Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1913-12-10

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sugar.. When the overdraft was con-
Yerted into preferred stock. this direct
interest charge disappeared, thereby
reducing McBryde's cost per ton and
increasing the factor Of safety for the
plantation in crucial times Ike the
present IF 's s4s = IS
As above stated, the issue Of pre-
ferred stock was proposed early in
1911, but owing to the various din
eulties and delays encountered, Il was
not contaminated until the last day
of that year,
Deal 10 Which Mr.. Kinney Objects.
During the latter part Of 1911, be-
fore the preferred stock was actually.
issued, the proposition OF refunding
the outstanding S2,o00. 900 issue Of 81
per cent 1920 year bonds by an issue
of like amount of 5 per cent 1920
year bonds was receiving considerar
ton by the agents. This IL the par
ticular deal In which TO Mr.. Kinney's
mind, the eloyen hoof of the agents
becomes fully visible In direct at.
tempt to obtain ownership of the as
sets and property OF MeBryde Sugar
Company, Limited. After having eli
minated the interest on the floating
debt as q direct charge against the
cost OF production and after having.
reduced marketing and other charges
against the plantation as far as pos
sible, the agents were still DESTROYS
of reducing the heavy interest charge.
on the bonded debt Of $4,000 per.
year against the company. As before
stated. 1911 was year Of high prices
and prosperous conditions and the
time seemed opportune for converting
/ the existing issue Of bonds into q new
issue at q lower rate Of interest The
plantation was not in position to
reduce the amount Of outstanding
bonds, and In order TO make 4 an
|indueemAlt to b dholdets to ex.
change the old he for the new at q
lower rate of int two aings had
to be done first, Il - 3 the Sc
Guilty behind the /, second,
e provide : large fund n
this connection, tDe HAkL Electric
Company had at the time an out
standing bond issue Of $50, 900 Of
bonds maturing In March, 1915. The
property of this company, as you well
know, Is absolutely vital to the well
fare Of McBryde Sugar Company Linz
tied, and could very properly be add
ed to the security Of the McBryde
bonds provided its own bonds were
paid. The agents having liQuidated
| their debt by the preferred stock Is
sue took up and retired the Kauai
Electric Company bonds so that the
- ,s<s,, -,
could be added to the security of that
| proposed bond issue. A cumulative
sinking fund Of $50. 900 per anntm out
| Of profits was provided, which. how
ever. meant only $4,000 after deduct
ling the saving In interest. At the time
| the matter was taken up, the financial
conditions were SO favorable that Il
was expected the larger portion Of the
bonds would be exchanged By the hold
ers. and the agents agreed to UNDER
write the entire issue at par and with
lout charging any commission there.
fore bat before the deal could Be- car.
lried out local financial conditions be-
Igan to tighten up, so that most Of
the holders preferred the cash to tax.
ing bonds at lower rate Of interest.
This necessitated the agents, contrary
to their expectations. taking over 81.
| 100000 Of the bonds IN order to put
| the deal through.
Change In Situation.
As above stated when the refunding
proposition was taken up the general
conditions we're very different from
what they are today. On the then rul,
ling prices of sugar Il was easy to-
figure that the profits would be suffi-
Gent to put aside the sinking fund,
pay dividends on the preferred stock
and something to the common stock
holders. It Is needless to call your
attention to the great change in the
situation arising from causes entirely
beyond our control. As Mr.. Kinney
says, the present Is crucial period
for all plantations, especially those
In the McRryde class. The test OF
whether or not q plantation can sur
vive depends to q large extent on
how much Of reduction can be made
In the cost of producing sugar. It's
borrowing power depends largely on
this factor: the assets of pIanta.
ton Ike MoBryde are Yalueless for
D1uA OHAHS puEpOS6S unless IL can re-.
duce the cost of production to meet.
new conditions and every dollars re-
ductinn IN fixed charges counts.
Where Stockholders Are Fortunate.
The stockholders of McBryde Sugar
Company, Limited, are fortunate in
having secured the $50 900 reduction
In bond interest In addition to the
large reduction in interest on open
account which the agents surrendered
IN taking the preferred stock. In.
other words III the old per cent
bonds were still outstanding, your
danger of foreclosure would be $50.
900 year greater than il iss today.
The sinking fund does not have to be
paid until there are profits out Of
which it can be paid, while in the
meantime, during this crucial period,
the plantation is placed in stronger
position in its endeavor to pull
through. !
Physical Conditions improved. =.
- In ff1n meantime rrIaI