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RECORD OFFICE

Reference -

1741C.O.882/12

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ALLY WITHOUT PERMISSION OF THE [BF REPRODUCED PHOTOGRAPHIC- | COPYRIGHT PHOTOGRAPH-NOT TO

PUBLIC RECORD OFFICE, LONDON

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(b) Government cannot see that there is anything to be gained by the appoint- ment of two local Directors, but suggests a reduction of the London Board by two.

(c) Government would welcome any attempt made by the Board to reduce its

London charges, which are very high.

(d) Government would support an application by the Company to the holders of the 5 per cent. Guaranteed Debenture Stock for the deferment of the operation of the Sinking Fund until 1934, thus bringing it into line with the other sinking funds.

2. The financial position is then discussed further, and Sir A. Gridley is in- formed that Government will place no obstacle in the way of any reasonable proposal made by the Board to obtain the £250,000 required by increasing the issue either of 5 per cent. or 7 per cent. Debentures.

3. As a means of meeting the deficit on Debenture and Loan interest, it is suggested that some agreement might be reached with the three parties interested, i.e., the 5 per cent. Debenture holders, the Government, and the 7 per cent. Debenture holders, to accept a pro rata reduction of interest and carry forward the debit balance until the position improves.

4. It is suggested that the Colonial Development Fund might be approached with a view to assisting to the extent of £150,000, i.e., £30,000 for raising the dam, £45,000 for house turbine switchgear and transformers at Malim Nawar, &c., and £75,000 for various other additions to increase consumption and for the more efficient and safe operation of the system.

5. Sir Arnold Gridley finally asks for an interim advance from Government of £75,000 (£30,000 for the dam and £45,000 for business development) pending joint negotiations with the Colonial Office as regards the Development Fund, as these nego- tiations are likely to take some time. He suggests that the balance of Ordinary Shares unissued (69,000) could be offered as a cover.

If

6.

Messrs. Leonard, Bradney and I are agreed that no such advance as is mentioned in paragraph 5 should be made, and that the Government is not justified in expending any further sum on the undertaking or in making any guarantee. and when some form of reconstruction is found to be inevitable, Government must be prepared to face any losses, pro rata, with the other shareholders.

7. If Your Excellency approves the above, I will cause it to be communicated by letter to Sir A. Gridley, who leaves Ipoh on the morning of the 26th July.

22nd July, 1930.

C. W. H. COCHRANE,

Chief Secretary to Government, Federated Malay States.

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I am sending five copies of this memorandum in order that this may be handed to the various members of the Conference. A further five copies will be forwarded in the course of a day and my Board would be grateful if you will kindly forward a copy to Sir Cecil Clementi as soon as possible after his arrival in England.

In drawing up these proposals the Board has had in mind a letter which was addressed to Sir Arnold Gridley by the Under Secretary of the Federated Malay States Government on the eve of his departure, a copy of which is enclosed.

From the last paragraph of that letter it will be observed that the Federated Malay States Government state their willingness, upon a financial reconstruction becoming necessary, to assist by facing any loss pro rata with the other Shareholders.

Whilst applying in the proposals, as you will observe, the principle indicated by the Federated Malay States Government, the Board at the same time have felt, and indeed have been advised by their Financial Advisers in the City, that the position of the Debenture-holders must, so far as possible, be preserved intact and that the Debenture-holders (in which is included the Federated Malay States Government with their loan of £850,000, as my Board regards their loan in the capacity of second- debentures) should receive better treatment than the Preference or Ordinary Share- holders.

·

One of the great difficulties in preparing this scheme has been the necessity for finding a further sum of £150,000, and I venture on behalf of the Board to ask for the most favourable consideration to be given to the proposals set out in that con- nexion in paragraph 11 of the memorandum of proposals.

It's thought inadvisable to approach the Trustees to either 5 per cent. or 7 per cent. Debenture Stockholders until the proposed conference has considered the whole question, and no action, therefore, is being taken at present in this direction.

There is one question which is not directly dealt with in the memorandum and that is connected with the present number and remuneration of, the Directors and constitution of the London Board. The Chairman of the Company, Lord Elibank, is prepared to discuss this question and to make suggestions which he hopes may be acceptable.

In conclusion, the Board wishes to emphasize the fact that both the water power and steam station installations have been finally completed to the satisfaction of the Consulting Engineers-subject to final adjustments and official tests of the turbines and generators at the hydro-station. It therefore only requires the resuscitation of the tir industry, the unfortunate state of which is universally known, for the Com- pany's business to develop and to prosper, and to justify all the time, trouble and money which has been expended upon the undertaking.

I am, &c.,

D. C. BROOK,

Secretary

سم

No. 2.

THE PERAK RIVER HYDRO-ELECTRIC POWER COMPANY LIMITED to COLONIAL OFFICE.

SIR,

[Answered by No. 4.]

SIR,

3, Central Buildings, Westminster, S.W.1, 3rd November, 1930. IN continuation of my letter to you of the 24th October,* regarding the con- ference which it is proposed to hold as soon as possible after the arrival in this country of Sir Cecil Clementi. between representatives of the Colonial Office, His Majesty's Treasury, the High Commissioner, and the Directors of this Company, I am now, by irection of my Board, forwarding herewith the memorandum of financial proposals referred to in the last paragraph of that letter.

* C. 72367/A/30 [No. 84]: not printed.

Enclosure 1 in No. 2.

Kuala Lumpur, Federated Malay States, 24th July, 1930.

I AM directed to refer to the meeting held at Carcosa on 22nd July, at which

the Chief Secretary to Government, Acting British Resident, Pahang, Acting Treasurer,

the Director, Electrical Department and yourself were present.

2. You asked at this meeting for an interim advance from Government of £75,000 (£30,000 for the dam and £45,000 for business development) pending joint negotiations with the Colonial Office as regards the Development Fund, as these nego- tiations are likely to take some time.

3. I am to inform you that this Government is not prepared to make': any such advance as you suggest, and that it considers that it is not justified in expending any further sum on the undertaking or in making any guarantee. If and when some form

C. 72367/A/30 [No. 86].

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