LOYAL LIMITED

Waikato Times, Volume 127, Issue 21198, 22 August 1940, Page 12

LOYAL LIMITED

TOBACCO CASE OFFERS FROM AUSTRALIA (By Telegraph.—Press Association) AUCKLAND, Wednesday The public examination, before Mr Justice Fair, in the Supreme Court, of officers of Loyal Limited, and Consolidated Tobacco Company, Limited, two companies in process of being wound up, was continued today. Edward Valentine Owen, reexamined by Mr Mackay, said that he and his father, who was one of the first growers of tobacco in New Zealand in a large way, conducted experiments and arrived at the conclusion that the New Zealand leaf had different bacteria from that of the American leaf and they endeavoured to inoculate the local leaf with bacteria of the American leaf. When he started with Loyal Limited he had evolved the full process. The time required by his method was much shorter than for other processes in New Zealand. While he was with Loyal Limited he was offered a contract to go to Australia, where Mr Davie, of Melbourne, was prepared to pay him £30,000 to take his processes to Australia. He did not accept the offer because of his interests in Loyal Limited. He eventually agreed to sell his formula for £20,000, taking a part payment in shares, because he regarded these as likely to be more valuable than money. Replying to Mr Meredith witness said he had one letter mentioning the Melbourne offer but he did not think it stated the price he had been offered. Evidence of Maher Michael John Maher, hotelkeeper, of Wanganui, said he subscribed £IOO and later took up 95 shares. In the first year there was a quite substantial loss of £1321. Next year the balance-sheet showed a profit of £4535, and in January of the following year the Customs Department issued a writ alleging £6BOO shortpaid duty. Witness said he knew it had been arranged with the Comptroller of Customs to pay and not to contest the claim. There was no previous arrangement that witness should get a substantial share of the money paid by the company to Owen for his formulas. That was entirely in Owen’s hands. In reply to further questions, witness said that in valuing the stock he took a rough all-round price. Nine days after getting authority from shareholders to increase the capital, the value of Owen’s formula was increased from £IO,OOO to £20,000. The latter figure left a margin of £12,000 after the payment of £BOOO to the customs. Witness was examined regarding the valuation of stocks as shown in the balance-sheet of April 30, 1935. A total of 29,0001 b. of tobacco leaf at Is 6d a lb. was bought in on April 30, he said. He would not say it was unusual to value goods in a balance-sheet at above cost. It depended on the markets. Out of the £70,000 fresh share money, £16,000 went to Owen for his formulas and witness got approximately £2OOO, he said. The subscribers of the £70,000 lost all their money, and the creditors of Loyal Limited got 14s in the pound. He had nothing to do with the valuation of Loyal’s stock at the end of April, 1935, at £51,000. This concluded the inquiry.