TRUST CONTROL

Taranaki Daily News, 20 November 1934, Page 7

TRUST CONTROL

FRESH SUGGESTIONS RECONSTRUCTION PLANS POWER FOR INVESTORS COMPANIES COMMISSION OBJECTIONS OF COUNSEL By Telegraph—Press Assn.—Copyright. Rec. 8 p.m. Sydney, Nov. 19. Presenting his new scheme for the reconstruction of certain trust companies, Dr. Louat told the Commissioner, Mr. Justice Haise Rogers, when the Companies’ Commission resumed to-day, that it was proposed to eliminate all the smaller companies and re-allocate their assets to the main companies. Certain companies must be retained, said Dr. Louat, and the British National Trust was one of them. It occupied a position of importance in relation to the two main companies, the Southern British National Trust and the Investment Executive Trust. Three courses could be adopted. Firstly, all companies could be wound up. Secondly, debenture capital could be converted into share capital. Thirdly, the methods of control could be changed, and it was the third course that he advocated. If this course were adopted the gross rents of the trust building could be managed by a board of independent directors and they could build it up into a going concern. The trust organisation, Dr. Louat explained, would consist of the Investment Executive Trust, the Southern British National Trust and the British National Trust. It was proposed that the articles of the Investment Executive Trust and the Southern British Trust be altered to provide for boards of seven directors, of whom two would be elected by shareholders and five by debenture-holders. INTERESTS OF SHAREHOLDERS. The inclusion of two shareholders’ directors was entirely calculated to serve the interests of debenture-holders in that it enabled them to retain the assistance of McArthur and Alcorn in a deliberative capacity. He pointed out that the provision for five directors forming a quorum would ensure a majority of de-benture-holders’ directors at all meetings. In regard to the British National Trust it was submitted that, there should be a board of six directors, two of whom would be appointed by the shareholders and two each by the debenture-holders of the Southam British Trust and the Investment Executive Trust. Four directors would constitute a quorum. The last section of the plan was a suggestion that, with a view to strengthening the financial structure, a new mortgage should be raised to replace the existing mortgage on the trust building at a substantially lower rate of interest. The Commissioner remarked that it might be advisable to get what was possible by nursing the assets rather than by running the risk of losing everything. If the debenture-holders approved of the scheme, he could do nothing but recommend it. Perhaps the scheme could be modified a little. “If the scheme is modified Dr. Louat will lose all interest in it,” said Mr. W. Monahan, K.C., who is assisting the commission. “All these moves are being made to cover up your previous findings and to put the matter in a new garb. Personally I do not think there is the slightest hope of the public contributing any further money to these companies.” Mr, Monahan said he had' considered Dr. Louat’s scheme, but it was fundamentally opposed to the views of the Crown. The Crown could not countenance any scheme that did not allow for the restitution of money to the deben-ture-holders, It was a mockery for any scheme to allow McArthur and Alcorn to take out £lOO,OOO and he would not associate himself with any scheme that acquiesced to such a state of affairs. i DEBENTURE-HOLDERS’ SCHEME. Mr. Pitt, K.C., said he represented 326 debenture-holders, whose subscriptions to the companies were nearly £74,000. Mr. Swan, of New Zealand, had handed him a proposal which would be put before the debenture-holders of New Zealand. The scheme was similar to that put forward by Dr. Louat, suggesting control by the debenture-holders, although there were certain differences in detail. He suggested he should be allowed time to confer with Dr. Louat to try to reconcile their differences. The Commissioner said any scheme would have to be feasible, otherwise it would be idle to put it forward. A statement should be prepared showing to the de-benture-holders the financial advantage of any particular scheme. The Commissioner recalled Hewitt, a New Zealand solicitor having some connection with the companies. Asked about the rents from the trust building, Hewitt said they, amounted to about £5OO a month. The building was not fully let as difficulty was being encountered because of the uncertainty regarding the future of the companies. When prospective tenants realised that there was continuity of occupation the remainder of the building would probably soon be let.

The Commissioner said that before the value of £300,000 could be placed on the building the rents would have to aggregate about £16,000. Before adjourning, the Commissioner asked that both Mr. Pitt’s and Dr. Louat’s schemes should be submitted to Mr. Hill, an accountant, for a report to the Commissioner. The Commissioner said he would receive counsel in his chambers if they wished to adopt his suggestion for thrashing the matter out there.

The inquiry was adjourned till Friday.