Nova Scotia Carriage
Article #1 from 1914.
[This article was copied from an issue of the Financial Post held in the Western Libraries at the University of Western Ontario. The original article should be consulted since this copy may contain some errors. The text and/or the image are being made available to researchers for scholarly purposes. They should not be used for commercial gain without the permission of the author or publisher.]
Loss on Year's Business of $22,000 - Big "Write Off" on Buildings and Plant - Reduction in Preferred Shares of $150,000 - Some Drastic Knifing of Over-Capitalization.
Halifax: Sept. 9 -
The Nova Scotia
Carriage and Motor Car Company, Limited, in which Halifax and Amherst men
chiefly are interested, and which was organized to build carriages and
automobiles at Amherst, has had a short and uneventful career and a highly
unprofitable one. At the annual meeting just held it was decided that the
company should disappear from the list of going things, and that its place
should be taken a new concern -- Nova Scotia Carriages, Limited.
This decision was
taken after the accounts for the year were looked into, and not forgetting
the year before. The company, organized two years ago, has an issued capital
of $550,000 of 7 per cent preferred stock and $1,000,000 common. The
statement presented to the meeting showed a loss during the year of $77,000,
with gross receipts of $120,000. Of this loss, about $57,000 is accounted
for in the writing off of value on buildings and plant and in other ways,
the sum of $22,000 being the actual loss on the year's business, a rather
discouraging presentation to the Amherst and Halifax men who had put their
money into the concern. This was one of the factors that determined the
shareholders to make a change in order to save the industry and keep the
factory, one of the larger of Amherst's industrial edifices, in operation.
Reorganization
was unanimously determined on by the company. One thing that simplified this
was that a contract with the McKays, who had sold out a business they
managed to the company, and who were promoters, provided that they should
make good losses on assets taken over from them. They held $150,000 of the
preferred stock, and to remunerate the company for losses which did occur
they agreed to hand this stock back, taking in lieu of it, besides an
acknowledgment that their indebtedness was wiped out, a building in
Kentville, valued at $5,000, and some other small assets. The cancellation
of this stock reduced the preferred capital from $550,000 to $400,000.
The next thing
the shareholders agreed to was to cancel the $1,000,000 of common stock,
which had been given to the promoters as a bonus with the preferred stock at
the time of the flotation of the securities.
The third drastic
thing done was to pass a resolution that the $400,000 of preferred stock be
reduced to $100,000, that shareholders be given 25 per cent. But in lieu of
the 75 per cent cancelled they are to get along with their 25 per cent
preferred stock, 50 per cent of their old holdings in a new issue of common
stock of the Nova Scotia Carriages, Limited.
The shareholders
come out of the reorganization, therefore, with the total loss of all their
common stock, and, instead of the old preferred and common will hold 25 per
cent of preferred and 50 per cent of common of the new concern.
The total capital
will thus be $100,000 of preferred stock and $300,000 of common in the new
company, as compared with $550,000 preferred stock and $1,000,000 common in
the old.
This was
considered better than losing all by liquidation. It is a pretty complete
squeezing out of water, and, as a matter of fact, a good deal more than
water is gone.
The company will
cut out the manufacture of motor cars and confine itself exclusively to
carriages, of which there is an annual consumption in the Maritime Provinces
of 12,000, compared with a total capacity for the company's factory of
5,000.
Amherst people
insisted on this reorganization, or recapitalization, and would take nothing
less. It is said they expect from the first to pay dividends on the
preferred stock under the new agreement. It is to be hoped they will.
Amherst needs some encouragement in these war times. It is a manufacturing
town, and with the large population of men who ordinarily find employment in
its industries, the keeping of one going, like the factory in question, is a
matter of importance.
The promoters who
looked to some value for their $1,000,000 of common stock are naturally
disappointed, not to speak of the men who bought the $400,000 of preferred
stock. With the $100,000 to which this has been reduced they hope to see
their way out of the woods, and it is hoped they are right.
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Article #2 from 1917
[This article was copied from an issue of the Financial Post held in the Western Libraries at the University of Western Ontario. The original article should be consulted since this copy may contain some errors. The text and/or the image are being made available to researchers for scholarly purposes. They should not be used for commercial gain without the permission of the author or publisher.]
Liquidator is Closing Out Business of an Ill-fated Eastern Concern.
Nova Scotia
Carriages, Limited, a company with a somewhat inglorious career, whose
factory and plant are at Amherst, N.S., is nearing its end, the liquidator,
Percy C. Black, of Amherst, having had its affairs in hand for some time. He
expects the whole business will be bound up in two or three months. This
concern was formed by the reorganization of the Nova Scotia Carriage and
Motor Car Company, promoted four or five years ago with high hopes of
success. The works were then situated at Kentville, but the company built a
big factory at Amherst and moved there. No money was made from the first.
The making of automobiles was dropped and then the carriage portion of the
operations proved almost equally unprofitable. By the reorganization in the
Nova Scotia Carriages, Limited, shareholders were wiped out and the
bondholders alone tried their fortunes. Soon it was shown that the new
company was no more able to succeed than the parent one, and after various
vicissitudes, it is being wound up. A circular issued on behalf of the
shareholders, some considerable time ago, and signed by E. R. Fenwick, of
St. John, set forth the facts as they existed prior to the commencement of
the liquidation proceedings.
The shareholders,
Mr. Fenwick said, were through with the carriage business and had no further
interest in the carrying of it along, as they considered the money they had
put into it lost. The only interest is that the directors wish to see the
liquid assets of the company distributes as advantageously as possible, so
that the creditors may receive some portion of the amount due them. The Bank
of Commerce had hypothecated the liquid assets of the company for the amount
of their claim. If the bank appointed a liquidator it would dispose of the
assets to secure the amount of the loan. If the bondholders appointed a
liquidator they would do likewise to the extent of protecting only the bank.
Under the winding-up process the total assets of the company, including the
building, machinery and goods, were the property of the bondholders subject
to the hypothecation of the bank. Mr. Fenwick in his circular said further:
"The local
manager will recommend that the bank loan the company $20,000, the amount
estimated to carry on the business for six months, on the guarantee of the
creditors for this amount, with the stipulation that the present amount of
$85,000, due them, will be paid first out of the proceeds. Considering the
fact that the stock on hand has been inventoried at cost price and materials
that enter into this construction have advanced greatly in the last year,
and as there are orders on hand for fairly large amounts of carriages and
sleighs, by rushing work these could be marketed early."