Daily inter mountain. [volume] (Butte, Mont.) 1881-1901, 1900-10-10
HECRANDT TRUNK
INTERESTING STORY OF REOR-
CANNING THE RAILROAD.
TWO MIN0RITIEs WHO WON OUT
Second Mortgage Holders Will Have
Their Pay Before R~eorganiza-
ton Is Complete.

New York, Oct. Observation-Disclosures
Of important banking interests in New
York, in commenting upon the dramatic
episode of the Grand Trunk meeting
yesterday in London, said that the
trouble was due to an old enmity be-
tween the past and present chief execu-
tive of the system. They also conceded
that security holders of the American
company. which owned the Chicago and
Grand Trunk company had grievances
that could not be questioned. The cor
roration was controlled by the Grand
Trunk railway of mad though the
company did not hold all of its bonds.
Its securities outstanding in 1899
amounted in round numbers to Sc. 000.-
Zoo first mortgage bonds. (~sixes>. s6,Ooo.-
DG0 second mortgage fives and Sc, 000, G0O
common stock. The first skies We're to
mature Jam. l, 1900. In November, 1899,
a reorganization plan was brought out.
as the circular describing it. suggested
"in the interest of all parties concerned"
According to the ~reorganizers, the
Chicago & Grand Trunk was unable to
meet the first skies at maturity without
the cooperation of the bond holders.
The bonds held by the Grand Trunk.
(about a quarter of the issue), We're of
course. practically sure to be assent
trSs Some of the minority holders. how
ever, demurred. They showed fight. got
a protective committee together. and
found a syndicate OF Amsterdam bank
ers willing to buy the road. to buy their
bonds at par and interest, or tc guaran-
tee interest for so years. Then the re-
organization committee fcurld the heart
to indulge the first mortgage holders
desires. They promised them par and
interest for their bonds, and made other
guarantees of q pacific nature. The Sec
Old mortgage holders had been invited
In the first instance to c%apitulate on far
more eNacting terms. The compromise
was to give them but $3.50 in new tours
for each 81, GOO of the second five. Moth
ing was sale about the interest during
the season of reorganization and moth
ing offered in the way of a Grand Trunk
guarantee. At first sight there was no
promise of opposition from this quarter,
and the assents covering a practical ma
Jorlty of the bonds seemed certain from
the fact that the Grand Trunk already
owned half the whole issue. But the
minority holders got wind of the success
secured by the minority of the first
mortgage bond holders and they pplied
for help to some of the most expert legal
authorities upon railway reorganization
In the United States. The case was
drawn up, and after the usual show
down the reorganization committee ex-
pected a concession. They not only
agreed to give the holders of the seconds
$3.50 in guaranteed instead of unguaran-
teed new first tours. but they also UNI
dertook to pay the last coupon IN the
bonds, reimburse certain expenses in
Cured and finally to give them
$3.50 on each five-year four per
cent bond, the reorganization company
to reserve the right to turn the latter
bonds back at any time within ten years
at So cents on the dollar. Before, there.
fore, the Grand Trunk gets a cent on
5; 900, 900 stock of the new company
which is to be issued to it in repayment
Of advances, and in full satisfaction of
the floating debt, the old stock appar-
emily being wiped out, the old second
mortgage bond holders will nave to re-
ceive the four percent interest on their
s., 800, 0000 income bonds in full.