Vermont phÅ“nix. [volume] (Brattleboro, Vt.) 1834-1955, 1892-05-27
The AtchisOn reorganization.
Its Basis and What It Promises to Ac-
cOmplish.

We are indebted to the Boston News
Bureau for the following advance informa-
tion in regard to the proposed bond re-
organization of the Atchison, Topeka 81
Santa FG railroad company:
Five years ago tine present financial manage
ment of the Atchisol, Topeka & Santa F6 rail
road company came into power. An expenditure
of more than SlODWO,COO had been made by the
previous management for the buildi z of extern
slons 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 associates
carried the company for a year and brought
forth a scheme Of financial Reorganization which
mas ever since been cnnsttere masterpiece. II
proposed. in brief, that Sl20OO.0O0 of charges be
divided upon the basis of making one third OPP
tional to pay according to net returns and inn
provement requirements of the company For
this SI.OOO.OOO Of optional interest $50 600 900
holders
1t was Immediately seen that there was a defect
in such plan-an uncertain feature made neces-
sary at that stage by the uncertainties OF the
future and that there remained open the temp
taton 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 earnings into i'm
provements. II was proposed tn cure this by
voting trust but objection being made to this
trallzation of power that plan was dropped
Inc same banking management, however, con-
tlnued in control and carried forward the devel-
opment of the property until the mileage
after five years of operation has shown its earn
ing capacity and proven the ability of the COM
pany to return to fixed rate of payment upon
all the money that went into the construction of
the Atchison road save that represented by the
capital stock
The company now proposeS-what could not
have b en- pro- osed before-to cure the one de-
feet IN the Reorganization plan. and make provis-
ion for improvements upon capital account for
mileage
will substitute a second mortgage per cent bond
Tor the present income per cent bond, but pres
ent income bOndholders will get 2l5 per cent this
year. and at the rate of 10 per cent for the IS
months from July next, then 3 per cent for one
year 31a per cent for the next year, and the reg
ularly established rate Of per cent thereafter:
making the present income bonds into per cent
mortgage bonds with 2l5 per cent declared upon
them payable September ! next, but waving in
the aggregate during the next three years per
cent OF their fixed per cent annual interest.
As per cent mortgage bond is far superior to
a per cent income bond, there is no ground for
complaint from the holders Of the incomes. and
stockholders, while being benefited by the reduc-
ton from per cent TO per cent in the charges
ahead Of them, have the credit of the company
placed upon such a basis that they can improve
their property during the next four years by the
porceeds of S20OO,OOO Of the new per cent
bonds; and when the property has thus been inn
proved. there will be no more interest charge than
at present between the stock and the first mort
gage bonds Meanwhile the road viii be paying
Dut graduated scale upon the second lien in
crraSing after 1893 by only S40OOOO per annum.
The details of this amendment to and
completion of Atchison's great re0ganiza-
tion plan have been worked out in a mas
terly manner and will be read from the
official advertisement of the company,
published in this issue of The Phoenix by
all investors in railroad properties as well
as by the 10000 or more directly interest
ed in the shares and securities of this great
Western railroad prOnerty