THE Daily Telegraph WITH WHIOH IS IRCORPORATED THE WAIHI MINER TUESDAY, APRIL 26, 1921. COMPANY FINANCE.

Waihi Daily Telegraph, Volume XIX, Issue 6202, 26 April 1921, Page 2

THE Daily Telegraph WITH WHIOH IS IRCORPORATED THE WAIHI MINER

TUESDAY, APRIL 26, 1921. COMPANY FINANCE.

Hoffi shall the Press the People's Right maintain Urmv.'Cil by influence and unhribed by gain Hero Patriot Truth her glorious precepts draw, Plunged to Religion Lilertv and law

Many companies are fiaiding it a very difficult matter to secure sufficient working capital ad tlio present time. Increased values x>f slocks and assets and higher laDour costs, to say nothing of heavy imports much, in excess of normal requirements, have put a strain on finance- that is giving executives something to think about. Inflated values were not followed by a commensurate increase of capital in inou cases, an i the result is that'to-day the amount of money at command is altogether inadequate tor trading purposes. When everything was rosy and business was brisk, the hanks could be rdied on to tide oyer .the difficulty in regard to finance, but tuny that financial institutions have ifecreoj that overdrafts must he reduced the company that was oyer-trad-ing on too little capital is ; ‘up against it.'’ There is no need t'o get alarmed over the situation. Here and there a concern wisl fail, but for the most part such businesses will go under, not so much on account of the financial qtriugoncy, but because of reckless trading and .speculation. These concerns would mcot a similar late under normal trading conditions. Precisely a similar set pil conditions to those we are now experiencing in K*-w Zealand wa r evident in Eaig’-iand months ago. Those companies that found that n/oi-o ready capital was required discovered as we now know to bo the case hero, tlmt a high rate of fntertvf. would have to bo paid for money. To issue additional shares either as ordinary or preference capital would entail a burden on the company for all time because some special inducement (would have to be offered for money for ordinary r haves and a high rate of dividend paid for .subscriptions Ido a preference Issue. A temporary form of borrowing wao introduced and the nukhod has much to commend it. Hearer bonds with interest coupons attached were issued to investors, and these were ?or -three, five or seven years according to the views of the management in each case of the company’s future requirements and the probable duration of /the present monetary stringency. The bonds or notes were readily taken up and have proved to be a popular form of investment a,s they arc simple and can bo readily transferred. From tht> company’s point Of view they enjoy the advantage that the present high rates of interest need only IV-nii a temporary charge. They can be paid ell when money becomes cheaper. In mostcases that have conic* under notice the* Bond issue is not- secured by any specified assets, the holders are in the position of ordinary eredilor.-i, ranking in funit o' the whole share capital, put after debenture-holders or secured'creditors. Whore a, company is in a sound) financial position, and has plenty of margin the issue of these bonds represents a good investment, and an investor is given a njost attractive ri*tc of intcro.sk. It is surprising that something of 'tins uni ure has not been done >u Zea- j lapd. but the probability is that some', of our wiorc- progressive companies will j be foundl floating an issue of this de-h scrip/ti'on Inter pit- 1 i