POVERTY BAY MEAT CO.

New Zealand Herald, Volume LX, Issue 18520, 3 October 1923, Page 10

POVERTY BAY MEAT CO.

sale; to vEsi^svi^om SHAREHOLDERS' DECISION. BANK'S' ADVICE rejected. - TRANSFER OF THE LICENSE. OFFICIALLY -APPROVED: [ST T?I J EGEAPH.--OW.N ; "■■ ',*',..,,, GISBOBNB, Tuesday. The offer of:' Messrs. :: Vestey; 8r05.. : to '■■ purchase the Poverty Bay Farmers' Meat - Company's, works at Waipaoa,; was re- . " fused at a largely attended " meeting .of ' '•-shareholders this : afternoon. . Mr. ,W. V. : , Lysnar, M.P.; chairman of director?,., presided. '••■." ■■■ r - : ;'y[- ■-'■'■'■ ■■■■ .-'-*' ■ ";! - The chairman read a statement drawn . up by the directors in which it was stated—"ln the first place the directors desire'to say that, the general manager . of- this company's bank, -has..very ..airly and frankly, admitted to three of . your directors that ho is only forcing the. posi- ; tion now because of the immediate pros- . pect of . selling , out,; to . Vestey v Eros., which, he considers, is- m the, best interest of the bank and guarantors. Your directors, - while not agreeing . with his conclusions, recognise. that he « actuated by the very best intentions. It is only fair to say that lin the past the bank has acted "in ■• a fair and reasonable .way toward the company and; your directors ; have no complaint to make against it. J '''' r^'V.Tlie- Directors' Terms. - The -statement added:that the r question of selling to Vestey's first .arose- in v February last When the -chairman was approached he indicated that unless the buyers were prepared to negotiate on the following terms ho did not- think there was any possibility of doing business.:— • (1) The buyers must be '■ prepared .to purchase the" company's ship, the Admiral Codrington, in conjunction with the : works (2) The shareholders of the com- ■ pany must -have an absolute right to put the* meat "in the works on their .own account arid' to bo; charged a fate not more than the average of other freeing works in the Northland. (3) The sale would' have to be first ; approved .by the shareholder*, as well as by; the Government, and the Meat Producers Board It subsequently transpired that the inquiries • were being made on .behalf, .of Yestey Bros., and, although some interviews took place between some of your • directors and Mr. Rowlands Dominion manager of Vestey Bros., it was found quite impossible to "do any business and the negotiations were',' broken off. ; A counter proposal was made that \esteys should sell their local works and, on the "matter being referred to frondon,;;* .reply came that thoy were not sailers. Three days later, the following telegram was received from the manager of the National Bank of New Zealand: "Have received . word from Mr. A. Rowlands that an offer was made to-day for the -Poverty.-.Bay Farmers" Meat Company undertaking/ exclusive of the Admiral Codrtngton. Inform - Mr. • ;W. D. Lysnar and tne . other directors .that in my opinion an > immediate Mile is.the only way: to stop further loss to both the guarantors arid the ■"■ bank. '-'Unless the offer is 'accepted by .;•:'. the directors immediately, the bank will * -take steps -for compulsory liquidation." The same day, a" I definite--; offer was ; re:i- ceived- on l> behalf ■>" of '« Vestry Bros, rof • £225,000 for? the works',', ate., -'but ; not including the ship, this, offer remain open; for seven days. ' sum -of £150,000 • \ was to -be paid in cash, tho balance to „ ; be arranged.-;-:■-,';>■ ■\V-' ; -: : .r i 'fi r '.■'■:'■ ," : ; ' ' ".'\ Negotiations with Bank." ■ ;■■'■■; ;i A meeting lof directors ■; was called when it was decided : ; that : three of the directors should; immediately c proceed- to Wellington and interview 'the general manager )s of- the bank ; and point out the * serious results •ifl the sale were '-■?carried ; ;; through, and that if. the bank •'. (Would? give time steps would be taken vte>fc place more shares. The ; bank declined ; ! to -en- . tertain this until ; iK was known if '• the authorities would • sanction 4ho transfer,of ;.;- ; 'theJ. license.■■;;,■■;'>■ - . : '.v;.-:r ,/r-'i:\\}' '..']■ A. -; further - meeting of. directors . was :: held .on September 14, when -the following resolution was - passed "That the , directors ; ; cannot accede to the request of f the; iSational ; ; Bank. of New Zealand, - Limited, ,to accept;^the: offer ,to '- purchase the -t works as the proposed consideration is; totally.inadequate • and:.will 7caused ruin to, the,, company, and apart from, this-fact • upon the following '.grounds .;— - ; vi?X'-n.: ■'; "■ " (1) '.-That tit is against the- interest of shareholders and detrimental to: the • pnbi-. ' lie i- interest that ) such, a powerful combination., with capiltal recently-4 increased ;-'to;:.r. ; £8,750,000, should be . allowed to :; squeeze out a legitimate ; farmers' co-op- ; erative company ■ and thus: def ■fit- the .-,very object for which the farmers have /made : bisf, 1 sacrifices to establish these C.larga and efficient works.h ■'.-<[.'■■*%'.\ t ,^ : ■.■■-:■ "(2) In: view ;of the, bank's intimation that if: the directors do not accept this offer : the bank will force :tho-<orapsnv into ; / liquidation ; and sell the. works ito Vestey Bros., immediate' steps should be taken "to request , the Minister = for ,? Agriculture .'• to give an intimation that if: this purchase ■' 'is: effected, as suggested: he .will "exercise his power to refuse to;transfer 1 the: license , to Vestey ? Bro«i. ': or its ' representative in connection with.:thft." works in 'accordance . with..ihft powers vested; in ; him by law. ' >.- .' .. Appeal to Meat Board. -;.<,• >■-"■ (3) That -if necessary the Meat Pro- ' ducers' Board be requested :to give effect to: their ■ official statement, made on May .; 1 to the executive of - the ; New ..Zealand ; "' .; Farmers' % Union, 'that it is- not; in the best interests of the.meat producers of the Dominion 'that the purchase .of freezing works by overseas meat interests should be made "'; or that overseas concerns should ;'-.';' acquire any further interest in New; Zealand freezing-works, or that '■ new works should be erected by any other than New Zealand interests.' The board now decides that i;in;- the : event of : : such purchase or ;••■'. purchases or erection of .; freezing .works by overseas interests without the approval : of the ' board, .it ; will take such action las will-prevent such interests controlling the meat going ; ~ through j such v- freezing ;, -works.'": v j '-'■''■ "-/-*■■ .;'■«. k:. -.* .:,' :-..-(.. ■ /'. '; ;■ This resolution was- embodied in a letter dated September 14 and sent to the Minister for Agriculture, and 'the:' chairman .at once proceeded J' to- r Wellington to interview '■■'■ him; ■:On t September ~\ 26 the -latter informed the chairman' the r matter•' had been considered and - that he was ,: prepared to consent to the transfer to Vestey Bros. On September 2*7 an application was handet to the Meat Producers' Board in ; Wellington asking them to go into this question and fix a time to hear ; the company in the matter. So-fair/ "no definite appointment or reply has beeni-received from the board. In the opinion of the directors suggested consideration of £225,000 is totally inadequate and not a fair, value.- In September. 1921, the directors had a valuation made • by l two. freezing works engineering experts, Messrs. James arid;: McCartney, of Wellington,, -which showed that; the -land, . plant,, and buildings wero worth; £401,802. This valuation had since been confirmed, as being the value at the, present date. /The preliminary balance-sheet for'the ; last season has been made up to the/annual balance date of August .30, 1923, and it, shows ■that there is a working profit on the works of £3822. There are-losses of £5886 "on the previous ~ year's ' operations": to -go against this.. In all. the ; preceding "years, excepting 1922, tho works made 'a : substantial profit. '. ■'_ , _ ;_■'■■ ""'••'•{ ~:';.:;:;:lndebtedness Reduced. . •■;.. The directors 1 ,. report stated -that during this ; year the .indebtedness '.-. to ; the -bank has been substantially reduced. On Feb- :: ruary 13 last the amount actually due to the' bank was , £350,388. while on August 30 this indebtedness had been reduced to £303,326.-.: There -was. due to • the, bank - to-day, after -allowing tho half-year's inter- " est, the sum- of £299,768 10s. The directors fully recognise it -will be impossible to collect the whole of i the- . call' money ■■;•; - ; due,- and'even - some of the '--bill's' that are ■ ' held' may not be fully : paid;-* but consider ' that v with "the further call money .-'that 'should be "collected within a short time, :•'- it-would bis safe to r s%;^tthri : account .> con! 4 h"» brought ' down' to •a-'working '.'!'■*'■';."■.-iV•*!■■;■*'-"■.■',.'■■ - ,'i'- ■ ,:■■■■ '■'.:■■"•"--■ .' :■■' -r'- ■• •■" V- -' ' - '*■ , •;■■.•;■,':■;,-■■■■".

basis of about £290,000, which would be • a reduction of £60,000 from what it stood at in February last. ',' i Regarding the earnings of the steamer Admiral Codrington from; the date of the purchase until she left' Falmouth on January 16 1823, where she had been tied up for about: seven months, a loss is shown of £5958. Since then she has earned another freight, and, according to the figures that will be shown in the balance-sheet, there will be' credit but, as 3 against this, there will bo disbursements made in Britain that will absorb the' wholo. i Considering the disadvantage the boat had laboured under and the loss of time in insulating her, as well as the loss of time through the several ' accidents that have happened, and that only one trip a year has been made with her when she could have done two trips a year, and the fact that there has been no back loading, it may fairly be claimed that the result shows that if back loading could bo obtained, and two trips a year run, the working of the boat would show a substantial profit. ' , Soiling Admiral Oodrington. V It is tho intention of the directors to dispose of the boct on the first favourable opportunity. At present there is a mortgage on her to ', tho extent of £60,000, which is arranged for in England, and has nothing to do with the bank. Tho directors had received a letter from a large meat buyer who put through the local works last year about 90,000 sheep and lambs" in which ho states that if Vestey Bros, purchase these works it will entirely eliminate their competition at Gisborne, as they will cease to operato here, which -would bo very detrimental to the producers. A local buyer on behalf of an outside operator also says he has definite instructions if Vestry Bros, buy these works, ho is not to pat any stock through them. It will be readily seen that, with the attitude taken by the buyers, that it would seriously reduce competition, and be a very serious thing for the farmers. Should the sale be carried through at the price offered, the statement concludes, 'it would mean the shareholders would lose all their capital and leave a balance of about £80.000 for which the guarantors would be liable; but, should the sale not be carried out, seeing that' during 1921-22 the directors completed improvements 'amounting to '■■ £45.065 in order to bring the works up' to the highest possible mark, the necessity for eny further expenditure for many years to come is obviated, and the whole earnings of the works could go in reductions of its liabilities. With the substantial support assured for the coming season, the directors are satisfied that they can still further substantially. reduce the amount of the .company's indebtedness to the bank, if they will give time, thus avoiding any loss to the shareholders or to the guarantors. u

Motion to Refuse Offer. Messrs. H. J. Cameron and J. B. Kells moved the following resolution: ''That this meeting of shareholders expresses its entire approval of the course adopted by the directors in refusing to sanction the sale of '.the works to. Vestey Bros., and it endorses the resolution of* the directors for, in the opinion of the shareholders, it would be a calamity and to the spirit and intention of the legislation and the pledges of the Government if a sale wore sanctioned to such a huge combination, as it will unquestionably give i Vestey Bros, an undue 'advantage . as against, other buyers of stock, and so. stifle competition to tho detriment of trade ; generally. The meeting further suggests that a respectful request be again made to the bank not to force the sale, and, while 1 fully recognising that the bank has acted very fairly and reasonably in the past, the meeting desires to assure the bank that the individual shareholders will do their very best to support the company with their stock and any extra shares the bank may consider necessary to protect its position fully, providing time is given, or alternatively to agree to a definite pledge against stock. That if the bank still refuses -to give time, then ft further appeal should bo made both to the Government and to the Meat Producers' Board to stop the sale, and, failing this' being successful, then this meeting pledges itself' to take. every legitimate step possible to prevent Ycstey Bros, or any other overseas interest from continuing to work or acquire any freezing works in New Zealand '*:". :■ ' . ' - ■.■■-.:.'■/'■..: ;- A Hostile Resolution. J Mr. P. S. Bowen, whose rising was the signal for a . demonstration, moved an amendment that, the chairman of directors be asked to resign, arid that a committer of five shareholders be appointed to meet the bank and ; .to make arrangements -for the reconstruction of ■•■ the works. The rough and ready statements of the chairman, >he said, covering a loss of about £400,00G, were too -well known for them to accept such a resolution as that proposed. ;; :, : ,- "'.", '■/.-. ', : Mr.'C. G. ; Holdsworth seconded the amendment. 'The chairman said he regretted that neither the mover nor the seconder was qualified Ito vote, and therefore was not eligible to put ; forward the resolution.

..Proposed Levy on Stock. ' ■ Mr. E. R. Black said it was proposed that all ; shareholders agree to a levy on all; surplus stock sent off their properties, the levies going :' into a fund which represented a subscription list to relieve the guarantors of tHeir liability/ If they agred to a levy of 6d' per head ; on all surplus stock,"they would find a fund, of £6000 per year. -' •' i - Mr. Henry Williams repeated an offer to take >up £5000 worth of new. shares if it would enable the company to carry on. :v/ (Applause.) ' ' ; Mr. C. Matthews said that he had that day seen the National ''-[ Bank manager, who : gave him an intimation to convey to the- shareholders. The general, manager of the bank had wired that the- Meat Board had approved tho transfer of the license, and that Vestey's held an assurance that the Government would not object to the transfer. The manager - was quite j satisfied that Mr. Lysnar's efforts to block thai transfer would prove futile, while they might react; upon the company'!! interests. It meant that if the sale :v.was forced the company would be put into liquidation, and the Bank of Scotland (would be forced /to take action as regards tho steamer. ,If the directors and shareholders would agree to 'the sale the transaction could be '.-; effected / without putting • the company into liquidation. Mr. Matthews : considered the ;'■■ levy 'scheme/ quite . a ; good one, and quite possibly acceptable to the National Bank, with the result that the position would be saved. He believed the retirement of the directors would be in the interest of evo&ybody, and he was quite prepared to resign. - ' Directors Willing to Eesign. Mr. Lysnar expressed accord with the other directors in. their willingness to resign, to give the shareholders a free hand. When the gathering was held on the. arrival of the ship, was there a shareholder who said anything .about that ship? }./• ■,'■ The motion was then put to the meeting and carried, .a few voices being raised/against it. ;.; ' .