"26th November.
Ly our advertising columns yesterday morning there appeared a notice of the approaching sale by auction, "under instructions received from the Russo-Chinese Bank," of the ground, buildings, machinery, and plant of the Yah Loong Cotton Spinning Company, Limited. The shareholders in this company were not entirely unprepared for this blow, but it is none the less a very heavy one, for it means, if the share market is a fair indication, the loss of ninety-nine per cent of their investment, The actual notice given to. the unfortunate shareholders by the directors of the company was less than a week, for it was only on the 19th instant that they were called together to be told that if they did not pay up the sum they owed the Russo-Chinese Bank, nearly Tls. 380,000, on the 24th inst, the Bank would realise their security. At the meeting on the 19th instant the Chairman, Mr. J.S, Fearon, explained that on the 24th of July the company was notified that its overdraft must be cleared off on or before the 24th of November; but "as shortly after this notice was received, the demand for our yarn improved and prices advanced to a point that gave. us a small profit over and above the cost, which included the heavy charge for interest, viz, 8 per cent and 9 per cent, it appeared to your directors reasonable to hope that, as our financial position was improving, our bankers would be dis-wesed to have some consideration for the shareholders, and grant some further extension of time, as should the outlook for our cotton industries continue to improve, as it has done in the past few months, there would be much better chance to reorganise say six months hence than at present." This would have been a very reason able expectation had the Yah Loong company been dealing with a local bank; but the probability is that the managers here of the Russo-Chines Bank were acting under instruction: from St. Petersburg, and had not the power if they would to extend the time beyond the date named in the notice given to the company on the 24th of July. Much sympathetic consideration should not be expected from a board of directors thousands of miles away, impelled as they are by the banker's dread of having assets locked up for a long period, even if they are earning good interest. It is very different with a local bank whose directors are on the spot, or a foreign bank whose manager is allowed full discretion and is himself a local man with a long experience of local conditions. The Yah Loong company has a property that has cost Tls. 736,000 and has not sensibly depreciated in value, and it does seem hard on the shareholders that they should lose their dobe of not more than half its value. property altogether on account of a
They may possibly complain that the notice given them by their directors was too short to enable them to find even the Tls. 100,000 with which the Chairman said they could probably tide over the present crisis; but the directors have no doubt been trying their best to avert the calamity threatening them, and did not wish to confess their inability to the shareholders as long as there was any chance of success.
The shareholders in the Inter-[national Cotton Manufacturing Ca., L4,, whose report was printed in our columns on Friday last, have also to seriously consider the question of ways and means. As appears by their accounts they have an overdraft with the Russo-Chinese Ban! of some Tls. 475,000, and their Report states:—"Our Bankers, the Russo-Chinese Bank, have given notice to terminate on the 31st of January next the agreement with respect to the overdraft, but negotiations are proceeding with a view to its renewal. At the same time the directors consider it absolutely necessary that the finances of the company be placed on a sounder basis, and with that end in view they have decided under the powers con: ferred by the Articles of Association, to issue debentures bearing interest at 7 per cent per annum to the extent of Tls, 500,000, and they look to the shareholders to materially support the said issue, The directors furthermore recommend the reconstruction of the company, viz., to reduce the paid-up capital by 25 per cent, say from Tls. 838,490 to is. 628,800.... With normal profits it would probably take two or even three years, to wipe off the loss now standing in the books, and the directors consider it in the best interests of the shareholders to lask them to make this immediate {sacrifice whereby their stock may reasonably be expected to become in he immediate future a dividend-arning one, or, in other words, to yoke @ fresh start with full provision made for depreciation up to date." If this scheme is successful, che position of the company will be: paid-up capital. Tls. 800 628,
Text read from the printed page and cleaned; old type leaves the occasional error.