WOOLLEN MILLS

Southland Times, Issue 20536, 12 July 1928, Page 8

WOOLLEN MILLS

THE GORE PROJECT CONFIDENCE OF SHAREHOLDERS LIQUIDATION NOT FAVOURED Confidence in the delayed project of the Southland Woollen Mills, Ltd., to erect and operate mills at Gore was expressed at a meeting of shareholders held in the Gore Town Hall last evening. The meeting had been convened by Messrs D. S. Mackenzie and T. J. Quin as a result of the circularizing of shareholders by three Dunedin holders of shares urging that the company should go into voluntary liquidation. Mr Mackenzie presided oyer an attendance of about 80 shareholders. Mr- D. S. Mackenzie explained that the meeting had been called as a result of a circular which had recently been sent out to shareholders and in which it was stated that it was proposed to take the matter into the Supreme Court with a view to forcing the company into liquidation. He had discussed the circular with Mr Quin, who agreed with him that the wisest course to take would be to call a meeting of shareholders for the purpose of finding out whether they were behind the company or wished it to go into liquidation. With a few others he had put in several days canvassing when Mr Halliday had put forward a resolution to wind up the affairs of the company some 16 months ago. As the shareholders were aware that motion was defeated by practically a two to one majority. Mr Halliday had then stated, knd Mr Ellis had supported him, that they would get behind the concern and push it for all they were worth. He, personally, felt quite certain that neither Mr Halliday nor Mr Ellis were in any way connected with this latest circular. The only one he knew of those who had signed the circular was Mr Andrew Scoullar, and he would say that he had thought that Mr Scoullar was too good a sport to have put his name to such a circular. One thing in the circular to which he would like to draw attention was the statement made in regard to the Kaiapoi woollen mills. This statement merely contained a half-truth which was sometimes worse than a whole lie. The Kaiapoi Company had certainly had a rough spin, but had it not been for its woollen mills it would not have been in existence to-day. The company had sunk an enormous sum of money into the establishment of warehouses and had purchased great quantities of imported stocks. It had gone in extensively for trading, and it was in respect of thjs department that the company had come to grief. In making such a statement as that contained in the circular those responsible should at least have justified it by giving the true history of the case. Another matter to which he wished to refer was the statement in regard to the delay that had occurred in making a start. Had the directors gone ahead from the start he believed that the shareholders would have had something to complain about. The directors could not have done better than they had by holding off. In the meantime they had acquired a great deal of useful information and would start under much more favourable conditions than if they had proceeded at once. All the thanks they had received for safeguarding the interests of the shareholders was a circular such as that which had been issued. It showed a great want of appreciation to the directors for the good work they had already done. He would be very glad to hear the views of any shareholders present as it would give the directors an indication as to how they regarded the proposal. A number of the directors were present and the chairman of the board and the director, Mr F. Wallis, jnr., would probably have something to say in regard to some of the statements contained in the circular. “MANDATE TO GO AHEAD.” Mr Wallis said that there was one thing which the directors wished to make very plain, and that was that .they had been appointed to manage the affairs of the company. He could say that they had done this to the very best of their ability. After Mr Halliday's motion to liquidate the company had been defeated, the directors had regarded it as a mandate for them to go ahead. Although it was known that a certain amount of opposition still existed among a small section of shareholders, the circular had come as a bombshell to the directors who did not think that any definite move would be made to wind the company up. He could assure them that if the bulk of the shareholders did not want the mill, the directors would be quite prepared to fall in with their wishes and would not shed any tears about it. They wished to make sure, however, that the shareholders whom they represented did not make any mistakes, through any misrepresentations. It was very evident from the statements contained in the circular that this opposition had not arisen from any genuine concern in regard to any lack of success of the company’s operations, but was merely a cog in the wheel of the opposition that had been raised all the time. One of the grounds on which it was proposed to appeal to. the court to have the company’s affairs wound up was that it had hung fire for so long. If there had been any mal-administration or if the directors had allowed affairs to drift, there might be some justification for this plea. Such had not been the case, however, and he .did not think that such a reason would be seriously considered by any Judge of the Supreme Court. It had been unfortunate for the company that it had been necessary for it to mark time. When it was first formed everything was at the peak and it would have been madness to proceed at that time. Machinery costs were at their highest, and conditions generally were beginning to get bad. It was certainly not the time to start the company. At the time of the second drive through Gore and district financial conditions were beginning to decline and rumour was rife that there would never be woollen mills in Gore. The promoters of the company were not responsible for fixing the capital at £200,000, that was the broker’s concern. Had this full amount been subscribed the mill would not have been any larger than if £lOO,OOO had been subscribed. As a matter of fact, the board considered that the latter sum would be ample in the first instance. The Bruce mill had been started on a capital of £30,000 and all the big companies of the present day had commenced operations on small capital. AFFAIRS OF OTHER COMPANIES. The statement that although a determined effort had been made through Gore and district only 2,000 shares had been cold was not as derogatory as it might seem and the board of directors considered that this number of sales was reasonable considering the financial conditions at the time of the drive and the fact that approximately £28,000 had already been subscribed. At the same time the speaker felt that there were some people in Gore and district who could reasonably afford to take up shares in the company but who had not yet subscribed. He thought this was a poor policy and people who could should take up shares. The promoters had been up against opposition all the time. Mr Wallis referred to the statement in the circular quoting the failures of the Bruce, Kaiapoi and Wanganui mills and suggesting that the position of the Gore mills if established would be likewise. He said that the reason for the failure of the first two was due to the concerns becoming speculative on attaining large'profits. The Wanganui mills had been erected and put into operation at the peak time and there had been several changes in the management. Prices had commenced to fall almost immediately after the mills had commenced and naturally difficulties had been experienced. In the case of the Gore company, the board had waited for prices to readjust themselves. Machinery costs alone had fallen

to such an extent during recent years that for the Gore mills machinery would cost £B,OOO less now than a few years ago. •It was for the shareholders to decide whether the mills should be brought into operation. If they djd not wish to go on with the pro ject they had the matter in their own hands. The directors had put a tremendous amount of work into the business and had gathered a great deal of information and their considered opinion was that if the board had the reasonable luck to pick a good manager the business had “as good a show of success as any other business in Gore:” It was not promised that the mills would return a large dividend but there was a reasonable possibility of success. In regard to Mr Quin’s suggestion that the shareholders should be taken more into the confidence of the directors, Mr Wallis said that progress reports could have been Issued, but the only useful information they could have contained would have been that the whole field of inquiry was being carefully prospected. A tremendous amount of advice had been received from experts connected with the textile industry and all information had been checked up. Referring to the various stages of the woollen industry, the speaker stated that it was desirable that the bread and butter line of the industry should not be tackled. The people possessed all the information necessary to start a mill of their own and with a certain amount of luck which was always required in the establishment of any business, the woollen mills would be a good investment for their money. In his opinion nothing in the circular carried any’ weight although one thing was against them in that it was easier to stop a thing than to ctart it. Still one thing which was, certain was that, whatever dividends might accrue, there was no doubt about Gore’s chare. The establishment of the industry meant a wonderful boost for Gore.— (Applause). All property owners in Gore should support the scheme provided, of course, they had faith in the promoters. If they had none, they should kick them out. A voice: We have a lot of confidence in them. At the conclusion of his address Mr Wallis was greeted with applause. OPPOSITION FROM SPECULATORS. Mr A. S. Fleming, one of the directors of the company, stated that Mr Wallis had traversed the situation very carefully. The people of Gore had considered the project for the past four years, and he noted that there was little opposition in that locality. A voice: We might have some. W'e have hopes. Continuing, Mr Fleming said that the opposition which kept cropping up was from disappointed investors' in ventures such as the Kawarau Gold Mine. (Laughter). These people were just mere speculators. The prospects of the woollen industry to-day were infinitely much better than they were when the plan was mooted four years ago. The country had gone through two difficult periods, the slump after the war and the depression following on the slight wave of prosperity which ensued. If the people of Gore were to progress in the development of secondary industries, they must possess optimism and courage. Speaking on behalf of the directors, he felt sure that the project could be carried to a successful issue. By first creeping and then running they could go ahead with the mills. By starting quietly they could build up a spirit of goodwill for what they could produce. Too much notice had been taken of the opposition from outside shareholders; they should ignore those people who went about crying “Stinking fish.” Where would the people of to-day be if the early pioneers had been afraid to venture ? The shareholders were not leaping in the dark as the initial step had already been taken in obtaining the site which was conveniently situated near the railway with a good water supply available. If the war had not intervened they would have had woollen mills years ago. The position of the woollen industry in Australia and New Zealand to-day was as good as that of any other country and it was right and proper that New Zealand should develop the manufacture of its raw material at every point possible. There was always room for an industry to start on up-to-date lines and be thorough in turning out its products. Some shareholders, continued Mr Fleming, were like the ratepayers of Southland who cried out some years ago at the imposition of the Power Board rate and who were now rapidly dwindling away upon realizing the benefits of the scheme. In conclusion, he stated: “We’ll take off our coats and show them how it can be done.” (Applause). Mr J. Usher said that while he did not agree that the company should go into liquidation he thought that the directors should not have allowed shareholders to get into arrears with their payments. When the first balance-sheet had been issued the arrears had been stated as £4,000. This had increased each year, the amount being £7,000, £lO,OOO and last year £13,000. He felt that this showed a weakness which would not be atoned for by suing for the arrears. This would have the effect oi causing the shareholders who were sued to oppose any further development of the scheme. LACK OF APPRECIATION. Mr Wallis said the calls had not been made, for at the time they fell due the general financial position had not been good and as the company proposed to mark time ; and the directors knew they were going to 1 lose some prestige . Mr Usher: You are going to lose more now; you are going to sue for the arrears. Mr Wallis said that the people who were opposed to the mills being brought into operation had adopted an attitude of passive resistance, and although they had been circularized with requests to pay the arrears and given* all the information of the position, they had taken no notice. As a matter of fact the arrears did not now amount to £13,000, but had been reduced on the threat of summons to about £6,000. The chairman said that the failure of some shareholders to meet the calls showed a lack of appreciation for the consideration shown by the directors. Mr A. McGibbon contended that the directors should ignore the circular which had been sent out and take up the attitude that they would proceed with the project in terms of the mandate given by the share holders. Mr Wallis said the directors did not wish to force the scheme on to the shareholders, but wished to advise them strongly that the mills should be brought into opera tion. The chairman said he thought some active steps should be taken in opposition to the serious threats made in the circular. Mr T. J. Quin then moved, that the meeting reaffirm its previously-expressed confidence in the project and its present management, and hope that the mill would soon be an accomplished fact. This was seconded by Mr H. E. Bacon and carried.