The Providence news. (Providence [R.I.]) 1891-1906, 1902-06-02
TO PREVENT
BOND ISSUE.
Stockholders In Steel Trust
Bring Injunction Suit.
MORGAN & COMPANY NAMED.
Petitioners 0hj,ct TO the Profits Il Is TO
Receive for Financing the Scheme New
JsTssy Law Attacked.
MORGAN & COMPANY NAMED.


able. the contamination of the plan ar
ranged by the directors of the United
States Steel corporation to Execute and
deliver $500 0Oo, 600 OF its bonds for the pur-
chase and retirement. or the exchange
Of 500. 900. 900 OF its preferred stock, G. IA.
Venner & Co, New Jersey concern. and
James Pollitz, OF this city. have begun an
action In the supreme court.
They seek TO restrain the corporation
from carrying out the plan and to pre-
vent the placing OF any lien or mortgage
upon the property or assets OIL the cor
poration to secure the payment OF such
bonds. George ii. Yeaman is counsel for
the plaintiffs
c. ri. Venner & Co own 500 shares of
common stock of the corporation and
Poilitz owns 100 shares OF preferred stock.
J. p Morgan a. Co. agents for the
steel corporation In financing the scheme,
are made parties TO the action, together
with the officers and stockholders OF the
corporation.
POWERS EXCEEDED, 1T IS CHARGED
BY its amended certificate of incorpora-
ton, the United States Steel Corporation
has an authorized capital OF s1.l00, 900.
with $3.50, ,000, 900 in preferred stock and the
same amount OF common. The com
plainants allege that there is no power
In the corporation TO issue these bonds.
except for money or I'm payment for prop
erty acquired by IL In the transaction of
its business.
II is alleged that the corporation has
not complied with the laws OF this state.
being a New Jersey corporation. In that
II has not paid a license fee or obtained
n certificate that IL has complied with
all the requirements of law authorizing
II TO do business In this state. and. there
fore, has no right TO transact business
IN this state.
Under the charter of the corporation
the holders OF preferred stock are en-
titled TO receive dividends Of seven per
cent before any dividends are paid on
the common stock. and II is declared that
the corporation has no right TO pay for.
redeem. retire, purchase otherwise
liquidate shares of preferred stock when
II is not I'm the process of liquidation or
dissolution.
1t Is charged that the proposed plan
would give the holder of such preferred
stock exchanged a priority over other
stockholders which ia not authorized by
the corporations charter. This. II is as
serted. would work an injury TO the hold
ers OF common stock and depreciate its
value.
OBJECT TO BIG COMMISSION.
The plan is TO issue $3.50. oO0. 900 OF bonds
bearing five per cent interest secured by a
mortgage upon the property. 20 use $780,
900. of bonds for the purpose of raising
an additional working capital 10 be used
In the prosecution of its business and 10
exchange $500. 900, 900 bonds for preferred
stock. The result if this IL is asserted,
Is simply 10 rearrange the present capt.
talization Of the corporation by increas-
ing It's bonded Indebtedness TO an amount
of $500, 600. 900.
This, II Is alleged. will Increase the fixed
<<l.p nf he l1..
So00o.ooo annually. increase the danger
Of voluntary dissolution and endanger the
ability OF the corporation to pay divi-
dends.
II is said that the plan is In the hands
OF j. p. Morgan & Co. and a syndicate,
included In which are directors and OFF,
GERS OF the corporation A commission
OF four per cent, or about $40. 900 900, Is
10 be paid. OF which j. p. Morgan a. Co
will get about 81 900 900 and the syndi-
cate about $4,000 900.
The complaining stockholders allege that
the corporation can easily negotiate S50,-
100000 OF its bonds 10 raise an additional
working capital without the payment Of
four per cent commission on 500. 900 900
OF bonds 10 be exchanged for preferred
stock. They allege that no meeting OF
the stockholders was held to vote on the
plan, and that the object Is TO enable
certain holders Of preferred stock TO be-
come secured creditors
II Is charged that 900 OF bonds
are now being dealt in. bought and sold
I'm the open market. 10 be delivered II
issued. 1t is under an act passed by the
legislature OF New Jersey on March 2s
last that his scheme lis being carried out
The assertion is made that this law Is
In violation OF the constitution of the
United States. which proyd that no
state shall pass any law impalring the
obligation Of contracts and that no state
shall deprive any person Of life liberty
or property without due process OF law
The complaining stockholders say that ~
this arrangement is not enjoined they
will be deprived Of their property by an
arbitrary diminution In value.