Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1882-06-23

so
Now these securities will be in every re-
spect exactly similar to those OF the East
Tennessee, Virginia and Georgia Company's,
now quoted on the Exchange, and no differ
ence can be made between them by the East
Tennessee, Virginia and Georgia people with
out affecting their own in the same way; be-
sides, if the consolidated company should
earn more than 6 per cent. on the income
bonds, then the preferred stock Is to receive
the balance until it should get dividend of
6 per cent. and in that event any surplus
will 90 to the common, so that the present
stock of Memphis and Charleston will al
ways get everything that the road may earn,
and cannot, in any way, be cheated or de-
frauded; and as the entire eystem will be
consolidated in every sense of the word, there
can be no difference practiced in rates for
passengers or freights, as might be under the
lease were there disposition 10 do so. And
again, while the East Tennessee, Virginia
and Georgia Company gets control OF the
the 1924 miles of the Memphis and Charles
ton under the proposed consolidation, the
Memphis and Charleston has equally the
control of the 1900 miles when
ompleted) of the East Tennessee, Vir-
ginia and Georgia road, because the
Memphis and Charleston stakeholder be-
comes at once a stakeholder in the East Ten
nessee, Virginia and Georgia Company, as
well as it becomes stakeholder in the Mem
phis and Charleston Company. Suppose, for
arguments sake, that the consolidation will
not be agreed TO by the stockholders OF the
Memphis and Charleston Company, what
could they do better?
They must, in that event. either operate
the road under the existing lease, which does
not expire for seventeen years, and
guarantees nothing to the stakeholder
in the way of rental or dividend
consideration for the use of the property,
but allows the lessee to absolutely control its
operations, cutting off other alliances, and
simply pays to the stakeholder what the
road may earn over and above fixed charges
and expenses under these guarded and cir
cumvented conditions. And before the stock
holders can even do this, they must first pay
to the lessee the floating debt of some $780,
900, which would under that arrangement
require some three or four favorable years of
the surplus earnings, which would postpone
dividends for that length OF time. In the
meanwhile they could not hope for higher
prices for their stock. On the other hand,
suppose the stockholders concluded to break
the lease in the courts. In that event the
lessee would require immediate payment of
the floating debt, which would not only keep
off dividends for three or four years, but
would at once depTess the stock in the mar
ket to where it was before this movement
first began, namely 30c-possibly lower, as
capital fears the uncertainty of litigation
and naturally abhors the Imprisonment
which must necessarily attend such a strug-
gle, for the suit might possibly pend some
time. In the meanwhile the lessee would
have possession, and the operations and
finances of the property would be controlled
by the adversary during all this time.
Neither of these plans look as favorable as
that of the proposed consolidation, which
provides for the payment OF the floating debt,
and gives each dollar of Memphis and
Charleston stock in addition zoe in income
bonds, zoe in preferred stock, and 10Cc in
common stock. And since the income bonds
will pay per cent. this will amount to 90
100 per cent. on the old stock, besides get
ting zoe of preferred stock and 100c of COM
mon stock, which are to receive any surplus
tn at may be earned beyond the per cent. on
the income bonds. In other words, this plan
pays the Memphis and Charleston indebted
ness and guarantees to the stockholders all
the properly possibly can earn under an adj
vantageous combination and an impartial
management, as there can be no reason for
discrimination under thorough consolida-
ton, even if there was disposition to do so.
Is the proposed consolidation a fair one?
This can only be tested by a systematic COM
parisou of the conditions of the consolida-
ton.
THE EAST TENNESSEE, VIRGINIA AND GEoR-
GIA COMPANY
has 900 miles completed earns about S14, 800
per mile; fixed charges about $1,000 per mile;
equipment and condition the same; has $l5,-
900 income bonds per mile, and has $15, 1000
preferred stock per mile.
THE MEMPHIS AND CHARLESTON COMPANY
has 1924 miles completed; earns about the
same; fixed charges about the same; equip
ment and condition about the same; has in
come bonds per mile about the same, and has
preferred stock per mile about the same.
The East Tennessee, Virginia and Georgia
Company has $25, 1000 common stock; has
$4,000, 900 in treasury; owes no floating debt.
The Memphis and Charleston Company
has the same in stock; nothing in treasury;
owes 100000 floating debt.
Under the proposed consolidation just
enough Of the above securities issued to the
Memphis and Charleston stockholders will
be retained at present prices, to pay the float
ing debt as shown before, and the stockhold-
ers will get every dollar of the remainder.
Could the Memphis and Charleston stock
holders place the same securities with any
one else and raise the $700,000 with which
to pay the floating debt? And should these
securities have any greater future value, the
Memphis and Charleston stockholders will
get it, as their securities thus retained by the
East Tennessee, Virginia and Georgia Com
pany will go into a common treasury, there
to remain until they are needed some time in
the future, and the benefits OF their sale will
result to the benefit of the Memphis and
Charleston road in the ratio of 1924 miles
TO 900 miles; in other words as a resume.
The Memphis and Charleston stockholder by
comparison is placed upon an equality with
the East Tennessee, Virginia and Georgia
stakeholder in earnings, in fixed charges, in
equipments, in the same issuance per mile,
of the same securities; the Memphis and
Charleston stakeholder pays his debt to the
East Tennessee, Virginia and Georgia Com
pany, has nothing left in the treasury except
the future rise on the securities retained by
the East Tennessee, Virginia and Georgia
Company over and above the 100000 and
comes into full division and enjoymen OF
S. 600, 600 with no liability attached, already
in the possession of his new companion,
under the proposed consolidation. The
former high prices at which the
Memphis and Charleston stock ranged
was due the expectation that this very
consolidation would be carried out, and the
East Tennessee, Virginia and Georgia Com
pany's securities which we are now to re-
ceive were commanding prices at that time
which would warrant such hopes, and the
present low price of the Memphis and
Charleston stock Is due to two causes,
namely: ne securities OF the East 1e1neS-
see, Virginia and Georgia Company which
we are to receive have deprecated in the
market, keeping pace necessarily with the
great decline in the general list; secondly, as
Memphis and Charleston stock is now selling
for ten cents less than the aggregate values
of what it is TO receive, is due to fear that
the proposed consolidation may meet with
some delay or opposition, which is not
possible when the foregoing terms are under
stood.
At the conclusion of the reading, Mr.. r.
Dudley Frayser asked that the act of 1881
governing the matter be read, and there be-
ing no objection it was SO ordered. No one
present having a copy of the act, the read
ing had to be dispensed with, and Mr.. Fray
ser made statement to the effect that, as he
understood it, the said act did not permit of
consolidation at all, or, if it did, it would
require three-fourths vote of all the stock
of the road to carry it into effect, which
amount was not represented at this meeting.
The meeting then, without further action,
adjourned to meet at Huntsville, Ala, on
the fourth Tuesday in August next.
what fhe Chesapeake and Ohio is Doing
1t is now reported that the Hatchie river
bridge, on the Chesapeake and Ohio railroad,
will be completed and through train pass
over it on July 4th. This will be a great
benefit to the people along the road, as well
as TO Memphis merchants. The work to be
done IN the city by this company is quite
extensive. The bluffs between Union and