TRADING COMPANY BURNS PHILP RETREATS FROM PACIFIC

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By Michael Field and Asha Lakhan

AUCKLAND, New Zealand (November 1, 1998 -AFP)---A once-tenacious trading company that took on Imperial Germany to become the commercial ruler of the South Pacific is retreating from the region as it struggles under the weight of huge debt.

Burns Philp and Co, founded in 1883, began trading in trochus shells, beche-de-mer and copra and went on to create an empire across atolls and islands.

Now an Australian spice and yeast trading company, Burns Philp (BP) has been struggling to cope with debt worth 1.5 billion Australian dollars (one billion U.S.).

It said last week in Suva, the Fiji capital, that it would sever its last ties with the South Pacific island. It has already left Samoa and most parts of Micronesia.

"For many of the staff, who were part of BP for many years, the demise of the company is certainly very sad to see," Ross MacDonald, now retired managing director for the Pacific Burns Philp group, said in Suva.

"Over many many years BP played a major role in developing the commercial sector of the economy and in bringing in skills and business acumen into the community."

Burns Philp was the most aggressive of a number of trading companies which historian Douglas Oliver called in his 1951 work, The Pacific Islands, "an all-embracing mercantilism."

"Whether one was sitting in a native hut or lounging on a club verandah in the British Islands, the conversation sooner or later got around to 'BP'," Oliver wrote.

"Notwithstanding many of its critics, BP does not stand for 'Bloody Pirate."

James Burns established a general store in Townsville, Queensland, in 1872, employing two years later Robert Philp who later became a partner. They then joined another businessman, Isidore Lissner, and in 1883 became Burns Philp.

They began trading in the Pacific, buying copra from the hundreds of scattered islands, setting up plantations, financing small planters and providing freight and merchandising services. Hundreds of Australians found themselves living in splendid isolation supervising Pacific Islanders on copra plantations.

They printed "money" which was used in islands that had no currency.

At the turn of the century the Marshall Islands were under German rule and a Hamburg company, Jaluit Company, had preferential treatment. Burns Philp took them on and so Germany imposed crippling taxes on the Australians to drive them out.

Australia protested to Britain which in turn took the matter up with Berlin. The taxes were abolished, but Jaluit was given a heavy freight subsidy to get its product to Europe. Burns Philp still won the battle but in 1914 the islands went to Japan which closed them to outsiders.

Between the wars Burns Philp built up a major shipping line and dominated Pacific trade. It even owned atolls, including lonely Fanning Island.

In the 1950s it had exclusive retail stores throughout the Pacific, along with wholesaling, shipping, car sales and inter-island shipping interests.

Last month the company announced a 285.4 million-Australian-dollar loss, an improvement on the loss of 873.3 million dollars the previous year. Most of the losses came from spice trading in the United States.

The embattled group nearly collapsed last year but was saved with a recapitalisation plan and asset sales which allowed it to settle around half of its debt.

Officials say the company is dealing with its mountain of debt and is back from the edge of bankruptcy.

"It's a positive story; it's what the company has been working for," Burns Philp company secretary Helen Golding said earlier this year.

Its U.S. herbs and spice business, Tones Inc., was restructured and most of its European operations were sold.

Burns Philp also has a new agreement with its banking syndicate to provide a three-year term finance facility, providing term debt and working capital facilities.

Michael J Field Agence France-Presse Auckland, New Zealand TEL: (64 21) 688-438 FAX: (64 21) 694-035 E-Mail: afp.nz@clear.net.nz WWW: http://www.afp.com/english/

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Hi, Hoping someone out there knows the connection between the company and a row of terraces built on Unwin's Bridge Road, Sydenham around 1917. All the houses are names for Burns Philp ships, for example - our house is named "Marsina" any ideas? cheers Glen

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