RENEWAL LOAN

Timaru Herald, Volume CXXXVII, Issue 19604, 26 September 1933, Page 6

RENEWAL LOAN

COUNCIL’S ACTION INSURANCE COMPANY’S OFFER The position in regard to the Borough Consolidated Renewal Loan of £45,500 was discussed at a meeting of the Timaru Borough Council last night. In a statement at the commencement of the meeting, the Mayor (Mr T. W. Satterthwaite) said that the loan had been subscribed to the extent of £26,150, leaving £19,350 unsubscribed. He indicated that at a later stage he proposed to bring forward proposals for the renewal of the remainder. When the Finance Committee’s report came forward, the Mayor said that as the loan was falling due, and it had been decided to renew, holders had been notified and asked if they wished to continue. At the last meeting of the Finance Committee, the amount unsubscribed was £20,150, and the town clerk had then forwarded a circular to the various insurance companies which were considered likely to take up a large parcel. In reply to the Mayor, the town clerk (Mr E. A. Killick) said that he had had replies from most of the insurance companies, none of whom desired to take up any of the loan. Offer From State Office. The Mayor said that the local manager of the State Fire Insurance Office had waited on him, and had said that he had had a letter from the head office asking him to investigate to see if it was possible, in the event of the State Fire Office taking up the loan, if they could secure the Council’s insurances. Nothing could be done on those lines until they had information from the State Office in Wellington. Subsequently the general-manager had come to Timaru. chiefly for the reason of getting the standing of the borough. The general-manager could do nothing until he returned to Wellington, and on Saturday a telegram had come from Wellington indicating that the State Fire Office was prepared to take up £20,000 of the loan on certain terms. That day a letter had been received from the general-manager of the State Fire Insurance Office stating that at a general meeting of the Board, it was decided to offer the Council a loan of £20,000 for 15 years at 4 per cent, with a sinking fund of 3 per cent, or alternatively the same amount at 4 per cent on a 20 year repayment table which would entirely extinguish the loan within that period. The offer was made conditionally on the Council placing its insurance with the State Office during the term of the loan. The Mayor went on to say that on top of this, that afternoon a letter had come from the Timaru manager of the South British Insurance Co. applying for £20,000 of the Borough Consolidated Renewal Loan, on condition that the Council’s insurance was placed with the company, during the period of the loan. The Mayor said the South British Office had been circularised, along with the others, and they had had an opportunity of taking up the loan. Why they had changed their minds he did not know. Councillor G. Benstead: They must have got the wind up about the insurance. The Mayor said that the loan expired on Friday, and they had £19,350 still to be taken up. They might be able to sell the lot in a week, or they might not. A week ago they had an offer from Dunedin to take it up at one per cent brokerage, which would have cost the Council £2OO. He thought it would be good business to accept one of the offers. Early Action Needed. Councillor F. C. Vinnell said that it appeared to him that they would have to take action and take action quickly. If one of the proposals was to be supported, then he had no hesitation in selecting the State Office. It might seem a wrong thing to tie up their insurances, but if they did so. they would be giving them to an office which would give the Council as good terms as any other office. Councillor W. G. Tweedy said that as he understood the position, the Council’s insurances were effected with the South British Office, which distributed them with the other offices, and he took it that that arrangement had been satisfactory to the Council and to the companies concerned. He was opposed to the principle of any monopoly of the Council’s business. He did not think it would be a wise move for the Council to tie up its business, and he was not prepared to support any resolution that the insurance be given to one company. Points to be Considered. Councillor P. B. Foote said that he did not propose to vote in the matter because he was interested in insurance, and preferred not to be involved. There were two things which needed to be guarded against. One was that if they tied themselves to one company for 15 years, they should make sure that the Council received the lowest rates. As both offers stood, it would be dangerous to accept them without some such provision. Then again, in the next 15 years, the Council might want to carry out its own insurance. There was also a further point, and that was whether the Council should tie future Councils for 15 years. The Mayor moved and Councillor Mathers seconded: “That this Council accepts the offer of the State Fire Insurance to take up the remainder of the renewal loan, approximately £19,350 and agrees to the conditions set forth in their letter regarding insurances.” The motion was carried. Councillor Tweedy dissenting. Councillor Benstead then moved and Councillor Hall seconded: “That in reference to the renewal loan and the acceptance of the offer of the State Fire Office, conditional on insurance being given them, the whole matter of the terms of the agreement relating to insurance rates be referred to the Mayor and Councillors Mathers and Foote, with power to act.” This motion also was carried. Councillor Tweedy dissenting.