The sun. [volume] (New York [N.Y.]) 1833-1916, 1894-12-11
ERIE REPRESENTATIONS Plan.
June and December Coupons OF this Year
on the New Bonds Must Re Funded.

June and December Coupons OF thI. Year
ON the New Bonds Must he Funded.
Messrs. Drexel. Morgan & Co. OF this city and
J. S. Morgan d Co. of London issued a circular
yesterday to the holders of their receipts for
the second consolidated mortgage bonds. funded
coupon bonds of 1888, and income bonds de-
posted under the plan of reorganization of last
January. About s3e. ooo,O 90 out of a total OF
s3s. ooo, 900 OF these bonds have been so de-
posted. and the circular says that the earnings
Of the Erie system have been and continue to be
inadequate to meet the interest maturing on the
proposed issue of new general mortgage bonds.
It Is not deemed expedient to treat this de-
hciency In earnings as an occasion for present
foreclosure. especially as payment OF the sub
scriptions to the new bonds has not yet been
called in order to pay of the floating debt.
Il is. therefore, proposed that the June and
December coupons of this year OF the new bonds
shall be funded until such time as the net earn
ings shall be sufficient after payment OF interest
and rentals hereafter accruing to pay of these
coupons. In case, however, of default on later
coupons the funded coupons shall retain their
original rights. The new bonds to be given for
the cash subscription will bear interest from
II, however. the earnings continue to indicate
that the company will be unable TO pay the cou-
Messrs. Drexei. Morgan & Co. or their
successors, j. p. Morgan a Co; and J. $.
Morgan a Co., are TO take Whatever aC-
ton they may deem best for the interests
or enforcement OF the bonds against which their
receipts are held. instead of delivering the new
honda.
The bankers say that unless these modihca-
lions OF the original, plan are approved OF to-
satisfactory extent they will abandon the plan,
and that the bondholders will thus lose the bene-
Mt OF the valuable full foreclosure rights prOyid-
ed under the new mortgage.
The Erie plan OF reorganization, which was
by the directors or the company,
and which Drexel, Morgan d Co. and J. 5.
Morgan d Co. agreed 10 assist in carrying out,
was promulgated on Jan, ., 1894. IL provides
for the issue under a blanket mortgage OF
$40, 900. 900 S per cent. l00-year bonds into
which other bonds are to be exchanged. Under
It's terms holders of second mortgage and
funded coupon bonds are required to pay IS
per cent. assessment for which they receive
new bonds at 90. and income bondholders TO
pay 100 per cent. and TO receive therefore
new bonds at 90. The distribution of the
new bonds was explained as follows; S33,501,-
400 to acquire the present second cOnsOls.
81. O3l 400 to acquire the funded coupons,
$500, DOS TO acquire the incomes, S0,Dl 10, 20s for
subscription as above. S6.5l2, 500 TO acquire the
old reorganization first lien and collateral trust
structioD, equipment, &c. not to exceed $1,000
900 In any one year except that 100000 may
be used to acquire existing car trusts;
In their circular recommending the plan TO
security holders the directors stated that the
floating debt OF the company at the time amount
ed to nearly 80. 600, 900, exclusive OF car trust
obligations. TIL annual report, recently issued.
1904. the company failed 10 earn ixed charges
and rentals by the sum of 81, 49, O7, and that
at the end OF that fiscal year the interest ON
funded debt In default amounted TO 81, l65, S44.