The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1885-10-02
PORTLAND & ocDENsBuRc.
The Views of the Hon. C. F. Libby.

A reporter of the PRESS called upon C. F
Libby, Esq, yesterday, and asked him if he
would state his opinion as to which method
of re0rganizing the Portland d 0gdensburg
Railroad would be best for the interests Of
the city. He said that the choice between
the schemes depended somewhat upon the
object to be secured. If the maintenance OF
the control Of the road by the city was the
Important object to be secured, he considered
that the reorganization on the basis of the
foreclosure was the most effectual and salts
factory, as it would Immediately place the
road in good financial condition and credit,
and would leave much smaller mortgage on
the road than the other scheme and the
smaller the mortgage the less danger of the
control of the road passing out of the hands
Of the city as new stakeholder. In reply to
a question as to what comparative liabilities
the road would start under in case the reor-
ganization was effected under one or the
other plans, he said that depended on what
basis was adopted for the issuance of the
preferred stock, and the terms on which
settlement was effected with the holders of
thlru mortgage bonds and floating debt. The
scheme OF reorganiZing by mutual agreement
OF all interests leaves the old stock outstand-
ing, and contemplates the issue of preferred
stock to the amount of $1,500,O00, and the
issue OF new mortgage to take up outstand-
ing receivers certificates and, as stated by
Mr.. Putnam in his letter, securing the
amount determined to be issued for taking
up the present bonds of Nov. 2, 1871, with
perhaps sufficient in addition thereto to
complete the road" If the second mortgage
bondholders agreed to take one-half new
bonds and one-half preferred stock, and set
tlement could be made with holders of third
mortgage bonds and floating debt for from
$4,000 to $4,000 as stated by Mr.. Putnam,
then the liabilities of the road if reorganized
under the mutual agreement scheme would
stand about as follows:
Old stock. ................... 81 O52 1 S5
ISL mortgage bonds. 100000
Receivers certificates. eS................. 250,OOO
I'd mortgage bonds (renewed) ....,..... 1,134,0OO
Preferred stock Tin lieu of I'd mortgage
Preferred stock to take .up Sd mort -''''
gage bonds, Observation-Disclosures. $4,000
Total .....................$4,4 "a, ,420, 1856
If reorganized on basis of the foreclosure the
liabilities would be relatively as follows:
Stock equal to I'd mortgage bonds 81, ,268, 900
1st mortgage bonds. .-.......,, ......... 100000
Receivers certificates. s.................. 25O,OO0
S2,31S,ooo
In answer to question as to how much it
would cost to complete the mountain section
and how money raised for its construction
would affect the city's rights or control under
both schemes Mr.. Libby said the uncom-
pleted gap on the mountain section was
about ia miles, extending from Fabyan's to
Scott's Mills, and that he understood it could
probably be built inside of $350,000.
The amount added to the mortgage debt in
the above statements would give a mortgage
debt Of S2,534, 900 in one case, and 81, ,400, 900
in the other, with the probability that the
road could pay the interest on the one and
not on the other. These amounts do not
take into account the interest on the present
second mortgage bonds, which if renewed in
any form would increase the liabilities some
$1,500,000.
In answer to question as (Which scheme
offered the greatest risk of the city's losing
control of the road, he said Upon reorgan-
ization based on the foreclosure the control
OF the city was fully secured, and could only
pc lost by their voluntary and deliberate ac-
tion of placing a larger, new debt on the
road than it could take care of, the necessity
for which he did not foresee. The danger
IN the other scheme lay in the fact that it is
not proposed to limit the issue of the new
mortgage bonds to the amount required for
the pro rata payment of the present second
mortgage bondhOlderS, by which their rela-
tive holdings would be preserved, but to in
crease the amount so as to take care of the
first mortgage bonds and the receivers certi-
tcates, and to provide funds for the compile
tlon OF the road. AS the city cannot by reason
OF its Indebtedness and the constitutional
limitation purchase any of these new bonds,
the holding must remain stationary and be-
come minority interest; and there is dan
ger that the new mortgage will, in the end,
control the road. Whether or not the same
result would follow from the issue of pre-
ferred stock would depend upon the basis on
which it is issued.
When asked if he knew of any equitable
reason why the third mortgage bonds and
floating indebtedness, amounting to $15O,O00,
should be paid by the Portland division, he
said he did not, and that it was unusual for
a mortgage, like the city, Who was only get
ting small proportion of its Indebtedness
paid by the foreclosure, to waive it to let in
junior encumbrances and holders of old float
ing debt.
In answer to a question as to whether he
thought the common stock of the road would
ever be of value, Mr.. Libby said that there
was nothing in its past history or present
prospects as he knew them, to lead to such
a belief.
In answer to question as to whether or
not holding stock in place of bonds would
affect the city's income from the road, he
said that he could not see that the city's
rights would be any less to share of its
earnings, if sufficient for dividend, wheth-
er the holding was in one shape or the other.
With less liabilities, as shown in the fore
closure scheme, the chance for dividend
must be greater. The control of the matter
of expenses and extensions would be in the
hands OF the city as majority stockholder.