CONVERSION OF £500,000 GUARANTEED DEBENTURES, DUE 1915 (LETTER FROM MR. S. C. LEARY, ACCOUNTANT, TO MR. W. F. MASSEY, M.P., RELATIVE TO).

Appendix to the Journals of the House of Representatives, 1910 Session I, B-06b

B.—6b.

1910. NEW ZEALAND

CONVERSION OF £500,000 GUARANTEED DEBENTURES, DUE 1915 (LETTER FROM MR. S. C. LEARY, ACCOUNTANT, TO MR. W. F. MASSEY, M.P., RELATIVE TO).

LaM on the Table of the House of Bepresentatives by Leave.

Dear Sir, — 158 Featherston Street, Wellington, N.Z., 20th September, 1910. Acting under your instructions that I should examine the statement 8.-6 a and extracts provided with reference to the conversion of £500,000 4-per-cent. guaranteed debentures, due 1915, I now beg to report as follows : — The debenture-issue of £500,000 was redeemed in the following manner : — £ 3f-per-eent. new inscribed stock ... ... ... ... 616,000 4-per-cent. guaranteed debentures converted ... ... ... 500,000 Showing the Dominion's increased indebtedness ... ... ... £116,000 Consequent upon conversion, the accumulated sinking funds of the guaranteed loan, amounting to £260,073 2s. 5d., were sec free, out of which sum sinking-fund debentures amounting to £96,371 were redeemed, leaving an amount of £163,702 2s. sd. at the disposal of the Dominion. At the date of the conversion the following was the position : — £ a. d. £ a. d. Loan, guaranteed debentures ... ... ... 500,000 0 0 Less sinking fund ... ... ... 260,073 2 5 Deduct sinking-fund debentures ... ... 96,371 0 0 163,702 2 5 Amount required towards paying off £500,000 loan ... £336,297 17 7 On the £500,000 loan being converted, another loan of £616,000 was brought into existence, and the available sinking fund of £163,702 2s. sd. set free. This sinking fund was not appropriated in reduction of the £500,000 loan, but was in effect treated as another advance to the Dominion, the position being— £ s. d. Amount of guaranteed debentures at par ... ... ... 500,000 0 0 Less accumulated sinking fund ... ... ... ... 163,702 2 5 Dominion's ... ... ... ... ... 336,297 17 7 Discharged by issue of 3J-per-cent. new inscribed stock ... 616,000 0 0 Dominion's increased liability ... ... ... ... £279,702 2 5 If, however, the £336,297 17s. 7d. was raised by the issue of 3J-per-cent. new inscribed stock, it would be necessary to issue £384,340 of such stock; £ s. d. The increased debt of the country would thus have been ... 616,000 0 0 Less ... ... ... ... ... ... ... 384,340 0 0 £231,660 0 0

B—6b.

Dealing now with the interest, the position is as follows :— 3 i per cent, on £616,000 ... ... ... ... 21,560 0 0 Less 4 per cent, on £500,000 ... ... ... ... 20,000 0 0 Increase of £1,560 0 0 lo this must be added— Loss of interest on sinking fund of £260,073 at, say, estimated £ £ at 3% per cent. ... ... ... ... ... 9,102 Less saving of interest on sinking-fund debentures, £96,371 at H percent ... ... ... ... ... ... 4,337 4,765 Increased interest of ... ... ... ... £6 325 In considering the matter of interest, the question as to whether the net amount received from the sinking fund is or is not being used for reproductive works has not been taken into consideration, this being outside my province, and probably unascertainable. ot. ~ .. Yours, &c, W. F. Massey, Esq., M.P., Wellington. S. C. Leary.

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