HARBOUR BOARD LOAN

Taranaki Daily News, 23 July 1931, Page 7

HARBOUR BOARD LOAN

RENEWAL AT 6j PER CENT.

DEBENTURES HELD IN BRITAIN.

Special resolutions to renew a loan of £127,000 at 6J per cent, for a period di seven years, were adopted at a meeting of the Auckland Harbour Board on Tuesday afternoon. A criticism of the high rate of interest was made, by Mt. T. Bloodworth, but other speakers pointed oUt that inore expense would be involved by floating a new loan, although a lower rate of interest could be obtained.

Tlie loan is being renewed by the board for the purpose bf repaying the principal of the amount raised under the Auckland Barbour Board Loan and Empowering Act, 1919 (second issue), not provided for by any accumulated sinking fund. For the purpose, one debenture of £127,000 is to be issUed, or debentures of £lOO or multiples of that amount .are to be made available. It was decided, to establish a sinking fund for the redemption of the debentures, at nut less than 3 per cent, a year calculated on the amount issued. “This is a renewal of a loan authorised in 1921 for a period of 10 years at 6J per cent.,” Mr. Bloodworth said. “The same pate of interest is being agreed to in spite of what may happen within the next seven years. The debentures are held by one of the most powerful lending Organisations in Great Britain, and yet we are told that the credit of New Zealand stands high abroad. I consider that this is an evidence of how high it stands.” ■ ■- ■ f Mr. Bloodworth considered the rate, of interest was exorbitant for a redemption loan. Ho failed to see the use of a sinking fund at 3 per cent. Unless it were to redeem the, 16am It appeared to him that the effect of the sinking fund would be to make the burden on the board higher by £Bl5 a year. In his opinion, the board should not agree to the rate of interest without a definite protest. Replying to Mr. Bloodworth, the chairman of the Finance Committee, Mr. J. B. Johnston, pointed out that Mr. Bloodworth had made no suggestions regardlng the loan when he had been invited to do so during a committee discussion. » “The facts must be realised,” said Mr. Johnston. “This money must be paid id London to meet a loan raised 10-years ago. Mr. Bloodworth suggests that mofo strenuous efforts should be made to secure better terms- Apparently,; ha does not know Wlmt efforts were made. The company said, in t effect, that it could not renew the loan at less than 6J per cent. The board’s bankers, under instructions, investigated the London market in an endeavour to secure better terms, and reported that the market was unfavourable. Later, the bankets advised the board that it could not possibly do better than these terms. “It would have been a big order to have raised the £127,000 locally. Even if the money were available here at 5| per cent., the costs of-flotation would have brought about more expense than is entail by the renewal at 6J. It is no new experience for the board to pay 3 per cent, sinking fund.” . Mr Johnston thought. Mr. Bloodworth had been illadvised to attack a private enterprise in public board. The company had a duty to its shareholders and its attitude was perfectly legitimate. Mr. M. H. Wynyard said" it was necessary to understand that the board’s bankers had not said money could not be raised in England at a lower rate. It was the costs of floation which would make the burden heavier than in the case of renewal. The chairman of the board, Mr. G. R. Hutchinson, said the board had authority for the action from the Govern 4 ment, ’ which had recognised that the board could not do better. The position whs that the loan was due next month and the board was finalising arrangements for the repayment of the amount. Circumstances: were expected to be better within the next seVcn years.