TRADERS’ FINANCE CORPORATION LTD.

Poverty Bay Herald, Volume L, Issue 16496, 31 July 1924, Page 8

TRADERS’ FINANCE CORPORATION LTD.

WILL SHORTLY COMMENCE BUSINESS. ' Considerable' interest lias ibebn aroused in ,tlie commercial world by the flotation of ; tin* Traders.’ Finapjee- Corporation* a limited 1 liability compapy, with a capital (if £300.000, and l intended to supplement the existing- banking facilities. It is n matter of surprise that such an institution has not long previously beyn established. All business men realise that certain'liiiiineial transactions which are not undertaken bv the banks are nevertheless sound operations in every .sense of the term. The Corporation is, however, not intended to compete with the banks, but to collaborate with them. ITS POWERFUL BACKING. If is safe to say that no company hitherto established in New Zealand lias had such a strong and representative group of promoters at its back. Of the Provisional Board of Directors, no fewer than six are managing directors of leading Auckland firms. Perusal of the prospectus now issued to the public shows that in addition to these there are thirty other promoters, who include three wellknown merchants, two retired bank managers, two prominent newspaper proprietors. the editors of two of the most widely-read newspapers in the North Island, andl two of the most experienced insurance managers in the Dominion. Among all these valuable supporters of this "almost national undertaking, there is no single Jperson whose knowledge and ability will not be of the highest value. THE PROOF OF GOOD FAITH. An equally noteworthy feature of the flotation is that no cash is payable io anv promoter or for any item in connection with the promotion, the only recompense to the thirty-seven promoters being the issue to them of 6000 ordinary shares in the Corporation in consideration of the/time, work and expense which have been outlaid in connection with the preliminary stops of the scheme. But the greatest proof of the belief of these expert business men in the future of the Corporation, and l a feature that is almost unique in such cases, is that they have hound themselves to purchase a further SCOO ordinary £1 shares fully paid up for cash, and a still further 25,000 ordinary contributing £1 shares on the same terms as those being offered for public subscription. No stronger evidence could be required to show that this is intended by its founders to become one of Hie soundest financial institutions in New Zealand. THE BENEFITS TO THE TRADER, The primary object of the Corporation is the financing of credit sales. The simplest and most general example of this is the case of hire.-purchase agreements. Nowadays farm 1 ; .’jirtplemeiUs,’ motor-cars, typewriters, cash registers, furniture, pianos, and numerous other chattels are sold under this system, and. the firms which ett’ecU the, sales have, a large proportion of their capital tied up for considerable periods. The intention is that the- (lorporiffibii- should’ purchase such agreements with the endorsement ,of the'vendor. Thus the trader will be able to increase his liquid assets and greatly extend 1 his turnover. The Corporation then becomes the principal in five transaction, and makes all collections which are payable under the agreement. The Corporation will also have a. giltedged security for its advance to the trader, having three separate securities: obligation of the pprelinser; and .(c) its lien over the chattel. No other investment. offers a three-fold security for every advance made. Another very noteworthy example is the case of a trading concern incorporated as a limited company which requires a temporary advance on. the security oi its stock! Tt will he possible for it, to give a. debenture to the Corporation and secure a short-term loan of, say. 25 per cent, of the value of its stock-in-trade. There have not, previously been any By purchasing shares in the Corporation. the trader will assist .in. making those financial arrangements possible, will participate, in the profits, and will ensure preference being given to his application for accommodation. 1 THE BENEFIT TO THE INDIVIDUAL. The operations, of,’the Corporation will be of great advantage to the private buyer, as he will be able to purchase out of his income instead of from capital, and writ also be freed! from the necessity which often arises, of realising investments or selling assets, when he wishes to purchase chattels. Under existing circumstances such more or less forced sales frequently involve considerable loss, and opportunities aye missed through insufficient. cash being available. The case for the investor. In this connection investors may be considered in two classes. Firstly, the trader himself, who will, by acquiring an interest in the Corporation, assist in giving it the status of a co-operative trade bank. Secondly, the private investor, to whom the preference shares carrying a cumulative preferential dividend of 7 per cent, offer a very attractive opportunity. But the most remarkable features of the investment offered are the absence of the speculative element and the cheapness of the’ordinary contributing shares. These are being called to 5s on allotment, and may;possibly be called to 10s within twelve months, but it is unlikely that they will for an indefinite 1 period be called to the full amount of £l. The reason of this, which’ is a feature of all such financial bodies as the Traders’ Finance Corporation, is that it- is far better business and is the usual practice to obtain large sum's of money from the hanks on the security of the uncalled capital, and to invest these resources in the company’s business. PROjFITS. The Provisional Directors have purposely been most conservative in making any estimates of the profits to be .earned by the Corporation, but those who are aware of the dividends declared by the hanks and 1 investment companies, and of the premiums paid for their shares, .will he fully aware of the possibilities; >lt would have been easy to draw highlycolored pictures of a golden future for shareholders, but it is preferred: that the .Corporation should be judged on the merits of the undertaking and of those engaged upon it. FURTHER INFORMATION. Copies of the Prospectus may ho obtaihed from and application for shares made to (lie representative of the organising broker, Cl. Craig, at the Gisborne hole]; to Hie local, agent of the organising broker, E. Plainer Mountfort, Lowe street; or any member of Hie Gisborne Stock Exchange.