THE NEW ZEALAND LOAN AND MERCANTILE COMPANY.

Wanganui Chronicle, Volume XXXVIII, Issue 11951, 29 March 1894, Page 2

THE NEW ZEALAND LOAN AND MERCANTILE COMPANY.

(Otaoo Times Special Correspondent.) London, February 9. Happily common sense prevailed, in tho 1 end, at the meeting of New Zealand Loan and Mercantile debenture-holders on Friday last. Tho result you, of course, learned by cable. The holders of stock not secured under tho conversion scheme of 1892 definitely decided not to opposo the scheme ot ' reconstruction recommended ,by the committee of creditors, and declared their con« fidence in that committee. This removes the chief obstacle to the acceptance of tho long-talked of scheme, and will, it is to be hoped, materially facilitate tho rehabilitation of the company. Colonel Cooper Gleadow, who, as the specially appointed representative of tho various classes of debenture-holders not covered by the conversion deed— viz., tho holders of terminable debentures, perpetual debentures, and debenture stock of 1888— convened the meeting and presided, pointed out to those present that they were a distinct class of creditors, and in his opinion a specially injured class of creditors, and contended that they should have been separately called together by tho official receiver to consider tho proposed Bcheme of reconstruction, which scheme he regarded entirely unacceptable, although it was recom. mended by the oreditors' committee. Mr W. Graham, solioitor, urged that tho whole circumstances of the issue of tho Schroeder stock in 1892 were such as to call for thorough investigation. He soid he had laid a case before Sir Richard Webster, Q.C., and had had a consultation with him when he (Sir Richard) took a strong view of the manner in which the dcbenturo-holders had been treated. He expected to recoivo Sir R, Webstor's opinion on tho whole case on Monday. Ho put it to those present whether they would not prefer liquidation to the shady reconstruction offered— a suggestion which was received with warm applause. Colonel Gleadow then moved the following resolution :— " That this meeting being dissatisfied with tho provisions contained in the reconstruction scheme, so far as the interests of holders of terminable and porpetual debentures and debenture stock of 1888 are concerned, resolves that a committee of five be appointed to take suoh steps as they deem fit to secure better terms for the holders of terminable and perpetual debentures and debenture stock of 1888." . . During the discussion which followed, a letter was read from Sir James Fergusson, who, writing as a debenture holder, deprecated opposition to the sohemo of reconstruction, and pointed out that if litigation were to ensue there would be no hope of preserving the largo business still belonging to the company. Mr Banbury, M.P., held that there was no doubt at all as to the Schroeder stock ranking before tho other debentures in priority of view. He thought the Sohroeder mortgage was unassailable, and had no hope of their being able to upset it. But what he did think, also, was that those present had i a very strong olaim and case against tho* l1 '! directors for obtaining the debenture money by misrepresentation. This remark also was loudly cheered. And so the talk, went on. One speaker said that when he was in Australia, about 10 years previously, the company^was doing " the worst kind of pawnshop business ot any company in the Australasian colonies." Many other observations of a highly uncomplimentary nature were indulged in with reference to the conduct and the management of the company. . Steam having thus been safely blown off, that solid sense of the Anglo-Saxon began to re-assert itself. The Chairman of the Creditors' Committee (Mr Vesey Holt) pointed out that if they allowed- themselves to bo persuaded to go into litigation it simply meant liquidation, and even if they did gain a victory over the Schroeder trustees—a most unlikely contingency— they would most probably have nothing to show for it, while the present soheme of reconstruction did seem to offer a prospect of something tangible. The receiver (Mr A*. Young) declared emphatically that in his opinion it would mean utter ruin if tho oppositionists to the soheme were successful. By this tune the majority of those present had begun to realise the unwisdom of performing that suicidal operation vulgarly known as " biting off one's nose to spite one's face," and after a good deal of do* bate, in which the-opinion was freely ex* pressed that even half ' a loaf might bo better than no bread at all, Colonel Greadow stated, amidst cheers, that after the expression of opinion that had taken place he thought it better to withdraw the resolution he had proposed. This was agreed to, and j then a vote of confidence in the Creditors' Committee was carried with only one dis» senting voice. This may he regarded as • practically meaning the acceptance of the reconstruction scheme by those from whom opposition was chiefly feared. I may point out that the real danger consisted in the temptation which existed for the "old debenture"holders to hold out in the hope of obtaining better terms. They could not defeat tho Schroeder mortgage deed— it may as well be clearly understood that there wasj no chance whatever of that, for some of the ablest counsel in England had independently pronounced that mortgage deed impregnable,—but they might have hoped, under the advice of lawyers with an eye to "pickings," that by carrying on protracted and harassing litigation they would compel tho new debenture-holders to come to terms, It is most improbable that such would have been the result, because the SchrocdejT debenture-holders were too strong to bo easily frightened, and knew tbat the heavy expenses of such an attempt must come in the end, out of the pockets of the other side. Still, it is just as well that the attempt has not been made, iind it may now bo hoped that the reconstruction will proceed. Tho Standard has something to say, in its usual pleasant way, about the result. It puts the case thus : " The holders of New Zealand Loan and Mercantile Agency terminable debentures »nd 1888 dobenturo stack have decided not to fight tho scheme of reconstruction. They were told they would wreck tho company, and probably would get nothing if they did. We do not see much probability of their getting much in any case, but they cannot be blamed for refusing to go to great trouble and exponso merely to vindicate a principle." ' This I regard as very encouraging, because it is quite certain that the Standard's City editor would not have ceased to urge opposition so long as there remained the faintest chance of his counsel being accepted. His abandonment of the case may, I hope, be taken as an indication that even the single dissentient at last Friday's' meeting does not intend to proceed to extremities. The debenture-holders do appear at last to have really grasped the fact that, oven admitting that there was misrepresentation, or other unfairness, in the past action of the directors towards them, all was done and could not be undone, and that no possible good result could accrue from destroying a valuablo property and business merely in a vain attempt to gratify personal resentment, however well-founded this might be. There is littlo doubt that the shareholders will gladly accept an arrangement whioh lets them off with i';j 10s instead of £22 10s in calls and still gives them a chance of seeing some of thoir original capital back again ' instead of all being tiually and hopelessly lost. So I am sanguiuo now that tho reconstruction will be an accomplished fact.