The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1878-01-22
PORTLAND * OGDENsBURG.
Plan for the Reorganization of the COM
pauy.


| ment of the bonded debt was presented. Hon
| VIM. W. Thomas was unable to serve on the
committee. The following in the plan as pre-
| sented:
The undersigned of the committee
| appointed at the annual meeting o.
the Portland and Ogdensburg railroad
company, to ascertain whether any arrange
| ment is practicable for such an adjust
| ment of the bonded debt of the company, as
will enable the company to resume payment
on its obligations at an early date, and i,
| necessary, to procure legislation for that pur-
pose, beg to report the following plan, upon
which they are substantially agreed.
Of the entire amount of the bonds of No
vember l, 1871, commonly known as the Sec
ond mortgage, all have been issued except
100000 reserved by the trustees to secure
first mortgage bonds for like amount, and
the disposition of them is as follows:
Paid out Reconstruction and sold, s 231, GOO
Exchanged as collateral with city, 1.350,000
Pledged collateral at about % per cent, 554 900
Pledged as collateral otherwise, 1854, 900
Four 800 bonds not issued, AGO
$25OO,OOO
The bonds hypothecated, other than to the
City of Portland, are at rates varying from
20 to Is per cent of their par value, but the
total average is 333 per cent.
1t is plain that the value of the property
covered by the second mortgage is very much
less than the par value of the securities out
standing, and one of the points to which
your committee have been obliged to direct
their attention, is to ascertain what is the
actual value of the property in question.
After careful consideration of the question,
they have come to the conclusion, that it is
not unreasonable to suppose, that in the
course of year or two, the net earnings of
the road will be sufficient to pay six per cent
interest on total funded Indebtedness of
1000, 900, thus making the estimated value
of the property covered by the second mort
gage $800,000.
With these figures as basis they there
fore recommend plan which reduces the
second mortgage to that amount. and leaves
the relative position of all owners of second
mortgage bonds, and all holders of the same
as collateral security, unchanged.
The plan,to 60 more into detail, proposes to
scale down the second mortgage to one third
of its present nominal value, that is to say,
to $S33,000. 1t proposes to give to all hold
ers of bonds at over 335 per cent of their
nominal value whether owners or holders as
collateraD one third of their present hold
ings in "scaled" bonds at par, settling the
differences which exist between the amount
of their claims and the amount of "scaled"
bonds which they receive, by an issue to them
of the amount of differences in preferred
stock at par.
1t pays holders of bonds as collateral at
33s per cent of their nominal value, the
amount of their claims in ''scaled" bonds at
par, and no preferred stock.
1t gives to the holders of bonds as collateral
below 333 per cent the option of settling
fhoir oil hy iscn m Thorn Of Haoaled
bonds at par, they acquiring valid title to
them, and of keeping their claim open against
the corporation holding as collateral security
therefor SCALED bonds in the same proper
ton as they now hold the existing bonds,
that is to say, one third of the amount of
their present holdings, in "scaled" bonds at
par.
To illustrate: parties who have purchased
bonds or who hold them as collateral secur-
ity at par, would receive, by this arrange
ment, for every $4,000 of Indebtedness
$4,000 in scaled bonds, $1,000 in preferred
stock; parties who hold them at IS would
have $4,250 bonds, $3.50 stock; holders of
bonds at SO, $1,000, bonds $4,000 stock.
Holders at 339, or those who hold them at
lower figure but are willing to settle their
claims at that price, would receive the
amount of their claims in "scaled" bonds at
par and no preferred stock.
Holders of collateral security below 33s,
would have the option of holding their
claims against the company, with the same
proportionate collateral in "scaled" bonds.
For example, the holder of claim against
the company of $4,000 with bonds at 20 as
collateral, now holds 100000 in bonds, and
under the arrangement would still hold as
collateral $l6,666 "scaled" bonds.
A necessary part of the plan is, further,
that all the floating unsecured debt of the
company now existing, shall be adjusted, by
the issue to the holders of it, of preferred
stock on the most favorable term for the
company possible.
AS the city of Portland is to change its
relations to the corporation, becoming bond
owner instead of the holder of bonds and
stock as collateral security, it will be ex-
pected to surrender, for cancellation and
destruction the stock which it now holds as
collateral security.
Authority must be obtained from the Leg
islature for the company to issue preferred
stock in sufficient amount to carry out the
plan proposed, such stock having the voting
power and the common stock to lose its vot-
ing power until such time as reasonable divi-
dends have been earned and paid upon the
preferred stock, when the control of the cor
poration shall revert to the common stock
holders. Your committee, with the assistance
af the president of the company, have pre-
pared bill to this effect, which they sub
nit herewith, and recommend that pending
further consideration of this plan, the bill in
question, approved by the city authorities,
be sent to the Legislature, and passage re-
quested.
The plan further provides, that all bonds
relinquished by parties consenting to the ar
rangement, shall be placed in the hands of
trustees appointed for the purpose, there to
remain for the benefit and protection of all
parties until all bondholders and holders of
bonds as collateral shall have consented to
the arrangement, and until all now existing
unsecured debt is adjusted or paid. Such
trustees sre to issue their certificates to par
ties so depositing bonds, which certificates
shall express upon their face a promise
to pay any surplus that may be
earned by the company after paying
operating expenses and the interest
upon the first mortgage, such surplus reve-,
nue. paid not to exceed the amount of six per
Holders of such certificates as collateral Sc
curity, to endorse the amount of dividend
paid upon them, if there is any, upon the
company's promissory notes in their hands.
1t shall be the duty of these trustees,
whenever all the second mortgage bends of
the company are held by them, and they are
satisfied that the now existing floating debt
of the company is paid or adjusted, ard reg
ular dividends of not less than six per cent
have been paid upon the certificates issued by
them, to cancel and destroy all of the bonds
held by them except the amount necessary to
carry out this arrangement, and to deliver to
the holders of the certificates the amount OF
"scaled" bonds to which they are entitled,
with sufficient number of coupons removed
to adjust the interest account. They shall
also cause to be certified upon the mortgage
and duly recorded, the fact of the destruction
of the bonds by them.
The plan proposes that no interest is to be
paid to holders of the company's bonds as
collateral security, who do not join in the ar
rangement.
Holders of claims against the company
with collateral lower than 33g to be allowed
to settle at any time, by taking "scaled" bonds
at that price.
A sufficiently accurate statement of the
condition of the company under this arrange
ment Excluding the first mortgage and thu
common stock) is subjoined: