CO885-(11-12) — Page 111

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OPERAT

RE ORD OFFICE

། ། ། ། ། །

Reference →

CO.882/1

882/12

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PUBLIC

RECORD OFFICE, LONDON

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during the current year ending 31st July, 1931, it is not safe to assume that the average annual load to be sold during this period will exceed 11,000 K.V.A. to 12,000 K.V.A. It is, therefore, clear that the Company will not be in a position to meet any of its fixed charges due to be met on the 31st January, 1931, other than the interest upon the 5 per cent. Guaranteed Debenture Stock. It is further apparent that unless and until the sales of power approximate 20,000 K.V.A to 25,000 K.V.A., from which a gross revenue of some £350,000 to £400,000 per annum would be derived, the Company will not be able to meet all its fixed charges.

7. It seems, therefore, that to be effective any scheme intended to assist, must, inter alia, necessarily include arrangements respectively with the Federated Malay States Government and the 7 per cent. Participating Debenture-holders under which, so long as the slump continues, the interest due will only be payable if cash is available out of profits, and any interest unpaid during that period will be acknowledged by the Company by some form of certificate of rights redeemable as soon as profits are available.

8. In formulating the following scheme, the fact has been borne in mind that the Federated Malay States Government, in a letter of the 24th July, to Sir Arnold Gridley, signified their willingness, on the basis of some form of reconstruction. to assist by facing any losses pro rata with the other Shareholders.

9. The present capital arrangements are here set out :-

Share Capital.

Authorized:

500,000 Ordinary Shares of £1 each

£

500,000 8 per cent. Preference Shares of £1 each

500,000 500,000

£1,000,000

Issued:

£

£

431,237 Ordinary Shares of £1 each fully

paid

431,237

500.000 8 per cent. Preference Shares of

£1 each fully paid

500,000

5

per cent. Guaranteed Debenture Stock.

Authorized and issued

931,237

1,250,000

$50,000

1,600,000

1,350,000

£4,381,237

5 per cent. Federated Malay States Government Loan.

Authorized and issued

7 per cent. Participating Debenture Stock.

Authorized

Issued

Note. A further £250,000 of 7 per cent. Participating Debenture Stock has been actually issued but is held in reserve by the Company.

10.

Details of Proposed Scheme. (a) Sinking Funds. The Company has the following Sinking Fund Commitments :—

5 per cent. Guaranteed Debenture Stock. 20 years' sinking fund com- mencing on the 31st January, 1930. Annual payment £34,995.

Federated Malay States Government Loan. Actual repayment of this loan commences on the 31st July, 1934, by equal half-yearly payments on principal and interest from that date amounting to £56,733 per annm, or an excess of £14,233 per annum over the amount of £42,500 per annum previously paid in interest alone.

7 per cent. Participating Debenture Stock. 28 years' sinking fund com- mencing on the 31st July, 1934. Annual payment £28,368.

It is proposed that the first annual payment in connexion with the above sinking. funds and the commencement of the repayment of the Federated Malay States Govern- ment Loan be postponed until the 31st July, 1938, the other terms and conditions of the sinking funds and of the Federated Malay States Government Loan to remain unaltered.

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(b) Payment of Interest. The following are the annual interest payments under

the various Trust Deeds :--

5 per cent. Guaranteed Debenture Stock

戈

62,500

Federated Malay States Government Loan (to 31st July, 1933)

7

per cent. Participating Debenture Stock

$2,500 94,500

The following proposals are suggested in connexion with the above :--

(i) per cent. Guaranteed Debenture Stock. It will be seen from the table

in paragraph (5) above that the revenue from the present average sale of 11,123 K.V.A. should be sufficient to cover the costs of operation and administra- tion and leave sufficient margin for the payment of the 5 per cent. Guaranteed Debenture Stock interest.

(ii) Federated Malay States Government Loan and 7 per cent. Participating Debenture Stock. It appears from an examination of the possible growth of load that it is not safe to assume that the Company will be able to meet the interest on the Federated Malay States Government Loan and the 7 per cent. Participating Debenture Stock out of profits until 31st July, 1933, unless there is a rapid return to prosperity in the tin industry. It is, therefore, suggested that, in view of the principle of equality of sacrifice contained in the letter of the 24th July, from the Federated Malay States Government to Sir Arnold Gridley, and in order to assist the Company temporarily, the interest upon the loan and upon the 7 per cent. Participating Debenture Stock should, subject to the approval of the Federated Malay States Government, rank pari passu and should be satisfied by the issue of Certificates of Rights should funds not be available out of profits for the payment of interest at any of the interest dates. These Certificates would entitle the holders to payment of their interest as and when cash is available out of surplus revenue and the funded interest represented by these Certificates would be repaid out of surplus revenue remaining after payment in any year of the interest upon the 7 per cent. Participating Debenture Stock, either wholly or by instalments. Satisfaction of interest on the Federated Malay States Govern- ment Loan and the 7 per cent. Participating Debenture Stock by the issue of Certificates of Rights would include the interest due on the 31st January, 1931, and if necessary all further payments up to and including the payment due on the 31st July, 1933. It is suggested that in respect of interest due on the 31st January and 31st July, 1933, Certificates of Rights should only be issued after the Company has satisfied the Government and the Trustees that it is necessary for them to be issued. If in any of the years during which Certificates of Rights are issued after payment of operation and administration costs and of the interest upon the 5 per cent. Guaranteed Debenture Stock, profits are available, such profits, subject to the approval of the Federated Malay States Government, shall be divided pari passu up to 5 per cent. each between the Federated Malay States Government and the 7 per cent. Participating Debenture Stockholders. The balance up to 2 per cent. on the 7 per cent. Participating Debenture Stock would be satisfied out of the remaining profits, if any, otherwise Certificates of Rights would be issued for the remainder.

(c) 8 per cent. Cumulative Preference Shares. The present authorized issue is £500,000, all of which are held by the Federated Malay States Government. It is suggested that these Preference Shares shall become non-cumulative from the 1st January, 1930, and that instead of 8 per cent. they shall be entitled to a prior dividend of 6 per cent. per annum before a dividend is declared in any year upon the Ordinary Shares. In addition, it is proposed that after the Ordinary Shares have received 6 per cent. dividend in any year, the Preference Shares shall be entitled to a further per cent. of dividend for every 1 per cent. dividend declared upon the Ordinary Shares above 6 per cent., and pro rata until the Preference Shares have received a dividend of 8 per cent. per annum in all. In view of the alteration in their rights, it is suggested that the description of the Preference Shares be altered to ** 6 per cent. Preferred Ordinary Shares.' The proposals in this sub-paragraph are a modification of certain proposals put forward by Sir Arnold Gridley to the Federated Malay States Government in a letter dated 29th June, 1930, when he was recently in Malaya.

(d) Ordinary Share Capital. It is suggested that the authorized Ordinary Share Capital of 500,000, shares of £1 each, of which 431,237 are issued and fully paid, shall be written down to 10s. per share. At the same time the authorized issue should be increased again to £500,000, leaving £284,381 108. unissued. The confirmation

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