The times., 1901-05-28
PLAN OF REORGANIZATION
Developments in Washington Trac-
tiOn Affairs Nearing a Head.

Important Committee of New York
Financiers Considering New Deal
May Be Announced at Once or
Bond Interest May BE Paid June L.
As the date for the payment of the
semi-annual interest on the Washing
ton Traction and Electric bonds ap-
proaches local financial people are be-
coming greatly interested in the ques-
tion as to what the syndicate behind
the company intends to do. The in
terest payment is 2E per cent the
bonds being AZ per cent bonds. The in
terest is due on June 1. It has been
understood that the company is not
earning this interest, over and above
the operating expenses and the fixed
charges on the underlying mortgages.
although its present business shows a
marked improvement over that Of last
year.
The first Turnor regarding the mat
ter in + Street was that the interest
charge would not be paid, and that
the company would, therefore, be forced
to go into the hands of receiver. 4
few days ago the statement was made
by an authority that the company is
actively considering a reorganization
plan which win obviate the necessity
of bankruptcy This plan, it was said,
contemplates the scaling of the bonded
Indebtedness of the company 25 per
cent and will therefore make it pos
sible for the company to continue. Yes
terday a new phase was developed in
the situation, the latest information be-
ing that the committee considering the
reorganization plan is divided. Some of
the members are said to be in favor
of announcing the plan Immediately,
and others wish to raise the money for
the interest payment, in order that the
plan may be worked out in full before
making any public announcement AS
far as could be learned yesterday IfJer-
noon, there is a deadlock in the COM
mittee on this point.
The committee working on the ieOr-
ganization plan is understood 20 repre-
sent the three financial concerns inter
ested in the bonds-Brown Bros. &
Co., Kountze Bros, and the United
States Mortgage and Trust Company.
As far as can be learned, this plan con-
templates the retiring of the present
collateral bond issue Of S13, 400, O00 and
the issuance in its stead of a new bond.
1t is understood that the present bond
holders will receive $3.50 in new bonds
for $1,000 of the old issue. According
TO the statement made regarding the
matter. the bondholders are also TO re-
ceive $3.50 in new preferred stock, thus
making up 81 000 in bonds and pre-
ferred stock for each $1,000 of their
holdings of the present bond issue.
The company has a considerable
floating debt, according to its last an
nual statement, and according TO later
unofficial statements that have reached
this city. The understanding is that
this has been incurred for the most part
in the large expenditures for new con-
struction that have been made since
the present management came into con-
troll. These have aggregated two or
three millions of dollars 1t is also un-
derstood, as stated heretofore. that tie
company is not quite earning is fixed
charges, including the interest on the
collateral bonds. The reorganization, it
is said, is FOR the purpose Of paying off
the floating debt and Of reducing the
fixed charges TO a point where they
can be met by the income of the con-
Germ.
If the new bond issue IS Ia be OF
the same amount as the present-SI3,-
400, ,000-the scaling of . per cent would
leave Of the issue s., 350,v00 for The ray
ment Of the floating debt, and for the
raising Of cash working capital A
larger bond issue would provide a pro-
portionateIy larger amount OF cash. Of
the S12. .0o0. coo stock of the company,
$500, 900 only remains in the treasury.
according TO the best-informed people
The remainder was given to the prin-
cipal bondholders. it is understood. and
for the most part it is stin held by
them. According to the plan outlined,
new issue Of preferred stock viii
be made TO take precedence If this
stock. What the size of this issue
will be is not known. At least SC. 35O, 900
Of it would be required for the lay
ment Of the present bOndhoIders as
bonus with the ne-- bonds.
The present difference of opinion in
the committee does not seem to be with
regard 20 the plan itself. or not neces-
sariy, at least The supposition is that
sonle member or members of the COM
mittee believe it best not to announce
the plan TO the public at this time. and
therefore wish TO pay the interest on
the bonds when it is due. This would
give another six months for the con-
sideratiOn and execution OF the plan. It
would necessitate the raising of about
$200 900, or so much of that amount
as is not in the companys treasury
Apparently, this would be raised by the
creation OF additional floating debt
Whatever the plan is, it seems evil
dent that the principal holders of the
bonds consider il a satisfactory one
The price Of the bonds in this city
has been advancing steadily for sew
eral days and went up yesterday full
point or more. At the same time, it
was said that the price in New York
was around 20, or considerably higher
than the local price.
To he DocEed af Vancouver