A.—l

8

No doubt the completion of the matter will take some time, and we shall meanwhile receive from you full communication with reference to its probable course, and instructions with regard to anything further which may be wanted from this side. It is contemplated that, should the Act of Parliament be obtained, the new bonds will be prepared and issued, and will be forwarded through bankers to London, where due notice will be given to the holders of existing bonds to come in and exchange them. It will be observed that the agreement (see clause 14) provides that it is to be confirmed within four calender months by the Corporation. It is thought that such confirmation should be given by some short indorsement upon it under the seal of the Corporation. You will kindly at once place yourselves in communication with the Corporation, and endeavour as speedily as possible to give effect to what is desired. The question of costs remains. These, it will be seen, are, under the agreement (see clause 12), to be provided by the municipality out of the new loan. The municipality must also provide for the costs which may be incurred should the application for the Act not be successful. Probably you can arrange, in concert with its representatives, to secure yourselves against this contingency, and will let us know that you have done so. Yours faithfully, LINKLATBB AND Co. Messrs. Bell, Gully, and Izard, Solicitors, Wellington, New Zealand. Documents herewith: Original agreement, 9th February, 1893; copy Mr. Simpson's notes; copy notes as to loans ; copy notes as to Acts of Parliament; declaration by Mr. Gibbs, and exhibits; Milford Docks Act.

An agreement made the ninth day of February, one thousand eight hundred and ninety-three, between Beckwith Smith, of the Stock Exchange, London, stockbroker; Sir James Arndell Youl, of Waratah House, Clapham Park, Surrey, Knight, K.C.M.G.; William Albert Maud, of 15, Coleman Street, London, wool-broker; and Charles Marston Eose, of 3, Throgmorton Avenue, London, barrister-at-law, the joint committee appointed by the holders of the loans of the Borough of Oamaru, in New Zealand, mentioned in the schedule hereto (hereinafter called " the committee "), of the one part; and William Anderson Low, of 27, Craven Street, London, gentleman, on behalf of the Borough of Oamaru (hereinafter called "the Corporation"), of the other other part: Whereas the Corporation has raised the loans the particulars whereof are set forth in the schedule hereto (hereinafter called "the existing loans"): And whereas the existing loans are secured by divers rates which the Corporation has power to make, and otherwise : And whereas the holders of the existing loans first mentioned in the schedule hereto (hereinafter called " the loan of 1875 ") are entitled, under " The Otago Municipal Corporations Ordinance, 1865," to the benefit of a sinking fund, which, in the balance-sheet of the Corporation for the year ending the thirty-first day of March, one thousand eight hundred and ninety-two, is stated to amount to four thousand two hundred and twenty-nine pounds fourteen shillings and five pence (hereinafter called "the sinking fund") : And whereas the Corporation has made default in paying the interest, or some part thereof, due on the existing loans, or some of them: And whereas negotiations have been pending between the committee and the Corporation with the view to formulate a scheme for the consolidation of all the said loans: And whereas this agreement has been prepared in order to define the terms of such consolidation: Now, it is hereby agreed between the parties hereto, as follows :— 1. There shall be created a consolidated loan of the Corporation for the total aggregate sum of one- hundred and seventy-five thousand pounds (hereinafter called " the consolidated loan "). 2. The consolidated loan shall carry interest at the rate of five per cent, per annum as from the date of issue, payable half-yearly, on the first day of January and the first day of July in each year. 3. The consolidated loan shall be repayable at par on the first day of January, one thousand nine hundred and twenty. 4. The consolidated loan shall be secured upon all the rates upon which the existing loans, or any of them, are secured; and the holders of the consolidated loan shall have the benefit of all powers, including powers to increase any rates and provisions conferred by or contained in any Acts of the Parliament of New Zealand, ordinances of Provincial Councils, orders, or other instruments which would or might be available for the security or further security of the holders of the existing loans, or any of them, except the right to any continuation of any sinking fund; and the consolidated loan shall also be secured by a first charge upon all present and future sources of income of the Corporation. 5. The Corporation may issue one thousand two hundred pounds, part of the consolidated loan, to such persons as they think fit, for the purpose of raising the expenses of and incidental to this agreement, and the carrying the same into effect; and, as to one hundred and seventy-three thousand eight hundred pounds, the balance of the consolidated loan, the Corporation shall not issue the same except to the holders of the existing loans in exchange at par for the amount of the existing loans held by them respectively. 6. The amount standing to the credit of the sinking fund at the date of the issue of the consolidated loan shall be rateably divided among the holders of the loan of one thousand eight hundred and seventy-five. 7. The Corporation shall, until the issue of the consolidated loan, pay to the holders of each of the existing loans on which default has been made, as from the date on which default was made in payment of interest on such loan as mentioned in the schedule hereto, interest at the rate of five per cent, per annum ; and, as regards arrears of interest at that rate accrued due prior to the first January, one thousand eight hundred and ninety-three, such arrears shall be paid by two equal