POWER BOARD LOANS

Otago Daily Times, Issue 21980, 15 June 1933, Page 8

POWER BOARD LOANS

PAYMENT OF INTEREST TEST CASE IN LONDON (Special to Daily Times.) INVERCARGILL, Juue 14. At yesterday’s meeting of the Southland Electric Power Board it was decided to undertake a test ease in the King s Bench Division in London to ascertain whether the board could make interest payments on its London loans in New Zealand currency. The board’s total indebtedness amounts to £1,500,000, and it is estimated that in the event of success a saving of £20,000 a year will be effected with the exchange at its present level. , The amount borrowed by the board is made up of two loans of £750,000 each. The first loan, which was raised in 1921, bears interest at the rate of _6 per cent., and the second, which was raised in 1924, bears interest at the rate of 5 per cent. Both loans have the right of redemption up to 1936, or any time after that up till 1954. The loans were raised in London but the debentures were executed in New Zealand. The sinking fund is also established in this country. The interest is payable at the option of the payee in London or in New Zealand. Before deciding to proceed with the test case in London the board had considered the judgment of the Appeal Court in the recent case of the Broken Hill Proprietary, Ltd., v. Lathan and others, and also the opinion of Sir Gerald Hurst, K.C., M.P., who took part in that case. The board then considered that it was justified in paying in New Zealand currency, at the same time informing the debenture-holders that in the event of dissatisfaction a friendly test case could be arranged. However, a request was received from the Minister of Finance that the board should take no action until the legality of the payment in New Zealand currency had been settled by a test case. The-board then decided to fall in with the Minister’s request. The test case will be undertaken in London by originating summons and the court will simply be asked to decide whether the payment of interest and redemption moneys falling due are to be made in sterling without allowance for the differences in exchange, or alternatively in New Zealand currency converted into sterling at the rate of exchange for transfers to London on the due dates for payment.