PULP AND PAPER MILL

Taranaki Daily News, 11 May 1933, Page 3

PULP AND PAPER MILL

ESTABLISHMENT IN BAY OF PLENTY TIMBERLANDS WOODPULP CO. IMMEDIATE' STEPS CONTEMPLATED Incorporated some eight years ago with an initial capital of £lOO,OOO, this company is pioneering the establishment of the pulp and paper industry in New Zealand. The New Zealand, Australian and near Eastern markets, spending annually millions of pounds in paper and paper products, provide . a ready outlet for the company’s products. In this respect the company should enjoy a monopoly of this market owing to the fact that it commands an adequate supply of exceptionally cheap raw material in the form of pulpwood aiid will have its pulp and paper mills located in New Zealand, whereas its nearest competitor will be some 6000 to 8000 miles away. In 1931 the company sent its New Zealand attorney, Mr. H. •A. Horrocks, its technical director, Professor Corbin, and its engineer, Mr. R. P. Worley, on a special visit to the United States and Canada for the purpose of securing the latest information relative to the production of high-grade papers through the sulphate process—a process peculiarly adapted to the requirements of New Zealand-grown conifers. Particular attention was paid to the more recent developments in the southern parts of the United States where pitch pine and loblolly pine and other resinous species are being utilised for conversion into highgrade quality papers such as bonds, fancy tissues, etc. The company •is not particularly interested in. the production of newsprint. Part of the mission of this executive was to secure the services of a pulp and paper mill engineer to visit New Zealand and make a preliminary report upon the company’s project. Contact was made with Mr. L. A. De Guere, of Wisconsin, one. of the foremost pulp and paper mill engineers in the United States, who visited New Zealand early last year. Mr. De Guere brought with him Mr. P. B. Sadtler, of Philadelphia, a recognised expert on the sulphate process and the bleaching of pulps for the production of white papers. Some weeks were spent by these experts in an exhaustive examination of the timber resources of the Rangitaiki Valley, and a careful appraisement was made of the Australian and New Zealand market. Careful attention was given to the possibility of utilising existing supplies of rimu and tawa, or alternatively thinnings from the State Forests as an interim source of raw material.

In. February of 1932 the company’s bondholders—through their local committees—sent delegates to Rotorua for-the purpose of meeting the directors in conference and reaching agreement upon the company’s plans for the immediate erection of mills. At this conference a special head committee was set up to confer with Mr. De Guere and co-operate with the New . Zealand attorney, Mr. H. A. Horrocks, and the company’s expert advisers in bringing forward a comprehensive scheme for enabling the company to get into production through utilisation of State thinnings or any other immediate source of raw material available.

Since that .date events have moved rapidly.; A special report, embracing the whole of the company’s proposals, was submitted, to the Development of Industries Board. This was followed up with an inspection of the company’s plantatlons and the State Forests by certain members of the board and a recommendation by the board that the Government. should make every effort to come to some arrangement with the company—Howsoever, as a result of the present inability of the State Forest' Department to satisfy the company’s immediate requirements in the way of raw material, negotiations terminated towards the end of last year. Early this year the initial difficulty regarding immediate supplies was successfully overcome through the efforts of the head committee in securing options over the Matahina Forest embracing an area of 16,000 odd acres—which forest is alongside the company’s own block of 21,000 acres : near Te Teko.

30,000-TON PULP AND PAPER MILL. —As immediate supplies are limited, the initial production contemplated is confined to a 30,000-ton mill until the company’s own plantations are ready to pulp. Expenditure on this initial plant will approximate £650,000. RAW MATERIAL. The company is assured of an adequate supply of raw material sufficient to support a production schedule of 150,000 tons of-pulp and paper a year and the general lay-out and design of the plant has made suitable provision for this purpose.-; The company’s main supply . of rawmaterial is located on tire Rangitaiki River and embraces two properties—one of 41,000 odd acres—already planted up—and capable of' yielding on a sustained basis sufficient wood for an annual output. of 100,000 tons—this block is known as the .Pukahunui block. Also a further property of 21,000 acres near Te Teko known as the Matahina block—and capable of yielding,on a sustained output sufficient pulpwood to support an enlargement of the* company’s production up to 150,000 tons. The capital value of the Pukahunui block—in its present stage of pulpwood growth—with 1000 trees to the acre—is’, probably not less than £25 an acre—and as the property is freehold and unencumbered this, property alone affords substantial backing and security for the ' Bond Issue. The Matahina block is now-’being established and 5000 acres are being planted up this winter with some two-year-old trees—so that within a few years a similar value on an acreage basis will accrue to this particular. asset. INTERIM SUPPLIES. As previously mentioned, the Matahina Forest will suffice to enable the company to get into production at an early date, and supplies are sufficient to enable the company to carry on until its own plantations are ready to cut. Certain formalities have Jo be complied with before one or other of the options over this forest can be exercised—such as taking a vote of bondholders, etc., but as all preliminaries in connection therewith have been settled to the satisfaction of the directors , and the bondholders’ head committee and a provisional agreement entered into by them, ratification of this agreement by the bondholders is confidently anticipated, more particularly so as the agreement will enable the company to get into production at an early date. FINANCIAL. The company’s project is being financed by a Bond Issue running into well over £1,000,000, and to-day the amount of bond capital subscribed approximates £900,000, the greater portion of which is held in-New Zealand. The remaining capital is being offered to the public on such attractive terms that subscriptions are quickly absorbing the balance of the ■issue. ■ Out- of the Bond Issue approximately £750,000 in cash is reserved for payment of the mills, so that the company will be enabled to get into production with its mills' and extensive pulpwood reserves free of debt. . BOND CONVERSION. A vote of bondholders is to be taken in July upon both the options and upon

the profit-sharing proposals arising out of- the February conference. The agreement to be ratified provides for the bond issue to be converted into shares—the pooling of all assets as between the company’s shareholders and bondholders, and the appointment of the bondholders’ head committee to the present board of directors. EXECUTIVE. The company ever since its inception has enjoyed a very able Board of Directors, and in addition thereto an extremely efficient executive. has been built up in New Zealand. Establishment operations are under the supervision of Pro-.:, fessor H. H. Corbin, an experienced'and able forester, and recognised as one of the foremost experts on coniferous plantations.' Mr. L. A. De Guere is responsible for the design and general lay-out of the company’s pulp and paper mills —he has been engaged in the designing of pulp and paper mills for the past 37 years—and has been connected with the building, rebuilding and expansion of no fewer than 30 of the 58 mills in the State of Wisconsin, as well as numerous other enterprises in the Eastern States and Canada. ■ Mr. De Guere has associated with him in this New Zealand project Mr. R. B. Worley, of Auckland, a civil engineer cf recognised standing. Provision has been made under the merger scheme for the appointment of the bondholders’ head committee to the board of directors and the probable shifting of the head office of the company to New Zealand prior to the erection of the mills. Meanwhile the company’s main activities are being attended to by its New Zealand attorney, Mr. H. A. Horrocks, in consultation with th® bondholders’ head committee. Mr. T. R. Anderson, chairman of the Stratford County Council, represents Taranaki ou. the head committee.

EMPLOYMENT BENEFITS. OVER £lOOO A WEEK.—Arrangements have been made for Mr. De Guere to return to New Zealand in a few months time and complete his final plans and specifications so 'that tenders can be called for. On the basis that the mills and employees’ cottages take 12 months to erect—employment will be provided for round about 1200 men—and over £200,000 distributed in wages. On the initial production schedule of 30,000 tons Mr. Horrocks states the company will be distributing over £lOOO a week in wages and permanent employment provided in the mill for over 200 people—with corresponding increased employment when the output is increased to 150,000 tons. In this connection Mr. Horrocks states that the pulp and paper mills on the Pacific Coast of U.S.A, increased their output from 553,327 tons in 1925 to 1,150,518 tons in 1930—an increase of approximately 600,000 tons within five years —indicating the remarkable rapidity with which this industry can increase its output.

FOREIGN CREDITS.—As the bulk of the company’s equipment for its mills, will require to be purchased abroad—the' present intention being to purchase English equipment wherever possible—it is not unlikely that the capital represented by the last bond group will be placed on the English market in order to establish English credits and thereby save exchange. Hence, the present bond group is probably the last group of bonds available to the New Zealand public and affords the last opportunity New Zealand investors may have of acquiring stock on easy terms while the mills are being erected.

SPECIAL FEATURE. A unique feature of the bond issue and the merger scheme is the provision whereby on completion of the flotation all bonds will be automatically converted into shares. Bondholders have a direct voice in the control and management of the project. On completion of the flotation application will be made to have the company’s stock listed on the various Stock Exchanges throughout the Dominion. It is estimated the assets in the way of pulpwood reserves and pulp and paper mills will total over £2,000,000, so that the company will enjoy an exceptionally favourable position from a financial viewpoint for entering into the Australasian paper market and financing future extensions to its mills. BROKERS. The bond issue has been handled by Commonwealth Underwriters, Ltd., an Australian and New Zealand brokerage' House, with offices at Sydney and Auckland, and representatives throughout the Commonwealth and the Dominion—also in London.

The Taranaki representatives of the company are Messrs. R. F. Veale, of New Plymouth, and A. W. Paine; of Hawera.*