SLUMPED GAS SHARES.

Stratford Evening Post, Volume XXXIV, Issue 12, 6 September 1912, Page 2

SLUMPED GAS SHARES.

THE NEW SOUTH WALES BILL

The New South Wales Labour Government's Gas Companies Bill, the publication of Die of which was followed by a fall of some pounds in the value of the shares, of the Australian Gaslight Company (Sydney), figures largely in the newspapers to hand by mail. Summarising tho Bill (some particulars of which have been already published), the Daily Telegraph says it applies to three companies, the Australian Gas, North Shore Gas, and Newcastle Gas. If one of those companies has been paying 15 per cent for three years before the Act becomes operative, tho dividend which it maypay for the first year thereafter shall be 7 per cent, and for the next two years 5) per cent. After that the dividend may not exceed 4 per cent. A schedule to the Bill fixes the standard price which may be charged for gas as 3s 9d per 1000 cubic feet in the cases of the Australian Gaslight and North Shore Gas Companies, and 3s 7Jd in the case of the Newcastle Gas Company, those being the present rates. If the price of gas is reduced below the standard, the company may proportionately increase the dividend rate. Thus, if the Australian or North Shore Company brings down the price of gas to 3s Bd, it may increase its dividend rate above the standard by one-quarter per cent, and so on proportionately. The Australian Gaslight Company has paid 15 per cent for a great number of years on tho issued stock. A correspondent writes to the Daily Telegraph : “The proposal is to forcibly reduce the dividend payable to 4 per cent, lot it be carefully noted, on the issued stock, not on its present value. In the case of the three companies paying 15 per cent, tho stock is sold in the market at about three times the face value of the shares, yielding on an average 5 per cent on the capital invested; and it should be borne in mind that the vast majority of shareholders have invested on that basis. Now it is seriously laid down that the interest derivable should be cut down to 4-15 th —thus, £IOO invested would yield 11 per cent, equal to £1 5s per annum.” The Daily Telegraph comments: “It may be said that by reducing the price of gas the companies may pay higher dividends. But under the proposed sliding scale, the Australian Gaslight Company would have to reduce the price of gas to one penny per 1000 feet to enable it to pay its time-honour-ed dividend, and that has only to be stated to show its utter impossibility.” In its finance column the same j paper observes that the sliding scale I “is in the English Acts, and is per- | fectly right, provided the standard I price and dividend are right. So, too, are provisions that the new capital shall bo offered by- tenure or auction. The fangs of the measure arc wholly in the standard set up.”