CONVERSION OF LOANS

New Zealand Herald, Volume LXX, Issue 21505, 31 May 1933, Page 13

CONVERSION OF LOANS

MOUNT EDEN DECISION SUM OF £BOO,OQQ INVOLVED SAVING TO THE BOROUGH A decision to convert all the loans of the Mount Eden Borough Council, totalling £852,420, was made at a meeting of the council last evening. The total is inado up of £790,120 issued in flat rate loans and £62,300 in instalment loans, the interest rates varying between 4J and 6 per cent. In r. review of the local body loan conversion scheme, Mr. K. N. Buttle said tho amount of relief to bo obtained by tho council from tho 20 per cent reduction totalled £BSOO, representing 6sd in tho pound on tho rates. By the conversion to per cent, there would bo a further reduction of £2362. More than £600,000 had been raised on a dear money market. By the conversion of tho higher priced loans tho council was obliged to add a certain premium, amounting to about £33,000, and tho matter demanded the close attention of all tho councillors. "Tho Minister of Finance has stressed too severely tho need for taking immediate action and the need of the ratepayer has been more or less pushed into the background," he added. Mr. W. J. Gatenby said the scheme should bo worked out first so that each member could see what ho was dealing with. " We want to know tho further indebtedness of the borough," he said.

Mr. J. K, Johns'. ;on said an opportunity of placing the borough's indebtedness on a sound basis was presented. Mr. F. S. Battley said when tho loans fell due the council should have a sufficient sinking fund without refinancing. It was asked whether the conversion benefit was to be left out of the estimates, and Mr, Battley replied that it would not be included. Mr. Buttle said the main idea of tho Act was to give immediate relief. About 45 per cent of the 700 local bodies in New Zealand would have been in difficulties without this measure of relief. Loans totalling £182,000 held by the council would not receivo any benefit from conversion. The motion that all the loans of the council be converted was carried. A sub-committee was set up to report further to the council.

TRAMWAY BORROWING

PROPOSAL FOR THE BOARD

TOTAL SUM OF £400,000

A proposal to convert loans totalling £402,700, which are domiciled in New Zealand, was submitted to the Auckland Transport Board yesterday by tho chairman, Mr. J. A. C. Allum. Tho interest will be at the new statutory rate of per cent, the new issue to mature in 20 years.

Tho total loan money involved is made up as follows: —(1) Proportion of the original tramways loan of £1,250,000 domiciled in the Dominion and maturing in 1940, £293,400 (the balance of £956,600 is domiciled in London); (2) the tramways additional loan issued by the City Council and maturing in 1953, £28,000; (3) transport development loan issued by the Transport Board and maturing in 1949, £81,300. The chairman reported that the sinking fund relating to the original £1,250,0G0 loan was £612,231. He recommended that £90,495 of the sinking fund at present accumulated in connection with that loan, together with the sinking funds already accumulated of £2428 and £8768 respectively, applying to tho other two issues mentioned, making a total of £101,691, be allocated to tho conversion loan; that a sinking fund of 1£ per cent be established; and that in connection with £30,400 of the £81,300 loan, carrying 53 per cent interest, a premium of £1204 be paid in cash to the debenture holders in compensation for the additional reduction in interest from 4.6 per cent to 4.25 per cent. The recommendations were referred to the board in committee.