LONDON LOAN.

Star (Christchurch), Volume XLIV, Issue 596, 28 October 1932, Page 7

LONDON LOAN.

CITY COUNCIL SEEKS £70,000.

Negotiations Proceeding.

WILL BE USED TO REDEEM DEBENTURES.

Negotiations for raising a loan of £70,000 in London to redeem debentures maturing there on October 31, have been practically concluded by the Christchurch City Council, it was ascertained in the city this morning.:

When v ithe matter was mentioned to the Mayor (Mr D. G. Sullivan, M.P.), who arrived from Wellington to-day, he stated that it was quite correct that the council had entered into negotiations for raising the money in London, and the latest advice he had received was to the effect that the issue bad been practically completed, and the loan would be obtained at a satisfactory rate of interest, which would result in a saving to the ratepayers. The money is required to redeem three waterworks loans which were raised in London in 1907 at 4 i per cent interest, and for which sinking funds of 1 per cent only were provided. The total amount of the three loans is £114,900, of which £86,700 was raised in London. The sinking funds amount to only about £44,000, leaving a balance of approximately £70,000 to be raised by means of a redemption loan. Saving in Exchange.

With the object of saving exchange, the council decided to use the sinking funds to pay off the portions of the loan held in New Zealand, and use the balance towards the redemption of debentures in London. This left approximately £70,000 which the council has arranged to be redeemed by means of a fresh loan raised in London. If the council borrowed this money in New Zealand and transferred it to London it would have to pay about £7OOO in exchange, but this money is being saved as a result of tha new loan raised in London. The rate of interest at which the loan has been issued has not been revealed, but it is stated to be extremely favourable.

The Mayor said that the negotiations for the loan had been conducted by Councillor J. M’Combs, M.P. (chairman of the Finance Committee) in conjunction with himself while they were in. Wellington. The loans manuring were the Central Waterworks Loan of £66,400, of which £40.700 was held in London, the Linwood Waterworks Loan of £19,200 (£IB.OOO in London), and the St Albans Waterworks Loan of £29,300 (£28.000 in London). The whole of the liability of the council in New Zealand and a portion of the London liability had been met out of the sinking funds, and the only money being raised in London was the balance required there.