UNION STEAM SHIP COMPANY

Otago Witness, Issue 3105, 17 September 1913, Page 13

UNION STEAM SHIP COMPANY

VOLUNTARY LIQUIDATION SCHEME

SPEECH BY SIR JAMES MILLS

We have received a copy of the speech made by. Sir Janies Mills at the meetiiig of the members of the Union Steam Ship Company held on the 9th for the purpose of approving of a soneme for the voluntary liquidation and reconstruction of the company, originating in the necessity for increasing the capital of the company and extending its powers, so ae to place it in a position to provide fully for the requirements of its growing business. In' tho course of his remarks. Sir James Mills said;

“ The present company was formed in 1575—38 yoars ago—with a nominal capital of £250,000 in 25,000 shares of £lO each, and of these 11,917 shares were taken up during the first year, representing a paidup capital of £119,170, held by 53 shareholders. The objects for wh’.ch the company was established, as set forth in the Memorandum of Association, were to purchase three small steamers, which were being operated on the coast bv a local proprietary. trading under the name of the Harbour Steam Company, of which I was managing owner, and two new steamers then in course of construction in Great Britain, and generally to carry on the ordinary business of a steamship company. It was with these five steamers, having an aggregate gross tonnage of 2126 tons, that the company commenced in 1875. The company's operations at that time wore very limited. They consisted of a weekly service from Dunedin to Onchunga, via Lyttelton, Wellington, Picton, Nelson, Taranaki, and back, by the ’ two new steamers to which I have referred, while the smaller vessels ran short coastal trips between Dunedin and Lyttelton, via intermediate ports, with occasional trips to the West Coast of tho Middle Island. With the growth of population and trade in the colony, however, the business of the company progi cosed rapidly. Additional steamers were built -and purchased from time to time, which absorbed the full amount of the original capital, and rendered it necessary for ns to increase it. This was done in, September, 1879 The capital was increased to £500,000, and at tho same time the articles of association were altered to permit of the establishment of a London Board. During the following year our trade expanded rapidly, and we continued to add to our fleet until, in 1891, we found ourselves with 53 steamers of 56,767 tons, including tho fleet of the Tasmanian Steam Navigation Company, just then purchased. The capital of the company was then increased to £1,000.000, and some further alterations wore made in the articles of association to permit of the opening of a branch register at Hobart, and to enlarge our powers in other respects where it appeared to be necessary. Again, in 1897. wc began to feci that our ‘operations were hampered by the. limited powers conferred upon tho company under its original memorandum, and in April of that year we held a general meeting, when a series of resolutions was adopted, greatly extending our powers and ir.ak : ng further alterations in the articles, and in due eourse these were confirmed by the Supremo Court. Since that time no changes have been made in tho constitution of the company, but in 1907 we subdivided our £lO shares into 10 shares of £1 each, and at the same time brought our paid-up capital to £BOO,OOO. The result of the conversion of our shares from £lO each to £1 each was greatly to increase the interest of the public in the company’s operations. At the present moment shares are held in Great Britain and Australasia in nearly equal proportions. while as far as regards members, wo have more shareholders in Australia and New Zealand than in Groat Britain. “This review of the various operations affecting the capital and constitution of tho company brings us up tq the present dav, and to our latest action in connection with capital in tho shape of a recent issue of 200,000 shares which completed our authorised issue, bringing the paid-up capital up to £1,000,000, hold bv no fewer than 2575 shareholders, while the tonnage owned bv the company has increased to 75 steamers of an aggregate tonnage of 232.147 tons, indicating sometnmg like 212,000 horse power. This tonnage includes four steamers engaged in the direct trade with Great Britain, which wo recently acquired, and I should perhaps take this opportunity to refer more particularly to tho acquisition of these vessels. No doubt most of you have road the reports which have appeared from time to time in tho newspapers in connection with this particular development of tho company’s activities It has been stated that the company lias ulterior designs on through

trades via Panama when the canal is opened for traffic, and also that negotiations have been in progress for amalgamation between this company and one or more of the powerful companies in the Old Country. All this public notice is no doubt very flattering to us, but I take this opportunity of saying that there has never been at any time any foundation for such reports. I may say that we had no far-reaching object in view in purchasing those steamers; it was simply that the opportunity was offered us to secure them, and wo availed ourselves of it. It was believed that the steamers would not be unprofitable, while, at the same time, it seemed to bo advisable to obtain in this way an interest —although a modest one—in the oversea trades, in view of the fact that at no distant date some of the lines engaged in these trades may possibly adopt the route via Panama, and so be brought into contact with us through our Pacific services. It will perhaps bo interesting to you to know that, apart from the four steamers referred to, w r e have added to our local fleets during the past two years no fewer than 13 vessels of an aggregate tonnage of 73,780 tons. While saying this, I may add that our wants are not yet by any means supplied, as, apart from any further expansion of trade to be provided for, we shall have to continue building from year to year to replace some of the older ships which are not now wholly suited to modern requirements. “Wo also find ourselves led into the expenditure of capital in other ways in furtherance of our business: I refer to the acquisition of sites and the building of office premises at various important centres of trade. It is essential that wc should occupy suitable sites and premises; and in most "cases, in order .to occupy fittingly the sites acquired, wo have to build premises somewhat bevond our own present requirements. Again, as you know, we have secured a large interest in the Patent Slip Company in Wellington, and have erected somewhat extensive repairing works, and also a largo laundry to overtake our own work. This has involved an expenditure of a considerable amount of capital. We have also considered it desirable to erect an hotel in Suva, now approaching completion, for the purpose of encouraging tourists from New Zealand and Australia to visit Fiji as a winter resort. These instances will show you the demands made upon us, and, no doubt, from time to time we shall be called upon to make investments in other ways, in order to bring “grist to the mill” supplementary to our shipping business, “ I think shareholders will recognise that the sketch I have given of the company’s operations, and of the demands we have to meet from time to time, will be looked upon ns good and sufficient reasons for our asking for a further increase of capital, and more ample powers than we posses under our present memorandum and articles of association. When contemplating these requests, we thought it well to make proposals at the same time with regard to certain accumulated funds of the company, considering the time had arrived when thg shareholders might reasonably expect to derive a direct benefit from these. During the years that have gone by the growth of our insurance fund has been very gratifying. Each year it has been credited with the full amount of premiums which would have been paid away had our vessels been insured in the usual wav; and at the same time the charges against the fund have been very light. In our last balance sheet it stood at about £530,000, since then it has increased to something like £560,000. Then are also other reserves at our disposal, in Addition to which there is a margin to come and go upon in the value at which our fleet stands in our books, as during years when trade has been fairly good, we were able to write down our ships somewhat liberally. As a matter of fact these reserves have already boon utilised as capital, having been absorbed in the business and employed for the payment of ships. We, therefore, now propose that these reserves, to the extent of £1,000,000, shall be transferred to capital and dealt with in the shape of an issue to shareholders, by the way of bonus, of preference shared for that amount, carrying a fixed cumulative preferential dividend of sji per cent, per annum. This course lias commended itself for several reasons. The dividend on these bonus shares will be lees of a burden upon the xirofits than would be the dividend on a similar amount of ordinary shares. Again, preference shares carrying a regular fixed dividend will be attractive to a class of investors who do not care to take the risk of ordinary shares, with the possibility of a fluctuating dividend. The increase of capital will, of course, result in a lower rate of dividend on the ordinary shares, but tho combined dividends on ordinary and Iwiius preference shares should certainly not bo less than tho customary dividend hitherto paid. I feel sure that these proposals will commend themselves to shareholders.

“ W r o propose, therefore, that the capital of the new company- shall be £5.000,000, consisting of 3,000,000 shares of £1 each. Of those throe millions two arc required to pay for the property taken over from the present company, one million being represented by ordinary shares, and one million by preference shares, authority to issue which we are now seeking. It is not proposed to issue the third million im mediately, but to do so from time to time, ns may be required. The best method of effecting the changes proposed, h as been the subject of a good deal of consideration by the board. Acting upon counsel's advice, they were satisfied that the alterations could be carried out most readily and most expeditiously by a voluntary liquidation of the company, and its re-con-struction on a fresh basis. This is the usual practice now adopted where a company desires to raise additional capital with a view to widening its sphere of operations, and also to extend its powers under its memorandum and articles of association. You will understand that this operation is almost entirely a matter of bookkeeping, and does not affect the business of the company in any way. The new company will bear the same name as the present, and will simply ‘ step into its shoes,’ and carry on its business without interruption. ” In acknowledgment of a vote of thanks to the directors and staff for their success fill management of the company’s business, Sir James Mills said that by passing the resolutions they had closed, so to speak, the record of the original Union Steam Ship Company of Now Zealand. It marked an epoch in the history of the company, and as that was probably the last opportunity ho might have of addressing such a gathering of the shareholders of the old company, he would perhaps bo allowed to indulge in a few recollections of the original per-

sonnel of the company and of tho events in its history. Very little short of two-score years—nearly a lifetime—had elapsed since tho business of the company was started, and he found himself now the only member left of tho original board who was still in harness. It seems but yesterday since he sat in the office of the company in Crawford street, then on the water front, and watched through the windows the loading and discharging of the pioneer steamers — the Maori, of 174 tons gross register, and the Beautiful Star, of 176 tons. At that time who could nave foreseen that tho company would grow to its present size, and that it would ever own such a splendid ship as the latest addition to the fleet —tho Niagara, a steamer of 13,500 tons and 14,500 horse-power? Sir James then went on to describe the changes that had taken place In the propelling power since the formation of the company. He was happily reminiscent of the personnel of the original board, recalling the names of Sir George M‘Loan, Messrs Mac Neil, Tewsley, Cargill, and J. R. Jones. He mentioned also others of more recent date who had done good work on the board and as employees of the company. In speaking of the trade qf the company, ho said that whereas the earliest trades were confined to the const of Now Zealand, the fleet of 75 ships was employed far and wide. To give some idea of their distribution and of tho traded in which they wore employed, he might say that in their coastal and intercolonial running they had over 40 ships running. In tho trade between Tasmania and the mainland of Australia they had some 11 ships engaged. In the Pacific services, which included the Vancouver mail service, tho San Francisco mail service, and tho various island services, there were 11 ships employed. In tho overseas trade—Calcutta, Great Britain, etc. —they had six ships employed. On their voyages these steamers covered no less than 3,000,000 miles during tho year, and in doing so consumed very close on 600,000 t .ns of ooal. During the past year they handled no lees than 2.800.000 tons of cargo and coal, while the passenger steamers carried something like 250.000 passengers. Tho number of the employees afloat was no fewer than 4500. This was a record which they must look upon with some gratification. The company had had its dark days—periods of dull trade and keen competition,—and very possibly it would have similar periods of anxiety during the course of its career; but for all that they might look confidently for a steady development, as without doubt there was a great future before these southern dominions.' The company, in conjunction with tho sister companies on the other side, must put forth its best efforts to assist in the development of the trade and commerce of our southern dominions. The future of the company, however, was in the hands of the younger men, and he was sure they would appreciate the policy of the directors, when filling appointments on the board, of selecting men of experience in the prime of life, a policy which they also followed when selecting men for tho more responsible posts in the management. In this way they ensured the vigorous conduct of the company’s business in the future.