SIMMS MOTOR UNITS.
A correspondent has drawn my attention to the reorganisa- tion plan recently put forward by Simms Motor Units Ltd. That plan, it may be recalled, is concerned with methods for dealing with the arrears of Preference dividend. Among other things, the scheme proposed to write off the sum of £109,000 in reduction of book value of works and plant, goodwill and Deferred Expenditure. To achieve this, it is proposed that the Ordinary shares should be written down to 5s. each, 250,000 being held by present Ordinary shareholders and 75,000 by Preference shareholders in satisfaction of arrears of dividend, representing in nominal amount one-half the net arrears ; the future dividend on the Preference shares to be reduced from 74 to 5 per cent. On the appearance of the scheme, the opinion was at once expressed in some quarters that Preference shareholders might be inclined to question whether the giving to them of slightly under a quarter of the equity was adequate consideration for the cutting down of their future dividend by one-third and the sacrifice of arrears, both of which claims, it must be remembered, have rank in priority to the whole of the Ordinary capital, in which they are promised this small share. It is not surprising, therefore, that the Shareholders' Protection Association has expressed the opinion that the plan is inequitable to Preference share- holders. They consider that the compensation offered for the renunciation of the claim to five years' arrears of dividend and the drastic reduction of the fixed dividend in future is inadequate. They point out further that at present £7,500 in distributable profit goes entirely to the Preference share-
holders, whereas under the scheme the Preference shareholders will not receive an equivalent amount until the distributable profits amount to £15,870. When profits are higher than that, the Preference shareholders will gain by the plan. The Association considers in fact that no reduction in the fixed Preferential rate of dividend is justified, but that the proposal to substitute a share in the equity for the arrears of dividend
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