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DITRICE

PECORD OFFICE

Reference -

LANC.O.882/12

-ALLY WITHOUT PERMISSION OF THE REPRODUCED PHOTOGRAPHIC-

| CONTRIGHTRHOTOGRAPH-NOT TO A

PUBLIC RECORD OFFICE, LONDON

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4. It would, therefore, seem prudent to consider the Company's position in such an emergency and what temporary measures would be necessary to carry it through such a period.

5. The Company might be deprived of 40 per cent. to 50 per cent. of its existing load of 11,926 K.V.A., which would only leave revenue barely sufficient to pay its operating costs, but it is extremely difficult to do more than hazard a forecast.

6. Provision has been made in the Company's scheme to guard against what may be described as normal slump conditions, but the emergency conditions outlined above might render it impossible for the Company to pay the interest on the 5 Guaranteed Debenture Stock, or more than a part of it.

per cent.

7. In concluding any negotiations which have as their aim the placing of the Company in the position to carry on through these difficult times, the possibility of a state of emergency arising as outlined above should be taken into account, and it, therefore, seems desirable to bring the situation to the notice of the Treasury with a view to securing the Treasury's consent to the following proposal, namely, that in case of necessity, the Treasury would pay the whole or such part as is necessary of the 5 per cent. Guaranteed Debenture Stock interest in the case of the load being tem- porarily reduced as described. Any money so advanced would be a first charge to be repaid before any interest was paid on the Federated Malay States Government Loan or the 7 per cent. Participating Debenture Stock.

8. The whole tendency seems to be at present in Malaya for the development of the tin mines by dredging rather than by other methods owing to the fact that the cost of production by dredging is so much more economical and that a large number of the tin dredging companies have lands with a high tin content. This would not be injurious to the Company's interest, as unstable Chinese consumers would be replaced by substantial Companies taking large blocks of power.

9. The total output capacity of our combined generating plants is 33,500 K.V.A. At the present time the amount of power sold by the Company is as follows:-

Connected

Actual

Percentage

Load

Load

of Load

Revenue,

Annual

K.V.A.

K.V.A.

£

Chinese Mines

5,650

4,642

39

86,010

Dredging Companies

7,935

4,207

35

European Mines

+

1,857

1,473

124

74,174 25,593

Government and town lighting

4,323

1,604

134

23.763

19,765

11,926

100

£209,540

10. Negotiations for the supply of power to additional dredges to the extent of 1,590 K.V.A. have already been completed. Further 2,610 K.V.A. are held in reserve for Dredging Companies under agreement.

11. Apart from the above, inquiries have been received from prospective con- sumers representing a load of 15,000 K.V.A. approximately, but in view of the tin situation it is not possible to assess their value.

On behalf of the Board of

The Perak River Hydro-Electric Power Company Limited,

No. 4.

D. C. BROOK,

Secretary.

C. 72367/A/30 [No. 121].

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

Downing Street, 3rd December, 1930. WITH reference to your letters of the 3rd November, 1930,* and of the 17th November, 1930,† enclosing a memorandum of financial proposals and an

(Confidential.)

SIR,

* No. 2.

† No. 3.

न्

33

addendum, I am directed by Lord Passfield to inform you that the proposals of the Directors have been discussed with the High Commissioner, Federated Malay States, and representatives of the Treasury, and have been found unacceptable. The refer- ence made by the Federated Malay States Government to the necessity for facing any losses, pro rata, with the other shareholders, did not imply any intention to waive its rights as a debenture holder in connexion with the £850,000 loan.

2. It appears that the Company will be unable to meet its obligations on the 31st January, 1931. Neither the Government of the Federated Malay States nor the Treasury is prepared to advance any further funds to the Company or to agree to the waiver of any of the rights attached to the first debenture stock or the £850,000 loan.

3. The Secretary of State cannot recommend that a loan should be made from the Colonial Development Fund. Such a loan could only be made to the Government of the Federated Malay States, and that Government would, therefore, be responsible for the repayment of such a loan. But that Government is not prepared to undertake any further financial responsibility, in addition to the large amounts which it has already supplied. Further, even if the Secretary of State were able to recommend the proposal to the Colonial Development Advisory Committee, it is most unlikely that the Committee would be prepared to recommend the Treasury to give an advance for work which has already been done.

4. The Secretary of State is at present unable to see any alternative to the appointment of a Receiver. The Government of the Federated Malay States has already provided £1,425,000, which is a large proportion of the whole amount of oney put into the enterprise. Of this sum £850,000 was provided in January last in order to enable the Directors to complete the undertaking. So far as the Secretary of State can see, the only means of raising the money necessary to finance the Com- pany would be the appointment of a Receiver. If a Receiver is appointed, it is hoped that he would be able to manage the business as a going concern pending an improve- ment in trade conditions in the Malay States, and that ultimately he would be in a position to put forward a scheme of reconstruction offering favourable terms to the various creditors and the shareholders of the Company.

5. The Secretary of State is, however, prepared to arrange a conference, as proposed in the letter from this Office dated the 22nd of October.* At the conference the Directors will be at liberty to make any proposals for securing the necessary finance which do not depend on financial assistance from the Treasury, or the Federated Malav States Government, or the Colonial Development Fund; and in the event of no satisfactory proposals being made, Lord Passfield trusts that the Directors will be prepared to refrain from opposing the immediate appointment of a Receiver.

C. 72367/A/30 [No. 142].

No. 5.

I am, &c.,

G. JONES.

MESSRS. MAYO, ELDER, AND RUTHERFORDS to PERAK RIVER HYDRO- ELECTRIC POWER COMPANY LIMITED.

DEAR SIR.

10, Drapers Gardens,

London, E.C.2, 11th December, 1930.

As instructed by your Board we have considered the copy of the Memorandum of Financial Schemef and the letter of the 3rd Novembert from your Company to the Under-Secretary of State for the Colonies, and the Under-Secretary's letter to you of the 3rd instant.§.

2.

We observe from the Under-Secretary's letter that—

(a) Your Company's proposals have been found unacceptable.

(b) That in the opinion of the Secretary of State the only means of raising the necessary money required to finance the Company would be by the appointment of a Receiver, in the hope that he (the Receiver) would be able to manage the business as a going concern, and ultimately be in a position to submit a Scheme of reconstruction offering favourable /terms to the various creditors and the shareholders of the Company.

*C. 72367/A/30 [No. 83]: not printed,

+ Enclosure 2 in No. 2.

↑ No. 2.

§ No. 4.