The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1885-10-12
Portland & ogdensburg Again.

10 UIS EUUOF " Gto LFeoo+
The reorganization of the Portland & 0gdens-
burg railroad has already been fully discussed in
the plan submitted BY the committee of the sec
ond mortgage hondholders and In the eommuni-
cations and interviews published in the news
papers. As, however there still seems to be some
confusion of ideas in regard to the meaning, pur-
pose and probable results of the proposed "volun-
tary plan Ii may not be amiss to present BRIEF
statement of IL situation as 1t appears TO large
majority of the individual bondholdefs ana TO
MANY citizens of Portland who desire to preserve
the railroad intact and unbroken, and to secure TO
the city all the rights which 1t can have in the
company. under any form Of reorganization, but
in a compact and manageable form.
The foreclosure plan" has the merits OF SIM
plicity and of 'wiping OUT certain claims upon
the road, part of which, perhaps, ought not TO
be allowed, and part are legitimate claims and
should have some recognition IN reor ganization.
But reorganization under this plan does not in
crease the city's proportionate interest in the
nroperty over that which it now holds, or make
that interest any stronger than it would be under
the voluntary PLAN" 1t Is. moreover, open to
fLe folloWng grave objections:
The city (under the forecl0sHre) can nave
no control whatever of the road Tor many years.
The receivers certificates ana the receiYers ; IN
debtedness, amount according 10 tne nguIes oi
the Committee which are believed to be correct,
10 S35O, 900 The net earnings of the road are
estimated (and 1t Is far estnatel at t
interest on the first mOrtgage-S4S, ,oOO-and siz,-
900 on the receivers certificates issued leaving
about $4,000 year appeao;S s;ne ~ 'ce cempntstion
will show that II will take at least six years, at
the rate of earnings estimated to pay on the ex-
known to every one familiar with raisway man
agement that the administration OF reeefVef y
generally more expensive than that OF Doard OF
directors personally interested as owners OF the
property and consequently anxious 70 secure the
greatest amount of income possiDle. 2, Juugihg M M
from experience of similar cases. IT would not De
unsafe to predict that under the foreciosurr
PLAN the road could not be extrlcated IRON tne
grasp of the receiver for several years unleSS UNI III
deed arrangements be made hereafter 1or dohg
SO bv the issue of a new mortgage for that d'd
other purposes in which case the citys interest In
the road would be lost beyond redemptlona ,na .t..
O. serious and dangerous hazard under the
foreclosure plan" is this very facility by when
mortgage could be made, which being done, the
city;s interest would certainly be eXtlngulshed
1t Is easy to say that the owners OF properly
may safely be trusted to manage It IN tnelr own
way, and to mortgage it, If they think IL lor tnen
interest to do So and this may be true so far as
private owners are concerned. Past experience.
however has shown that municipalities may
sometimes be induced to do things which lndiyld-
nails. managing their own affairs, would not think
of doing. The city has now the control OF TINS
railroad, and if the company is reorganized under
the ssyoluntnry plan" cannot lose it, But reOr-
ganzed upon the basis OF stock alone lne tatal
facility by which new mortgage could be issued
upon almost any pretext makes te ts st,
plan" positive anu cons'ans 'e'i''e W s"0 0i''
3 Under foreclosure, the capital stock Of the
company will be about S4.0000OO. or course no
dividend can be paid this stock WDlie lne
road remains in the hands of the receiver, Dut
when, after term OF years tne receiver iuep. ~ ~
edness is liquidated and the road reyertS 10 int
control of the stockholders, what VIII De tne CON
dition of things? Assuming the net income OF the
road to be tbe 5eae est VIM orsage an an
nllal income applicable to dividends OF $4,000,
perhaps one and one-half per cent. per annum on
with he CITY majority owner of the stock and
the creator of the board OF directors, such dlV-
idend would be likely to be paid? IL Wouia DC
contrary to al experience that 1t should be.
The advantages of the plan of the commlttee
are clearly apparent to the private bondholders.
for it has their UNDIVIDED p Wby tbs
advantages to the city should not be the same?
The only reasons given for opposition 10 tne plan
on the part Of the city appears TO De t1at ISL, III
some way how it is not clearly stated, the city
may at some time lose It's contr0l OF tne rQdu
and I'd, that it IS for the interest," OF 6 Ine 61s h
made which should compel the payment OF any
annual fixed charge upon the property beyond
those now existing; the inference obviously being
that certain business men of Portland desire the
tariff of rates to be arranged that no surplus
for interest dividend Is likely to be- be earned Inn,
il can be stated squarely in regard to the rst OBJ
lection noted, thai under the plan OF the commit
tee it is impossible for the CITY TO lose any o
closure. The only way in when y is ctGtnseu tne
city may lose such control is through tne new
PROPOSED intermediate" mortgage OF S35O,OOo.
Now this mortgage is proposed to be issued solely
for the purpose of extending the receivers IN
debtedness. and of taking the properly speedy
from his hands; it does not change the relatlve
nosition Of the city as bondholder or as stock
holder That amount of indebtedness exists, and
is lien prior to everything else sre shG mus nus Dg
owners of the property can have any control what
ever over it. it is believed that by the issue O
| this $3.50 900 mortgage that amount Of Donds car
he negotiated the receivers debts taken care OF
| and (1nder the plan of the commttee) the roat
come at once into the hands OF preferred stesK
| holders of whom the city forms the majority
| This is not creating a new debt or IN any way
adding to the burdens of the company; It /
simply extending an existing oDngasttoMh t A. aon rn s'
erty to the rghtful owners. Is there Is any rlsh
to the citys control by the creation OF this mort
ana ultimately the principal Of it, it cannot Ger
tainly pay interest and principal OF the IKE
amount of receivers indebtedness now ontstana
ing and the results are in the one case, the very
imnrobable contingency of the foreclosure OF 8
mortgage whose interest of Sl7 800 cannot be
paid out of net earnings of 700; and IN the
ppther the road remaining in the hands of a re
ceiver indefinitely The risk OF the city losing lt
| control by any default upon this mortgage
S350,0oo is too insignlncant 10 De seriously coh
10 sum up, the advantages of the plan of The
committee over the foreclosure plan are: A.,
l. Ii continues the control of the city over tht
railroad better and more surely and safely tnaI
| can be done under the foreclosure.
p 1t takes the property out Of the hands OF IN
RECEIVER sooner than can otherwise be done with
| out hazard to the eity's control.
8. 1t prevents any sacrifice OF the CITY am
other second mortgage bondhOlders by the lssu
Of a subsequent mortgage for any purpose what
| ever.
! 4. 1t gives to the second mortgage bondholders
| the city being a majority Of them, a security
second mortgage bonds-to the amount q, Of IN IN
present value of the property, upon which al IN
| earnings of the road, up to certain sum, must o.
| paid, and in addition thereto another security
| preferred stock,-which controls the management
| IF the road and which,will also receive some re
turn, if the selling value or earning power OF th'
| road increases.
| AS a representative of large amount Of secon6
mortgage bonds as citizen Of Portland warml.
| Interested in the Improvement Of its business ant
| as taxpayer anxious that the financial pnTdens
Of the city should be lessened, believe that th'
| committees plan for voluntary organization i
more for the interests of the city and OF citizens
| than the proceedings under the foreclosure, ana
| hope that it will be carried out -.
| PHILIP HENRY BROWN.