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FINANCE - MANILA - DAGUPAN RAILWAY

See also:
The Granada Railway
The GSSR
The Hornillo Company
The Bacares Iron Ore Mines
The related Bilbao companies
The Seville Tramway Company

The Manila - Dagupan Railway Company was another project of Edmund Sykes Hett's which is why it is presented here. He took on this project soon after starting on The GSSR project which caused some fuss in Almería, the press saying that he would not be able to give his whole attention to the construction of The GSSR. There is precious little documentation regarding this project, the prospectus below being all that seems to be extant.

DATEPRESS REPORT

1888

From The Sheffield Daily Telegraph, 15th February 1888:

PUBLIC NOTICES

THE LIST WILL BE CLOSED ON OR BEFORE MONDAY, THE 20TH INSTANT.

MANILA RAILWAY COMPANY

(LIMITED), INCORPORATED UNDER THE COMPANIES ACTS.

Authorised under Royal Decrees of the Spanish Government of the 9th April, 1885; 14th July, 1886; and 21st January, 1887, by which a guarantee of interest at 8 per cent. per annum on £4,864,400 is guaranteed for a period of 99 years on the terms and conditions stated in the decrees, payable out of the Treasury of the Philippine Islands, which at the current rate of exchange will amount to about £71,000 per annum.

The Hong Kong and Shanghai Banking Corporation, 31, Lombard street, London, invite subscritions for the following issue of the whole of the Capital of the Company, viz:-

£200,000 in Ordinary Shares of £10 each at par.
£300,000 £7 per cent. Cumulative Preference Shares of £10 each at par.
£730,000 £6 per cent. Debentures at £97&frac1/2; per cent.

Principal repayable 1978, unless previously redeemed, by the operation of an accumulative sinking fund sufficient to redeem the whole within ninety years.

ISSUE PRICE PAYABLE AS FOLLOWS:-

ORDINARY AND PREFERENCE SHARES.

On application....................................... 10s per Share.
On Allotment..........................................£1 10s. "
On 16th March, 1888.............................£2 10s. "

The balance per share as required in Calls not exceeding £2 10s per share, at intervals of not less than two months.

DEBENTURES

On Application.......................................5 per cent
On Allotment.........................................15 "
On March, 1888....................................17½ "
On May, 1888........................................20 "
On September, 1888.............................20 "
On January, 1889..................................20 "

Interest will be paid by the Contractors on each instalment from the above mentioned dates until payment in full, and thereafter until the final completion of the Line, upon the whole nominal amount of the Debentures, at the rate of 6 per cent. per annum, 7 per cent. in respect of preference shares, and 6 per cent. in respect of ordinary shares, payable half-yearly on 1st January and 1st July as hereafter mentioned.

BOARD OF DIRECTORS.-GEORGE NOBLE TAYLOR Esq.(Chairman of the Madras Railway Company), Chairman; ALEXANDER HUBBARD, Esq. (Director of The Great Western Railway Company); HANBURY BARCLAY, Esq.; EDWARD FORD DUNCANSON, Esq. (Member of the London Committee of the Hong-Kong and Shanghai Banking Corporation); G.R. YOUNG, Esq. (Messrs. Smith, Wood and Co., Manila); CHARLES J.C. SCOTT, Esq. (Director of the Union Bank of Spain and England, Limited).
BANKERS.-THE HONG-KONG AND SHANGHAI BANKING CORPORATION, 31, Lombard street, E.C.; THE UNION BANK OF SPAIN AND ENGLAND (LIMITED), 21, Old Broad street, E.C.
SOLICITORS. Messrs. BOMPAS, BENCHOFF; DODGSON, and COXE, 9 Great Winchester street, E.C.
CHIEF ENGINEER.-GEORGE HIGGIN, Esq., M.I.C.E., Broadway Chambers, Westminster, S.W.
AUDITORS.-Messrs. DELOITTE; DEVER; GRIFFITHS, and Co., 4, Lothbury, E.C.
SECRETARY pro tem.-Mr. H.B. BRIGGS.
OFFICES.-60, OLD BROAD STREET, E.C.


PROSPECTUS

The company is formed to take over the concession for the construction and working of a railway starting from the Port of Manila, Island of Luxon, and terminating at the Port of Dagupan, on the Bay of Lingayen. The length of the railway will be about 120 miles.

Under royal decree of the Spanish Government, dated 9th April, 1887, a guarantee of 8 per cent. on a capital of 4,964,400 dollars has been granted for a period of 99 years, payable out of the Treasury of the Philippine Islands.

The concession is for the term of 99 years from its date, namely, the 9th April, 1887; on the expiration of which term the Railway and Rolling Stock revert to the State without compensation.

The guaranteed interest at the rate of 8 per cent. per annum during the 99 years is on the capital of $4,964,400, after allowing 50 per cent. of the gross earnings for working expenses. It is expected that the cost of working the railway will be below that rate, and it is hoped will not exceed the average working expenses of Spanish railways, which are about 42 per cent.

The construction of the line is divided into three sections, and the proportion of the guarantee comes into force at the quarter of the year immediately following the time when each section is completed and opened to public traffic.

The full guaranteed interest, at the present rate of exchange and cost of remittance, will be sufficient to provide:-

£44,000 per rannum for the interest and sinking fund on the Debentures.

£21,000 per annum for dividend at 7 per cent. on the Preference Share Capital, leaving

£6,000, which would provide a dividend of about 3 per cent. on the Ordinary Share Capital, in addition to which it is provided by the Concession that when 50 per rcent. of the gross earnings of the Company exceed the guaranteed interest the surplus will be divided equally between the Government and the Company, the share of the latter would accordingly be available as increased dividend on the ordinary shares.

The budget for the Phillpine Islands for the year 1888, issued by the minister of the Colonies at Madrid, gives an estimate of revenue of £1,967,580, and an expenditure of £1,965,126, in which the income from Customs represents £404,680, and that from direct taxes £1,041,360 (the conversion into sterling being made out at 4s. the dollar). The Budget is annually drawn up by the Spanish Minister of the Colonies at Madrid and sanctioned by the Crown, and the amount for which the Government may become liable under the above guarantee will, when it comes into operation, form part of the ordinary expenditure provided for in such budget.

The imports and exports during the last eleven years show an increase of 80 per cent. as will be seen from the following statistics, as given in the newspaper of Madrid El Dia, of the 24th August, 1887:-

ImportsExports
1876..........$11,987,162..........$14,837,796
1877..........19,535,864..........16,362,444
1878..........17,292,847..........17,470,305
1879..........18,031,547..........18,813,452
1880..........25,486,461..........23,450,285
1881..........20,777,210..........24,579,006
1882..........21,260,765,..........20,673,334
1883..........21,308,002..........26,380,727
1884..........21,246,211..........22,672,833
1885..........19,171,468..........24,556,685
1886..........20,073,599..........25,122,002

Since the 1st January of this year the taxes on the export of sugar have been abolished, which is expected greatly to increase the cultivation and export of sugar, and will lead to a further important expansion of the trade of the Island.

The colony is already amongst the largest producers of sugar in the World. It is stated by Senor Tavill de Andrada, in his History of the Philippine Islands Exhibition in Madrid, published in 1887, that their exports of sugar during 1886 reached the figure of 189,185 tons, the shipment from the port of Manila alone amounting to 47,240 tons to the Atlantic Ports of the United States, 22,660 tons to England, and 20,000 tons to California, the continent of Europe, and China. The shipments of hemp from the same port in 1886 amounted to 370,000 bales.

Manila, the capital of the Philippine Islands, is the seat of the Governor-General and of the whole military and civil administration. It has, including the suburbs, a population of about 300,000 inhabitants, a flourishing commerce with the United Kngdom, Spain, the United States, the Continent, China, &c., a great part of which is in the hands of important English firms. Branches of the Hong-Kong and Shanghai Banking Corporation, the Chartered Bank of India,Australia and China, and other leading English agencies, besides Spanish and foreign banking houses established there, show the importance of the place. Subsidised Spansish Mail Steamers, as well as French and other lines, touch here regularly. It is stated in the work already cited that in 1886 vessels representing a tonnage of 220,762 entered the port of Manila.

The population of the island of Luzon, of which Manila is the Capital, is believed to be over 4,000,000 (that of the whole of the Philippines over 7,000,000); the density in the districts through which the line runs is demonstrated by the fact that it has been found necessary to make provision for stations, in some instances, at less than three miles apart.

The natural wealth of the Island of Luzon in all such produce as hemp, coffee, sugar, tobacco, and rice is well known. The construction of the railway will, of course, largely increase the commercial movement at the ports of Manila and Dagupan, and throughout the Island of Luzon, although the full extent which this movement will assume cannot be gauged at present. This being the first railway in the Island, there are no trustworthy statistics upon which to base the net traffic returns, but in view of the estimates made by the Government in connection with the granting of the Concession and the tariffs sanctioned, it is anticipated that the net returns will exceed the guaranteed interest, and after deduction of the share of the Government in the surplus as before mentioned, and payment of the interest on debentures and preference shares and provision for redemption capital, will permit of the distribution of a dividend of about 9 per cent on the ordinary share capital. In the district to be traversed by the railway, large purchases of land have already been made for new tobacco plantations, and from the increased cultivation which the construction of the railway will foster in the provinces through which it will run, it is expected that the actual returns from the line will confirm the above estimate.

Messrs. Hett, Maylor, and Co. (Limited) have entered into a contract with the company to construct the whole of the line, provide the rolling stock, and hand over the railway, entirely equipped to the satisfaction of the Government, and to provide a sum of £64,000 for administration, engineering expenses, and working capital during construction, and in consideration thereof the Contractors, on whose behalf this issue is made by the Company, are to receive the whole of the debentures and preference and ordinary shares of the Company, or the proceeds thereof, at the times and under the conditions therein stated. The rolling stock to be provided, in accordance with the requirements of the Goverrnment, is considerably in excess of what is usually supplied for a railway under similar circumstances.

A retention of 10 per rcent. up to £50,000 is to be made from all sums payable to the contractors upon Engineer's Certificates, and the sum so to be retained by the Company will only be paid over to the Contractors proportionally on the completion of each section.

The contract provides that until the completion of the whole line, interest on the debentures and preference and ordinary shares, at the rates above mentioned, will be provided by the Contractors, who are during such time to work the railway for their own benefit.

The contract also contains a provision enabling the Company to retain moneys due to the Company from the Contractors out of the amounts from time to time payable by the Company on Engineers' Certificates.

The commencement of the works, in accordance with the conditionss of the concession, took place on the 21st July, 1887, and the line has to be handed over fully equipped by the 21st July, 1891.

The following contracts have been enteresd into, viz.:-

Works contract dated 15th February, 1888, between Messrs. Hett, Maylor and Co. (Limited), and the Company.

Letter dated 15th February, 1888, from Messrs. Hett, Maylor, and Co. (Limited), to the Union Bank of Spain and England (Limited), and their reply dated 15th February, 1888.

Letter dated 15th February, 1888, from the Company to the Hong Kong and Shanghai Banking Corporation.

These Contracts, with copies and translations of the Concession, and the Memorandum and Articles of Association of the Company, can be seen at the Offices of the Solicitors of the Company.

Other Contracts between the Bankers, Brokers, and others in reference to the issue and subscription of the Capital, to which the Company is not a party, have been entered into in the months of December, 1887, and January and February, 1888; but applicants for Shares must on their applications waive any further specification thereof, under the provisions of Sec. 38 of The Companies' Act, 1867.

Prospectuses and Forms of Application may be obtained at the Offices of the Company, or from the Bankers of the Company.

Applications, accompanied by a deposit of 5 per cent. on Debentures and 10s per share (both preference and ordinary), may be made and forwarded to the Hong Kong and Shanghai Banking Corporation.

If no allotment is made, the deposit will be returned in full. Should fewer debentures or shares than are applied for be allotted, the surplus paid will be appropriated towards the amount due on allotment.

The first payment of interest on the amounts paid up on the Debentures, Preference, and Ordinary Shares will be made on the 1st July, 1888.

Subscribers may pay up the Debentures in full as allotment.......DATA MISSING.





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