WOOLLEN HULLS LOSSES'

Taranaki Daily News, 27 December 1929, Page 14

WOOLLEN HULLS LOSSES'

WANGANUI COMPANY. OPTION TO PURCHASE. The directors of the Wanganui Woollen Mills have signed an option giving the holder the right to purchase the mills as a going concern on January 31 next for £55, 000. This information was conveyed to a public meeting of city business men and shareholders, who met at Wanganui on Thursday morning. The identity of the option-holder was not disclosed.

The meeting was convened by Mr. T. Warnock, a local draper, who said his object was to assist in the interests of Wanganui to keep the mills going. He suggested that the resuscitation of the mills should become a responsibility for the public to take up. Mr. E. P. Sealey, manager of the Wanganui branch of the National Bank of New Zealand, detailed tlie action taken by the bank as dictated by the general manager. After the appearance of the balance-sheet of the company, ■ as at June 30, 1928, the bank was dissatisfied with the position, which showed accumulated losses totalling approximately £40,000. MORE. CAPITAL NEEDED.

It was decided then to write of! those losses and make - allowances for machinery which had been purchased, and was unsuitable for .requirements, and to write the capital down by half. To keep its finger on the pulse of operations the bank asked for regular statements from the mills showing the position from month to month.

After the appearance of the balancesheet as at June 30, 1929, which revealed a working loss of £9822, the bank notified the directors that they would have to submit fresh proposals for a further guarantee of fresh capital to cover the bank’s position. At that time Messrs. Macky, Logan, and Caldwell, of Auckland, had made some proposal about taking the mills over. The bank asked for a guarantee and was prepared to carry on until it knew what the next balance-sheet would show.

A GUARANTOR WITHDRAWS. . Judging by the fortnightly statements which had been submitted since June 30 last, Mr. Sealey said he believed the millwas holding its own. The position had been further complicated, however, through one of the guarantors withdrawing his guarantee. The communication he had from his general manager was to the effect that the bank was prepared to free the mill buildings, plant and land from the debenture. conditional on £25,000 being raised to reduce the overdraft. To cover the balance of the overdraft it would require a joint and several to be taken on the liquid assets, such as yarns and so forth, for £20,000. The margin of all assets over the bank overdraft amounted -to £80,489.

“As far as the directors are concerned there is no doubt that they require more capital, said Mr. Robert Lilburn, chairman of directors. “Whatever is done will have .to be done quickly if we are to carry on. We have been presented with the position by the bank. Unless we can get more capital we will have to elose.

“We have either to give effect, to the resolution passed authorising us to • sell the undertaking, or provide capital to satisfy the National Bank of New Zealand. We have explored fresh avenues from which capital might be provided, but have not been successful.. Unless, we can proide what is wanted the bank will insist on us signing an option. We know this option is a very bad bargain for the shareholders, but we have no alternative. Whatever we do must be done immediately. , We require a £lO,009 guarantee for the bank to carry on until the end of February.”

After further discussion the directors withdrew to discuss a phase of the problem that had not been made public,..and later they met a committee -appointed by the meeting. Upon resuming., it-was reported that the committee was satisfied that they was nothing to.-do but sign the option, which was to be taken up by the end of January.

Wanganui Woollen Mills, Ltd.,, was formed after the war with .an authorised capital, of £200,000 in fl shares. At June 30, 1928, £184,252 had . been issued, paid, up to £178,064. Im September, 1928, a resolution was passed by the shareholders to reduce the authorised capital from £200,000 to £lOO,OOO by reducing the . shares from £1 to 10s, and to write down theissued capital- of £184,252 to £92,126. This made the paid-up capital £85,939,. • there -being £6178 calls unpaid. This resolution was confirmed by order of- the Supreme Court in March last. - , . ■