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SCHEDULE.

1. High Commissioner's despatch No. 649 of 4th October, 1930.*

2. Trade Facilities Act Advisory Committee. 11th March, 1931.

Counsel's opinion, dated 21st November, 1930.†

3. Secretary of State's despatch No. 143, 8th April, 1931

4.

High Commissioner's despatch No. 425, 30th June, 1931.§

5.

Trade Facilities Act Advisory Committee. 10th February, 1932.||

6.

High Commissioner's despatch No. 713, 3rd November, 1932, paragraphs 1-4

and all enclosures.¶

C. 92302/32 [No. 69].

(F. 8720/4.) SIR,

No. 27.

TREASURY to COLONIAL OFFICE.

[Answered by No. 31.]

Treasury Chambers, 22nd December, 1932. I AM directed by the Lords Commissioners of His Majesty's Treasury to refer to Treasury letter of the 8th July last (F. 8720),** and recent semi-official discussions with your Department regarding the proposals of the Perak River Hydro-Electric Power Company, Limited, for securing the electricity supply to the Malayan Tin Dredging Company, Limited, and Southern Malayan Tin Dredging Company, Limited, and to request you to inform the Secretary of State for the Colonies that They have had under consideration the telegram on this subject, dated the 10th instant,tt addressed by the High Commissioner for the Malay States to the Secretary of State.

2: Their Lordships are satisfied that it is in the best interests of all parties that the proposals set out in the Treasury letter under reference should be carried through, and that the Company should be enabled to operate without a further issue of Prior Lien Debentures in excess of £400,000 provided that operations can be continued until the end of the Moratorium period in 1937, when the whole position of the Com- pany must necessarily be reviewed.

3. For this purpose and having regard to the terms of the High Commissioner's telegram, it has been suggested informally to Their Lordships that the Company should seek the consent of the Guaranteed Debenture Stockholders to a temporary suspension of Sinking Fund payments.

4. Their Lordships have carefully considered this proposal but They have decided that even though the Stockholders should be willing to agree to such a suspension, it would be damaging to Government credit for Them to consent to the adoption of this

course.

5. In all the circumstances, however, Their Lordships are prepared to contribute towards the service of the Guaranteed Stock so far as may be necessary to enable the Company to meet operating expenses until 1937, and to retain sufficient funds available during this period to meet any reasonable capital expenditure on new develop- ment which may be approved by Them.

6. Their Lordships understand that in the opinion of the Directors it would prejudice a favourable reconstruction of the Company, when the opportunity arrives, if the Company had defaulted in payment of interest on the Guaranteed Stock, but that this contingency should not arise if Sinking Fund payments can be met under the Treasury guarantee.

7. Their Lordships accordingly undertake that provided the acquisition of the Malayan Tin Dredging and Southern Malayan Tin Dredging Station is carried out on the terms proposed by the Perak River Hydro-Electric Company, They will meet under Their guarantee the annual Sinking Fund payments on the Guaranteed Debenture

* C. 72367/1/31 [No. 6]: not printed.

C. 82367/1/31 [No. 4]: not printed.

+ C. 82367/1/31 [No. 1]: not printed.

§ C. 82367/1/31 [No. 5]: not printed.

** No. 20.

†† No. 25.

|| C. 92302/32 [No. 1]: not printed.

¶ No. 24.

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Stock so far as may be agreed with the Company to be necessary for the objects set out in paragraph 5 above, on the understanding :-

(i) That the amounts thus becoming due to the Treasury and interest thereon in terms of Clause 6 of the Treasury Agreement of 26th July, 1926 (which replaces interest that would otherwise be payable on the Guaranteed Debenture Stock redeemed out of the Sinking Fund payment) will be chargeable against the balance of the gross income of the Company on Revenue Account before net profits are arrived at in terms of Clause 5 of the Scheme of Arrangement.

(ii) That except in so far as the Company may be able to recoup these amounts from time to time without detriment to its operations, Their Lordships will not enforce payment before the end of the Moratorium period on 1st August, 1937.

(iii) That the Government of the Federated Malay States will not before 1st August, 1937, enforce payment of interest on its loan to the Company except in so far as net earnings are available for this purpose.

8. In view of this undertaking Their Lordships trust that the Secretary of State, acting on behalf of the Government of the Federated Malay States, will intimate forth- with his consent to the Company's proposals on the basis set out above, so that the additional revenue accruing to the Company may be obtained without further delay.

I am, &c.,

C. 92302/32 [No. 68].

No. 28.

R. V. NIND HOPKINS.

THE SECRETARY OF STATE to THE HIGH COMMISSIONER.

(Paraphrase.)

(Sent 3.30 p.m., 22nd December, 1932.)

TELEGRAM.

[Answered by No. 29].

No. 210. Your telegram of 10th December.* Perak River Hydro-Electric Power Company. The Treasury are unable to agree to moratorium in respect of interest and sinking fund of guaranteed debentures, but agree that Prior Lien issue should not exceed £400,000 in any event and they contemplate following arrangement which Company consider will give adequate funds: Provided Malayan Tin Dredging Station is acquired on terms proposed the Treasury will under their guarantee meet sinking fund payments of guaranteed stock so far as may be agreed with the Company to be necessary to cover operating charges until 1937, and to retain enough funds to meet reasonable capital expenditure on approved new development during the same period. The sums thus due to Treasury and interest thereon will be chargeable against balance of Company's gross income before any profits are arrived at in terms of Clause 5 of scheme of arrangement. Except in so far as Company may be in a position to repay from time to time without detriment to its operations the Treasury will not enforce payment before 1st August, 1937. Federated Malay States Government will not enforce payment of interest on its loan before same date with similar exception. Treasury are advised that some doubt exists as to whether under Clause 9 of scheme of arrangement Federated Malay States Government could legally enforce rights before 1937. They recognize however that this was not the intention of the Clause and they wish to deal with the matter on the merits. As at present advised I do not entirely concur in legal advice tendered to Treasury but at this stage it is not necessary to discuss the question since foregoing is only acceptable proposal. I strongly urge that you should accept arrangement on above lines.

* No. 25.

64

Ja

RECORD OFFICE

Reference -

MMC.O.882/12

PUBLIC RECORD OFFICE, LONDON

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