FINANCE AND INVESTMENT
By CUSTOS
IT is an open secret that for some weeks past discussions have been taking place between the Capital Issues Committee and the Stock Exchange Committee on the vexed question of " permission to deal." The case has been put, on behalf of the Stock Exchange and other City interests connected with the business of making new issues of capital, that the control as at present exefcised by the C.I.C. is having undesirable consequences. The complaint, I under- stand, is not that applications to make issues are being unnecessarily turned down, but that, having sanctioned issues of capital, the C.I.C. has often refused to allow permission to deal in the resultant securities on the Stock Exchange. In some instances there have doubtless been good reasons for this apparently arbitrary procedure. In others, if the City critics are to be believed, permission to deal has been refused without any real justification. Whatever the rights and wrongs of the matter may be, there is no denying that the effect of the official veto has been to create a situation in which large blocks of new securities, running into many millions of pounds, are being sold direct to insurance and trust companies without going through the normal market channels. To the half-dozen or so large stockbroking firms which are row handling the bulk of the new i issue business these arrangements do not present any difficulties. but it is significant that it is these very firms which are advocating change.
DORMAN, LONG POSITION
That there are many more ways than one of dealing with a hiv- rated debenture stock is clearly illustrated by the plan now pu forward by Dorman, Long, the Middlesbrough iron and steel makers. Instead of offering a lower-rated stock to the holders o the £3,o31,56o of 5 per cent:debentures, the board has decided to pay off this 5 per cent, stock out of the proceeds of an issue of 2,094,334 new ordinary £r shares at 27s. each. These new ordinaries are offered to existing ordinary and/or preferred ordinan shareholders in the proportion of one new for each share hell. From the broad standpoint of sound finance this plan is lmexceptioT- able. The company gets rid of a heavy prior charge and at the same time alters the gearing of its ordinary capital. Where], hitherto the ordinary shares have been very highly-geared, they arc now part of a much more balanced capital structure. They are correspondingly less exciting from the speculative standpoint an, more attractive as an investment. Now quoted at 29s. cum right, they yield about 6 per cent. on the 8 per cent, dividend an should be worth holding.
BRITISH COATED BOARD
Since I. outlined the position of British Coated Board and Papa Mills 5s. ordinary shares on May 14th the price has fluctuat within narrow limits around 6s. 6d. A week ago the direct ° announced that the accounts for the year to March 31st we delayed pending the settlement of a claim arising out of 6= requisitioning of one of the company's factories by the Ministt of Supply. As I have previously emphasised, this company business is now largely on a rental basis with the Govenunen' several factories being leased on satisfactory terms. How don shareholders will have to wait for the overdue accounts I cannt predict, but when the figures appear they should be good.
the year to March 31st, 5942, profits were equivalent to 28.7 p cent. on the k12o,000 of capital, and I shall be surprised if the figures have not been substantially exceeded. In view of L immediate dividend prospects and the not unpromising post-out outlook for a company of this kind the 5s. ordinaries should but speculative possibilities around 6s. told.
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