The Washington times., 1901-09-10
LOOKING TO FORECLOSURE.
BondhOlders' Second Step Against
the Washington Traction.
Supplemental Bill Filed in Virginia
Company Fails to Pay Interest
in Three Months Allowed - sale
May BE Ordered in Thirty Days.

|
| in Three Months Allowed - snl'
/ May Be Ordered in Thirty Days
| The trustee of the bonds of the Wash
| ington Traction and Electric Company
the United States Mortgage and Trus
Company has filed a supplemental bill IL
the Norfolk court, declaring the right:
i of the company forfeited. under the pro
vision of the face of the bond. This Il
the second legal step of the bondholder'
looking tc the sale of the properties own
ed by the Washington Traction Compan,
under foreclosure. Under the rules of th'
court, no further step can be taken fol
thirty days from the filing of this supple
mental bill, or until October. What tn,
intention of the trustee for the bondhold
ers is with regard to proceedings aftel
| this period has elapsed is not yet known
at least, to any except the chief bond
| holders themselves. 1t is known to &
| number of people interested however
| that the affairs of the company are rap
idly developing and that definite actor
of an important nature will be taken il
the near future
The face of the Washington Traction
bond provides that on the failure of the
company to pay the interest on the bonds
at any semi-annual interest period, the
right of the company to pay the interest
shall not be forfeited until three months
shall have elapsed. The company failed
to make it's interest payment last June
A receiver was appointed on motion OF
the trustee of the bonds. Under the above
mentioned provision of the bonds the COM
pany was allowed three months to pay
the interest. but failed to make the pay
ment. The action of the trustee in filing
the supplemental bill followed
\ peculiarity of the original bill of the
trustee that has not been commented on
heretofore Is that it asked for the fore
closure and sale of the property of the
company. 1t is not necessary in Virginia,
in applying for a receiver to take charge
OF the affairs of a company, that any
application for foreclosure be made, and
it is not understood why the bill took
this form. in view of the supposedly
friendly nature of the suit. AS a matter
of fact, the Virginia law does not require
that any preliminary application for q
receiver be made on the failure of COM
pany to pay its interest charges.
The property of the Washington Trac-
tion and Electric Company. on which it's
bonda were issued, is composed of the
different stocks and bonds of twelve
street railway companies in the District
(all, in fact, with the exception of the
Capital Traction Company, and of stocks
and bonds of the two electric light COM
panies, The concern owns nearly the
entire capital stocks of all these COM
panies. There is an outstanding minority
stock interest in the City and Suburban
Company of about 4,500 shares. the
Washington Traction owning over
$4,000 shares. There is also small mi
noiity interest in the Georgetown and
Tenleytown outstanding. Virtually the
entire stocks of the other companies are
held. The bonds of the constituent cem-
panies are held largely by outsiders, the
Washington Traction Company owing
only comparatively small amount.
1t is these holdings of stocks and bonds
that would be sold if the Virginia court
should order foreclosure under the pres
ent receivership. Such a sale, of course,
would be equivalent to the disposal of the
constituent companies themselves, and as
far as the present Washington Traction
Company is concerned they would become
Independent concerns with the same
status as before the Washington Trac-
tion Syndicate bought up their control.
If such a course is to be pursued by the
trustee for the bondholders the import
ant and interesting question to Washing
ton business men will be as to who will
buy in the constituent companies The
interests now in control, by virtue of the
receivership, are the bondholders. To
what extent these interests are identical
with those of the stockholders of
the company remains to be devel-
oped, although it has been under
stood heretofore that the bondholders
are themselves the owners of a large part
of the Washington Traction stock. If a
forc->2sure sale takes place and the Sc
curities of the constituent companies do
not sell for the face of the Washington
Traction bonds. the Washington Traction
stock issue, about 81. .000, 900, will be wiped
out of existence 1t has been suggested
that the bondhoiders may conteil plate
sucn a course, and the repurcha..e by
themselves of the securities offered for
sale. Apparently this might be to their
interest, supposing that any considerable
portion of the Washington Traction stock
is held by outsiders.
There are other possible contingencies
The bondholders may have had all the
experience with the Washington Trac-
ton Company that they care for and may
not intend to bid in the securities now
held by il. In such an event they would
take whatever the sale of the securities
III the open market might realize and
wash their hands of the entire business.
Another possibility is that rtfp interests
now in control may be contemplating
the purchase of only portion of the
roads at the sale. 1t has been suggested
that they may wish to give up the City and
Suburban and other roads that have not
paid their way. and retain the Metropoli-
tan and other companies that are on Il
paying basis
As far as can be foretold at this time,
there is only one event that might pre-
vent the carrying out of any of these
plans. There has been some talk in this
city among the old owners of the Metro
poiitan and Columbia lines, of their re-
purchase from the syndicate If they are
ever offered for sale. 1t is not understood
that any definite plan along this line has
been formulated, however
The United States Mortgage and Trust
Company two weeks ago. with the CO.
lumbia Railway and other companies con-
trolled by the Washington Traction Com
pany, filed bills in the District courts
against the City and Suburban Railway
another of the constituent concerns of the
company. for $250000. due on demand
notes for money lent to the City and Sub
urban. The City and Suburban has not
been paying its expenses and apparently
has been forced to borrow from the other
companies and from the United States
Mortgage and Trust Company, which is
the trustee of the Washington Traction
bonds and has been one of the hackers
of the entire syndicate project. What
part these suits play in the general plan
of the controlling interest has been a mat
ter of much conjecture and will become a
still more interesting question in view of
the filing of the supplemental bill in Nor