SAFEGUARDING PRIOR CHARGES.
Before the present agreement can go through, however, consent is necessary from the various holders of securities in both companies, and, by reason of the actual sale of assets, there is, of course, a necessity for variation in existing mortgage rights. Again, expressing the matter briell,y and crudely it is to be a case 9f obtaininff deben- ture ture rights over the securities held in the new company rather than over certain actual fixed assets which are transferred, though the mortgage rights in assets remain- ing with the old companies remain, of course, unchanged. At the same time safeguards have been taken in the interests of prior-charge stockholders of both companies, and in the case of Armstrong 4 per cent. stock, not only is there to be a cumulative sinking fund of 2 per cent. per annum set up, but an opportunity is to be given after the agreement has gone through to holders to convert, if they wish, into 3f per cent. British Government Con- version Loan at the rate of £100 nominal of stock for £100 nominal of Conversion Loan, the option to continue until March 1st next. In addition there is the rather ingenious device of an insurance policy being arranged with a leading insurance company which, under certain conditions, guarantees up to an amount of £200,000 that the annual profits of the new company shall for the next five years reach £900,000.
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