The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1896-04-21

March is are entirely silent. win no;
1as reiinqasshrnent % the stcckholiers'
interest tAere-s constitute = third and still
( srcater assesSruent-
rIth--Wha. Is the answer 20 the sug-
EeStioa that the suit Instituted BY The
Farmers Loan and Trust e-oroDauy
AGAINST The Northern Pacifc company OF,
March =. 1926. In the United States dis
tr7ct court for the district Of Minnesota,
tor tss recovery OF a money Judgment for
interest on the bonds OF branch roads
guaranteed BY the Northern Pacific COM
Fsry. $ promoted by the company itself
IN AID % the reo-ys 1i-Sfioa plan. with the
purpose of entorciBg the Judgment 20 se
obtained IN that sas1 against the fnteres,
Of the preferred stockholders in preferred
stock land and said consolidated bonds
and the other property rights Indicated
above In order 70 deprive them thereof.
and to ccerce them to become parties 10
the reorganization agreement
Sisth-In View Of these objections stat
ed, upon what grounds do the company
and its officers Justify their recognmenda-
ton 20 the shareholders 20 unite in the
reorganization agreement and what as
surance have the shareholders that their
rights and interests win be duiy safe
/ guarded BY the corporation in the respect
indicated by these ohjectionse"
Brayton Ives Reply.
The reply TO the foregoing letter OF Bid-
Gle * Ward. signed by Brayton Ives, is as
follows:
''First-Ali Of those connected with the
plan OF reorganization concur in the views
expressed in the circular TO which You re-
Ter, as 10 the advisability OF securing a
perpetuation OF the rights and privileges
OF the present charter. 1t is hoped that
legislation viii be secured from congress
by which such result may be brought
about. In which case the new company
and Its stockholders viii he substantially
In the same position as at present II IS
not possible. however. 20 speak positively
on this point. az YOU can readily under
stand. But IL efforts In the direction indi-
Gated are defeated, others viii be made
which will doubtless secure whatever may
be necessary for successful reorganixa-
ton
'Second-The preferred stockholders
would undoubtedly surrender their rights
and interests as beneficiaries in the un-
sold lands OF this company east of the
Missouri river under the present plan.
and also in the &c. 600 of consolidated
mortgage bonds OF the company deposited
with the Farmers Loan and Trust Com
parly. and also in tho cash proceeds of
said preferred stock lands. 1t may be said
further that the advantages of retaining
the lands east Of the Missouri river have
been and are likely 20 be small. Further
more. X you Will stop 10 consider you will
see how extremely difficult IL would be to
apportion these lands among the stock
holders. This matter received careful at
tention during the discussion OF the plan.
and X WIS unanimously agreed by those
interested that the reduction of the assess
ment OF the preferred stock from SIS. as
originally proposed. to $40 would quite off,
set the net value of these lands, but it
viii be utterly impossible 10 set them
apart in plan of reorganization without
the unanimous consent of the first mort
gage bondholders. who have the prior
claim thereto. A mistaken idea prevails
that the preferred stock is lien on them.
As to the said S3.347.0e of bonds referred
TO. 1t Is proper to say that three we'll
known experts have reported after inves-
tigation that in their opinion the dividends
represented by the bonds had not been
earned and that the bonds. therefore. had
been improperly and illegally set aside
There is no doubt that II an effort were
made TO secure a division of the bonds an
Injunction would be issued which wouli
result in legal proceedings. the termins-
ton OF which would be al least doubtful
1t was proposed originally in the plan that
no new preferred stock should be given
In exchange for the present preferred
ana the protective committee felt that
they were securing sufficient Offset to the
valne of the bonds when II was agreed
that the present holders of the preferred
should receive 30 per cent. in the new pre-
ferred stock
'Third-As to the benefits likely to ac-
crue to the holders of preferred stock.
l can only say that. owing to the great
reduction of fixed charges, II is expected
that the new preferred stock will receive
dividends from the completion of reor-
ganization. The earnings OF the road at
present justify such a calculation and
there Is every reason to believe they will
increase rather than diminish. My own
belief is that within two years after reor-
ganization is effected the preferred stock
Will pay per cent. dividend.
'Fourth-No definite decision has been
reached yet as to the disposition of any
assets OF the company which may not be
covered by its mortgages.
'Fffth-lt is proper TO say that the suit
Instituted by the Farmers Loan and Trust
Company against the Northern Paclfi,
Company. in March. 1896. for the reconvey-
ance OF money judgment for interest on
the bonds of the branch roads was not
invited by the company itself in aid of
reorganization, but IL was brought without
the know ledge of any of its officers
"Sixth--Stockholders should bear I'm
mind that the reduction OF fixed charges
10 the extent of i,oeooS is a very great
advantage TO them Under the present
plan there is every reason TO believe that
both classes Of stock viii receive regular
dividends within the next i've or six
years
ives Reply Not Satisfactory.
This reply OF the president. Messrs Bid
die & Ward. in a letter dated April Is pro-
nouneed mot entirely satisfactory" In
concluding their correspondence with
Presdent Brayson Ives. Biidle q Ward
say:
You do not say whether the company
will make the defenses In the interests Of
the stockholders indicated in the circular
OF September H. 1884. but refer oaly to rfe
possibility OF obtaining from congress a
renewal of the present charter. IL seems
TO US extraordinary to suggest this as an
advantage 10 the stockholders. Such
step would be entirely in the interests OF
the bontiholders. ard would deprive the
stockholders OF the best weapon they poe
sess for their own protection. We are
obliged 10 interpret your letter as an ad-
mission that the company will not set UP
the invaliiity OF the mortgages or any of
the other dsfenses for I'll. protection Of
the stockholders. but. on the contrary, will.
as far as possible. aid the bon9hoI5ers In
asserting and securing. by legislation X
necessary the validity Of the mortgages
The other considerations mentioned Ia
your letter are OF minor importance. Stll
We are obliged 10 say that We cannot re-
gard the present slpwness OF the sales Of
iards or their prospective taxation. or me
difficulty OF distributing them arnorsg
stockholders. II such a course has ever
beer suggested. as good reasons why the
preferrea stockholders should surrender
their rights and interests In the unEoid
lands east OF the Missouri river and In ths
s. sf7 80 oil consolidated mortgage bonds
deposited with the Farmers Loan and
Trust Company, ard also IN the cash pro-