PLATT BROS. — REVISED VERSION I feel constrained to strike another blow
on behalf of second preference shareholders in Platt Bros. (Holdings), the textile machinery concern. When, a few months ago, the board put forward a capital reconstruction scheme, I advised holders of the second preference shares to stand together and vote solidly against proposals which did much less than justice to their claims. The board withdrew with as much grace as it could muster and the day was won. The new scheme now submitted is a big improvement on the last but that is the best that cats be said for it. While second preference holders are offered three and a half years' arrears of dividends in cash and an allotment of one-third of a new written-down 6s. 8d. ordinary per preference held, they are also asked to give up the remaining three and a half years' arrears and to accept a reduction from 7 to 5 per cent. in the cumulative part of their dividend, with the balance of • 2 per- cent. put on a participating basis.
It is a pity that once again the board has not told us what the anticipated earning capacity of the company is, although it is apparent, from the intimation that dividends could be paid on all classes of capital if the scheme goes through, that profits now cover the full 7 per cent. and something more. In these circumstances I cannot think that it is fair to ask second preference holders, apart from the alteration in their regular dividend rights, to accept one third of an ordinary share, valued in the market at is. 8d., in satisfaction of dividend arrears equivalent to 3s. 8d. net. My advice to holders is to reject the scheme—and to retain their shares. Whether or not the scheme is carried at the meeting, Platt Bros. LI second preferences should be worth something more than the current price of 215. A more reasonable valuation, on even a conservative estimate of earrings, would be at least 2s. 6d. higher.
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