Jt-LY 1, 1903. J tHE TROPICAL 
be put on record 
"TO THE DEBENTURE HOLDERS AND SHARE- 
HOLDERS IN THE DIJIDULA COFFEE COM- 
PANY, LIJIITED, OF CEYLON, 
*' Gentlemen,— The report furnished to tlie 
Debenture holders by ms, in May last, renders 
it almost unnecessary that, I should give further 
details as to the Diyagama property. I would 
refer them to the definition (Schedule 4) of the 
Estate, attached to that report, and to my 
recommendation to substitute the cultivation of 
tea, over a large acreage, for that of coffee. 
The further disappointment which has 
been experienced since "th.e date of my 
report on the coffee crop of the present 
season, points to the expediency of giving 
up the precarious cultivation of the latter 
product, and I now strongly urge the planting of 
the entire acreage under coffee, witli tea, for 
which in regard of soil elevation and climate 
the whole of the Diyagama land is undoubtedly 
well adapted. Any information which the Deben- 
ture holders may look for as calculated to be of 
service to them, in judging of the merits of the 
accompanying prospectus, should be such as will — 
firstly, give them some definite idea ot the value 
of the property ; and secondly, as will enable 
them to form an opinion of the probable 
results of the new undertaking which is 
represented, as the means of ultimately 
saving their invested capital. With regard to 
the first point, the present value of the property ; — 
In my report of May last, I stated it as my belief, 
that if the estace were knocked down to the 
highest bidder, it would probably not realise more 
than one-fourth of the mortgage loan, or say 
£20,000. Not that this sum represented the value of 
the estate, but that there beiug no capital in 
the Colony, it was most improbable that any 
bidder would present himself prepared to pay a 
higher price. I am still of the same opinion. 
Though there is, perhaps, more capital in the 
country now, than when I last wrote, and more is 
being daily attracted to it, I do not think that 
any one could be found to bid a higher figure 
than that already mentioned. It is certain, 
however, if we may judge from the prices at which 
coffee estates suitable for conversion into tea, 
have recently changed hands and from the form- 
ing at the present time of more than one Com- 
pany for the acquisition of such estates, that a 
rise has already taken pince in tueir mprkeo 
value. The fact that Companies are being 
started in tliis way strengthens my opinion 
that the soundest policy for the Debenture 
holders to pursue, for the protection of their 
capital (the strong recommendation in my report 
of the 20Lh May to give the Dimbula Coffee Com- 
pany an extension of time for the payment of 
their Debenture Debt having being found im- 
practicable) is to acquire the Diyagama property 
and to further develop it as a tea aiid cincliona estate, 
I consider that the present value ot the estate, 
to a Company formed to convert it into a tea 
estate, is not less than R440,000, and at this figure, 
I have no hesitation in stating my conviction 
that it can be made highly remunerative. 
Secondly, as to the probable results of the 
undertaking now submitted to the Debenture 
holders, I have framed with all the care in my 
power, leaving ample margin for every contingency 
and disappointment, an estimate of the outlay 
in effecting the gradual conversioa of the whole 
AGKlCULTUkiST. 45 
acreage into tea and cinchona, and of the result of 
operations. Pursuant to that estimate 1,9:W acres 
now under coffee, will, in the course of the three 
first years, be completely plantod with tea and 
cinchona. The total extent at the end of 1887-88, 
including what is already under cinchona and 
tea, will thus be 1.852 acres of tea and 240 
acres of cinchona. I propose that the entire 
outlay, attaching to the planting of tea and 
cinchona to the end of the f onrth year, be charged 
to capital account, in the meantime, tliegraJually 
decreasing production of coffee and the bark har- 
vested from the cinchona now growing on the estate, 
yielding a .suifie'.ent income to pay fully four 
per cent to the holders of a "A" shares in the 
new Company, and I estimate that in the 5th 
year the cumulative interest on tliose shares will be 
paid up, while the holilers of " B " shares will 
then be participating in dividends. In the ninth 
year (1893-94), when the entire tea acreage will 
be in full bearing, it is estimated that the net 
annual profit, from that product alone, will be 
R175,940 equal at 1/7 per ruiiee to £13,928 Us 8d, 
As I have already said, this estimate is the 
result of most careful preparation, and I have, 
therefore, no hesitation in recommending the 
Debenture holders one and all, to accept the 
scheme which has originate! among some of 
their own number, so persuaded am I, that if they 
do so, they will ultimately recover the entire 
amount of their respective investments in the 
Debentures of the Dimbula Coffee Company. 
With regard to the Shareholders in the 
Dimbula Coffee Company, Limited, it being 
out of tlie power of the Trustees to entertain the 
proposal, advccated by me in my report of the 
24tli May, to give them an extension of time for 
the payment of their liability under their Deben- 
ture Bonds, the offer which the projectors of the 
New Company have so considerately made to them 
to join in their undertaking seems the only 
arrangement that is possible with a view to saving 
them from the entire loss of their Capital. In my 
judgment, the opportunity which is now afforded 
the Shareholders in the Dimbula Coffee Company 
of joining in ttie new scheme, removes a dilliculty 
which 1 apprehend must have prevented them 
froLQ carrying out the proposal for an extension of 
time (if such had been possible) and which they 
do not appear to have considered, I allude to the 
impracticability which the Dimbula Coffee Com- 
pany, Limited, would find in raising the Capital 
necessary for the substitution on a large scale of 
Tea cultivation for chat of coffee, under the 
existence of tlie heavy primary charge of their 
Debenture debt, I need scarcely point out that 
it was out of the question that the Debenture 
holders, or their Trustees on their behalf should 
consent to the postponement of their mortgage 
cliim. I am, Gentlemen, your obedient servant 
F. K. -Sabonadieee. 
" 18, Lena Gardens, West Kensington Park, 
London, 9th February, 1885. 
Out of the first or Coffee Company, 
arose a Company with a very different 
fate ; for 
the new dimbula company, LTD,, 
has been and is one of the most prosperous 
tea associations in Ceylon, and here is part 
of the prospectus on which it was originally 
based r— 
