St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-04-27
THAT UNION PACIFIC DEBT.
OLFEy'S BILL FOR REkDJUS7iNG ~
SENT ~ TO CONGRESS-.
UNCLE SAM TO TAKE BONDS,

UNCLE SAM TO TAKE BONDS.
Payable Century Hence, With 2
Per Cent Per Annum Interest
Liberal Provisions Made ig the
Bill FIR Rcfunding she Com
pany's Other Obligations, and
for Protection of Stockholders.
" ASHINGToN, April 26. - Attorney
General Olney today sent to congress
the draft of bill prepared by the de-
partment OF Justice, as the representa-
tive of the government, for the reorgan-
izaiion of the Union Pacific and the re-
adjustment of the claims of the United
States against the company. The bill
authorizes the secretaryof the treasury.
with the approval OF, the president. to
receive in exchange for, and an ultimate
discharge OF the present claims Of the
United States against the Union Pdcihc
Railway company, and the liens of the
u lied States upon the railroad prop
critics of the said company, the bonds of
tie said Union Pacific railroad to all
amount equal 10 all aggregate amount
Of the Indebtedness of said company to
the United States on the 1St day OF
July. 1894, for the principal and interest
of The bonds of the United States
issued in aid of the construction of the
Union Pacific and Kansas Pacific, which
bonds, so to be received by The United
States. shall bear interest at the rate
of 2 per cent per anuum, and shall
be secured By mortgage as hereinafter
set forth. Such aggregate amount
Shall be computed and ascertained
as follows: FIRST. to the total amount
of the principal of said bonds of the
United States shall be added the inter
est which shall then have been paid,
and the interest then and thereafter to
he paid thereon until the maturity OF
the said bonds, and payment made and
credit given thereon and deducted.
From the aggregate amount SO obtained
shall tie deducted any or all pay mentS
or credits upon the indebtedntS IS to the
United States as shall appear in tue
bond and interest accounts of the said
companies and the United States Oh
July l, 1894. The present worth of the
balance found \ all be computed as OF
July l, 1894. D, discOunting the said
balance at tile rate of 2 per cent per
annun for the period between said last
mentioned date and the average of MA
turity of said bonds of the United
States. The amount SO computed and
ascerlained shall be deemed to be the
amount due to the United States on
July l. 1894. and the bonds OF said CON-
pany shall be received by the United
States as herein preferred, at par, for
said amount.
The bonds TO be received by the Unit
ed States are
TO RUN 1G0 YEARS.
to mature July l, 1894. and 10 draw 2
per cent per annum interest. The bonds
Shall De secured by mortgage covering
all the properly. real, personal and
mixed of the railroad company. Under
the terms of this mortgage the Union
Pacific, be Ginning with the year 1905.
shall pay annually into the United
States treasury sinking fund S1.650.O 900
amount. Default for six months shall
be cause for foreclosure, security now
in the hands of the United States to be
held as further security for the new
bonds to be issued. The attorney gen
eral is given authority To cooperate
with the Union Pacific reorganization
committee now at work. The plan this
committee shall have agreed upon, it Is
provided, shall limit the annual fixed
charges ut the company to $S,5G0.000.
BoudS for extension and development
Of the reorganlZed system, however,
may be issued hereafter by the
consent of two-thirds of the board
Of reorganization, the bonds to be
subject to the general mortgage bonds.
Power is given the company to issue
preferred and common stock to an
amount to he fixed by maturity of the
Stockholders. The existing first mort
gage bonds now prior and superior to
the governments lien. the company
is given power to provide for by issuing
at or before maturity other bonds TO run
not exceeding Seventy-fye years and To
bear not exceeding 5 per cent annual
interest, the lien To be The same as that
of the present bonds. An annual sink
ing fund of s45. coo is provided for the
redemption of these bonds. The board
U! directors is TO consist of five govern
ment directors and fifteen other direct
OrS, seven of whom may be chosen by
preferred stockholders and eight by
common stockholders. Provision is
made for the courts aScertaining ana
Tor other incidents of the foreclosure.
PROPOSED LEGISLATION.
The main features of legislation pro-
posed in the plan submitted by the at
t0ney general are as follows: The eX-
listing corporation is to be preserved.
That ought to be done without resort to
the harsh process of foreclosing its liens
If it should turn out otherwise, however,
the bill provides for foreclosure by sale
or otherwise, and if by sale authorizes
reorganization plan conforming to the
provisions OF the act and not less favor
able to the United States.
Second-The existing first mortgage
bonds for S33. $50, Sig less amount of
bonds in sinking fund to be cancelled,
S7.7l6.00G, are TO be renewed and ex-
tended at lower rate of interest mot
exceeding 5 per cent?, with a provision
for sinking fund estimated at suffi-
cient 10 eXtinguish the debt at the ma
turity of bonds.
Third-The debt of the United States,
to the amount OF $50. coo, 900, is to be
paid in 2 per cent 100-year bonds
secured by second mortgage on all the
present. and in future to be acquired
property of the company. and further
secured by a provision for sinking
fund of such amount that the annual
payment on account of it and interest
on these bonds shall always equal the
sum of S1,650.CO0. From this arrange
ment the United States receives great
advantage, accOrding to the attorney
general. Its debts become secured by