Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1892-05-30
Atchison's Reorganization Completing.

Boston-Fiye years ago the present fnan-
| cial management of the Atchison Topeka &
Santa Fe X. K. Go. came into power. An
expenditure of more than 500 200. 600 had
| been made by the previous management for
the building of extensions and new lines
but when the balance sheet was struck net
earnings were found to be not only under
| dividend expectations, but one-third less
| than actual interest charges. while floating
| debt and needed physical improvements
| hard pressed the company
| The new directors and their banking as
sociates carried the company for year and
brought forth scheme of financial reor-
ganzatlon which has ever since been CON
sidered Il masterpiece. 1t proposed in brief
| that SIP 900 900 of charges be divided upon
the basis of making one-third optional to
| pay according TO net returns and improve
ment requirements of the company For
this $1,000 900 of optional interest SSo.-
opo,000 per cent income bonds were is
sued TO the bondholders.
| 1t was Immediately seen that there was q
defect in such Il plan-an uncertain feature
made necessary at that stage bv the un-
certainties of the futurc-and that there re-
manned open the temptation to rival or
speculative railroad interests to purchase
control of the property and develop the
stock at the expense of the holders of the
income bonds by putting all the net earn
ings into Improvements. 1t was proposed
to cure this by a voting trust, but objection
being made to this Capitalization of power
| that plan was dropped.
| The same banking management however
| confirmed in control and carried forward
| the development of the property until the
| new mileage after five years of operation
| has shown its earning capacity and proven
the ability of the company to return to a
| fixed rate of payment upon all the money
that went into the construction of the
| Atchson road save that represented by the
| capital stock.
The company now proposcs--what could
| not have been proposed before--to cure the
| one defect in the reorganization plan, and
| make provision for improvements upon
capital account for present mileage for sew
eral years 10 come. 1t will substitute a
second mortgage per cent. bond for the
present income = per cent. bond but pres
cnt income bon'l-hodcrs will get 2 ~ per
cent. this year. and at the rate of > - per
cent. for the 10 months from July next
then 3 per cent for one year
: ~ per cent. for the next wear,
and the regularly established rate of
! per cent. thereafter: in effect, making
the present income bonds into per cent.
mortgage bonds with , - per cent. de-
clarcd upon them payable Sept. next, but
waving in the aggregate during the next
three years 3 per cent. of their fixed per
cent. annual interest.
AS / pcr cent. mortgage bond is far
superior to > per cent. income bond there
is no ground for complaint from the holders
of the incomes, and stockholders, while
being benefited by the reduction from ) per
cent. to I per cent. III the charges ahead of
them, have the credit of the company
placed upon such basis that they can i'm
prove their property during the next four
years hy the proceeds of $50 900 900 of the
new per cent. bonds AMI when the prop
erty has thus been improved, there will he
no more interest charge than at present be-
tween the stock and the first mortgage
bonds. Meanwhile the road will he paving
but graduated scale upon the second lien
increasing after 1898 by only Sipo, 900 per
annnm.
The details of this amendment TO and
completion of Atchisoh's great rrorganiza-
ton plan have been worked out in a mas
tcrly manner and will be read from the
official advertisement of the company, pub
lished today. by all investors in railroad
properties rs well as by the 2O.0UO or more
directly interested in the shares and seeuri-
ties of this great western railroad property