XN000022-1975-01-22 — Page 4

WEDNESDAY, JANUARY 22, 1975.

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EVEN ON THESE CALCULATIONS. THE COMPANY WOULD NOT BE VIABLE AND IT WAS ESTIMATED THERE WOULD STILL DE A NET CASH SHORTFALL OF ABOUT $100 MILLION IN 1975.

EXPLAINING WHY A 20 PER CENT INCREASE IN TELEPHONE RENTALS WAS BEING PROPOSED, THE FINANCIAL SECRETARY SAID THAT THE EFFECT OF THIS LEVEL OF INCREASE ON THE COMPANY'S FINANCES, TOGETHER WITH THE WAIVER OF ROYALTY AND NO DIVIDEND PAYMENTS ́ IN 1975, WOULD ROUGHLY EQUATE TO A 50 PER CENT INCREASE IN TELEPHONE RENTALS, AS PROPOSED BY THE ADVISORY COMMITTEE.

*WITH THE SO PER CENT INCREASE THE GASH SHORTFALL IN 1975 WOULD BE ABOUT $100 MILLION. WITH A 30 PER CENT INCREASE IN RENTALS AND NO DIVIDEND AND ROYALTY PAYMENTS, THE CASH SHORTFALL SHOULD BE NOT VERY DIFFERENT AND, IN FACT, A LITTLE LESS (JUST UNDER $90 MILLION), HE SAID.

MR. HADDON-CAVE SAID: THE SITUATION REVEALED BY THE ADVISORY COMMITTEE'S REPORT INDICATES A FAILURE OF THE MANAGEMENT AND THE BOARD OF THE COMPANY IN THE PAST TO MONITOR PROPERLY ITS FINANCIAL POSITION AND TO DRAW APPROPRIATE CONCLUSIONS FOR FUTURE PLANNING.

IT ALSO POINTED TO THE FACT THAT EVEN AN EXAMINATION AS CAREFUL AS THE ONE CARRIED OUT DY THE ADVISORY COMMITTEE IN THE TIME AVAILABLE, HAS NOT COMPREHENSIVE ENOUGH TO REVEAL THE WHOLE POSITION OF THE COMPANY AND TO MAKE RECOMMENDATIONS FOR FUTURE CORRECTIVE ACTION, HE SAID.

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