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The Pamphlet Collection of Sir Robert Stout: Volume 84

Reduction of Capital

Reduction of Capital.

As intimated in the Report of the Committee of Investigation, a reduction of capital seems absolutely necessary, as the Patents for which so much money was given have gone out of your possession, and the contract with the Postmaster General for the supply of Telephones, from which no doubt it was expected you would derive very large profits, is at an end.

It must also be borne in mind that should the anticipation of your Board be correct as to the payment of a dividend next year (on which subject they see no reason to change page 17 their opinion already expressed), that you could not take that dividend by reason of your not having sufficient assets to represent your paid-up capital.

Your assets amount to the nominal sum of about £360,000, and consist of the following :—
£14,000 9% Debentures of the River Plate Telephone Company,
£11,500 9% Preference shares of the River Plate Telephone Company,
£19,250 Deferred shares of the River Plate Telephone Company,
*£30,000 5% Debentures of Telephone Company of Austria,
£23,000 Ordinary shares of the Telephone Company of Austria,
£190,000 Ordinary shares of the Edison-Grower-BellCompany of Europe.

In addition, you have the amount to be received from the United Telephone Company, if that Company elects to terminate the agreement. Stock at home and Abroad, bills due at various dates from the Edison-Grower-Bell Company. Instruments to be supplied under the agreements with the subsidiary Companies. Plant, goodwill of business, and cash in hand or owing the Company.

We do not think that all these assets could be said to be worth more than £170,000, though of course this is only your Committee's opinion on the subject, as you will readily perceive that it is a difficult matter to value securities which have no market price; one thing we may say, we are of opinion that the value of these securities will increase.

page 18

A reduction of five shillings per share would bring the capital of the Company down to £168,880, and a resolution to that effect will be brought before you.

* In course of issue.