The evening herald. [volume] (Shenandoah, Pa.) 1891-1966, 1893-06-05

the interest upon the mortgage indebtedness
| prior in lien to that of the general mortgage
might all be taken up according TO the
precedents established in former receiver.
| ships by the issue of recei ,er's certificates
| Ihe remaining floating debt consisting of
| bills payable, which will all become payable
| within a few months, Is secured by the pledge
| Of shares and bonds, or coal and coal nc
| counts, or consists Of equipment notes. The
shares and bonds pledged as collateral
security give to the Reading system the con
| troll Of branch and connecting lines which
| are essential to its prosperity. The coal 1ow
under the control Of the Finance Company.
II sold at forced sale in foreclosure proceed
ings, would involve heavy in idental losses
| The rolling stock, which secures the equip
ment notes. is necessary for the full and
profitable operation of the railroad.
The terms of the income mortgages
prevent the making Of subsequent
fixed charge upon the earnings of the
| Railroad Company, and consequently
the collateras already pledged as security
for the floating Indebtedness, and the
general mortgage bonds, amounting to S1O,-
363,00O to be issued January /, 1895 as pro-
yided in the plan of reorganization of 1856
consti ute the only available basis for q new
loan. If the property of the Railroad and
| Coal aud Iron Companies can be held together
and worked to advantage, and the floating
indebi edness funded in permanent form, the
income from these collateral5 will more than
suffice TO pay the interest of the loan and
| thus the present floating Indebtedness be car
ried without increasing the current interest
charges of the company or encroaching upon
the earnings dedicated to the income mort
| gage bJndhOlders
The reduction Of the fixed charges, under
the leases or guarantees created subsequently
TO the income mortgages of 1885, is as ess n
ial as the funding of the floating indebted
css. The terms of those mortgages express.
, forbid the appropriation of the earnings to
The payment of subsequent rentals or guar
Ices, and in in the present condition Of the
company its promise to pay such charges is
worthless. A connection between the Read
ing ystem and the lines of railroad acquired
subsequent to 1883 is of mutual advantage,
but all that the Reading Company can do it
to treat each property fairly, to keep its
earnings separate, and in case they are not
tnOulh to pay the stipulated rentals or guar
intees. to secure indulgence until the earn
ings Of the property itself will enable it to
pay its own fixed charges.
Tho agreement to fund the general mort
gage interest is of even more importance
There should be no possibility of default
Turing the next five years. and as all better
mentS and improvements must be paid out of
The earnings, the right to fund the interest
] ~
to any safe reorganization of the affairs of
lhe company. During the last five years the
company has paid SS,34I47540 in interest
upon the income mortgage bonds. 1t is
proposed heretlter to exercise the privilege
given by the terms Of the income mortgages
and to charge against income the entire cost
Of maintenance and renewal, "inCuding
such reasonable Improvements thereof and
additions thereto as shall be necessary for the
safe proper, and economical" operation of the
property; and If this should require the ap-
prOpratiOn of an amount equal TO the
amount paid upon the income mortgage
bonds and the entire interest on the general
mortgage bonds during the next five years
| 100000 and the earnings should he as
large as they were during the last five years
and they should be larger, rs both the past
and future expenditures in the improvement
of the property should be productive). there
would if necessary, be upwards of $1,000.
900 secured for the use of the company dur.
ing that period under the provisions OF this
plan, in addition to the proceeds of s. 600 600
Of present issue of bonds. Whatever is re.
quisite to put and keep the property in good
condIti will be so expended but it is not
5 anticipated that it will be necessary or pos
sible to spend, in operation and maintenance,
all the net earnings in excess of the interest
/ upon the mortgage Indebtedness prior to the
! general mortgage, and if the net income
u
l general and income mortgages will be paid
In the present juncture of affairs, however, il
v is essential that the payment of even the
Y general mortgage interest should be volun-
c tary and not compulsory, and it is upon the
condition that the concessions above enume-
rated shall be made upon the fixed charges OF
the company, and that the control of the
management shall be given to vo ing trustees
l for seven years from July 1st, 1893 that the
c subscriptions, amounting to over 500 900 OOO
u to the collateral trust bonds and general
q mortgage coupon trust certificates have been
e secured.
D The most important concession has already
,, been agreed to by the Lehigh Valley Rail
= road Company, which has consented, upon
E the condition that the plan is put in o,eia.
tiOn, to make a reduction Of its minimum
fixed rental to a sum sufficient to pay divi
= dend of five per cent, which is believed to be
E less than can always be earned by its own
- lines when operated in conjunction with the
lines Of this company. The importance to all
interests of retaining the alliance with that
| company it it can be done without cost Ia
U the income of the Reading Company, is man.
Il itest, while it is equally advantageous TO the
owners of that property thai it should be
oierated in conjunction with the Reading
system.
S The Pullman Company and the Messrs
G Burnham, Williams & Co have agreed Ia
- ohAl lHi'ANl NhN NAiulplltlb lloltS utlu DIV Lnen
u and take an immediate settlement, which can
, be made out of the proceeds of the collateral
II trust bonds if the plan is accepted. These
notes amount to over $1,000 000 and are q
g lien on cars and locomotives, which are a
J. necessary part of the present equipment and
: Of not settled for according TO the terms OF
> the planl must be paid out of the earnings in
II the course OF the next five years at the ex
q pense of the mortgage bondholders, or the
= | tQuipmCnt will be lost
T. Mention should be made of the liberal
manner in which the Finance Company met
e the views of the management, and consented
Il TO surrender its contract for handling the coal
! 7 and coal accounts Of the Reading Coal and
Iron Company, provided the proposed plan is
=, adopted.
- 1t is proper that the management should
gratefully acknowledge that tho subscribers
!, to the proposed issue of collateral trust fond
- and coupon tIust certificates composed
chiefly of the trust companies and other
n financial institutions and individuals of this
/. city, but including also a considerable mum.
I. her in other cities have been, in large meas.
ure, influenced by friendly desire to assist
in restoring the company to solvency, and
thereby averting from its creditors and
stockholders the losses which would result
from foreclosure. If these terms are ne.
cepted by the creditors and stockholders. the
personal property of the Company will be
saved from sacrihce the integrity of the