Evening star., 1898-07-14
MAY ASK FOR RECEIVER
Probable Action in Case of Important B.
and 0. Branch.
Failure to Pay Interest on Second
Mortgage Bonds of Staten
Island Railway.

| 1t is expected in banking and railroad cir
! cles that application will be made this week
! for the appointment of Il receiver for one
| of the most important of the branch lines
of the Baltimore and Ohio Railroad Com
pany-the Staten Island raiiway-because
of the failure of the Baltimore aid Ohio
receivers to pay interest July l on the sec
ond mortgage bonds of the Staten Island
Rapid Transit Company. The Baltimore
and Ohio Company owns a majority of the
stock and guarantees principal and interest
of the second mortgage bonds.
The capital stock of the Staten Island
company is 500, 900, of which 81 per cent
| is owned by The Baltimore and Ohio. The
bonded debt consists of 81 900, 900 first mort
gage per cent 30-year bonds, due October
1, 1919; S2,5O0,000 second mortgage ) per
cent bonds. due January l, l925, principal
and interest guaranteed by the Baltimore
and Ohio Railroad Company, and 81 SOC, eco
income bonds. cue November 81, 1915, in
terest subject to future earnings in excess
of all other charges and rentals.
Tie Staten Island Transit Company's line
extends from Eliza bethport, n. j. TO South
Beach, n. Y, a distance of 10. 40 miles Be
sides the Baltimore and Ohio holdings the
securities are largely owned by Baltimor-
cans. The property is operated in coniunc-
ton with the New York freight terminus
OF me Baltimore and Ohio company.
Work of REORGANIZATION.
The preliminary work of reursanizing the
Baltimore and Ohio, according to the STATE
ment of a member of the reorganization
committee, is progressing in manner sat
isfactory to the majority of those inter
ested, and the Mercantile Trust Compan,
New York, is now receiving deposits Of Sc
curities under the plan Of reorganization.
AS the bonds treated are to a very Iarg
extent controlled by the banking firms con-
nected with the reorganization said this
member of the committee, ''and as all in
terests representing bonds provided for are
agreed in recommending the acceptance of
the plan. We infer that there can be no
doubt of early announcement that
large majority Of all securities have been
deposited and that the plan is operative
y. F. Morgan & Co. control absolutely
the consolidated mortgage bonds, and no
doubt can influence acceptance by the hold
ers of the Chicago division, the Parkers-
burg branch and Pittsburg and Connells-
vile division. Speyer & Co. control abso-
lutely the Baltimore and Ohios IS of 1925
(Pittsburg and ConnellsviIle second consoli-
dated) and Brown Bros. and Others control
Philadelphia division, terminal mortgage
and other bonds. The terms offered are so
liberal that it would appear they would be
universally acceptable. Confining the plan
of reorganization to the main line and inn
portant branches, leaving the leased and
controlled lines to be dealt with separately
slmp1fies matters.
The Syndicate's Offer.
The syndicate has agreed to purchase
for cash, upon the plan being declared oper-
ative, all Baltimore and Ohio Railroad
Company 1oo-year per cent consolidated
mortgage bonds, deposited under the plan,
whose holders prefer to accept cash rather
than to take the new securities, at the
price (New York; of 10 and interest ac-
crued and unpaid since the maturity of the
last paid coupon, provided such holders
shall signify their election to take cash in
the manner and within the time herein
after limited. Depositors electing to re-
ceiye cash for their bonds must signify
their election by presenting their Mercan-
tile Trust Company certificates of deposit
at the office of that company in New York,
or at its London agency above specified,
within sixty days from the time the plan
shall be actually issued, 20 he stamped as
electing to accept such cash payments and
will thereupon be entitled to receive such
cash payment so soon as the plan is de-
clared operative by the reorganization man
ayers, upon surrender of their certificates
of deposit so stamped.
1T will be observed that all past due
coupons. with the exception of the coupon
of the Washington City and Point Lookout
bonds. are to be paid in cash with interest,
and that the holders of consolidated mort
gage IS have the option of receiving the
new securities proposed or to sell their
bonds to the underwriting syndicate at 11o
and interest, provided depcsitors eIecting
to receive cash for their bonds shall signify
their election by presenting their Mercantile
Trust Company certificates of deposit with
in sixty days from the time the plan shall
be actually issued, to be stamped as elect
ing TO accept such cash payments.
Dissent;uR Interest.
''The only dissenting interest is the Balti-
mole and Ohio first preferred stock. The
holders of Baltimore and Ohio first pre-
ferred had good reason for believing that
their was preferential claim. The
face of the stock declares positively such
to be the case, and the laws under which it
was issued seemed so to provide. The low
er court, however, decided adversely to the
claims Of the stockholders, principally upon
the grounds that the stock was not an en-
forcible lien The case was appealed, and
Is now pending in the Supreme Court Of The
United States. 1t would seem desirable that
by mutual concession some satisfactory set
tleElent might be reached.
Considering the possibility of decision
by the Supreme Court favorable to the
first preferred stockholders il should seem
committee may be persuaded TO grant more
advantageous terms.
Baltimore and Ohio second preferred ard
common stockholders have either to pay
the assessment and accept the terms Of
fered or sell their holdings Baltimore and
Ohio second preferred is selling at about
y and common at about 14i2-'