The morning news. [volume] (Savannah, Ga.) 1887-1900, 1895-06-17
THEY TALK OF ORGANIZING.
PROSPECTIVE INCOME BONDHOLD-
Frs WANT To PROTECT
THEIR INTERESTS.

The sOuthern's Majority Holdings OF
Central stock Invaluable Except
for COntrOI-It Could Divert Traffic
and Make II Worth Something in
That Way-In That Event the In
come BondhOlders Might De Shut
Out, and They Want to BE Pre-
pared to Apply to the Courts in
Case Their Interests should suf-
fer-They Have no Present Fears.
However.
While it has been stated all along that
the purpose of the majority stockhOlder
the Southern Railway Company. is to have
the Central railroad operated as an indie
pendent and separate company. there has
already been talk on the part Of some of
the prospective junior security holders
under the plan of reorganization, of organ
izing and getting in shape for the protec-
ton of their interests in the event that
purpose is not properly carried out
This talk has been precipitated, more
strongly no doubt. by the recent alliance
of the Southern with the Atlantic Coast
line railroad, through which the former
seeks seaport outlet for its traffic
through Norfolk, Va. The question which
this brings up is to what extent the traf-
nc naturally tributary to the Central rail-
road, and consequently belonging properly
to the port Of Savannah, Will be diverted
to Norfolk, If any at all, by reason Of the
Southern railways control.
The alliance between the Southern and
the Atlantic Coast line is understood to
be, Of course. merely a friendly traflc ar
rangement, but one which is adj
vantageous to the Southern and
which gives 1t a long haul. Under the
new plan of reorganization the
Sorthern, now holding a.. 200 shares of the
capital stock of the Central will receive.
the entire issue Of stock. or 10000 shares,
the minority stockholders being given
third preference income bonds for their
holdings. In speaking of this arrange
ment, an interested security holder said:
1T Is natural that the Southern should
desire and seek to make this stock OF
some value to its security holders AS It
stands alone 1t is good only for the CON
troll of the Central railroad property, thar
| Is, the election of such officers directors
| and employees as the holder might see
nj TO place in power But in the hands
OF such a corporation as the Southern
investment
great power. This is why the minority
stockholders were not so very favorablv
impressed with the plan, because in case
the majority stock is improperly used
their right of appeal to the courts as mi
nority stockholders, is taken away They
nave no stock certificates to substantiate
thelr right TO appeal to a court of equity
In case Of any improper management bpr
| there still may be some remedy for this
Tho minority stockholders, however. coula
say nothing in objection TO the plan
on account of the fact that their pres
ent holdings are practically vaIueless and
they must be content to receive the third
preference income bonds
AS l said, it will be natural for the
southern to seek to make that stock worth
something Before II could draw anv divi-
dends there are about $1,8l5,0OO of fixed
charges to be paid. after which there are
income bonds to draw 500 GOO to $500 O0O II,
interest charges before the stock could
come in at all. This means practically
that the stock cannot, for many years at
| least, hope to participate in the earnings
of the property. The S1,Sl5,O0O fixed
charges must be paid, but the Southern
has 1t in its power to cut Oft any other
earnings and divert them into its own
treasury, by reason of the fact that being
in control of the property it can divert
| traffic from what would naturally and or
dinarily be the Central railroads terri
tory, over it's own lines, and to the Norfolk
outlet, which it has secured by this new
| alliance.
II do not mean to say, by any means,
that the Southern railway has any such
| purpose in view. In fact, we are assured
| otherwise. l only mean to say the posi-
hility is there, not to speak of probability,
| and it Is natural to assume that the
Southern should want to make this Cen
trail railroad stock of some value to it
self.
Il say, in view of these facts it may be-
hoove the income bondholders to protect
| themselves. There are many classes of
| the junior security holders who will re-
| ceive income bonds, either first, second or
| third preference, for their holdings and
there are a number of them here who have
| already talked of organizing for their nu,
| tual protection, in case any diversion OF
| traffic from its natural channels for the
| purposes stated could be shown While
| there will be no stakeholder to appeal
| to the courts in any such event, the in
| come bondholders would certainly have
| the right of appeal to the courts in case
! they showed there was a diversion of
| traffic which was prejudicial to their in
terests, and which might prevent any or
all of them from receiving a dividend to
which they would be entitled
| II am not in a position to say what NAV
| come of this, but there will be ST., 500 600 of
| income bonds issued if the plan goes
| through, as it no doubt will, and there is
no doubt that the prospective holders of
| these securities have been seriously dis
| c1lssing the formation of an organization
| among themselves for the protection of
| their interests along the lines indicated"
This is only one of several parties inter-
| ested, which while they have no particular
| fears of the present good intentions of the
! Southern, are seriously contemplating the
| necessity of forming such an organization.
PORT PARAGRAPHS.