Santa Fe new Mexican. [volume] (Santa Fe, N.M.) 1898-1951, 1899-07-28

49, Va oN AiiSo ioi liloiC IAiuL
$3.50, 0OO, 900, on which the annual inter
est charges were more than SO, 200, 900,
and it's net earnings from all sources
were less than ST. 500, 900. 1t was evil
dent that no plan would be effective
that did not either require the holders
to surrender a portion of their holdings
or that did not reduce the annual inter-
est charge on the same.
A plan was accordingly promulgated,
which was accepted by almost all the
$3.50, 600, 900 4 per cent general mortgage
bonds, and $50, 600, 900 5 per cent income
bonds. After this much had become eff
fective it was assumed thai the income
of the property would be sufficient to
meet the interest on the first mortgage
bonds, and ordinarily contribute reve-
nue. in the way of dividends to the hold
ers of the income bonds, and also in the
future produce something for the own
ers of the stock-which had decreased
in value from lao to 65 in a short space
Of time.
APPLICATION FOR RECEIVER.
Notwithstanding the year ending
June 30, 1893, was, in the matter of in
come, the most fortunate in the history
of the Atchison, it's gross earnings We're
many millions short of it's requirements,
and a receivership and foreclosure We're
inevitable, as the road was hopelessly
insolvent. Consequently, on December
%, 1898, an application was made to
Judge Caldwell at Little Rock for the
appointment OF receivers.
OFFER no BONDHOLDERS.
The plan promulgated March Ia, 1895,
proposed to give to the holders of the
general mortgage bonds (tirst mortgage
bonds) rs per cent in new 4 per cent
bonds and 40 per cent in income bonds,
the interest OF which at 4 per cen per
annum should be payable if earned, but
not otherWise-thus requiring the own
their securities rs per cent. To the
owners of the $50, 600, 900 second mort
gage bonds the plan offered preferred
stock on condition that the bondholders
would stand an assessment of $40 on
each bond of 81, 1000 face value. To the
stockholders of the Atchison company
h committee proposed to issue for
each 500 capital in the old company a
like amount Of common stock in the new
company and $40 of preferred stock, up
on condition that such stakeholder
would sustain an assessment of $40 on
each share Of stock held by him, thus
enabling some $14, 600, 900 to be raised
for the purpose Of recognizing the
company.
The object Of any reorganization is
to obtain money necessary to put the
affected line on a sound financial
basis. This ordinarily requires not only
that the road shall be foreclosed and
sold and some provision made for the
holders of preferred lines, but it like
wise requires hat one shall be pro-
vided for the immediate necessities of
the company, for almost invariably a
company which requires reorganization
has lines of railway that are not in good
physical condition. And then, too, as
in the case of the Atchison, receiver
ships generally result in large receiv-
ership debts, which must be paid off
in cash and for which securities will
not be taken.
FINANCED IN HOLLAND.
1t is the usual thing to offer stock
holders some opportunity to invest in
the securities of the new company.
This is because those who have been
stockholders in the company generally
know it's condition better than others,
and are more willing to invest in the
doubtful or speculative securities which
the company may issue. The reorgan-
izers consequently supposed that the
assessment of $40 per share, not because
the securities they would receive would
be at h time equal to the amount paid
by them, but because of the faith they
had in the property.
Any reorganization plan must be I'M
derwritten. That is, responsible men
must be found who will for a stipulated
premium guarantee the payment of
cash necessary if the holders Of the Sc |
curities fail to take what is offered
them under the plan. And it must be !
underwritten by men who can raise
derwriters were required to raise $14,-
000, 900 if. the holders Of the common
stock and second mortgage bonds re-
fused to pay their assessments.
1t Is sale that when the plan was Of 4
fered in New York the ablest and most
successful financial men Of the city de-
clined to underwrite 1t. They thought
the times were not propitious for such a
drastic plan as the one proposed.
Therefore the plan was taken to Eng
land and Holland, where it was under
written. 1t Is a significant fact that
the people of England and Holland have
always had great faith in the Atchison
system.
After the plan became affective a sale
of the road was had and the new COM
pany took possession January 1, 1896.
WITH SOUTHERN PACIFIC.
After the Atchison had acquired the
stock Of the Valley company 1t was
that some arrangement
should be made for connecting the line
Of the Atlantic and Pacific, terminating
at Mohave, with the line Of the Valley
road, terminating at Bakersfield. This
would require the construction Of a
line through one Of the most difficult
passes in California and would have
cost the Atchison several millions of
The Southern Pacific was nat
urally anxious to keep the Atchison out
San Francisco If it could, but upon
becoming satisfied that the Atchison
would build IL not given trackage rights |