30,000 TON PULP AND PAPER MILL

Waikato Times, Volume 113, Issue 18950, 20 May 1933, Page 9

30,000 TON PULP AND PAPER MILL

ESTABLISHMENT IN BAY OF PLENTY DISTRICT.

TIMBERLANDS WOOD-PULP COMPANY TO OPERATE.

IMMEDIATE STEPS CONTEMPLATED.

Incorporated some eight years ago with an Initial capital of £IOO,OOO. this company is pioneering the establishment of the Pulp and Paper Industry in New Zealand. The New Zealand, Australian and near Eastern markets, spending annually millions of pounds in paper and paper products, provide a ready outlet for the Company’s produots. In this respect the company should enjoy a ’monopoly of this market owing to the fact that It commands an adequate supply of exceptionally cheap raw material In the form of pulpwood and will have its pulp and paper mills located in New Zealand, whereas its nearest competitor will be some 6000 to 8000 miles away. In 1931, the company Bents its New Zealand Attorney, Mr H. A. Horrooks, its Technical Director, Professor Corbin and Its Engineer, Mr R. P. Worley, on a speoial visit to the United States and Canada for the purpose of securing the latest information relative to the production of high grade papers through the Sulphate Process—a process peculiarly adapted to the requirements of New Zealand-grown conifers. Particular attention was paid to the more recent developments in the Southern parts of the United States where the Pitch Pine and Loblolly Pine and other resinous species are being utilised for conversion into high grade quality papers suoh as Bonds, Fanoy Tissues, etc. The Company is not particularly interested in the production of newsprint. Part of the mission of this executive was to secure the services of a pulp and paper mill engineer to visit New Zealand and make a preliminary report upon the Company’s projeot. Contact was made with Mr L. A. De Guere of Wisconsin, one of the foremost pulp and paper mill engineers In the United States, who visited New Zealand early last year. . Mr De Guere brought with him Mr . p B Sadtler, of Philadelphia, a recognised expert on the Sulphate Process and the bleaching of pulps for the production of white papers. Some weeks were spent by these experts In an exhaustive examination cf the timber resources of the Rangltafki Valley, and a careful appraisement was made of the Australian and New Zealand market. Careful attention was given to the possibility of utilising existing supplies of rimu and tawa or, alternatively, thinnings from the State forests as an Interim source of raw material. In February of 1932 t’he oompany* bondholders, through their local committees, sent delegates to Rotorua for the purpose 'Of meeting the directors In conference and reaching agreement upon the company’s plans for the Immediate erection of mills. At this conference a special head committee was set up to confer with Mr De Guere and 00-operate with the New Zealand attorney, Mr H. A. Horrooks, and the company’s expert advisers in bringing forward a comprehensive scheme for enabling the company to get Into production through utilisation of State thinnings or any other mmedla.te source of raw material ivailable. Since that date, events have moved rapidly. A special report, embracing the whole of the company’s proposals, was submitted to the Development of Industries Board. This was followed up with an inspection of Ihc company’s plantations and the Slate forests by certain members of the board and a recommendation by the board that the Government should make every effort to come to some arrangement with the company. Howsoever, as a result of the present inability of the State Forest Department to satisfy the company’s immediate requirements in the way of raw material, negotiations terminated towards the end of last year.

exercised, such as taking a vote of bondholders, etc., but as all preliminaries In connection therewith have been settled to the satisfaction of the directors and the Bondholders’ Head Committee and a provisional agreement entered into by them, ratification of this agreement by the bondholders is confidently anticipated, more particularly so as the agreement will enable the company to get into production at an early date.

Financial.

The company’s projeot is being financed by a bond issue running into well over £1,000,000, and to-day the amount of bond oaplt&l subscribed approximates £900,000, the greater portion of which is held in New Zealand. The remaining capital is being offered to the publio on suoh attractive terms that subscriptions are quickly absorbing the balance of the issue.

Out of the bond issue, approximately £750,000 in cash is reserved for payment of the mills, so that the company will be enabled to get into production with its mills and extensive pulpwood reserves free of debt. Bond Conversion. A vote of bondholders is to be taken In July upon both t’he options and upon the profit-sharing proposals arising out of the February Conference. The agreement to be ratified provides for the bond issue to be converted Into the pooling of all assets as between the company’s shareholders and bondholders, and the appointment of the Bondholders’ Head Committee to the present Board of Dlreotors. Exeoutive. The company ever since its inoeption, has enjoyed a very able Board of Directors, and In addition thereto, an extremely efficient executive has been built up In New Zealand. Establishment operations are under the supervision of Professor 11. H. Corbin, an experienced and able forester, and recognised as one of the foremost experts on coniferous plantations. Mr L. A. De Guerre is responsible for the design and general lay-out of the company’s pulp and paper mills. He has been engaged In t’he designing of pulp and paper mills for the past 37 years, and haß been connected with the building, rebuilding and expansion of no less than 30 of the 58 mills in the State of Wisconsin as well \s numerous other enterprises in the Eastern States and Canada.

Mr De Guerre has associated with him in -this New Zealand project Mr R. P. Worley, of Auckland, a oivil onglneer of reoognlsed standing. Provision has been made under the merger soheme for the appointment of the Bondholders’ Head Committee to the Board of Dlreotors and the probable shifting of the head office of the company to New Zealand prior to the erection of the mills. Meanwhile the company’s main activities are being attonded to by Its New Zealand attorney, Mr H. A. Horrooks, In consultation with the Bondholders' Head Committee.

Employment Benefits—Over £IOOO a Week. Arrangements have been made for Mr De Guere to return to New Zealand in a few months’ time and complete his final plans and specifications so that tenders can be called for. On the basis that the mills and employees’ cottages take 12 .months to erect, employment will be provided for round about 1200 men, and over £200,000 distributed 3n wages. On the initial production schedule of 30,000 tons, Mr Horrocks states the company will be distributing over £IOOO a week in wages and permanent employment provided in the mill for over 200 people, with corresponding Increased employment when the output is increased to 150,000 tons. In this connection, Mr Horrocks states that the pulp and paper mills on the Paolflc Coast of U.S.A. increased their output from 553,327 tons in 1925 to 1,150,518 tons in 1930, an increase of approximately 600,000 tons within five years. Indicating the remarkable rapidity with which this industry can increase its output. Foreign Credits. As the bulk of the company’s equipment for its mills will require to be purchased abroad —the present intention being to purohase English equipment wherever possible—it is not unlikely that the capital represented by the last Bond Group will be placed on the English market in order to establish English credits , and thereby save exchange. Hence, the present Bond Group Is probably t’he last group of bonds available to the New Zealand publio and affords the last opportunity New Zealand investors may have of acquiring stock on easy terms while the mills are being erected.

Early this year the initial difficulty regarding Immediate supplies was successfully overcome through the efforts of the head committee in securing options over the Matahlna Forest, embracing an area of 16,000 odd acres, which forest is alongside the company’s own block of 21,000 acres near Te Teko.

Commencement —30,000-ton Pulp and Paper NUN.

As immediate supplies are limited, the initial production contemplated is confined to a 30,000-ton mill until the company’s own plantations are ready to pulp. Expenditure on this initial plant will approximate £650,000. Raw Material. The company is assured of an adequate supply of raw material sufficient to support a production schedule of 150.000 tons of pulp and paper a year and the general lay-out and design tfT the plant has made suitable provision for this purpose. The company’s main supply of raw material is located on the Rangitalki River and embraces two properties—one of 41,000 odd acres, already planted up and capable of yielding on a sustained basis sufficient wood for an annual output of 100,000 tons. This block is known as the Pukahunui Block. Also, a further property of 21,000 aores near Te Teko known as the Matahlna Block, and capable of yielding on a sustained output sufficient pulpwood to .support an enlargement of the company's production up to 150,000 tons. The capital value of the Pukahunui Block, in its present stage of pulpwood growth, with 1000 trees to the acre, Is probably not less than £25 an acre, and as the property is freehold and unencumbered, this property nlono affords . substantial backing* and security for the bond Issue. Tho Matahlna Block Is now being established, and 5000 acres are being planted up this winter with some two-year-old trees, so that within a few years a similar value on an acreage iiasis will accrue to this particular asset. Interim Supplies. As previously mentioned, the Matahtna Forest will suffice to.enable the company to get. Into production at an early date, and supplies arc sufficient to enable the company to carry on until its own plantations are ready to cut. Certain formalities have to lie complied with before one nr other of Ihe options over ttds forest can li»

Speolal Feature. A unique feature of the bond issue and the jnerger scheme is the provision whereby on completion of the flotation, all bonds will be automatically converted into shares. Bondholders have a direct voico in the control and management of the project. On completion of tho flotation, application will be made to have tho company's stock listed on the various Stock Exchanges throughout the Dominion. It is estimated tho assets in the way of pulpwood reserves and pulp and paper mills will total over £2,000,000, so that the company will enjoy an exceptionally favourable position from a financial viewpoint for entering into the Australasian paper market and financing future extensions 1o its mills. Brokers. The Bond Issue has been bandied by Commonwealth Underwriters, Ltd., an Australian and New Zealand Brokerage House, with offices at Sydney and-Auckland, and representatives throughout the Commonwealth arid the Dominion —also in London. The local representative of the company is Mr A. \V. Win stone. 386 Victoria Street, Hamilton. Phone 3353.