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provided that:—

(i) Save in so far as there are net earnings of the Company with which to pay such arrears the Federated Malay States Government will not require or enforce payment of the cumulative arrears referred to in (b) of this Clause until on or after the 1st August, 1937;

(ii) The 7 per cent. Debenture Stockholders will not require or enforce payment of their fixed interest under (b), save in so far as there are net earnings of the Company available with which to pay such fixed interest, until on or after the 1st August, 1937;

(iii) The 7 per cent. Debenture Stockholders will not require or enforce payment of the cumulative arrears in respect of the period up to 1st August, 1937, unless and until there are net earnings of the Company available to meet such arrears.

(8) The net earnings of the Company are to be arrived at by deducting from the Gross Income of the Company on Revenue Account the following items:-

(a) All current outgoings of the Company on Revenue Account (including all expenditure upon repairs, maintenance and renewals of buildings, plant and machinery, and other assets);

(b) Depreciation upon such a scale as shall be laid down by the Treasury in accordance with Agreement between the Commissioners of His Majesty's Treasury and the Company dated 26th July, 1926;

(c) Interest and Sinking Fund on the Prior Lien Debentures as provided in

paragraph 3;

(d) Interest and Sinking Fund on the 5 per cent. Guaranteed Debentures; (e) Any other interest payable by the Company on advances from the Com- pany's Bankers not exceeding £50,000 outstanding at any one time. The balance shall represent the net earnings of the Company available for payment of the interest on the Federated Malay States Loan and the 7 per cent. Deben- tures, as provided in paragraphs 6 and 7.

The net earnings as above, shall be ascertained as soon as is reasonably practicable after the end of each year and shall be certified by the Auditors of the Company, whose certificate shall be final and conclusive as to the amount of such net earnings as against the Company and all other interested parties. Within one month of the Auditor's certificate the net earnings shall be applied by the Company in or towards making the payments provided in paragraphs 6 and 7.

(9) No dividend shall be paid on any Share Capital of the Company in respect of the 1 years ended 31st July, 1934, or thereafter as long as any arrears of interest on the Federated Malay States Loan or on the 7 per cent. Participating Debenture Stock remain unpaid. Scheme.-Ends.

Further telegram follows shortly. --PASSFIELD.

·

C. 72367/A/30 [No. 173].

No. 10.

THE SECRETARY OF STATE to THE HIGH COMMISSIONER.

(Sent 7 1st January, 1931.).

p.m.,

TELEGRAM.

No. 2. WITH reference to my telegram of 30th December,* giving text of revised Perak scheme, I should add that conditions stated in my telegram of 12th December,† with regard to resignation of Directors, appointment of new Directors, &c., remain unaltered, and Company will be informed that local advisory or managing board may be required.

Treasury will not approve issue of further Prior Lien Debentures beyond amount now to be raised without consent of Federated Malay States Government unless such further issue is required to meet interest or sinking fund on 5 per cent. Guaranteed Debenture Stock and will not approve expenditure out of moneys raised by Prior Lien Debentures without consent of Federated Malay States Government.

* No. 9.

† No. 7.

43

It was explained at meeting at Colonial Office that.only those already financially interested in the Company would subscribe money for the 5 per cent. Prior Lien Debentures, and that, as neither Treasury nor Federated Malay States would subscribe it was necessary to approach 7 per cent. Debenture holders to obtain their subscrip- tion to Prior Lien Issue. It was necessary (1) that the scheme of arrangement should be framed to avoid practical certainty of default by the Company at the end of the moratorium period, and (2) that the 7 per cent. Debenture holders should be given a chance of receiving some return on their 7 per cent. Debentures within a reasonable period.

Scheme has been communicated to Clementi who concurs.-PASSFIELD.

C. 82367/31 [No. 8].

No. 11.

A

THE HIGH COMMISSIONER to THE SECRETARY OF STATE. (Received 9.55 a.m., 4th January, 1931.) TELEGRAM.

4TH JANUARY. Confidential.

Your telegram of 30th December, No. 152 [157], Confidential.* Modified scheme for Perak Hydro-Electric was considered and agreed to by Committee on 3rd January. Committee desired to repeat their opinion regarding need for stipulations referred to in my telegram of 17th December.†

C.82367/31 [No. 12].

(F. 8720/3.)

SIR,

No. 12.

TREASURY to COLONIAL OFFICE.

Treasury Chambers, 5th January, 1931.

I AM directed by the Lords Commissioners of His Majesty's Treasury to refer

to recent semi-official correspondence and discussions with regard to the position of the Perak River Hydro-Electric Power Company.

I am to request you to inform the Secretary of State for the Colonies that on the recommendation of the Trade Facilities Act Advisory Committee, Their Lordships, as guarantors of £1,250,000 5 per cent. Guaranteed Debenture Stock of the Company, are prepared to concur in a Scheme of Arrangement with the Company's Debenture Stockholders in terms of the draft scheme dated 31st December, 1930, as agreed with your Department and the Government of the Federated Malay States.

Their Lordships' concurrence in this Scheme is subject to arrangements being made to Their satisfaction for the reconstitution of the Board of the Company and for the overhaul of the organization and administration of the Company. For this purpose it must be made a condition of acceptance of the Scheme that the Chairman and all the Directors of the Company shall place at the disposal of Their Lordships letters of resignation, to be made use of as and when Their Lordships may decide.

Their Lordships are anxious that there should be full consultation and co-operation between Themselves and the Federated Malay States Government in the arrangements proposed, having regard to the special interests of that Government. I am accordingly to request you to inform Lord Passfield as follows:-

(i) In terms of the Scheme of Arrangement it is provided that the Company shall be entitled to create Prior Lien Debenture Stock to an amount not exceeding £400,000, of which not more than £200,000 shall be issued immediately. It is also provided that the arrangements for the placing and issue of the Prior Lien Debenture Stock for its sinking fund and for expenditure from the special account into which the proceeds of the Prior Lien Debenture Stock will be paid shall be subject to the approval of the Treasury.

* No. 9.

† No. 8.

PECORD OFFICE

Reference -

C.O.882/12

PUBLIC RECORD OFFICE, LONDON |

ALLY WITHOUT PERMISSION OF THE DE PEPRODUCED PHOTOGRAPHK.-

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