THE UNION COMPANY

New Zealand Times, Volume XLII, Issue 9692, 21 June 1917, Page 2

THE UNION COMPANY

DISSATISFIED SHAREHOLDERS SOME CRITICAL REMARKS ABOUT THE MERGER. The merging of the great Union Steam Ship Company of New Zealand with the still greater Imperial concern, the Peninsular and Oriental Company, naturally has caused some concern amongst the shareholders and public in the Dominion. Of the two million shares of the company, the holders are fairly evenly divided between Australasia and the Old Country. These shares are valuable, being worth about three times their face value, and the Union Company has been recognised as a most profitable concern, as its published balancesheets disclose. In fact, some critics of the company, like the late Mi Thomas Taylor, M.P., have looked upon it as a “taxing machine.” A Wellington citizen, who has made a special study of the financial status of the company, gave some interesting facts and figures to a “Times” reporter yesterday. Ho pointed out that there was some dissatisfaction amongst shareholders of the company with regard to the proposed “merger” with the P. and O. Company, which may be regarded as practically an accomplished fact, unless, of course, tho Government intervenes before it is too late. He pointed out that tho gross tonnage owned by the company at the present time amounted to 2(34,156 tons. At £ls a ton this meant a value of £3,962,340. In last year’s balance-sheet reserves were given as £150,000, insurance fund £534,548, reserve for liabilities not yet adjusted (including provision for allowances on adjustment of contracts), Imperial, Commonwealth, and Dominion taxes and extra depreciation on steamers in Government service, £359,227, a total of £1,043,776 —over five millions in all.

Referring to the present value of tonnage, it was pointed out that tho company paid £150,000 for the Daimore, now the Waitotara (4717 tons) and £120,000 for the Waikawa, ex Schloischen (6642 tons), and that the market value per ton would be about £4O.

Taking the steamers in the company’s list from 31 to 40, a total of 45,771 tons at £4O a ton. this would represent a value of £1,830,840. This, in the opinion of the critic, showed plainly that the Union Company’s shareholders were paying an inflated price for P. and O. stock, while only getting pre-war rates for their tonnage. In the interests of New Zealand, he considered tho company should be bought up by the farmers, or commandeered by the Government. “What a wonderful milch cow it has beenl” said the “Times” informant. “Up to 1907 the company had a called-up capital of £600,000 in 1907. In 1907 the capital was increased to £BOO,OOO bv capitalising £200,000 of the reserves. In 1913 the company issued 200.000 ordinary shares at a premium of ton shillings a share, which made the capital one million, of which shareholders had paid only £900,000. In 1913 .after the issue of 200,000 ordinary Shares, a million preference shares were issued, which were paid for out of reserve —watered stock. So that the original shareholders who held their shares received over 15 per cent, last year on their original investment. I wonder ; if the company would be prepared to turn the business over to the Govefnment of New Zealand for four millions, which is the value apparently at present put noon it for the purposes of the merger. The Union Company is apparently valuing the business on the pre-war rates at something less than four millions (£ls a ton) Thus we are not getting the inflated value for our steamers, but we are paying inflated value for P. and O. stock." , THE PRESENT POSITION. The present position seems to be that the recent regulations designed to retain Dominion shipping on the New Zealand register _ were drafted with the view of keeping a hold over the shipping of the Dominion. The Government already has an option over the transports in the service of the State, at prices which have been fixed, and it is not impossible that decisive action may be taken within the next few days which will considerably _ alter tho trend of events in shipping circles. INCREASED FREIGHTS. A local shipping agent informed a “New Zealand Times” representative yesterday that he had just received a written communication from the head office of the Union Co., intimating that the company had increased the freight of ooal from Newcastle bv about 3s to nearly 4s per ton. He remarked that it seemed more than a coincidence that this rise practically synchronised with the taking over of the Union Company by tho P. and O. Company. STATE ACTION FAVOURED. Brief reference to the merger was made bv Sir John Findlay, M.P. for Hawke’s Bay, when interviewed in Napier on -Monday. “It is evident, from the observations of the Hon. G. \\. Russell that he, at least, will strenuously resist this fusion,” said Sir John. “It may ho well that the House will insist upon seme drastic and effective means by which the country can bo protected against the possible oy iU which may fall on New Zealand from the proposed combination. In tnie and in several important directions it may well ho that a majority of the House will demand effective State action ; not merely negative, in the form of statutory prohibition, but positive, in tho favour of new State agencies. With the example of England before us in this respect, it is hardly likely that the House will shew any timidity in embarking on such State enterprises as mav be deemed essential for the protection of our people against monopolies or against the exigencies of New Zealand, owing to- the war, being exploited for purposes of improper commercial profit.”