THE FIRST CHANCE GOLD DREDGING COMPANY.

Otago Witness, Issue 2524, 30 July 1902, Page 25

THE FIRST CHANCE GOLD DREDGING COMPANY.

TO 1 THE EDITOR. Sir, — I wouFil esteem it a favom if yen would insert the following letter m your \aluable paper. By doing so I verture to assert that you w:l) be doing a favour for many of your coii<ributors, and I will have attained the ol'ject I desire -namely, the warning of any hard- j working, tlmfty person who may have a, few j pounds to inve=t. Benig in this position myself nearly two years ago, I decided to take up sh-ues in the First Chance Dredging Company. The diedge commenced to work on July 4, 1901. After working for about three months fie dredge had to clos^ down on account cf the high river. On August 31, ]SOl. the second annual mating wbs he'd, and t'.ie 'o lowing repoit was pat for-.siird by tfv rl' rectors — " Th<s fir=t week's return of 40oz 33dwt c?rc promi«» of better results thaii ha-, c b?en realised, still on the whole the results ha^e

been satisfactory, as up to the 31st July a total of 630z 13dwt 9gr were obtained, the money value being £245 2s 3d. Your directors feel sura that before long good returns may be looked for, as the dredges immediately above are doing very well, and there is every reason to believe that your claim is equally rich. Few dredges have done anything like so well during the firs! month as your dredge has done. " Your directors hope, before long to reach th« dividend-paying stage, and trust shareholders will continue to have faith in the venture, and not sacrifice their shares, and thus lose theii interest in what is undoubtedly a valuabls property." Barely Ivro months later I received the following — October 1€ — " Your directors have found if necessary to issue four hundred (400) debenture! of £5 each, equal to the value of £20Q0, bearing interest at the rate of 20 per cent, per anmim, terminable in 12 months, and redeemable by ballot at any time on giving 30 days' notice. The security fof such debentures to be a first mortgage over the dredge and claim. Interest payable half-ycsvrly." A month later 1 received the following notice called a meeting for the purpose of considering and, if thought fit, passing an extraordinary resolution to the effect — '" That it has been proved that the company cannot, by reason ol its liabilities, carry on, and that it is advisabl* to wind up same, and that the company b« wound up voluntarily, and that a liquidator b« appointed." At tho meeting held November 21. 1901, after a good deal of argument by the two parties the one wanting the 400 debentures to be issued and tho other a reconstruction, it -was carried that the debentures be issued, and nearly all of the debentures were taken up before tho

meeting terminated. I may state that I took up ray share of debentures, still having good faith in the dredge, which belonged to a company of 11,000 shares at £1 each, and which had only worked about three months and by no means disgraced herself m that time. Shareholders who attjndcd that meeting will bear me out m saying that Messrs Sicvwright Bros, deservs great praise foT the determined stand they made against reconstruction, urgmg that it was not fair to the original shareholders.

After it had been decided to issue the debentures, the chairman director (Mr James) told the meeting that he favoured a reconstruction. He a'so told the meeting that the debenture money would pay off the debts and leave about £400. The dredge would be laid: up during the winter months, and it would cost about £3 a week during this idle time. The dredge remained idle for nbout six months, commencing work about the second week in May; that time at £3 per week would mean) a coat of £72. Time, when the dredge started work there must have been £328 in hand; yet after the dredge hnd worked a little over two weeks I was surprised to receive a notice to the effect that a meeting would be held onJune 30 to consider and, if thought fit, pass an extraordinary resolution to tho effect " that it hus been proved that the company cannot, by reason of its liabilities, carry on, and that it is a-dvisable to wind up same, and that tho company be wound up voluntarily, and that a liquidator be appointed." To say that I waa surprised on receiving this notice is putting it very mildly. Only fancy, working two whole weeks, and then advise liquidation ; no money owing outside the company, and the debentures being held by the shareholders, and none .of them pressing their claims. The meeting was held, the directors carried their wishes- -liquidation, reconstruction, — aud if I, who had nearly £100 in the old company, wished to be a shareholder in the new company I could apply for a certain number of shares, paying 103 a share down when I applied and 103 a share down when the directors kindly allowed mo the shares. Though my faith in the dredge was still as good as ever, my pockets were almost empty ; my head contained more knowledge of the peculiar ways of directors than when I placed my bard-earnecl cash in dredging shares. I believa the dredge was sold privately for a little over £2000; 3500 shares wero sold for £1 each, and 3500 shares were given away, and the new company was started, and at the end of the second week I received a notice — of liquidation, did you say? Oh, r.o 1 The dredge had started at the bottom of the claim, and the first week obtained 1470z ; second week, bo far, 117oz. Marvellous, is ifc not? I sny that I believe the old dredge was told for so-and-so, a 9 the otilv information I can receive is from the man in, tho street, for, as soon as I wes unable to forward another £1 for every share that I had already paid £1 for, I ceased to hold any intertst in the old company or the new company, and I could go to the devil for all the directors cared; and to think that I bad assisted to vote these gentlemen to that position to guard my interests! If a business man owning £11,000 worth of goods called a meeting of creditors, saying he was "bankrupt, as his debts amounted to £500, the authorities would deem it necessary to place him in a lunatic asylum, deeming hum mad or cunning : yet this is really what took place with tho threctors of the First Chance Dredging Company. In conclusion, I wish to 3tat« that as a shareho'der anil debenture-holder in the old company, I will gladly make one of a number to test ihe legality of* the directors' action in giving uwav tiiat which 1 partly owti. — I am, etc , No. 2 Enterprise Disaitoikted.

TO THE EDITOR

SiR, - I huve rfa<l tlu letters corcernir.g the First Chance Gold Dredging Company, and ai another victim would be glad to subscribe pro rata to bring this matter to a legal issue. Undoubtedly the 3500 paid-up shaics in the new company wei ■> given r.s part consideration foi the dredge and claim, and shareholders are entitled to them in the same ratio as they held shares m the oid company, whether they subsinbcd for contributing shares or not. The directors had no morn right to give my fo 1 . ereign to induce another man to take up

k share than they had to say to an employee of the dredge : "We owe you £50, but unless you- take up 50 contributing shares in the new company you will forfeit your money." Looking at it from another point of view, there was absolutely no need of reconstruction. The directors had announced that the dredge was on good gold before bringing out the scheme for a new company, the last three weeks' returns amply proving their statement. Yet they would not let the dredge touch it until after reconstruction. I hope town shareholder! will convene a meeting at once, and form a. committee to claim cvi irghta.— l am, etc., Chancery.