The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1914-01-23

enc bond issue and make said payment
preferred over dividends on the pre-
fcrred stock, there was nothing 70 pre-.
vent the McisrydR1 Sugar Company,
Limited, from ereatinnnn a LEGATION 10
any amount year I'D shaking III
same intervene az prior Hen on the
income and profits OF the McBrvde
Sugar Company, Limited. over divi.
bends on preferred stock. thereby 10.
tally destroying the market value Of
the preferred stock.
Finding.
in the opinion Of your committee.
the $50U00.pu per annum cumulative
smiling fund provision Of the new bond
issue IS the real cause of Complaint
~ MT. Kinney against your agents.
This Is In part supported BY the evil
denee furnished By copies Of Mr.. Kin
ney's letters TO the officers Of Alexander
Baldwin, Ltd, and dated subsequent
70 some OF the acts herein Complained
Of wherein be expressed complete satisl
faction with it, administration Of the
POLARIZATION affairs, which satisfaction
evidently eontinned until after the isl
sue Of preferred stock at the end o.
1911.
"Irhe directors Of the McBryde Sugar
Company, Limited, az meeting held
upon March D, 1912, decided upon rec
ommending to the stock holders the re-
demption Of the $2,0O0,00000 six per
cent bond issue, by a refund issue Of
a like amount Of five per cent bonds.
with the Understanding that the prop.
erty Of the Kauai Electric Company
| would be added as security under, The
new issue, and that $I0O00.00 per an.
mum sinking fund featnre-to be de.
rived from prohts-w would be included.
1.-THE word cumulative does not appear
/ in these minutes What does appear,
however, is statement to the effect
that as a saving Of $20,000.00 per an
mum will be effected in interest. that
an additional charge of but 100000. 90
per annnm will be incurred by the plan
tation At the same meeting, the pro.
posed draft Of a letter to the attorneys
lof the company TO prepare the necessary
details, etc4 in connection with this is,
sue, was approved Of, in which letter,
Fin outlining the provisions to cover tie
issue, a sinking fund feature Of $50.
100000 per aHnam was stipulated, ire
speetive OF profits. 500
At the stockholders meeting. held
March 20, 1912, the matter was submit.
ted 70 them for approval and they en-
powered the directors to fake up the
six per cent bonds by an issue Of ave
per cent bonds, upon the general plan
outlined by the directors. The notice
sent ont by tho treasurer Of the Me,
Bryde Sugar Company, Limited, upon
March p, 1912, TO the holders Of the
original six per cent bonds, wherein
they were offered the opportunity TO
exchange the 6's for 5s' explained In
full and without giving room for any
possible ambiguity Of construction, the
i 100000 per annum cumulative fea.
ture, derivable from net profits, Of the
new issue. 81
Were Directors Authorized7
The questions arise: AZ the word
cumulative was not specifically used
at either the directors or Stockholders
meetings referred to above, or at least
does not appeaf in the minutes Of those
meetings, were the directors legally an
thorized to enlbody such feature in
the deed of tfustf
+ " Again Did the resolution passed By
the stockholders, authorizing the issue
upon the general plan outlined by the
directors, confer the necessary legal au-
thorityf t
s'Again: The letter to the attorneys,
etc. provides for the $4,000. 90 Der
ahnuin sinking fund, with no mention
made Of cumulative or profits; would
the directors have been legally author.
lied, under the authority so conferred
by the stockholders, to have embodieS
q, 50,000.00 per annum mandatory sink.
ing fund featnfe, irrespective Of profits
All Of these appear To be Questions
Of the legal authority conferred upon
the directors by the Stockholders IN
connection with this refund issue. which
your committee is not prepared TO an
swer. What was done, as you are aware.
was TO embOdy q cumulative sinking
fund feature Of $50,000.00 per annam
derirable from profits, and IL Is Ia
connection with this action by the al.
rectors and how, if al all, II affected
i the value Of the stock, common and
preferred, in your company, and how il
has Affected the prospects OF future
! dividends upon these two classes OF
stock, that an opinion is being ex-
The Reminding issue.
"The proposition TO refund the six
per cent bonds was receiving eonsidefa-
ton from your agents late. In the year
1911, before the preferred stock issue
Of $000,000.00 had been actually placed,
but il was March, 1912, before the mat.
ter was submitted to the stockholders.
The object Of the refund, as set forth
! by the agents in their letter TO the
stockholders and read at tho Meeting
lheld upon December 10, 1918, was to
fireplace the six per cent bonds by five
per cent bonds and thereby effect a
saving in interest to this plantation
l'of $20,0O0O0 per annuin; they reaiiz.
ing, and quite properly SO, that II the
| plantation was ever to he placed upon
asound basis two things had TO be done,
1 !, e., TO reduce the cost of production
and also TO reduce the outstanding obi.
cations Of the company. Although the
original issue Of @ 3 had been placed
ten years prior to this date, but 49,.
000.O0 had ever been applied to the
sinking fund 10 redeem the iseue, IL,
therefore, appears that the hun reds @
| Thousands Of dollars spenf ~ the t,lan.