Omaha daily bee., 1902-04-26
STEEL TRUST NEEDS MONEY
More Capital is Required to Pay for Plants
Being Constructed,
FIVE PER CENT BONDS TO BE ISSUED
Plan H. TO Retire seven Per Cent Pre-
ferred stock for Bonds and
Save Difference in
the Interest.
FIVE PER CENT BONDS TO BE ISSUED

NEW YORK, April 25.-stockholders OF
the United States Steel corporation received
today the circular letter Of the corporation.
setting forth the exact terms under which
It is proposed to retire 5000, 900. 900 OF Z
per cent preferred stock and issue $3.50 000,-
900 Of per cent bonds. thereby increasing
the bonded debt from $780, no, 900 to $780,
900, 900. 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 a series Of resolutions r%eciting how
the plan is to be carried out. The stock
holders report, signed by President Schwab
and Chairman Gary, says in part:
In February, 1901, various subsidiary COM
panies 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 the subsidiary companies.
The aggregate OF these contaminated eX-
As stated in the preliminary report at the
time of organization 1T was hoped much
might be accomplished in the way of avoid
ing wasteful expenditures for unnecessary
enlargement of plants and much has been
accomplished by cooperation among the
several companies, enabling one to utilize
the facilities of the other. However, owing
largely to advance commitments, 1t was
Impossible 10 STOP all CONSTRUCTION at Ine
time your corporation was organized, and,
in order to finish work then already under
way, cash payments have beer. made dur
ing the year to the amount of SIS, 100000.
II was not possible to determine how
much of this contemplated expenditure of
about 100000 900 would nave to be made,
would IL rave been wise to capitalize any
part of the 100000 that have been ac-
tually expended.
Payments Falling Due.
Within the next few months will fall due
payments aggregating about SlO,OOO,OOO for
properties purchased almost Immediately
after your corporation was organized. In
the preliminary report to stockholders
these payments were described as ''pur-
chase-money obligations" Thu finance
committee is unanimous In its support of
the executive committees recommends
tions and believes that, as desired by the
executive committee, S25, 600, 600 should be
made available for Improvements.
capitalizing both the $15, 600 expended
during the year for commitments made
and the $40, 5000 Yet to be paid for prop
critics as above stated. These three pur-
poses i'm the aggregate call for $50, OO6, 900.
The problem confronting the finance
committee has been to make provision for
this 100000 without issuing preferred
than par and which, If sold at par, would
be entitled TO dividends at the rate of Z
per cent, and would increase by 100000
the present annual dividend requirements
of the corporation.
To Rearrange capitalization.
After discussion with some of the prin-
cipal stockholders 1t appeared practically
to rearrange your corporations capitaliza-
ton (Which, in round numbers, now con-
sists of $500, 100000 o. bonds. $500, 600, 900 of
preferred stock and $500, OOO,OO0 II common
stock by substituting for 500, 100000 of the
preferred stock S2OO,OOO,0OO of sinking fund
siXty-year 5 per cent mortgage gold bonds,
end by selling $4,000, 900 additional bonds
stock carries Z per cent dividends, while
the bonds would bear but 5 per cent in
terest, the $4,000, 600 desired could in this
way be added to the corporate resources
and the aggregate of the annual charges
increased SO, 10000 would be decreased
81, 500, 900, as compared with the present
sum total of these two requirements.
The unanimous conclusion of the finance
and executive committees is that, consid-
ering the vast aggregate value of the
physical properties, the proposed $500 900,
$3.50, OOO.O coo is wise and conservative, the
preferred stock issue being simultaneously
deGseaSe1t g P Sc .o cent tsd or SEQ CGo'G S,1,a The
payments, as compared with the $12, 800. 900
increase of interest would result in an an
nual saving Of $l,5OG,DO, exceeding by $780,
of 81, 0lO,0 900 TO be required by the proposed
mortgage, and which, invested at | per
pay off all of the $3.50, 100000 bonds.
Syndicate Is Formed.
To further the success of the plan there
some directors which will receive four.
ffths of the I per cent compensation to be
paid under the contracts with Messrs. ].
of stockholders meeting.
The stockholders meeting to vote on the
proposed changes in the company's securi-
ties will be held at Hoboken. N. j., OF
Nav 10