WAIPORI DEVELOPMENT

Otago Witness, Issue 3513, 12 July 1921, Page 23

WAIPORI DEVELOPMENT

THE £550,000 LOAN. ISSUE HELD IN ABEYANCE. The following supplementary report, which was prepared on the 6th respecting the proposed loan of £350,0C0 for tile development of Waipori, was considered by the City Council in committee the same evening: “1 he proposal to raise a further loan of £550, CC0 for* extensions of tile Waipori electrical plant has engaged the serious attention of your committee since last meeting. jhe proposal was to go to London for the issue alter having secured a Shale guarantee to the loan in terms of 'The Bocal Bodies Loans Act, 1913.’ “Inquiry poims to the fact that the ioan could probably be raised if issued at 6 per cent, ancl offered at a discount of £4 per cent. Then, in terms of the Loans Act, a Government guaranteed loan would have attached to it a sinking fund sufficient to pay off the whole loan at the date of maturity. I'or a short dated loan, and with interest at the iugh rate ruling at the present, the burden for interest and sinking fund would be" more than the Department could hope to stagger under, while to take a long dated loan at a high interest rate is, in the opinion of your committee, equally open to objection. “In view of this position, tyid in view also of the fact that a substantial portion of the repayment loan to be ntised in March next concerns the Electrical Department, your committee sees no alternative at the present time but to leave the matter of a new loan issue for Waipoii in abeyance. It is certain that the rearrangement of finance arising cut of the repayment loan will of itself impose a very heavy additional yearly charge on the department concerned for interest and sinking fund, and we are firmly of opinion that we should know just what the effect of the forthcoming rearrangements are to bo before embarking on further capital on day at Waipori. It is probable that die delay may seriously inconvenience the users of power from our electrical undertaking, but in all the circumstances that is unavoidable. - ’

Dunn? tlie discission. Cr Taverner (chairman of the Finance Committee) explained that on 11 to terms imposed by the Government. and utilising the Government guarantee. the annual inteiest charge would be a shade tinder 62 per eait., but that tha large provision required as sinking fund precluded the possibility of at present utilising the Government guarantee. To pay oit £350,000 in 10 years would require an annual contribution, inclusive <>* interest, of £52.500: in 20 years, an annual contribution of £31.440. The report was adopted