimates from shipowners and from insurance managers, which clearly demonstrate that the freights and insurances from Port Waikato are no more than from the Kaipara."

" Do you think the new Act wili tend to greater activity in company promoting?" " No; but it will lead to a better class of investments coming forward. If some of the vexatious and unnecessary provisions • were eliminated I think the Act would proven substantial l»!nefit to and be productive of greater confidence in investors. Of course, it will absolutely kill 'wild eats'— that is, if the prospectus issued faithfully complies with the provisions of the Act."

Since the above interview, Mr. Holmes has received from the chairman of the Marine Underwriters' Association a reply to a letter which he and Mr. E. Canavan Smith, joint secretary, addressed to that gentleman respecting a rumour that was in circulation that insurance companies would not insure ships oi cargoes from Port Waikato, and asking him to give an authoritative denial to such reports. The chairman, in his reply, writes : " I may say that you will have no difficulty in obtaining insurance at tariff •-ates. aud can thorofore deny the statement." -