651
of 49 years from the present date, but the Sinking Fund Contribution does not commence until two years hence.
3. Bearing these conditions in mind, it will be seen that if the Debentures are converted into Stock at par the Colony will make certain savings during the 13 years which the Debentures would have run if they had not been converted, mainly in the form of a lower rate of interest and the discontinuance of the Debenture Sinking Fund contribution for the two years which have still to elapse before the Stock Sinking Fund commences.
Against these savings have to be set the yearly charges for interest and Sinking Fund on the Stock issued on Conversion and as these charges would have to be met during the 36 years (49 - 13) the Stock Sinking Fund would require to accumulate after the original Redemption date of the Debentures, it will readily be understood that the substitution of Stock for Debentures on such terms would eventually entail a pecuniary loss on the Colony, for which the indirect advantages of uniformity and a somewhat more important line of Stock might be an inadequate compensation.
4. But if any considerable amount of the Debentures can be extinguished without the necessity of issuing Stock either in exchange or to provide the funds for extinction, then the saving to the Colony is increased by the disappearance of the interest and Sinking Fund charge, together 7.4 per cent, on the Debentures extinguished. Acting on this principle we have determined to offer to convert only £140,000 of Stock and to provide funds for the extinction of the remaining £60,000 of Debentures, by the appropriation to this purpose of the Sinking Fund accumulations of £58,600 and by the sale of Stock for the small balance.
(2.)
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of 49 years from the present date, but the Sinking Fund Contribu-
tion does not commence until two years hence.
3. 'Bearing these conditions in mind, it will be seen that
if the Debentures are converted into Stock at par the Colony will
make certain savings during the 13 years which the Debentures
would have run if they had not been converted, mainly in the
form of a lower rate of interest and the discontinuance of the
Debenture Sinking Fund contribution for the two years which
have still to elapse before the Stock Sinking Fund commences.
Against these savings have to be set the yearly charges for in- terest and Sinking Fund on the Stock issued on Conversion and as these charges would have to be met during the 36 years (49 - 13)
the Stock Sinking Fund would require to accumulate after the original Redemption date of the Debentures, it will readily be
understood that the substitution of Stock for Debentures on
such terms would eventually entail a pecuniary loss on the Colo-
ny, for which the indirect advantages of uniformity and a some- what more important line of Stock might be an inadequate comp en-
sation.
4. But if any considerable amount of the Debentures can be extinguished without the necessity of issuing Stock either in exchange or to provide the funds for extinction, then the saving to the Colony is increased by the disappearance of the interest and Sinking Fund charge, together 74 per cent, on the Debentures extinguished. Acting on this principle we have de- termined to offer to convert only £140,000 of Stock and to pro- vide funds for the extinction of the remaining £60,000 of Deben- tures, by the appropriation to this purpose of the Sinking Fund accumulations of £58,600 and by the sale of Stock for the small
balance.
(2.)
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