FREEZING MERGER

Southland Times, Issue 19900, 19 June 1926, Page 12

FREEZING MERGER

VICTORIAN PLAN. LOSSES OF THE COMPANIES. The New Zealand freezing companies are not the only freezing companies that are feeling their financial- weaknesses and are thinking of amalgamations or mergers. In Victoria freezing companies are publicly discussing a similar position. There is a difference in that the Victorian Government seems to be already involved in the financial backing of companies, and has come into the issue directly with a merging scheme. Bendigo advices state that at an extraordinary meeting of shareholders held in that town the Victorian Co-operative Freezing Company, Limited, decided to recommend the directors to enter into negotiations with the other co-operative freezing companies in the State to form a merger, as proposed by the State Ministry. The chairman (Mr J. H. Henderson) said that, as the result of the shipping strike and the consequent disorganisation of transport arrangements, all the freezing companies had suffered seyere losses. At present the company had not enough capital to carry on its business. The merging scheme submitted by the State Ministry was the only satisfactory solution of the position, and it would be of ultimate benefit to the shareholders. The total indebtedness of the company to the State Ministry was about £93,000. The company was £16,000 worse off at present than at the end of the previous trading year. Last season 89,000 lambs had been treated by the company for export. Mr R. J. Eagle, director, said that other companies engaged in the export trade were in a worse position than the Bendigo company. The Ministry had stated that it would not give any further financial assistance under the old conditions. It was imperative, added Mr Eagle, for the company to have a trading capital of £50,000 or more, to carry on successfully. The position had been made acute by the shipping strike, and, owing to the frequency of shipping and other disabilities, it was considered best to amalgamate the co-oper-ative companies. It was proposed that each company should have a representative on the board of control before any dividends were paid by the merger companies. The Ministry would receive repayment of the moneys advanced. The companies concerned in the merger were those at Bendigo, Ballarat, Mutoa, and Donald. It had been decided, provided that the merger was consummated, that Bendigo should receive a third of the profits obtained in trading. Mr W. Dowling said that a large number of shareholders had not observed the spirit of co-operation. Instead of supplying the company with lambs for export, many shareholders had sold their prime exportable lambs in the open market. Prices had been inflated owing to the competition for lambs, and farmers and pastoralists had got the benefit of the competition created by the freezing companies. The chairman said that efforts to raise additional capital had failed, and the directors had reluctantly to abandon the proposal to increase the capital by the issue of cumulative preference shares.