Friday, 25 May 2012

The Pattison's Syndicate

I told you I'd be coming to the shadowy syndicate trying to take over the Pattisons business. We'll be getting to them in a minute. First some lighter news - the personal bankruptcy of Robert Paterson Pattison (crazy name, crazy guy).

"THE Estates of ROBERT PATERSON PATTISON, sometimes called ROBERT PATTISON, Distiller and Wine Merchant. Leith, were Sequestrated on the 9th day of March 1899, by the Court of Session.

The first Deliverance is dated the 9th day of March 1899.

The Meeting to elect a Trustee and Commissioners is to be held at twelve o'clock noon, on Saturday the 18th day of March 1899, within Dowell's Rooms, No. 18 George Street, Edinburgh.

A Composition may be offered at this Meeting ; and to entitle Creditors to the first Dividend, their oaths and grounds of debt must be lodged on or before the 10th day of July 1899.

The Sequestration has been remitted to the Sheriff of the Lothians and Peebles at Edinburgh.

All future Advertisements relating to this Sequestration will be published in the Edinburgh Gazette alone.
28 Charlotte Square, Edinburgh, Agents."
THE EDINBURGH GAZETTE, MARCH 10, 1899, page 267.

Short and to the point, eh?

What I don't quite get is how, despite being bankrupt, there was still a trade in Pattison's shares. OK, they weren't going for anything like the £10 they had originally cost. Knowing what I do, I'd have snatched the hand off anyone who offered me a couple of quid a throw for them. Read this and things may become a little clearer:

Considerable interest has been excited, during the course of the past week by what may be called a boom in the preference shares of Pattison's, Limited. Since the 6th March, when the preference shares stood at 14s, the price has steadily gone up. This week the top quotation at which business was done is 48s 6d, and at present they stand a few shillings under that figure. The explanation of this boom. is the rumour of a proposed reconstruction scheme which a London syndicate is said to have initiated. The scheme is understood to take the form of a new company, with a capital of £400,000, which it is said is already underwritten. In consideration of the purchase of the entire business the syndicate propose to pay the secured creditors in full, to give the unsecured creditors 13s 4d in the £, and to allot to the shareholders £6 5s of scrip in the new concern for every £10 shares held at present. The liquidators will require the consent of the Court before any scheme of this kind could be adopted, and while it is stated that a number of wealthy men are interested in it, the scheme is received with some hesitation in commercial circles."
Belfast News-Letter - Wednesday 15 March 1899, page 8.
With the syndicate proposing to give more than 6 quid in new shares for each old £10 share, there was a potential profit if you could pick up the old ones cheaply enough. Of course, that only applied if the syndicate's bid were successful. 

But the price of Pattison's shares jumped up and down on rumours of the syndicate's progress. The court asked it to jump through a few hoops to prove it was serious. When they were reluctant to jump, investors got jittery:


Glasgow, Wednesday Evening. Pattisons Preference shares furnished a sensation at the opening to-day, business being done down to 16s, as against 47s. The reason set forth was that the syndicate, which was asked by the Court to lodge £50,000 as a guarantee of good faith, had failed to do so, and had offered only half that amount. Everybody was a seller, Edinburgh quoting even as low as 13s 9d. However, the price rapidly rallied to 28s 3d, and closed at 23s 3d. It would, therefore, look as if the necessary money will be forthcoming to push on the reconstruction. London got some of the shares to-day."
Dundee Courier - Thursday 23 March 1899, page 2.

Just see how the price bounced back up again after the syndicate paid in the £50,000:

Mr. James Craig, chartered accountant, on behalf of the London syndicate who propose acquiring the business of Pattison's Limited, lodged in the Bank of Scotland yesterday afternoon, in the names of the liquidators and himself, the £50,000 stipulated by Lord Darling as necessary that he might give the liquidators authority to allow the syndicate to examine the books of the firm. On Tuesday the syndicate offered £25,000, but the Judge declined permission at this figure. It is understood that, as the result of this new development, the negotiations for the acquisition of the business will be continued."
Leeds Mercury - Thursday 23 March 1899, page 7.

That good news saw the price of the shares rise on the very last day they could be traded:

"Pattison Preference shares, which, by the way, have been to-day deleted from the Stock Exchange Official Share List, have changed hands from 38s to 42s 6d, closing about the latter quotation. The books of the Company will be closed finally on the 15th prox,, and all dealings now will be settled for special settlement, which has been fixed for the 10th prox."
Dundee Courier - Tuesday 28 March 1899, page 2.

Clearly there were many willing to take a punt on the success of the syndicate. Remember they were offering £6 5s worth of new shares for each old £10 share. So if you could pick up one of the latter for £2, there was more than £4 profit. A pretty good return. But only if the syndicate were successful. If they weren't, the shares were likely to be worthless.

We'll be finding out soon if they were. Successful, that is.

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