New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-01-25
NO SHIPBUILDING PEACE.
aSCHWAB'S CONTROL 4 BAR
BondhOIders Want Promotion Sc
curitieS ThrozCn ont.

CuTILGCS Il fTOJGH OUL.
Prospects for a settlement Of the United States
fEhipbuiiding Company litigation did not seem to
he so bright yesterday. when It was learned that
she new reorganization plan said to have been
favored by James Smith. Jr, the receiver OF the
ehipbuicing company, had not been submitted
10 Samuel Untermyer. counsel for the bondhold-
ers who have made the fight against the Shell
don reorganization plan William Nelson Crom-
well the supposed custodian OF the plan, as
counsel for the Sheldon committee, refused last
might TO talk about it, and Mr.. Untermyer said
he had not been informed OF the features OF the
plan which Mr. Cromwell was supposed 10 have
Mr. Untermyer said he could not talk about a
plan which had not been submitted to him.
A fact to which Mr.. Cromwelrs attention had
been called possibly accounted for his failure to
offer terms to Mr.. Untermyer. 1t was not
known to Mr. Cromwell until Saturday. appar-
entity, that II the receiver withdrew his answer
10 the suits to foreclose the Shipbuilding and
Bethlehem mortgages the bondholders' COM
nittee represented by Mr.. Untermyer could in
terVene and answer the suits thus continuing
the litigation This fact escaped Mr. CromwelPs
notice, probably because he had not been en-
gagged as counsel IN the litigation. He doubtless
thought that If the receiver agreed to the new
reorganization plan and withdrew his answer to
the foreclosure suits, the mortgages could be
without the minority bondholders being able to
make serious opposition.
It turns out that when the counsel for the
Bodybuilding company asked leave to amend
certain answers in the suit for a receiver some
time ago. Mr.. Untermyer agreed condition
that there should be another agreement to per-
NIT the bondhOlders' committee to take the place
of the receiver in the foreclosure suits If. for
any reason, the receiver desired to withdraw an
do
of court orders, and AIr. Untermyer had these
orders entered in the courts OF California, Maine.
Connecticut, Delaware, New-Jersey and New
York Consequently, the bondholders can pre-
vent the foreclosure OF the mortgages even If the
receiver withdraws his answer to the suits. A
plan Of reorganization cannot be carried through,
therefore unless It Is satisfactory to the fighting
gbondholders
The plan Of reorganization to which the con-
sent Of the receiver has been obtained by Mr..
iCromweu, it is said. provides that the mortgages
shall be foreclosed; that a new shipbuiding
company be formed with capital Of $4,000
600 one-half preferred and one-half common
stock; that all the old shipbuilding stocks and
bonds be wiped OUT that IN place Of his S1O,-
100000 Of Bethlehem bonds Charles N. Schwab
shall receive S9.0O0.00O Of preferred stock and
100000 OF common stock, and the remaining
Se,00Oo00 Of preferred stock and $9OOOOOO OF
other bondholders. It is said to be part Of the
plan also that the Sheldon committee shall
name three Of the seven directors Of the new
\ company, the bondholdeTs represented by Mr..
II Untermyer shall name two, the Commonwealth
Trust Company shall name one and the six
sdirectors SO chosen shall select the seventh
It was ascertained last night that the fight
gsng bondholders win insist on certain amend
ments to such plan or viii keep up the litiga-
ton indefinitely. One amendment would affect a
provision understood to have been carried over
from the abandoned plan Of the Sheldon COM
Inittee. This provision that Mr.. Schwab
should provide 100000 for cash working cap
itaI Of the company and take 5 per cent
FIRST mortgage bonds Of the new company IN
payment It is said that Mr.. schwab wants to
take the 100000 Of bonds at so instead of at
par. The bondholders viii insist that he take
the bonds at par.
Another amendment on which the bondholders
Fwculd insist would take out % the stock divi-
sion plan the bonds now held by the Sheldon
committee. or by others, which did not repre-
sent cash or real values when they were issued.
These bonds are Of the face value of about
100000. Part OF them were issued to vendors
of shipyards practically as bonuses, and part
were issued to the group represented by John
W. Young. as the promoter Of the shipbuild-
ing company. The bondholders who paid cash
for their bonds win insist that all Of the So
called promotion" bonds and the bonds given
as bonuses to vendors shall be thrown out.
An amendment which is regarded by the bond
holders OF the greatest Importance, however
would remove from Mr.. SchWab for a long
period OF years the possible control Of the new
Ehipbuflding company. Mr. Schwab would have
at the outset half the stock and II he kept It
end bought more in the market he could control
the company by voting a board of directors
The bOndholders will insist on a provision in the
reorganization plan to which they give assent
Tor board OF directors TO be named for a period
OF years. such directors to be men who could be
trusted TO take care OF the interests OF all the
stockholders.
II the reorganization plan which Mr. Smith is
said 10 favor fails. the bondholders win keep up
the fight in the courts with two well defined OBJ
sects in view one Of these objects is to have
the S10,000O00 OF Bethlehem bonds held by Mr.
6chwab declared invalid. Another object is to
have the S4.000,000 Of promotion" and bonus
bonds declared worthless and cancelled. With
these So, 600 600 OF bonds out Of the way the
Fighting bondholders believe that the receiver
could pay interest the remaining bonds and
~ehsbilitate the company.