LOAN CONVERSION

Otago Daily Times, Issue 24607, 15 May 1941, Page 6

LOAN CONVERSION

GOVERNMENT’S DECISION MATURING SECURITIES TOTAL OF £21,000,000 (P.A.) WELLINGTON, May 14. According to an announcement by the Acting Prime Minister (Mr W. Nash) in an interview to-day, the conversion of Government loans totalling £21,000.000 of debt domiciled in New Zealand is to be attempted in the near future. Mr Nash said the offer to convert was addressed to the holders of the following Government securities: —3 per cent, stock and debentures maturing on July 15 of this vear, 33 per cent, stock and per cent, stock maturing on March 15, of this year, and per cent, and 4 per cent, stock maturing on March 15, 1943. These holders were invited to apply forthwith, and in any case not later than June 14, for the conversion of their holdings in any or all of these loans into new 3< per cent, stock maturing in 1957-60 at the rate of £lO3 of new stock for every £IOO of old stock surrendered, or. alternatively, into shorter-dated 3 per cent, stock maturing in 1946-48 at par. Conversion Dates Applications for conversion, Mr Nash said, were required now, but would take effect in respect of each of the three loans as follows; —3 per cent., July 15, 1941—0 n July 15. 1941; 33 per cent., November 15, 1941 —on August 15, 1941; 3i and 4 per cent., March 15, 1943—0 n September 15. 1941. The interest on the old loans, Mr Nash said, would, of icourse, be paid up to these conversion dates and the interest on the new loans would commence from those dates. The Minister explained that the first-mentioned date was the final maturity date of the loan, while in the case of the other two loans formal notice had been given of the intention to repay them on August 15 and September 15 respectively. This meant that if the offer of conversion was not accepted by June 14 the holder would be repaid in cash with interest to the date of settlement. Mr Nash added that a valuable concession was being offered to those accepting conversion by which they could stipulate that the whole or any portion of the new conversion stock should be available at par for the payment of the death duties in an estate in the event of death occurring before the loan matured. The return to investors from the new securities, allowing for premium, was £3 9s 3d, per cent, in the case of the longer-dated issue and £3 per cent, from the shortdated securities. These terms were practically the same as the National Development Loan now on the market, Appeal to Holders

“Taking all the relevant factors into consideration.’’ the Minister continued, “ the Government feels that the conversion terms were straightforward and fair, and it confidently anticipates that the holders of the securities affected will accept the offer and so ensure the success cf what is one of the largest conversion operations ever undertaken in the Dominion.” .. ■ Mr Nash added that success m. these operations would clear ’ the decks of maturing debt probably for the '•dttration of the war, and would be a material factor in securing the financial stability which was so essential a factor in a sustained war effort. Mr Nash urged all holders of the stock affected to give the matter of conversion urgent consideration, and added that conversion did not Involve any cash applications for investment. Such investments.. however, were invited for the national development loan, which would remain open for subscriptions to the 3} per cent. 1956-59 issue at £97 ss. This gave a return of £3 9s 3d to investors, the same as the longerdated conversion offer. The shortdated 3 per cent, national development issue, however, had been withdrawn.- 1 Another War Loan Replying to a question as to, the likelihood of another war loan, Mr Nash stated that preparatory work for the financial programme for the year for both the war. and the ordinary Budgets was now in hand. There was no doubt that a war loan would be necessary, and it would be issued as soon as a review of the requirements and resources generally had been completed. He could say. however, that the war loan for this financial year would be purely voluntary. FAVOURABLE TO INVESTORS SATISFACTION WITH TERMS (Special). AUCKLAND, May 14. Satisfaction with the terms of the conversion issue and belief in its success were expressed by Mr J. W. Frater, chairman of the Auckland Stock Exchange, to-night. The operation, he stated, should be favourably received by investors, the terms appearing to offer a very fair basis of conversion. The yield would be virtually that which was now ruling in the open market. The importance of the Minister’s announcement concerning another war loan would not be lost on the market. Mr Frater said. From it. investors take confidence and at this juncture the statement should materially assist the success of the conversion issue.