MCARTHUR COMPANIES

Wanganui Chronicle, Volume 79, Issue 102, 1 May 1936, Page 7

M C ARTHUR COMPANIES

DEBENTURE HOLDERS MEET SALE OF SHARES QUESTIONED STATEMENT BY McARTHUR LEGISLATION CRITICISED I Per Press Association. ] WELLINGTON, April 30. Called by the Public Trustee, a meeting of debenture holders interested in the J. W. S. McArthur properties was held to day, at which the Public Trustee (Mr E. O. Hales) presided over about 80 debenture holders and their representatives from al] parts of New Zealand. Mr E. I\ Hay attended as counsel for the Public Trustee. Debenture holders were checked in, and even the Press representatives, admitted by the passing of a resolution, had to assure their bona fides. Dr. F. Louat moved: “That in view of the fact that the Investment Executive Trust debentures held by the sterling Investment Company are held internally for the benefit of the debenture holders by one of the companies being liquidated, such debentures be disregarded for the purpose of this meeting, ami that it is the wish of this meeting that no vote be recorded in respect of them.” Mr E. P. Hay, speaking on behalf of the Public. Trustee, ruled the motion nut of order, citing the decision of Mr Justice Blair. As liquidator for the Sterling Investment Company, the Public Trustee said he could exorcise his vote if he wished to. Mr E. E. Hammond, uho said he represented a number of people present, said that the. debenture holders were in ignorance at present about where their property was, and whether the other property could be considered with it. ’.the position had been allowed to go or. for two years without the debenture holders being told anything about it. Sale of Dunedin Shares Tn connection with the sale of shares in Dunedin, Mr Al. V. Bale.-, public accountant, Auckland, said he would like the Public Trustee to inform the meeting at what prices and to whom and when the sharts were sold. The Public Trustee replied that the shares were sold at £3 15s 6d per share, free of brokerage, to Fome of the. directors of the Trustee and Executive Agency Company. They were disposed of about February 20, negotiations having opened with the company on February .18. 'rhe whole parcel was sold in one lot. Mr .Bates said that the interests he represented were prepare! to p:iy 50 per cent, more than the I’ablic Trustee accepted. The Public Trustee: I can only say that, if your principals wove prepared to pay 50 per cent, mon*, it is a peculiar thing that yo;*. jnado no inquiries between September and March when you learned the shares had been sold. Dr. Louat: Perhaps you will tell us what stops you did take to got the full value of those shares? The Public Trnste-e said that he knew the whole of the buyers on February 18. The companv in Dunedin approached him foi the sale of the shares. It had been said that, they were on the market for £3 10s, but those concerned were told that they wore not on the market at that price. ll.' asked £3 Iss 6d and. after three days negotiations, they were bought at that, price. Since that date the directors had tried to got various members of he companv to take up the shares and they had not been succesful at the A Protest Voiced Mr Norman Levy said he wanted to enter a vigorous protest •'.oncoming this transaction. He submitted that their best interests had not been primarily served. A debenture holder: The only safe place for your assets is with the Public- Trustee. This remark was greeted with cries of “No, no! ” and one debenture holder said that he strongly protested. Mr J. AV. S. McArthur, amidst applause, rose and said that there were certain facts about this matter which the meeting had a right Io know. He asked the chairman’s permission if he could proceed. One of the debenture holders said that he would like tn know what was Mr McArthur’s standing nt the meeting. The Public 'Trustee explained that he was present as a proxy holder for the McArthur Trust, of Queensland. This was quite in order. Air ATvArtlinr proceeded: “At the time of the liquidation and until, I understand, some few weeks ago. the debenture holders had as one of their assets 4500 shares in the Crustees and Executors Agency Company, of Dunedin. The value of this as (t to yourselves and al] other debenture holders had no relation whatever to the market. price. That price to-day is about £3 5s a share, but because the Investment Executive Trust’s interest in the shares amounted prarticallv to a controlling interest the shares we held had a very much higher value. The Dunedin company' has assets of a total value of about four and a-hnlf million pounds. From a very earlv staqe in its life the Investment Executive Trust held a certain number of shares in the Dunedin company, and n 1933 because of certain information which came to the knowledge of th -1 directors of your company, thev decided to increase its holdings by every moans possible. The information wc received from a reliable s.-.rce was that the New Zealand Insurance Company, of Auckland, had embarked on secret negotia- j Cons with this Dunedin Iru toe Com- | panv with the object of pur-hasing the | whole of the issued share capital of the company, making pavmcnt in Now Zealand Insurance Company shares. Energetic P’an Pushed Forward

“During 1933 and the fust half of 1934 the directors of th* Investment Executive Trust pushed forward energetically a plan to acquire interest in the southern company for the benefit of debenture holders. The shares were actually bought by the Transport Mutual and General Insurance Company, which was owned wholly by the Investment Executive Trust. By June, 1934, we had, in this way, acquired a total of shares repre-

seating over 45 per cent, of the total share capital of the I’unelin vompany. ( I understand that these .-hares have now been sold by the Public Trustee. 1 have not yet been able to find out, . nor have I met anyone else who has. ' who are the fortunate purchasers of these shares, or what stops the Public Trustee took to see that he wrs realising on your behalf their enormous poI lenU.al value. 1 have said that they j are worth a very great deal and much more than the market value as cstab- , lished in the liquidation. What they ’ would have been worth if the special . legislation passed by the Coates Government had not destroyed the in- ' voters Executive Trust, you can inutg- • inc from the fact that four and a-half million pounds worth of investments are controlled by the Dunedin company. I had caused an i’lquiry to be made about- the methods of management of the Dunedin company, and we were fully satisfied that those methods could have been improved in efiiviency 5 and policy so as to produce nearly - double the profit at that time being ? earned by it. There was no doubt • that the Dunedin company’s business 1 was capable of very considerable expansion. .Its business at that time was, j and, as far as 1 know, st.ll is. almost , entirely confined to Otago. A. policy - of enterprise ami vision applied to this > management could rapidly have inI -creased the spread of its business over - a. large part of the Dominion. In ad- - dition you. as debenture holders, would 1 have hail added strength and security. which would have resulted from hav- > ing your controlling interest in this f company supporting your debentures. 1 • have tried to sho\\' what prespevts were in plan to acquire these shares, and what their value was when thev were ] sold a short time ago. They still have . the value that I have described ‘ and s the |x'rsons, whoever they are. who , have been fortunate enough to buy a block of practically half the shares in 5 this Dunedin company have now got the j benefit of this special value instead of vourselves .as debenture holders.’* , A woman debenture-holder wanted to know what was the reserve price on the “famous Sydney white elephant.” ; The Public Trustee replied that, it , was £273,000. A Motion Moved. Af this stage the following motion, • moved bv Mr. Norman Levy and sec- - onded by Mr. J. T. J’aul. of Dunedin, ' was open for discussion:— “That as the existing legislation for liquidation of the assets of the company was passed without obtaining any expression of opinion from the debenture-hold-ers, this meeting declares that the ' realisation and sale of the assets ' of the company is not in the best interests of debenture-holders, against which course this meeting , emphatically protests.” Speaking in supjmrt of the resolution, Air. McArthur said that it drew ' attention to the fact that the forcing of this company ink) lifiidation Mas carried out without any expression ot ’ opinion from the debenture-holders. The onlv complaint he had about this 1 portion ‘of it. was that it understated the fad. The liquidation was actually forced upon them as debenture-holders, in direct defiance of a representatix e bodv of opinion among the debentureholders whose views were actually sought/ bv the Government of New Soudi Wales. In this connection Mr. McArthur referred io a ballot taken ot all debenture-holders in the Southern British National Trust, which, he said, was exactly similar in organi.-ation to the Investment Executive Trust, with i the difference that it was situated in i Australia. The. result of the ballot was a clear majority against the liquidation. There could be no doubt that this position represented not only the views of Australian debenture holders, hut the views of these in the Dominion !1S well. Meetings of debenture-hold-ers in the Investment Executive Trust had expressed, bv an overwhelming majority, a protest against any proposed liquidation, and a demand that the business of the company should be allowed to be carried v.“.. .Mr. J. T. Kenton said he had been instructed bv a number of Canterbury debenture boldets to oppose the motion, Liquidation was the only sate wav to proceed. A motion was also proposed that th-c meeting views with app.'/ieuMOn, Mie possibility of the sale of the Trust Building in Sydney at less than the reserve price fixed by the Court am]'re quests the Public Trustee to ce-mniuni-cate with the Public Tru-tee in New South Wales rging him, on behalf of the E-ceeutiv-e Trust debenture hold?.* | to withhold the building from sale less than the reserve price. ►Several debenture holders urged th d more could be gained Vy the icor ganisation of the companies than by liquidation. The first motion was carried by an overwhelming majority on a show cl hands A demand wa*s made for a ballot but it was decided to postpone the ballot till after the discussion on the second motion, the chairman ruling that l hr ballot would be decided on the number and value of the votes, proxy votes having to be taken into consideration. The second motion was carried on the voices with little di« : en«*ic'-n and the