Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1902-04-26
A $3.50, OOo,o DEBT
VIII Soon Be Owed by the United
States Steel Corporation.

New York, April 25.-Stockholders OF
the United States steel Corporation re-
ceived, Friday, the circular letter of the
corporation setting forth the exact
terms under which it is proposed to
retire 100000 GEO OF per cent. preferred
stock and issue $3.50 000,00 of per cent.
bonds. thereby increasing the bonded
debt from 5000, 900 to $500, 1000.
Accompanying the circular was re-
port of the finance committee which
sets forth in detail various reasons
why the refunding plan should be APP
proved together with series of reso-
lutions reciting how the plan is to be
carried out.
The stockholders report. signed by
Pres. Schwab and Chairman Carey,
says in part:
IN February, 1901 various subsidiary
companies having under contemplation,
and in many cases actually had begun,
the construction of additions to their
plants, which in some instances would
have duplicated the facilities of other
subsidiary companies. The aggregate
of these contemplated expenditures
was something like $4,000. coo. AS stat
ed in The preliminary report, much that
ut the time of organization. it was
hoped. might be accomplished in the
way Of avoiding Wasteful expenditures
for unnecessary enlargement Of plants,
has been accomplished by cO-ODera ton
among the several companies, enabling
one to utilize the facilities of the other.
However, owing largely to advance
commitments. it was impossible II stop
all construction at the time your cor
poration was organized, and, in order
to finish work then already under way,
cash payments have been made during
the year = the amount Of $l5.000,000.
1T VAS not possible then to deter
mine HOW much Of tho contemplated eX-
penditurc Of about $50.000,0 900 would
have to be made, or in advance would
it have been wise to capital any part
IF The Slj,Oo0.O00 that has been actu-
ally expended.
"Aithiu the next few months viii
| fan Cuo payments aggrcgating about
| Sl0.Qo0J0 for properties purchased al
most Immediately after your corpora
| tion was organized. In the preliminary
report To st ickhoIders these payments
were described as purchase money OBJ
| ligajiuue. The finance committee is
unanimous in its support of the execu-
! tive committees recommendations ana
| bell VS. that as desired by the eXecu-
/ tive committee 25000.O0O should be
made available for improvements.
The finance committee also recon-
mends capitalzing both the $25, O000 600
eXl,-n !cd durin: the year for commit
! ments made prior to your corporations
| org1 niz2ti0n and the 100000 600 Vet to-
be paid for properties as above stated.
! These three purposes in the aggregate
call for $500G0 eco.
The problem confronting the finance
committee has TO make provision for
this $50, G00,0G0 without issuing preferred
stock. Whic1 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 $3,jGo,0G0 the present annual divi-
| dend requirements Of the corporation.
! After discussing with some of the
| principal stockholders it appeared
practicable TO rearrange your corpora
lions capitalization (Which in round
numbers, now consists of $500, 1909, 600 of
| bonds, $5C6,000,0 600 of preferred stock
ana $500, 0O00 900 Of common stock, by
| substituting for $500 900 600 of the pre-
ferred stock 5000, OO0,00o of sinking fund
| 60-year per cent. mortgage gold bond.;
and by selling $50000,000 additional
| bonds Of such issue for cash.
"As the preferred stock carries per
cent. dividends while the bonds would
| bear but 5 per cent. interest, the. $50,
! 000G00 desired could, in this way, be
I rT6O1 tho 70
| the aggregate of the annual charges
| for interest and dividends instead Of
being increased S3,500,0O0 would be de-
creased S1,500,000, as compared with the
present sum total of these two require
ments.
THE unanimous conclusion of the
! finance and executive committees is
that. considering the vast aggregate
value Of the physical properties, the
proposed $3.50, GOO, COO increase of bonds
from $500. 100000 to $3.50, coo is wise
and conservative, the preferred stock
issued simultaneously being decreased
20 per cent. or S20o,00O,e coo. The conse-
| quent S11,000000 reduction of dividend
payments as compared with the $12,-
| 100000 increase of interest would result
in d, net annual saving of 81, 100000 ex-
| ceedinS by S490,000 the annual sinking
fund contribution of S1.010,000 to be re-
| CURED by the proposed mortgage and
which. invested at A per cent, would
be sufficient in GO years to pay off all Of
The 500, 100000 bonds.
| 40 further the increase of the plan,
| there has been formed syndicate in
Guiding some .directorates which will
! receive four-fifths of the 4 per cent.
compensation to be paid under the con-
tract with Messrs. J. p. Morgan & Co.,
mentioned in the notice of stock
holders meeting"
| The stockholders meeting, to vote on
the proposed changes in the companys
securities, will be held at Hoboken, N.
j., May 10.