362
advantage of the public. At the annual meeting in December last you stated that by the time the new line was constructed the old company would have a reserve almost equal to its capital and would be in a position to face any opposition. The CHAIRMAN-I think it was said at that meeting that we should have to reduce our dividend to meet any opposition. At that time we did not know there was any possibility of getting this concession and we were, as a matter of fact, petitioning the Government against the top terminus of the new Peak Tramway being alongside our own.
Mr. MOIR-Can the old company be disposed of without the shareholders being unanimous ?
The CHAIRMAN-A three-fourths majority of the shareholders is sufficient.
Mr. MOIR--And then it must go before the Court.
The CHAIRMAN-No. It is not necessary. Mr. BROWN Mr. Chairman, and gentle- men: Following what Mr. Moir has said I am quite of his opinion that the general managers and the consulting committee had no authority and did wrong in committing the company to the Government for the purchase of the concession that they granted to Mr. Findlay Smith without any authority whatso
Was
And before the resolution is passed I
to
ever. would like to make a few remarks. We are here te-day to discuss the advisability of passing certain resolutions leading up to the dissolution of the company followed by the sale of same to a new company. Following that, we are told that the object of the meeting is for the purpose of sanctioning a re-construction of the company to acquire aud construct a new tramway to the Peak that would otherwise be con. structed by an opposition company fatal to the continued profitable existence of this company. I am not here to-day to arbitrarily obstruct the business for which the meeting
called, bnt
learn whether any better reasons than those already given are forthcoming to justify a dissolution of the com- pany for the purpose set forth, viz: the sale of same as a going concern to a new company at the price of $200 per share-or say, $250,000. I am not opposed to a dissolution if the price offered for the purchase of our undertaking was reasonably near its value, but I am opposed to the sale of our property at the ridiculously low figure mentioned-practically half its value The last balance sheet shows the written down assets of the company at the end of 1904 af $243,909.17- virtually the price we are asked and advised to accept, to sell and hand over our valuable and handsome dividend-earn. ing, going concern-earning as it has been for some
years, net profits, after paying charges and all runoiug expenses, &c., of be- tween $40,000 and $50,000 per annum on a capital of only $125,000, about 40
per cent
per annum, and we are asked and advised (or rather ill advised) to give it away for $250,000-only double the capital of the company, while enjoying as we do a monopoly which is growing in value every year. There are a number of other nice little monopolies in the Colony, the shares of which are quoted at 2, 3, and 4 times above their par value for the reason that they are earning good dividends on their market price. I wonder if they would-even if asked or advised-be willing to sell out at only double par value I think not. Our tramway shares have been quoted as hith as $325 and over before now, in fact until very recently, and justifiably so; and there is no reason that I can see, based on the admirable position the company is in-or its dividend earning power-why the shares are not to-day cheap at $300 and over. I do not agree with the general managers that the opposition of a line that will take about three years to build and get into running order is, to use their own term, going to be fatal to the existence of this company as a dividend paying concern. Let me here, how- ever, quote from the general manager's speech at the last ordinary general meeting, showing what their views were on the subject at that time when the opposition was referred to. He spoke of the reduction of dividend and the plac- ing of an unusually large sum to reserve fund and went on to say, "If this policy be pursued for another two years (about the earliest period in which any opposition line could be opened for traffic) this Company will have a reserve fund of about $100.000, and with its small capital,
their
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THE HONGKONG WEEKLY PRESS AND
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and a reserve almost equal to its capital, will be in a very sound position, and strong enough to meet almost any contingency that may arise." But why is ti ere such a change in the opinion | of the general managers? In the circular issued the other day it says: "The genera managers consider such opposition would be fatal | to the continued existence of this company as & dividend paying concern and they, with the consulting committee, have for the past six months been strenuously opposing the new scheme; and on finding that they would be unable to prevent the Ordinance authorising the scheme from being passed, they made arrange- ments with a view to the amalgamation of the concerns.' Why have the general managers changed in six months when they knew as much about the forthcoming opposition in December as they do now? It will take very strenuous, determined and long con.inned competition to pull the net profits of our company down to even 10 per cent., and 10 per cent. ought to satisfy any reasonable investor, so that the contemplated opposition does not, to my mind, Turn- justify a dissolution of this company. ing to the question of the new company in which we are offered the privilege of taking shares by transferring our interests in this to the new company, that proposition does not. either, strike me as beneficial or inviting. I understand the new company is to be capitalized at $750,000, and we are told by the Press that "the profits already acorning from the present tramway, are ample to assure a steady dividend of at least 6 per cent. on the whole of the capital of the company now in formation." How does 6 per ceut. in the new company strike you gentlemen as against about 4 per cent. which our present company is earning, and, in any event, and dealing simply with the period in the immediate future-why should the present company, with its capital only of $125,000, be burdened, during the three years the new line is under construction, with earning dividends on $750,000-the capital of the new company? Opposition, even when it does come, will never to my mind be able to bring our dividends in the present company down to a 6 per cent. basis, which is all we can look for with any degree of certainty in the new company. And
hope that a majority of shareholders here to-day will vote against this sacrifice sale of our property, into which an effort is seemingly being made
to force us into.
The CHAIRMAN- I take it that Mr. Brown's principal exception is to the price at which the old company is being sold to the new-that is to say at $200 a share f
Mr. BROWN-In the first place. I object very strongly and very forcibly to the directors committing -
The CHAIRMAN-That has been replied to. Mr. BROWN-And now I say my contention is that the company should not be sold at that price unless it is for the purpose of improving the position of the Company or making an advantageous sale; otherwise there is no neces- sity for this dissolution.
The CHAIRMAN -You have the option of taking scrip in the new company over and above the shares you will get in exchange for sorip.
your
old
Mr. BROWN-I know that. The CHAIRMAN-You are, therefore, practi- cally selling the company to yourself. What does it matter then. if you sell at $20, or at $500 per share.
Mr. BROWN-If I may speak again, there is another point I overlooked. Have I your per- mission to speak again ?
The CHAIRMAN-You will get 12 per cent. for these three years and if this opposition line came off, as it would no doubt come off, if we had not bought the concession; you might not have got anything at all. If you disapprove of what we have done we are very sorry, and it is open
you to
an amendment, if you wish; and now I should be glad to answer any question which any other shareholder might wish to put.
to
CgkQTI
"Mr. BROWN-Might I speak again for a mo
The CHAIRMAN-Y88.
ment?
Mr. BROWN-I omitted to state and bring out a point in connection with the sale of the pro- perty for $250,000. In the position in which it is to-day, let me draw your attention to the fact that in selling this company you are selling
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[June 12, 1905.
the future m nopoly of the High Level Tram- ways business for $250,000. I don't think that either the Government or the people of Hong- kong looking to the tramway service will be more pleased than we shareholders, who are being forced into a sale of their shares at little over half their value.
The CHAIRMAN-All these remarks have been practically dealt with in the Chairman's speech, and I hardly think there is any necessity
go into them again at length.
to
Mr. ARNOLD-Do you think there is traffle enough to pay a dividend on such a large capital?
have
The CHAIRMAN-Yes. We have gone fully into that matter. I may mention that fifteen years ago our traffic receipts amounted to $27,000 a year. Last year they amounted to nearly $10,000, and who shall say that fifteen years hence, the joint lines working in harmony under one management, should not total $500,000 a year? You may accuse me of being a little sanguine, but when I look
take round and
B mental note of all those people in the Colony who been successful, although they may, in many respects, be as wide apart as the poles, they all have one thing in common, namely, a great faith in the future of Hongkong. I, myself, have faith in the future. The last ten have witnessed a great metamorphosis, and I am confident the next ten will bring changes equally as great. I hope that those of you who are here, then, will not think unkindly of those who have secured for you what may then be one of the most prosperous tramways in the world.
years
Mr. ARNOLD There are a limited number at the Peak, and most of the sites in the districts through which the line will pass are occupied.
The CHAIRMAN-You forget this line is to. run through a very populous district, and when the Tytam Tuk reservoir is completed Pokfulum reservoir will be filled up, or at all events not be used as a drinking supply. A very large area above Pokfulum will then become available for building sites.
Mr. ARNOLD-I understand the terminus of both lines is to be at the same point.
The CHAIRMAN -The terminus of the new
line is to be at Victoria Gap the same as the old one.
Mr. ARNOLD.-'l'hat does not seem like opening up a new district,
It
The CHAIRMAN-All railways in England have their terminus in some part of London. does not follow because they have their terminus in the same place that they will not open up a new district. As a matter of fact, it often happens at the present moment that the Company are unable to meet the traffic by certain trams, especially by business trams in the morning and evening. We have had complaints from the public, the Government and the military authorities, and had arrived st a point where something had to be done when it was worked out for us.
Mr. ARNOLD--You have satisfied yourself that there will be a fair return on the capital?
The CHAIRMAN-That is our opinion.
Mr. MOIR-You have no doubt of the cost of constructing the new line, I suppose! This $750,000 is taken as an approximate amount?
The CHAIRMAN — We have had no detailed
survey or estimates. It will amount to over four times the cost of the present line.
Mr. MOIR-From what I see we have to tunnel through the gardens ?
The CHAIRMAN-Yes, there will be a small tunnel.
Resolution No. I was proposed by the CHAIE- MAN, seconded by Mr. G. H. Porrs, and carried. Six votes were recorded against it.
Mr. BROWN-Mr. Chairman, please note my protest against the resolution being put into effect.
Three shareholders voted against Resolution No. 2, which was proposed by Mr. G. M. BAIN, seconded by Mr. o Fook, and carried.
Mr. T. ARNOLD proposed and Mr. LAU CHU PAK seconded, the adoption of the third resolu- tion.
The proposition was carried, there being four votes against it.
Mr. H. P. WHITE moved and Mr. TARRANT seconded, the adoption of Resolution No. 4, The motion was carried, there being four votes against.
Mr. BROWN-I would also ask you, Mr.
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