9

H.— 30

At page 1096 another of Mr. Lysnar's directors admits that in regard to his own shares his calls had been paid, but that in respect of some shares that he owned with another person £500 was in 1923, and still was when he gave evidence, owing for calls ; his exact answer being, "Yes, and I am not ashamed of it, because I am not the only one that is owing a few pounds on calls." This same director, as can be seen at page 1097, admitted that he knew of Vesteys' offer having been made, and that the bank thought the offer should be accepted. And the evidence shows that on the 12th September, 1923, he gave a mortgage to his son for £30,000, and that there was no contemporaneous advance on the 12th September, 1923, of £30,000, the mortgage being given in respect of moneys said to have been owing by the father to the son from the year 1919. We here mention, thought not strictly in chronological order, certain occurrences that took place in the month of October, 1923, but they throw a considerable amount of light on the financial position about this time. A Mr. Appleton was called by Mr. Lysnar, and he stated that about three weeks before Mr. Lysnar's works were sold by auction Mr. Lysnar had seen him about raising £200,000 on firstmortgage debentures over Mr. Lysnar's works. Mr. Appleton said that he advised that there was just a reasonable chance of getting the money, provided £50,000 was put up in Gisborne, leaving £150,000 for the balance of the Dominion, but that he did nothing further. He was asked — Then what you did was to express the opinion to Mr. Lysnar that if £50,000 were taken up in the Poverty Bay district, your view was that it was possible that the balance might be subscribed in the rest of the Dominion, and you heard nothing further from Mr. Lysnar. We refer elsewhere in our report to Mr. Appleton's evidence. Mr. Thompson, who was called as a witness, was, in September, 1923, manager of the Bank of New Zealand at Gisborne. Mr. Lysnar when giving evidence said that every one of the bank-managers in Gisborne without exception wrote to their head offices recommending the proposed issue of shares. At page 1609 Mr. Thompson is asked— Now we have been told that all the Gisborne bank-managers told Mr. Lysnar that they would support such an issue, and would recommend their head offices to support it. Will you please say whether or not that statement is correct, as far as you are concerned ?—lt is not correct as far as we are concerned. I sent down to ask our head office's opinion about that matter —what they thought about it. I sent down at Mr. Lysnar's request. Did you recommend it ?—No, I did not, from what I remember. I have the correspondence here. You can look at that file, of course ? —I did not recommend it. Shall I read the letter ? -It is dated Bth October, and is addressed to your general manager : — " Mr. W. D. Lysnar, the company's chairman of directors, called on us to-day in reference to the proposed sale of the works to Yesteys Limited. As you are already aware, the freezing-works are advertised for sale by public auction on the 3rd November next, but an effort is now to be made by the company to prevent Vesteys acquiring the works, and with this object in view Mr. Lysnar states the company proposes endeavouring t<> raise £200,000 by a 7|~per-cent. debenture issue secured by a first charge over the company's land, plant, works, &c., valued by them at £400,000. He is, I understand, in communication with the Haines Advertising Agency (Limited), and that company's director, Mr. Appleton, advises that it is doubtful if the proposal is one that will appeal to the public, but he is of the opinion that the present antagonistic feeling against Vesteys might induce sheepowners, stock-dealers, &c,, to make subscriptions in the hope of keeping Vesteys out of the business. Mr. Lysnar also mentioned that, in addition to the proposed debenture issue, it is also the company's intention to endeavour to raise fresh capital by way of preference shares to the extent of £100,000, and he states that he is confident the farmers in the district will rise to the occasion and subscribe this amount. Our opinion is, however, that the company would at the present time have great difficulty in raising even half that amount. Mr. Lysnar states that his reason for calling on us is that a large number of the bank's customers are shareholders in the concern, and that, as the matter is one of vital importance to the farming community in the district, the bank might feel disposed to assist subscriptions to the debenture issue by recommending in this direction. We have told him that, in view of the company's present hopeless financial position, the proposition is one that does not commend itself to us, but at his request we pass the information on to you in case Mr. Appleton, of the Haines Advertising Agency, calls to see you on the matter." Mr. Thompson, you say that in your conversations with Mr. Lysnar you actually referred to the company's then present hopeless financial position ? —Yes ; that was in October, I think.

2—H. 30.