WAIHI POWER

Southland Times, Issue 25305, 7 June 1935, Page 7

WAIHI POWER

SALE OF PLANT PAYMENT OF PURCHASE MONEY " LONDON OR NEW ZEALAND (Per United Press Association.) Wellington, June 6. The Hon. A. Hamilton, ActingMinister of Finance, when approached in regard to the Waihi Gold Mining Company’s reply to his recent statement relating to the payment of purchase money for the Horahoia hydroelectric works, stated that he was unable to agree with the position as stated by the < company’s local director and attorney. In a brief resume of the negotiations, Mr Hamilton mentioned that the then local director of the company personally approached the Government in June, 1931, with a view to considering any suggestions concerning payment or other mutually advantageous arrangement. As a result of the discussions and having regard to the question as to the place of payment, held by the Government to be New Zealand whereas the company sought payment in London, a mutual arrangement was tentatively agreed to whereby the existing agreement would be extended for a period of three years. Confirmation of the verbal agreement arrived at was received from the company’s local director on October 29, 1931. An extension for three years with a modification of the agreement relating to the supply of electric energy and a reduction of the term of notice should the'company desire variation of the supply of electric energy, was the basis of a mutually advantageous arrangement. In August, 1931, the company was formally advised that failing an extension of the agreement on this basis, the Government would arrange to pay in New Zealand on the due date.

Various points cropped up in regard to the then proposed extension and it would appear, said the Minister, that completion of the final arrangement was delayed until ’ the company was fully aware of the effect of the then impending legislation as affecting the interest, rates and taxation, in other words the. company sought a method of settlement most advantageous to the company, having regard to the possibility of establishing its claim for ultimate payment in London which claim was, of course, not admitted at any time by the Government. Even after November 1, 1931, when the purchase money fell due, the company was still somewhat exercised in regard to the terms of extension and in February, 41932, a communication from the local director stated that his London office desired the question of place of the ultimate payment to remain open, with the added remark, “Three years from now the place of payment may be quite unimportant.” A further communication from the local director indicated that the company thought the matter of the ultimate place of payment as being open to doubt. The Minister went on to say that in June, 1932, the company was advised that the Government would accept an arrangement for three years of the extension as agreed upon, such decision having been influenced first, by the fact that the negotiations had been protracted to an unnecessary extent and secondly, on account of the Government’s programme for the financial year being then completed.

In conclusion Mr Hamilton stated that he could not understand the attitude of the company in regard to the 1931 negotiations in that when payment became due on November 1, 1934, the company then sought an extension of the agreement for a further period at a considerably reduced interest rate. This attitude, he suggested, did not fit in with the protestations of the company in regard to earlier negotiations and clearly indicated that the extension arranged in 1931 was at least advantageous, if not profitable to the company.

The Horahora hydro-electric works were purchased from the Waihi company by the Government in 1319. Payment of £212,500 fell due on November 1, 1931, but the due date was postponed for three years tn November 1, 1934. The Government then notified its intention of paying the £212.500 in New Zealand currency, and the Waihi company accepted the payment "as a payment on account and under protest, reserving the company's rights to receive payment in sterling.” The difference lies in the fact that in 1931 New Zealand currency was depreciated by 10 per cent on sterling, while to-day it is depreciated by 25 per cent.