New-York tribune., 1902-08-28
THE STEEL TRUST ANSWER.
,,s.-I ARES THAT CONVERSION PLAN
,yo7-I.D REDUCE FIXED CHARGES.
z.;.<s,les OF THE CoRPCRATIoN. IT
- ESTIMATED. WILL BE si4o.e9o60
THIS YEAR

--- Y ] Aug Z7-The United States Steel
r---o-sr5on to-day fled il the Court OF Chancery
= a-s7-e- 70 the amended bill Of complaint O. }.
9,-su Hodge Bernard Smith and William II
-. - restrain the proposed conversion OF SZvo-
.1aao ny cent preferred stock into S2rl"oV'"
ne cent SECOND mortgage bonds The answer
s,-5ss that the books OF the corporation SNO"
-.5ss N ~ the owner of any stock o. the con-
smith il Is ave-red. did not own any sIocA
-,-s -,--ll June q. 1892. after the plan o. con-
--sf-r had been adopted. and the stock no" re-
.,r5a5 IN smiths vas voted IN taFor O tie
L. Hodge II Is admitted owns Il" shares OF
--L rr5- il Is alleged that he was not present
:. = --ockbol5ers meeting when the plan was
-b-7irre5 and thar his stock was not Vo1ec either
~ himself OF n proxy
- +bs s-ee. corporation are members o. the sSho-
= through which the preferred stock was u he
converted INTO bonds L Is admitted that some ~
-bs directors are members of the syndicate ana
asserted that this FACT communicates 10 every
s----o.5-r n the circular - April !. 1872. IN the
following words
=, further The success Of toe plan there mas been
<o--7z5 syndicate. including some directors, Nno
receive f1Jlr-f1lhs o. the per cent commission
T. be paid unCer The contract with - Z. morgan
& Co. mentioned IT the notice Of the stockholders
uee--ng.
SYNDICATE MINORITY OF DIRECTORS
The answer says that the directors in the syndi-
cats are Z minority the board OF directors, but
thar they are large stockholders and favored the
conversion plan because they believed II would be
uie6 that any stockholders were offered special
rs-us p connection with converting their preferred
STOCK into bonds IL order 10 secure theIr aflra tive
votes fo- the pan Il IS denied th2t ne So ~ W
needed or purposes tn were chargeable TO the
The answer men takes up the line o: argument
man d The finance committee, fled last week, in
which Nj Perkins asserted that this additional
f0 30 : casa business and be projected against .
sion Ihs answer says the earnings OF the CORPORA
5a4; tor the month Q. April. So Sl2.S2l, ,766 May
Sl3-1S-5; June Sl---oSS-: July estimated sI1SS-
n ne Judgment Of the defendants the net earn
81 ll00Q0. Il i argued that i the payments
ing ana reserve funds and depreciation as
made n the year ending March 81. 1902. namely:
81 $685., the net earnings Of the corporation and
rs subsidiary companies applleabls to dividends
cess Of the same amount in the first year
PRESENT EARNINGS Is PER CENT.
L s set forth that or the last fiscal year the
earnings after deductirg interest, sinking and
e-ylleLcs O ne pre.eTreo STOCK We MsI5 eqSiaI -
more tran - per cent OF the SoECno1 sloek' ana e
making the same deductions and provisions have
been equal 10 more than % per cent on LIE common
Ths defendants say that the total outstanding
about sos 5po and that lis total capital IS
nov IN preferred and common stock. A.gls5SS 10.
estimated in the answer are IS follows: ~,
utauts mills. fixtures machinery, equipment, etc,
Sfol-oel coke and coal proper Tlles, SoSS eCLeS'
500 eglJo transportation properties llclldiIg Tail-
5,,e5 y - srs and IS locomotives 5000 90:
blast furnaces SzS0e00o: natural gas nelds SuesJ-
60: limestone properties S4eoe5o cash and assets
Is Of June / Is02. Sl4S-Sl.000; total, Sl49o-SllU
While admitting that the conversion OF tne pre-
1srred stock into bonds would increase the hxeo
crs-ges Of the corporation $l0.Og,uCo q year, Ihe
answer declares that such action would decrease
re cumulative dividend charge upon the preferred
srr,9z .1s10ay involving q saNlns SlL-
fenr 10 provide interest," the additional $50 oeooJ
~ bonds and & sinking fund OF sl-el0eo q year,
sufficient 10 pay the bonds before maturity, ana
leave z surplus OF sfscoe- q year
R1sk TAKEN BY MORGAN & CO
The answer admits that under the plan com
mission Of SO Osl COS was 10 be paid 10 j ? MOT
- 4 Co and sets forth that part O. the ooll-
r9rion - o. assumed that Mr. Morgan shou4Co
fse Spl &C 90 Of bonds. for which ne was 10 IurlSl
81 .5 l.t of preferred stock and S2OeooOD II casn-
IT,. answer iI-sthes the amount OF tnls conlIllls
sion on the ground that Morgan & Co. asSCn7e0 81 a
10 turn over "
7-z<z--eG stock on account OF the lkelhooo oL a.
aS-s--a - It's becoming known taal Ihsy were
81 -ne market q purchasers ..s 49, 1f-
Trl zrswer emphasizes the point raised py W.
Perkins mat the conversion pan WIN -0~--o W
fixed charges OF The company