Shareholders' Meetings of the Hermand Oil Co. Ltd.(1885)

1886

THE HERMAND OIL COMPANY - The second annual meeting of this company was held in Lyon & Turnbull's rooms, Edinburgh - Mr J. Armour presiding. The report stated that there was a sum of £1106 at the credit of the profit and loss account, which it was proposed to apply in wiping off the whole of the preliminary expenses, while the remainder - £452 13s 7d - would be placed to the credit of the depreciation of works account. The chairman said the money earned was the result of three months' working. It was evident that the mines could be worked with profit.

Edinburgh Evening News, 30th December 1886

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January 1889

THE HERMAND OIL COMPANY.

A general meeting of the Hermand Oil Company was held yesterday afternoon in Lyon & Turnbull’s rooms, Edinburgh – Mr John Armour, chairman, presiding.

The CHAIRMAN said it was not much over two years since they began running oil, and it was gratifying that they had been able to pay a dividend of £5 12s 6d per annum during sixteen months of that period, and for the last nine months of that same period the earnings already made were at the rate of 17 ½ per cent per annum. (Hear, hear.)

The capital expenditure account during the whole of these nine months being closed so far as related to their present works and mines, and the value of these being still written down below the amount they stood at last year, their earnings were therefore of the most solid and unimpeachable kind. Having stated the situation and extent of the mineral fields of the Company, he said it would be seen that the development of the Company was a necessity, and it had caused the directors great anxiety that this should be done entirely in the interests of the present shareholders.

He explained the scheme which the directors had drawn out, and showed its operation. He added that they had no doubt their success would increase. Owing to their yearly contract just expired they had yet reaped none of the benefits that had accrued to the oil trade during the last twelve months, though attended with higher wages to their miners. It was, therefore, expected with better prices they would be able to supply from their profits what was necessary to extinguish their debentures and enable the shareholders of new shares to reduce the uncalled liability on these shares, thus putting all in a position to retain their proportional interest in the most valuable property which at present belonged to them.

The Chairman concluded by moving as follows:- “That the capital of this Company be and hereby is increased by the sum of £30,000 and for that end there be and are hereby created 3000 new or additional shares of the nominal amount of £10 each; and that the shares so created be entitled to the following special privileges or priorities, viz.:- The profits of the Company mad during the financial year, or other period comprised in the accounts submitted to the ordinary general meeting in each year, shall be applicable and apportioned as follows: in paying pari parsu the holders of the existing shares of the company and of the said new shares in proportion to the numbers of shares held by them respectively, but the holders of the new shares shall not participate in any profits accrued prior to the first day of October 1889, as these may be ascertained by the auditors of the Company. Any deficiency of the profits in one year or period not meeting such rate, shall not be chargeable or carried forward against the profits of future years. Also to direct or resolve that no further issue of shares forming the original share capital of the Company be made which will increase the number of these shares above 3000.

Mr RUSSELL, Cupar, seconded.

Mr ROSS, ropemaker, Leith, said the scheme displayed an amount of ingenuity which would baffle even Mr Gladstone (laughter) – but he was willing to go into it.

The resolution was adopeted. Resolutions were also adopted afterwards to the effect that the new shares be offered proportionally, that the directors be authorised to borrow on debentures up to the amount of the uncalled capital, and that an interim dividend, as recommended in the report, be paid at the rate of £1 1s 3d per share for nine months, equal to 17 1/2per cent per annum on the called-up capital.

The Scotsman - Thursday 24 January 1889

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May 1889

THE HERMAND OIL COMPANY.-

The annual meeting of the Hermand Oil Company was held yesterday afternoon in Lyon & Turnbull’s Rooms, George Street, Edinburgh.

Mr JOHN ARMOUR, chairman, presided, and moved the adoption of the report (already published), which declared a dividend of 17 ½ per cent. for the year – 12 ½ per cent. of this having already been paid as an interim dividend. The Chairman stated that the new works were progressing, and they had received cash, or promises of same, for all the debentures the directors intended to issue.

Mr T. B. PARK, a director, seconded the motion, which was agreed to.

Mr A. RUSSELL, Cupar, having taken the chair, proposed a resolution come to by the directors, subject to the approval of the shareholders, that 150 of the original shares of the Company be issued to Mr Armour (and that he be paid £1275 to enable him to pay up calls of £8 10s. per share on the shares) in recognition of his services to the Company.

Mr T. B. PARK seconded the resolution.

A long discussion followed, initiated by Mr JAMES ROSS, Leith, as to the expediency of recognising Mr Armour’s services by the issue of shares to him. Mr ROSS considered that it would have been much better if the directors had seen their way to have made a cash payment to Mr Armour, without any conditions.

Mr RUSSELL explained that it was Mr Armour’s wish that he should have shares instead of money.

Mr ALLAN, Bo’ness, thought that the principle involved in the method of payment was not right, and that the method of a cash payment might have sounded better in the ears of the public. In reply to Mr Ross, Mr RUSSELL said there had been no arrangement that Mr Armour should keep his shares.

Another SHAREHOLDER said he had very much the same feeling as Mr Allan, and he rather regretted the introduction of the principle of payment by shares. The resolution was ultimately declared adopted.

In reply, Mr ARMOUR spoke of the position and prospects of the Company, and at some length expressed his views with regard to the patent royalties paid for retorts. He maintained it was disgusting to find they could hardly move in any direction without having to pay excessive royalties to men who, as managers of works, had procured patents for everything connected with the trade; and his object was, he explained, to show how profits were affected by a system which proceeded from the subsidiary management over-riding the principal management in a way that could not take place in private concerns. The other business was formal.

The Scotsman - Friday 17 May 1889

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September 1889

HERMAND OIL COMPANY.

A REFINERY TO BE STARTED.

An extraordinary general meeting of the Hermand Oil Company (Limited) was held yesterday afternoon in Lyon & Turnbull’s rooms, Edinburgh –Mr John Armour presiding.

The following report by the directors was submitted:- “After careful consideration the directors are of the opinion that it would of advantage to the company to be able to refine their own crude oil, and they recommend that a refinery be erected on the company’s property at Middle Breich. In view of this they propose that the capital of the company be increased by 6000 shares of £10 each, and that these be issued at a premium of £5 per share, in addition to the ordinary call liability for £10 per share. Of the share capital of £10 they propose that £1 be called up and paid on allotment of the shares. The premium of £5 per share may be made payable £2 on 2d January and the remaining £3 on 1st April 18?? With power to the directors to allow a discount to shareholders who desire to pay the premium at an earlier date. The erection of a refinery capable of dealing with 4,500,000 gallons of crude oil per annum, the approximate amount of the company’s requirement, it is estimated will cost about £30,000. The above call of £1 and the premium of £5 on the proposed new shares will accordingly enable the directors to proceed with the work, and any further capital required in connection with the refinery and the business it is proposed to meet by debentures to the amount not exceeding the called capital.”

The Chairman said the directors had for some time been of opinion that the company should, as soon as practicable, put itself in a position to refine its own crude oil, and in all the resolutions come to in connection with this subject the board had been quite unanimous. They were now about to have a production of crude oil equivalent to 50 tons daily, which in itself was sufficient to keep a refinery going. If it had all to be sent out to other refineries there might be a difficulty in placing such a large quantity of oil. Besides, the directors thought there was no reason why the company should not retain the profit of refining the oil on the spot.

The mining of the shale and the manufacture of the crude oil were the parts of the business which called for the large employment of labour. The refining involved principally plant, chemicals, and working capital. In dealing with the crude oil they had to enter on long contracts, whereas if they refined they were placed in a more independent position, and could regulate their business to suit the variations of the market and other circumstances. When the company passed the resolution to issue 3000 additional shares, it was for the purpose of raising the capital to increase their crude oil works to a reasonable size. This time the proposal was for the purpose of erecting a refinery, and the directors considered that this issue of new capital would enable them to complete the object aimed at in the original prospectus of the company. They had no intention of asking the shareholders to subscribe to any more capital. Last time the shares were issued to the shareholders at par, and every one of those shares was taken up by the several shareholders according to their holdings. As they knew, the value of these shares very soon rose 600 or 700 per cent. in the open market, They could not repeat that without straining the credit of the company, and, as many shareholders might object to the increased liability of uncalled capital standing against them, the directors considered it would meet all the difficulties by proposing to issue the new shares at a premium of £5. Of course the present shareholders would have the first offer in proportion to their holdings.

The directors considered this a very moderate estimate of the present value of the shares, and they themselves had decided, if the resolution was passed, to take up the new shares allotted to them. The premium not only protected those who did not see their way to take up their allotments from having the present value of their shares depreciated by the increased issue, but it added to their value. The premium itself, he expected, would put up the refinery. The directors had had plans prepared and an estimate made by a man of experience, which justified this statement. He hoped the shareholders would see their way to take up the new shares that might be allotted to them. There would be no difficulty, he understood, in disposing of the whole of them, but it would be satisfactory if each shareholder could maintain his proportionate share in the undertaking, which, so far as the directors could judge, had all the elements of success in it, and was likely to earn extensive profits. They would no doubt give the matter their full consideration during the next fortnight. He gave them his own recommendation to take up the shares without reserve, and he had no difficulty in adding the assurance that no pains would be spared by the directors to make the investment a profitable one.

He moved:- "That the capital of this company be and is hereby increased by the sum of £60,00, and for that end there be and are hereby created 6000 new or additional shares of the nominal amount of £10 each; and that the shares now created be entitled to the following special privileges or priorities, viz.:-

"1. The profits of the company made during the financial year, or other period comprised in the accounts submitted by the ordinary general meeting in each year, shall be applicable and apportioned as follows:- In paying pari passu to the holders of the existing shares of the company, and to the holders of the said new shares, a dividend at the rate of 7½ per cent per annum on the amounts, or respective amounts, called up and paid on the said shares during the period to which the accounts apply, and the residue shall be applicable in paying a dividend to the holders of the existing shares, and of the said new shares in proportion to the number of shares held by them respectively, but the holders of these new shares shall not participate in any profits accrued prior to the first day of April 1891. Any deficiency of the profits in one year or period, in meeting such rate, shall not be chargeable or carried forward against the profits of future years.

“2. That the said shares hereby created be issued at a premium of £5 per share, to be paid by the allottee or holder thereof to the company, in addition to the call liability of £10 per share, and each premium shall be payable in such instalments, and on such dates as the directors fix, and these shares shall be subject to a lien in favour of the company for executing payment of such premium.

“3. That the directors may enforce the said lien and all in such a manner as they deem expedient all or as many as may be necessary of the shares held by any failing to pay any instalment of such premium due for 21 days after the same becomes due.

“4, That interest at such rate as the directors may fix shall be payable on any premiums not paid when they fall due and the directors may allow interest or discount on any premiums paid before they fall due.”

Mr ARTHUR RUSSELL seconded the motion.

Mr JAMES ROSS, Leith, asked if the Chairman could give any idea how long it would take to erect the refinery. On the refinery the Chairman said it take from six to eight months. Of course their present crude oil works were just being finished, but there were a good many details to fix up before they could go heartily into the refinery. Their crude oil was sold for a considerable time to come, so that there was no hurry in that respect. They would have to fulfil their present contracts. Mr Hugh Brown asked if the contract ran for a twelvemonth.

The Chairman said it was generally for a twelvemonth. The present contract would expire on January 1. There would be no difficulty in getting the oil sold for this season – that was up to 31st March. By that time they would have their refineries pretty well forward. Of course, if they were getting a very favourable offer for their crude oil they could use their discretion in slackening their speed.

Mr Lyon asked whether they proposed to refine the oil only, or did they propose also to make candles.

The CHAIRMAN said the estimate included a candle factory, but it was very questionable whether they would go in for candlemaking. Mr Ross asked if there was a separate estimate excluding the candle factory.

The CHAIRMAN said he had not the estimate with him, but it gave details. He did not think it was a very large sum for the candle factory. But the candle business was now generally carried on by middlemen in the oil trade.

Mr Ross said he did not object at all to the proposals, as he thought they would be of great advantage to the company. But the candle factory was a new feature he had not anticipated. The history of candlemaking in this country had not been very favourable. He thought Burntisland had been brought to grief in a very great measure through its candle factory; at any rate it felt the effects of it. , But he had no doubt the chairman would not go into that unless he saw a safe outlet. He presumed the chairman WAS quite satisfied that the estimate of £30,000 was sufficient to erect the refinery?

The CHAIRMAN said he was quite satisfied on that point, as he had gone over the detail himself. Mr Ross said the only thing he objected to was the power to issue debentures to the amount of the uncalled capital. If £30,000 was sufficient to carry out the refinery, he thought the above power should be with held from the directors. He had every confidence in the present board, but they did not know how soon there might be a change.

The CHAIRMAN pointed out that upon each debenture the directors put a docket that, should they exceed four fifths of the uncalled capital, the lender had the power to call up his money. The directors limited themselves by putting these dockets on the debentures, which were this made a perfectly safe investment. There was a large margin given to the lender, and the consequence was the company got their money with great freedom and ease. As to the refinery, it would cost £30,000 to put up the bones of it; but they had to commence and make before the consumption came on in the winter, and they had to hold a large stock. Suppose they had to hold these stuff a little longer, rather than rush into the market and sell when prices were low, it was a capital power of a company to have the command of money. But if the shareholders tied up the hands of the directors, the latter would have to take an offer of some kind at once on their stuff. He thought the directors should have the length of their tether in that respect.

Mr DAVID HARLEY, Dunfermline, expressed a doubt if it was altogether wise to have such an enormous increase in one particular kind of share. It was rather an unusual feature in companies such as theirs to issue such a number of these shares with special privileges attached. Two classes of shareholders might be brought in, and their interests might come into conflict. Would it not be better to issue a certain proportion of each kind of shares, old and new? If the directors’ scheme were carried the new shares would be three times as numerous as the old.

The CHAIRMAN said all these views had been discussed by the board, but they had always come back to the arrangements they now submitted as the one which was likely to take and likely to be carried through. After further discussion on this point, and on the matter last raised by Mr Ross, the motion was unanimously adopted, and a vote of thanks to the chairman closed the proceedings.

Glasgow Herald, 4th September 1889