WRITING DOWN ASSETS.
One cannot, however, withhold a meed of admiration for the courage with which British investors have faced their losses, and the common sense and philosophical view which has been taken of the situation. I do not know whether any readers of these columns happen to be in the position of shareholders in the great firm of Sir W. G. Armstrong, Whitworth & Co., but iindivattecty the shareholders in that coinpany reason for concern with regard to the magnitude of the losses which have been disclosed in connexion with the recent prolonged investigation previous to the arrangement for the fusion of a part of the firm's activities with those of Vickers, Limited, the details of which have been announced during the past week. It is shown that the assets of Armstrongs will require to be written down by at least £11,000,000, a figure representing more than the share capital of the company, although, of course, the prior- charge issues run into an infinitely larger amount. Since the appointment of the present financial advisers to the company it is quite clear that matters have been handled in the most skilful fashion, and holders of some of the prior-charge securities will probably feel thankful that eminent specialists have been called in even at a late hour in the day. And even after allowing for the great losses referred to and the inevitable effect upon the fortunes of the shareholders, I think that in the brighter future which is now opening up even these shareholders may feel at least that the fusion scheme provides a good hope for the future of the company, the point yet to be determined being the extent to which the Ordinary shareholders may hope for participation in such improvement, and the period which must elapse before the full results of the economies likely to be effected under the Vickers-Armstrong agreement are revealed in the Profit and Loss Account.
At present it must be confessed that the outlook for the shareholders in Armstrongs is a serious one, for the profits foreshadowed in the proposals will be re- quired to satisfy claims of holders of prior securities. On the other hand, there can be little doubt that if chance there be for the shareholders recovering some portion of the loss already sustained by them, it is to be found in the carrying through of the Agreement between Vickers and Armstrongs, which seems at least to promise the maximum of economy and efficiency in the carrying out of the major part of the operations of the two companies, while much wasteful competition should be avoided.
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