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PECORD OFFICE

Peference -

TATAAC.O.882/12

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PUBLIC RECORD OFFICE. LONDON

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ments should be made for a Bank loan on the security of the Prior Liens as collateral. It was agreed that Mr. Kilpatrick's terms, having regard to the character of the transaction, were reasonable.

2. A further meeting took place on 16th January, 1931, between Sir Gilbert Grindle, Mr. Calder, and Mr. Bamford. The main issues were as follows:-

(a) Mr. Balfour held very strongly that the Prior Liens should not be issued at present and that arrangements should be made for a Bank loan. His views are expressed in a letter dated 16th instant, a copy of which is attached.

(b) It was by no means clear at the present that the full £200,000 of Prior Liens was required. Certainly, this sum was considerably in excess of immediate requirements, and the Company would consequently be losing interest for a substantial period.

(c) Arrangements could be made with Lloyds Bank to enable the Company to draw up to £200,000 within the next 9 months on the security of £200,000 Prior Lien as collateral, subject to interest at half per cent. over Bank rate with a minimum of 43 per cent.. Arrangements could also be made for a suitable set-off by the Bank in respect of overdraft facilities accorded up to the amount of the Federated Malay States Loan still standing on deposit.

(d) A Bank loan would accordingly give substantial savings in interest and would enable the Company to raise all the money required in the near future. Mr. Balfour had undertaken that if it was necessary to place the Prior Lien he would see it placed on terms as good as are at present

offered.

(e) After consulting Counsel (Mr. Gordon Brown) Mr. Baird advised that the arrangements with the Bank could be carried out within the terms of the existing scheme of arrangement. He also advised that the terms for the Prior Liens, if issued, may be framed so that the Company would have the option to pay off the Stock at any time on suitable terms. Mr. Balfour, Mr. Baird, and Counsel were all agreed that it was very desirable, with a view to a reconstruction of the Company, to avoid issuing the Prior Liens if it was in any way possible; or, in the alternative, to restrict the issue to the least amount necessary so that they could be paid off at an early date.

3. It was accordingly agreed that the Prior Lien issue should not be made at the present time, and that the Company should make arrangements on the lines indicated for obtaining facilities from their Bankers with the Prior Lien as collateral.

4. It was agreed that Mr. Bamford should take steps accordingly. The following action has been taken :

(a) Mr. Kilpatrick has been instructed to release his guaranteeing Syndicate (Mr. Kilpatrick agrees that from the broader view the policy now adopted is a wise one).

(b) The Company have been informed of the decision and instructed to make arrangements with Lloyds Bank accordingly. With assistance from Mr. Balfour arrangements have now been made with Lloyds Bank to obtain the necessary overdraft on half per cent. over Bank rate with a minimum of 4 per cent.

DEAR MR. BAMFORD,

BALFOUR, BEATTY AND COMPANY LIMITED.

66, Queen Street, London, E.C.4, 16th January, 1931. Perak River Hydro-Electric Power Company Limited.

I HAVE now had an opportunity of looking over the Resolution to be submitted at an Extraordinary General Meeting of the Company on 22nd January. Under the scheme of arrangement referred to in that Resolution it appears that you would not be able to free yourself from the obligations to the Prior Lien Debenture-holders for at least ten years, and if these are issued, except as collateral at the present moment for a temporary loan, you will have created a great stumbling-block to the proper reorganization of the Company's affairs.

I hold the strongest possible view in the interest of the Treasury, the Federated Malay States and the Colonial Office, that no effort is too great at the present moment to ensure that the Prior Lien can be used if necessary as collateral for temporary accommodation, and that we are in a position to extinguish the Prior Lien at the first favourable opportunity.

A

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The object I have in view is to secure as promptly as possible the £850,000 Federated Malay States Loan and replace the 7 per cent. Participating Debenture by securities representing in a suitable manner their junior position. I have no hesitation in saying that it would be a grave disservice to the interested Departments of State mentioned above if I am hampered by an outstanding Prior Lien of small amount which cannot be dealt with for ten years. If we are driven to place the Prior Lien I will see them placed on terms as good as offered at present, but I do not contem- plate having them in existence for any great length of time.

E. St. J. Bamford, Esq.,

Trade Facilities Act Advisory Committee,

Treasury Chambers,

S.W.1.

Enclosure 2 in No. 16.

Yours, &c.,

GEO. BALFOUK.

PERAK RIVER HYDRO-ELECTRIC POWER COMPANY LIMITED.

OPINION.

I AM of opinion that, if the scheme dated the 12th January, 1931, is sanctioned by all necessary parties and carried into effect, there will be nothing to preclude the Company, with the approval of the Treasury, from issuing the Prior Lien Deben- ture Stock or any part thereof to the Company's Bankers by way of collateral security for sums to be advanced by the Bank and paid into the special account mentioned in Clause 4 (p) of the scheme, instead of issuing such Prior Lien Stock outright; nor do I see any reason why the Treasury should refuse to approve such issues of Prior Lien Stock to the Company's Bankers, if it is satisfied that this method of financing the Company by the issue of Prior Lien Stock is advisable. The Bank advances referred to in Clause 5 paragraph (E) of the scheme are, in my opinion, advances made other- wise than against deposits of Prior Lien Stock, the interest on which is dealt with by paragraph (c) of Clanse 5, and in any event Clause 5 merely provides how the net earnings of the Company are to be calculated for the purposes of the scheme and does not, in my opinion, in any way prohibit the Company from in fact obtaining Bank advances in excess of £50,000 if it thinks fit and is able to do so.

C. 82367 31 [No. 104].

No. 17.

W. GORDON BROWN,

16th January, 1931,

Lincoln's Inn.

THE HIGH COMMISSIONER to THE SECRETARY OF STATE.

(Confidential.)

(Received 4th May, 1931.)

MY LORD,

Government House, Singapore, 4th April, 1931. I HAVE the honour to acknowledge the receipt of Your Lordship's Federated Malav States Confidential despatch of the 20th February, 1931,* on the subject of the Perak River Hydro Electric Power Company Limited, and to record my concur. renee with the view expressed in paragraph 4 of Your Lordship's despatch that the Government of the Federated Malay States, as the largest individual Ordinary Share- Holter and the holder of the Preference Shares, adequately represents the interests of the Ordinary Shareholders.

I have, &c.,

C. 82367/31 [No. 126].

No. 18.

H. M. SCOTT,

High Commissioner.

THE HIGH COMMISSIONER to THE SECRETARY OF STATE.

(Confidential.)

(Received 10th August, 1931.)

MY LORD,

King's House, Kuala Lumpur, 15th July, 1931.

In reply to Your Lordship's Federated Malay States Confidential despatch dated 30th April, 1931,† in which were forwarded copies of letters from the Crown Agents * C. 82367/31 [No. 76]: not printed. + C. 82367/A/31. [No. 99]: not printed.