New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-08-29
RAILROAD COMPLICATIONS.
A CONTEST OVER THE BONDS OF THE NORTHERN
INDIANA RAILROAD.

|
| A strange contest has recently been begun
concerning the bonds Of Joliet and Northern puian
pairoad number of these bondholders are residents
~ this CITY and much indignation has been expressed
at the action proposed by the Michigan central
Railroad Company The history of the case Is supstan
| TALLY follows:
The Joliet and Northern Indiana Railroad was puiit
20 years ago Its stock divided into 5000 shares' was
valued at 100000 building the road 1T became neees
sarv n issue mortgage bonds the amount Of SOO0OO
| Tho rate OF interest was fixed at per cent.
| These bonds were negotiated chleny on inc
| strength OF lease contract with the Michl-
| gan Central Railroad This was perpetual lease
and the Michigan Central to pay yearly $4,000 me
or for the of the road With this money the
per cent interest the bonds and stock was to be
paid The bonds to run for 90 years. and were con-
sequen thy payable July TO- 1874 As the semiannuai
coupons fallen due they have been paid out OF the
money obtained for the Michigan Centrals Lease AS
the last coupon became due the bondholders became
anxious for the redemption of their bonds. But the
Joliet and Northern Indiana Railroad was OF course un
| able to redeem them.
Meantime large portion OF the capital stock OF the
road had been taken by heavy stockholders In the Mchi
gan Central and sti other stock had been bought up
as opportunity offered Accordingly 1t happened wneh
the bonds became due, that OF the 5000 shares capla
stock the Joliet and Northern Indiana Railroad 224S
shares were owned by the Michigan Central. meeting
OF the directors Of the Michigan Central was held on
Aug L. to decide on of action with relation 10
the Joliet Road 1t then decided TO issue circular
to the Joliet bondhoders, stating the action which tue
Michigan Central willing 10 take The position OF
the Joliet Company toward the bondhoders was thus
| stated:
The COMPANY until stated date. unless the mortgage
is foreclosed win be in the receipt Of an annual rent
from the Michigan Central Railroad Company 81 $500 TO-
| matured OF ssOOOOO The mortgage bondholders must
either negotiate with the Joliet and Northern indaha
| Raj DAD
upon terms to be agreed upon, or foreclosure mus
place, which will terminate the lease ahu iedye
the bondhoders property probably insufficient to re-
| paw the debt for which II Is mortgaged. .,,,
1t is clearly then for the interest OF both the bond
holders and the Joliet and Northern Indiana Railroad
Company the lease should not be extlnguished by
foreclosure, and that soue new ARRANGEMENT shOuu We
made for an extension or renewal OF the mortgage
bonds With regard TO the stock OF the Company there
are 5000 shares OF capital stock or whlcn the Mcgan
Central Railroad Company holds 2245 shdres IedIlhs
757 shares in the hands OF private stockholders VINO
NAV by she tenor of the certificates have been led to
| suppose that the regular continuation or DIVIDENDS
S RT9 ne ou by the Michigan Central Railroad Con
pany IN OF which such stockholders are emitted
them To further which view, said stockholders should
be allowed exchange their stock for bonds each hve
shares of stock being entitled to bond OF $500 IL is
therefore clear duty of the Joet ana Northern IN
diana Railroad Company IL such extension renewal
is had or exchange OF stock made, appropriate the
entire rental-afor reserving sufficient amount Tor tne
necessary incidental expenses-rst, 10 the payment OF
the the renewal bonds and the bonds issued
in exchange for the 57 shares OF STOCK ane the residue
form sinking fund for the payment OF those bonds
when they mature. II was therefore voted That TINS
|
| able in 20 years from July TO- 1874, when the
the sinking fund shall suffice, with interest at the
rate of six per cent, payable semi-annuay. This Com
stock to Issue each five shares of stock surrendered
a SIX per bond of $500, payable as above, cond
exchange Of bonds Tue interest on the proposed bonds
be secured by the al ' se e Sane OF @
said rent deducnG necessary incidental expenses, 10
constitute nking fund for the payment hrs OF the
|
and second, for the payment OF the bonds OF 500 pro
posed 10 exchanged for the said 5 shares OF stock
| BY carrying out the proposed arrangement, u
will be found that there Will be semrannual
| Which, If invested TO produce at the rate OF
per cent interest, compounded every SIX months II
sufficient pay the principal of al the bonds IN 70
years. The original mortgage VIII sun continue III lofcc
mil the final payment of proposed six per cent
bonds old bonds being hed uncauceled by trustees
carried out IL necessary thus making the new bonds
secured both by original mortgage AMI the accunu-
| change for STOCK secured by the SINKING tahd'
The owners 757 shares now indignant at the
proposition of the Michigan Central. Taey claim that
they are entitled to per cent interest, and are I'M
willing TO compromise They pronounce 1t an outrage
that they should be compelled to accumulate sinking
fnnd for the payment of their bonds and AT the
| end of 20 years find the road the property OF the
Michigan Central. SO large portion of the stock Is
owned by the Michigan Central Railroad, however, that
the few outside boldholders are well hish helpless.
to an per bond and the matter may yet reach the
! courts.
| THE NETWORK AND oswEGO MIDLAND.
| The first mortgage bondhoders OF the NewYork and
Oswego Midland Railroad held u meeting yesterday
afternoon at the Cooper Institute. Charles Bell was
elected Chairman. The report OF the Committee and
the plan drawn up by it then read There was no
probability of advantageous sale TO others, 1t was
stated and the only way the interests OF the
first mortgage bondhOders is for them 10 become the
purchasers the property Before any return can be
hoped from such purchase expenditures VIII have
| TO be made. For this purpose it is best to seek
! the aid OF various other interests, and to re-
| lieve the first mortgage bondholders from bear
| ing assessments that may otherwise be unneces-
sary The present first mortgage bondhoders should be
represented by first mortgage bonds and the control
| OF the property should remain for suitable time
with the new mortgage b0ndh0lders For the prop
erty TO have a great growth the plan is practically that
the first mortgage bondhoders become trustees for the
stockholders and junior interests the control
gradually TO descend with the roads development
through the various classes of creditors till finally 1t is
vested again the towns and those who now hold full
maid stock thus returning the subscribing towns their
stock in the terms of their original subscriptions III
| shape TO secure to them its ultimate value.
The Committee proposes TO the holders OF Receivers
certificates that they fund their certificates IN the new
First Mortgage Bonds The holders OF Receivers GER
tfcates have power of foreclosure and the cerf-
Gates cannot become due be paid until the consent OF
the first mortgage bondhoders to sell the property be
obtained. The preamble OF the plan Is as follows
and management OF the railroad shall be lef In
the hands Of the brsi mortgage bndhoefs until The regular payment
| interest the bonds Is secured
first mortgage bonds and Receivers
bonds which shall bear
justified the reasonable expectation Of
| sufficient net earnings for that purpose
property thus mogseed there shall be raised
funds needed for putting the railroad In
repair and for dens such cash expenditures IS can
not be avoided the reorganization
That all fong debt and stock shall have
% & n the e1e, Ssaer % ,eei ppSn @