POWER BOARD LOANS.

Putaruru Press, Volume XI, Issue 268, 7 September 1933, Page 1

POWER BOARD LOANS.

BURDEN OF INTEREST. Efforts to Secure Reduction. Realising that 6 per cent, is too high a rate of interest to pay on its £350,000 loan raised in London in 1921, the Thames Valley Power Board has been endeavouring for some time to secure a reduction in the interest charges, if possible by means of a conversion to a lower rate of interest. This matter was considered at length at Tuesday’s meeting of the board. Extracts from the manager’s report are as follows: Southland Board’s Request. “ Members will have noticed from press reports that members of the Southland Power Board waited upon the Hon. J. G. Coates, Minister of Finance, with regard to that board’s decision te pay British bondholders’ interest in New Zealand currency. The members of that board considered that as £750,000 bears 6 per cent, interest the board has a strong claim for consideration by its creditors. The Government, while adhering to its attitude that payments should be made in sterling and not in New Zealand currency, appears to have agreed to make certain representations by cable on behalf of the Southland Power Board, through the High ’Commissioner.

“ The Thames Valley Board’s position is very similar to that of the Southland Board, in effect, that we have the right to redeem in 1936, but unless the exchange is considerably reduced, or the board met by _'ner means, London would know *eat it would be of no advantage to us to raise a loan in New Zealand and remit the money to England; this naturally would enable London . to stipulate for the retention of a high rate of interest.

'• Previous efforts for an imme- | diate reduction in the interest rate to 4i per cent., at the same time waiving our rights to redeem in 1936, have been of no avail. The reply of our bankers and their brokers in London definitely indicated that the conditions demanded by the bondholders for immediate conversion of their holdings would give the board very little relief in the interest rate of 6 per cent, now being paid. Reply From Mr. Coates. “ When it was noticed that the Government was making representation by cable through the High Commissioner, a telegram was sent to the Minister of Finance by the board’s chairman, as follows:—“ My board is similarly placed and interest is due in London on September 1. I ask you to negotiate also on our behalf for assistance.” “ The reply sent by the Hon. J. G. Coates was as follows: “ I regret I am not at present able to undertake negotiations in London. The Southland Power Board’s loan is in ;different category to loan raised by your board, in that optional place of payment is provided for in securities. Legal opinion as to Southland’s Board’s rights turns upon existence of this optional place of payment, and in absence of any such condition in your board’s securities there can be no question of payment of interest in London other than in sterling. Your board has power to arrange repayment or conversion on or after September 1, 1936, and it is highly desirable in interests of ratepayers that nothing be done now which will prejudice your board’s ability to arrange its finance in 1936. I strongly deprecate any suggestion that prior negotiations for interest reduction be entered into as this must create wrong impression and operate to detriment of the board’s interests. Later remarks are subject to discussion with Prime Minister m the light of his inquiries regarding whole position of overseas debt.”

“ However, the position is that the board has paid its interest for September, 1933, half year in sterling, and at no tirfte since the loan was raised has it considered any other of payment. But if assistance is being given to other boards similarly placed, then this board is

justly entitled to the same consideration.

“ The Financial News, London, in mentioning the coming visit of Mr. J. A. C. Allum, of the Auckland Transport Board, to London, says that it would be advantageous if discussion could be broadened to include other New Zealand bodies and the Government. ‘ The problem is difficult,’ says the paper, ‘ but there is: obviously goodwill on both sides. What is wanted is a provisional agreement to bridge over the period before the promised legislation can be enacted.’ Mr. Forbes’ Return Awaited. “ I have communicated with the Southland Power Board with regard to their method of payment, but as the date for their interest payment does not fall until September 15, they replied that the matter is still in suspense. “ The Prime Minister should return to the Dominion during the month, and if no assistance can be obtained as a result of his investigations, the board might consider making its own arrangements for relief.”