LOAN BAN LIFTED

New Zealand Herald, Volume LXXI, Issue 21761, 28 March 1934, Page 14

LOAN BAN LIFTED

DECISION IN LONDON QUOTATIONS REINSTATED ASSISTING AUCKLAND ISSUES SEQUEL TO STERLING PAYMENT The ban placed by the London Stock Exchange on Auckland loan issues has been withdrawn in view of the Auckland Transport Board's decision to remove the "without prejudice" qualification from the recent payment of loan interest in sterling. The following telegram from the Minister of Finance, the Rt Hon. J. G. Coates, wai;, received by Mr. J. A. C. Allum, chairman of the Transport Board, yesterday:—"With reference to London interest payments and the board's resolution of March 20, I am now advised by the High Commissioner that the Transport Board's securities will be restored to the Stock Exchange official list on Monday next, and that the proposed loan of the Auckland and Suburban Drainage Board will now be dealt with in the usual way. "The Stock Exchange has asked that a press announcement be made in London regarding the Transport Boards decision, and this is being arranged by the High Commissioner's office. London authorities appreciate the successful outcome and the Government is particularly gratified that your board has facilitated matters for the Drainage Board." Qualification Removed

The Transport Board's decision to pay in sterling without qualification was made at last week's meeting by fire votes to four. The subject has been frequently discussed by the board since June, when the board decided to pay in New Zealand currency the half-yearly instalment of interest due on July 1 on debentures of the tramway loan of £1,250,000 domiciled in London. The decision was later amended to provide for the payment of July interest in sterling without prejudice, and Mr. Allum went to London to discuss the question with the bondholders. On his return Mr. Allum referred to "the unwarranted opposition of the Stock Exchange," which intimated it would countenance no compromise arrangements. After Mr. Allum's departure from London the House of Lords' decision in the Adelaide Electricity Supply Company case was announced, and at a special meeting on December 29, the day of his return, the board decided to pay January interest in sterling "without prejudice." < London Stock Exchange's Attitude The London Stock Exchange intimated it was not prepared to facilitate any Auckland issue until the board removed the qualification. Having in mind the Drainage Board's desire to secure accommodation in London, Mr. Allum recommended the Transport Board, on February 27, to remove the tag from its resolution. The board then refused, but at its next meeting, three weeks later, by five votes to four, the board took that step, agreeing that the qualification had lost its significance. "The board's desire at all times has been that its obligations to bondholders should be clearly determined," said a statement approved by the board. "In view of the judgment of the House of Lords in the Adelaide case, payment due in London will be made in English currency. Thiis statement -is made subject to any other • decisions of the judiciary of Great Britain or enactments of Parliament." COUNCIL AND DRAINAGE BOARD

REDEMPTION LOAN ' ISSUES

Advice was received by the City Council last evening from the Bank of New Zealand that the London market was satisfied with the Auckland Transport Board's resolution and had reinstated quotsitions and uplifted the ban on fresh Auckland issues. On the motion of the Mayor, Mr. G. W. Hutchison, the council decided to ask the bank to advise when conditions were favourable for issuing the council's redemption loan of £200,000, for which temporary arrangements were made in London, and for the issue of a redemption loan of £150,000 that will be required on May 1, 1934. The Mayor, who is also chairman of the Auckland and Suburban Drainage Board, stated later that the board was also asking to be advised when it would be advisable to place its redemption loan of £95,000. OITY SINKING PUNDS INTEREST PAYMENT POINT ■ A difficulty has arisen in connection with the arrangements made for dealing Tvith the City Council's London loan of £200.000, which became due and was paid on January 1 last by an overdraft with the Bank of New Zealand in London. The sum of £200,000 is held by the Auckland City sinking fund commissioners in connection with this loan, and the Mayor, Mr. G. W. Hutchison, reported to the council last evening that the Auditor-General had advised that the Crown Law Office held that there was no authority in law for the City sinking fund, commissioners to pay tP the City Council the interest earned locally on the sinking fund as a set-off against the London charges on the overdraft. He had recently discussed this matter further with Mr. A. D. Park. Secretary to the Treasury, who had suggested that the council might instruct the city solicitor to draw up an empowering clause for inclusion in tha Local Legislation Bill next session, such clause to be submitted to the Minister of Internal Affairs for approval. Mr. Park was of opinion that there should bo no serious difficulty in securing tha passage of this clause, thus enabling the City sinking fund commissioners to pav the interest to the council. It was decided to take the course suggested.