Venturers' Corner
Capital reconstruction schemes which cut across the legitimate claims of preference shareholders are fortunately becoming more rare, but I cannot exclude from this category the plan now put forward by Platt Brothers (Holdings), the Oldham textile machinery makers. The basis of the board's decision to reorganise is, of course, that earnings have at last improved, but instead of the benefits being passed on to the second preference holders, who have now been without any dividend for over seven years, these unfortunate people are asked to accept a cut in their dividend from 7 to 5 per cent., admittedly in exchange for an improvement in status, and to take a meagre allotment of ordinary shares in satisfaction of seven years' arrears.
I do not know whether the scheme will- be carried through in face of the opposition it is bound to arouse, but it does seem to me that at 19s. 6d. the Li second preference shares are a good speculation. If the worst happens and the scheme is adopted, a holder will have a new Li 5 per cent, cumulative preference with its dividend well covered, worth, say, 17s. 6d., plus about 6s. nominal of ordinary capital, which I should value at another 3s., with possibilities of improving later on. If, on the other hand, the scheme is dropped and second preference holders decide to hold out for their 7 per cent. rate and collect their arrears as and when they can be paid out of earnings, the shares should be worth at least 255. It is obvious from the board's circular that earnings are in pros- pect which will be amply sufficient to cover the regular 7 per [Readers' enquiries, or requests for advice regarding particular shares, will be answered periodically as space permits. Correspon- dents who do not desire their names to appear should append iritials or a pseudonym_ to their questions.] _ _ _
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