History of Difficulties

Wanganui Chronicle, Volume LXXXIII, Issue 19504, 4 February 1926, Page 8

History of Difficulties

In seconding the motion Mr C. L. Duigan said that the shares in the New Zealand Ref rigcrating Company would ultimately be distributed according to the terms of the present agreement. Referring to the new share issue, which had been the subject of so much criticism, Air Duigan said that when it was made the company held stocks valued, at the then London parity, at £149,000. From July to November of last year the shipping strikes and labour difficulties bad held up their shipments, some of which had not yet arrived in London. The result was losses amounting to £50,000, and this was owing to the unforeseen slump in the London market. Just prior to the annual meeting on December 16, the bank “stopped” the company’s account, and the directors wore confronted with complete stoppage of the concern’s killing operations. Air Duigan said that the securities held by the Bank of New Zealand, were a first mortgage on the company’s uncalled capital, skippable stocks, and book debts. A first mortgage of £21,900 on the Castlecliff and other property was held by the C. and D. line, and this must be satisfied out of the purchase money. At the annual meeting when the gravity of the position was realised, shareholders were asked to assist, and several gentlemen were tasked to go on a committee to enquire into the position and confer with the Board but many refused, and ultimately Messrs Hope Gibbons, A. G. Bignell, A. Robinson and G. V. Pearce consented to act, and the directors were thankful for their assistance. The result was a proposal to sell the works to the Imlay company. Mr Hope Gibbons had prepared a statement, which had appeared in the papers and which most of them had doubtless road, showing why it was inevitable th’at the works should be sold. Mr Duigan said that day’s meeting was to ratify, or reject, the agreement made with the Refrigerating Company. No confirming meeting would be held, but if the meeting turned the proposal down the position would be very serious. The Marton Meeting The speaker mentioned last Monday's meeting at Marton, where shareholders under the new issue ventilated their grievances. Those grievances were undoubtedly very real, but the present position was- one that the directors had not been able to foresee. To a large extent the company’s difficulties were attributable to the farmers themselves. Their company hlad not been able to satisfy the fat stock raiders in this district, many of whom were substantial shareholders; and these had preferred to sell their fat stock to rival companies, and thus build up the reserve funds of these latter so that they had been able to push the Wanganui company into the present unfortunate position. They must recognise that it was impossible for their directors to make the company pay when they did not get any stock from many of their farmer shareholders. Dealing with the negotiations with the Refrigerating Company and the bank. Air Duigan said these had traversed many phases, the b'ank originally stipulating that it should be able to sell the shares in the Refrigerating Company or some of them. Its indebtedness to the bank constituted the company’s chief liability. Tn satisfaction of this the bank could hold the Imlay shares until August 29, 1929, and could draw the dividends from them until then, but thereafter these shares must revert to the Wanganui company’s shareholders. Tn addition calls amounting to about £40,000 on the unpaid capital of the Wanganui Freezing Company must be made to pay off the liabilities to the bank, i The price for the works, etc., was £124.000 less than their cost and £53.000 less than their present book rialue. ‘ ‘ Arbitrary Action ’ ’ Air G. V. Pearce supported the motion. “The arbitrary action of the bunk,” he said, “placed the company in a very awkward position at the height of the season. I don’t know why they did it, but it seems to me to have been very unfair indeed. “If we had had time—slay four or five months—to look about, I think it would have been possible to reorganise the concern and carry on, freezing on owners’ account. Owing to the action of the bank such reorganisation wtas not possible, as operators had already made their season’s arrangements. The Only Way Out It seemed that the only way out now was to sell, went on Air Pearce, and he said that credit was due to Air C. L. Duigan for getting the price as high as the figure eventually agreed on. The first offer made by the Imlay people was £30,000 cash land 30,000 shares, and the improved offer now made was entirely due to Air Duigan’s hard work. Air Pearce pointed out also that by a clause in the agreement with the Refrigerating Company it must treat stock for shareholders on the same terms las the Whakatu (Hawke's Bay) freezing works did. These terms were much lower than those of any works on this coast. Farmer shareholders would thus benefit.

In conclusion, Air Pearce said that at present there seemed no option but to sell, as the Refrigerating Company’s offer represented the best way out for the Wangianui company and for its shareholders. The New Shares Air Donald Ross asked the chairman to explain why the new share capital was not paid into a separate account. Mr Duigan said that about September, 19M, the bank suggested a debenture issue or the issue of further shares. The directors, however, did not then consider the time opportune, but in Alay, 1925, engaged a canvasser to dispose of the unissued shares. They had no idea, at that time, that anything like the subsequent slump in meat would happen, and had no reason then to apprehend it. Air W. Scott said he, like Air Ross, had been misled. Ho believed the money was to have been used for the purchase of stock. Mr A. Robinson’s Amendment An amendment to the motion was moved by Air Allan Robinson. In proposing that consideration, of the sale be deferred for a month, so that the prospects for an entirely new concern buying the works could be canvassed, Air Robinson said he took that action with considerable diffidence. But so important was it that the farmers should not let their own works be absorbed by a larger concern that he thought they would be patriotic enough lo themselves to offer to the directors a price as attractive las the Imlay offer. It was obvious that in New Zealand there existed a combination, of fat stock buyers and they were buyingstock at prices decidedly Jess than were offered and indicated when the season opened. If the AVangtanui company went out local farmers would nave to trust to outside buyers to purchase their stock. He moved that action bo deferred for a month, as when farmers realised what the results of the proposed sale would be, it might be possible to raise mo«ey for a new company to Hake over the works. The fates seemed to be against small companies. Even such concerns as the Gear Company might have to go out in the face of competition with firms that had better outlets for their produce in England. Air Robinson ventured to disagree with Air Duigan’s reproach that district farmers had not supported the works. Air Duigan: “That is a fact, and you are one of them.” Air Robinson said that if they lost so much money last year on what stock they did handle, they would have lost twice as much by handling more, so it was just as well. (Laughter). Air Robinson went on to st’ate that the company had paid no dividend for some years. The chairman said that on an aver- i age the company had paid £5 12s 3d on its share capital, besides giving a premium of £2 each on .15,000 odd of its shares. “An Old Lien’s Home!” Air W. Ritchie asked if there was not a chance of Government assistance. As far as going to the Bank of New Zealand for consideration was concerned, he said, they had as much chance as they had if they pHayed for rain. (Laughter). Air W. Scott seconded Air Robinson’s amendment. # Disagreeing with‘the amendment, Air Cresswell said they should sell now. If they deferred * consideration they might lose the option, or get a lower price. Air Pearce said they should not throw away the substance for the shadow, as they would if they carried the amendment. A shareholder: In the final wash-np will there bo anything further to come to the shareholders? The chairman: I cannot tell yon that. It depends on the price we get for the rest of our assets. Mr D. Ross: As far as I can see the shareholders go out with nothing. Nr Duigan: They must get one £1 Refrigerating Company’s share at least for each £5 share in the Wanganui company. Mr Ross: The shareholders do not know the position under the present agreement, and they will not know. Why were not all the company’s properties included in the sale? Mr Campbell: You can’t force people to buy. Mr Ross: The Imlay people should take all the property or none. Mr Ross said the whole trouble was that the concern had been ”an old men’s home for thirty ydars.” Tho Obvious Policy Mr A. G. Bignell, one of the investigating committee, said tho obvious and sound policy was to sell to the highest bidder, which was the Refrigerating Company. Under the deal the new shareholders, whom they were trying to protect, would get something. Under any other scheme they would get anything. Air Robinson’s proposal was all right, but who would put up the. fresh capital? Voices: You wouldn’t get a bob out of anyone. Mr E. E. Fletcher said he could sec nothing for it but to sell. They were in up to their necks now, and it Was no use prolonging the agony. Mr W. M. Smith asked what would be the liability of individual shareholders when the calls on uncalled capital were being made. Would the calls be on a pro rata basis? How would the position of the man who hud paid £3 10s each, on his shares compare with that of the man who had paid only 10s? Nr W. .1. Treadwell said that this matter was in the discretion of the bank. Air Smith: We should know its attitude before we sell our property. He pointed out that New Zealand Refrigerating Company shares were at present worth only 18s. A voice: It’s like buying a dead horse. Air Smith: Worse. (Laughter). Air E. Parsons asked how many shares of the Refrigerating Company were held in New Zealand. The chairman said that ho was credibly informed that 98 per cent of the shurcs were held in New Zealand. At this stage the discussion languished, and the amendment was put to the meeting and supported by only about a dozen shareholders. The motion that the works bo sold was then carried by a large majority. Outside tho building little groups lingered and discussed tho matter earnestly for some time.