The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-04-26
Two Hundred Millions of : Per Cent
Preferred stock to he Retired
and Bonds Issued.
LATTER TO BE FIVE PER CENTS
TOTAL ISSUE TO DE TWO HUNDRED
AND FIFTY MILLIONS.
Fifty Millions of the Amount to Be
Used i'm Improving Plants of the
Constituent Companies.
Fifty MilIio

NEW YORK, April 25.-StockhoIders of
the United States Steel Corporation re-
ceived to-day the circular letter of the cor
poration setting forth the exact terms under
which it is proposed to retire $500 100000 of
per cent. preferred stock and issue $780,,
100000 Of per cent. bonds, thereby increas-
ing the bonded debt from $500 0O0,0 900 to $780,
ZOO. Accompanying this circular was a
report of the finance committee, which sets
forth in detail various reasons why the re-
funding plan should be approved, together
with series of resolutions reciting how
the plan is to be carried out.
The stockholders report, signed by Pres
ident Schwab and Chairman Carey, says in
part: In February, 1901, various subsidiary
companies had under contemplation and in
many cases actually had begun the con-
struction of additions to their plants, which,
in some instances, would have duplicated
the facilities of other subsidiary companies
The aggregate of these contemplated ex-
pendtures was something like S500OOO00
AS stated in the preliminary report, it was
hoped at the time of organization that
much might be accomplished In the way of
avoiding wasteful expenditures for unnec-
esssry enlargement of plants by co-opera-
ton among the several corporations, en-
aiding the one to utilize the facilities of
the other. However, owing to advance COM
mitments it was impossible to start all
construction at the time our corporation
was organized and in order to finish work
then already under way cash payments
have been made during the year to the
amount of $15,00OOO0. 1t was not possible
then to determine how much of this con-
templated expenditure of about $4,000. 900
would have TO be made, nor in advance of
sufficient expenses would 1t have been wise
, capitalize any part of the $4,000, 900 that
would have been actually expended.
Within the next few months will fall due
payments aggregating about 100000 for
properties purchased almost Immediately
after your corporation was organized In
the preliminary report to stockholders these
payments were described purchase
money obligations The finance committee
is unanimous in its support of the executive
committees recommendation and believes
that, as desired by the executive committee.
s25, 100000 should be made available for i'm
provements.
THE finance committee also recommends
the capitalization of both the SIS, 600 ex-
pended during the year for commitments
made prior TO your corporations organiZa-
ton and the Sl0.000000 yet to be paid for
properties above stated. These three
purposes In the aggregate call for $50 900 900.
THE problem confronting the finance
committee has been TO make provision for
this $50. 100000 without issuing preferred
stock, which stock cannot be sold at less
than par, and which, If sold at par, would
be entitled to dividends at the rate of per
cent, and would increase by SO, 900 600 the
present annual dividend requirements of
| the corporation.
! cipal stockholders Ii appeared practicable
to rearrange your corporations capitaliza-
ton (Which in round numbers now consists
of $500 100000 of bonds. $500. 900 of pre-
ferred stock and $500, O00,O 900 Of common
stock) by substituting for 500, 600 of the
preferred stock $500, 100000 of sinking fund
| sixty-year per cent. mortgage gold bonds
and by selling $500O0,000 additional bonds
of such issue for cash. AS the preferred
| stock carries per cent dividend, while the
bonds would bear but per cent interest
the $50,OOO000 desired could, in this way, be
added to the corporate resources and the
aggregate OF the annual charges for inter-
! est and dividends, instead Of being in
| creased S3,5O0,000, would be decreased $780,
900 as compared with the present sum total
of these two requirements.
THE unanimous conclusion of the finance
and executive committees is that, consider
ing the vast aggregate value of the physical
| properties, the proposed $3.50, 600 900 Increase
| of bonds from $500 100000 to $S50OO0OO0 is
| wise and conservative, the preferred stock
/ issue being simultaneously decreased 20 per
| cent, or $2000O00O0. The consequent S14, 000,-
| coo reduction of dividend payments as COM
| pared with the ST., 800, 600 increase of inter-
| est, would result in a net annual saving of
| 81. SOC, OO0 exceeding by $4,000 the annual
! sinking fund contribution of 100000 to be
! required by the proposed mortgage and
! which, invested at per cent, would be suf-
! ficient in sixty years, to pay off all of the
! $3.50 900 900 bonds.
ITO further the success of the plan there
| has been formed a syndicate, including
| some directors, which will receive four
fifths of the per cent. compensation to be
/ paid under the contract with Messrs j. T.
| Morgan & Co, mentioned in the notice of
! stockholders meeting"
The stockholders meeting to vote on the
| proposed changes in the companys securi-
! ties will be held at Hoboken, n. j., on
/ May 10.