TO THE RATEPAYERS OF THE OAMARU HARBOR DISTRICT.

Oamaru Mail, Volume XXXVIII, Issue 10525, 5 August 1910, Page 4

TO THE RATEPAYERS OF THE OAMARU HARBOR DISTRICT.

(Per Favor Oamaru Mail.) Ladies and Gentlemen, — Although it will be necessary, in the event of the Oamaru Harbor Board . Enabling Bill, now in the hands ol : Parliamentary authorities, becoming law, to hold public meetings in various parts of the district for the purpose ol : explaining the proposals of the Board as set out in the Bill, I have thought that in the meantime a short statement outlining the purposes sought to be accomplished would not be undesirable, while the details might be left for fail explanation at the statutory meetings ' which will be held, and at which you will have the opportunity of fully discussing the proposals in all their aspects. As you are aware, the primary object of the Board is to effect a settlement with the debenture-holders of the 1879 loan, with whom negotiations have been proceeding for about two years. In addition to the principal sum of £IOO,OOO, the Board owes these deben-ture-holders the large sum of £103,000 in the shape of overdue interest, and it has been arranged between them and the Board to settle this large debt of £203,000 for the comparatively modest sum of £47,000, plus interest at the rate of 4 per cent, per annum from ~3lst December last, and the Board paying all expenses connected with the settlement. It must, I should suppose, be very gratifying to you that a .settlement on such manifestly advantageous terms should have been arranged, and I cannot doubt that if the necessary Parliamentary sanction lie obtained and the proposal is submitted to you for your approval it will receive your hearty endorsement at the poll. ' To bring about the removal of the .Receiver, and to stop the piling up of a debt at the rate of £6OOO per annum, not to mention .the wiping off the slate of a debt of over £150,000, is surely "a consummation devoutly to be wished," and I venture to think will meet with your approbation. The purpose of the Bill is in the first place to make the compromise binding on all deben-ture-holders, and to enable the Board -to borrow a, sum of money with which to make the settlement, the terms of which n.rn sot out in an agreement dated 26th April last, which was entered iuto_ by the London Committee representing a majority of the debentureholders of the one part and the Board ot the other. In the second place, the object is to empower the Board to consolidate all its loans, thus effecting an enormous annual saving in interest charges. Without going into details, I might say that the indebtedness of the Board—apart from the 1879 loan already mentioned, and deducting sinking funds to date—amounts to £165,651). On the first loan, viz., that of 1576, we are paying 5.1 per cent, interest on £28,00(1, and G per cent, on £45,400. This loan is a first charge oil the general revenues and has no rating security. The second loan (1879), already referred to, is £IOO,OOO at 6 per cent., and is a second charge on general revenues only. The ISB3 and 1887 rating Joans, amounting to £90,000, are at 5 per cent., while the remaining portion of the 1903 loan, which was issued to the public, is at 4.V per cent. I do not- think I need here explain all the arrangements connected with the proposed repayments of these loans, as this will be done in detail later on. I desire to refer only to the main features of the scheme. The Bill provides for the borrowing of a sufficient sum of money, for the purposes I have mentioned, not- exceeding in the whole £225.000. In fixing this amount as a maximum it has been deemed prudent to ask for authority to cover all possible contingencies connector *' le matter ill hand. 5? tdd, however, the negotiations for obtaining the money required issue m a satisfactory provisional arrangement being made, the actual sum to be borrowed will be appreciably less than the £225,000 mentioned, and 1 oulcl point out that the Board will be unable to borrow more than is actu- £ i Ilee^e( l' alK l 110 portion whatever of the loan can be applied to purposes other than those mentioned in the Bill. As no money can possibly be obtained by the Board except -on the security ~f rates in addition to general revenue you will be asked to give a rating security for the amount to be borrowed less what is required to repay existing rating loans. The security for the whole of the proposed consolidated loan is 7-12ths of a penny in the pound on the, capital value, and it may be stated in passing that this security is less than that which at present ' obtains. You will be furnished with full details of this when the matter is placed before you at the statutory meetings. As a large portion of the interest on the consolidated loan would be paid out of the Board's general revenues it will not be necessary to collect anything like the whole of the rate to be struck as security, and the Board will therefore levy year bv year only so much of the rate as will'be required for payment of .interest and sinking' fund after applying to such payment the net revenues' of the Board. As a matter of fact, nearly all the interest on the amount to be paid to the ; 1879 debenture-holders iii settlement of : their claim will be met not by rates but by a saving in'interest effected by repaying the 1676 loan which, as I have stated, bears interest at the rate of 5J and 6 per cent., and also by the saving of about £4OO a year made as a result of the removal of the Receiver. You will thus see how necessary it is to obtain fresh money to pay off tins 1876 loan. To separate it from the scheme would not only be unbusinesslike but it would involve the Board in a tremendous waste of money, which would require to be made up by collecting more rates than would bo necessary if., the loan is included in the consolidating proposals. Then there is an additional reason why it should be included. There ; is no doubt that if wo desire to obtain our money on the most favorable terms the security offered apart from rates must be a first charge oil the re- ; venues. Anything in the nature of a second mortgage would not be looked upon by investors with favor aftor the Board's default in the matter of the 1879 loan. Our scheme is to have one large, loan, an dalthough.it would be obtained in instalments, the security for each portion would be the same. Were our present first mortgage to refc . main, the balance of the money re- . quired would have to be a second mortgage as regards the revenues, and this should, as I have pointed out, be Avoided if possible. It is quite worth our while to offer the best possible security in order to obtain our money on the most favorable terms, so that the burden will not press heavily on present ratepayers. To restore order out of the financial chaos that has prevailed for well nigh twenty years is the aim of the Board, and I feel confident that the scheme will commend itself to you and, receive ycur hearty approval. I have the honor ,to be, ladies and gentlemen, Your obedient servant, ROBERT MILLIGAN, , ' Chairman Oamaru Harbor Board. *