New-York tribune., 1906-06-19
PARIS TAKESP.R. R. LOAN
PAPERS FINALLY SIGNED.
French Banks VII Send OUer Fifth
MilhOnS-TermS FAVORABLE.

FOrInal announcement of the successful con-
elusion Of the negotiations for placing the Penn
sylvania Railroads $5000O0O0 loan in Paris was
made last night by the banking house of Kuhn.
Loeb & Co, in a statement follows:
Kuhn, Loeb Co. have purchased from the
pennsylvania Railroad Company 100000, 900
francs or the pennsylvania company twelve-hf-
teen-year 3& per cent French franc loan OF 1906.
guaranteed as TO principal and interest by the
pennsylvania Railroad Company. The entire
loan has been placed by Kuhn, Loeb g. Co. with
a French group undsr the management Of the
Banque de Paris ct des Pays-Bas and the Credit
Lyonnais. The issue price will be in the neigh
borhood of par. Payment will be made in equal
monthly instalments, divided over the balance of
the present year, earlier. at the option of the
French banks.
The price at which the bonds were sold by the
Pennsylvania Railroad Company could not be
learned. but it is understood that the total cost
to the company will be about Al per cent which
would seem to represent rather better terms
than it obtained in the sale OF the S5O.OOO,OOO
short term notes few weeks ago in this city.
A member OF the firm of Kuhn, Loeb & Co..
speaking about the Ioan said:
We consider that the closing up of this trans
action is a most important event financially. It
marks the placing Of the first direct American
loan In Paris, and 1t is, further, the first off,
cially sanctioned American loan placed there.
II means that about S5oOooOoo IN French
money will come TO this country. This French
money will arrive here at most opportune
time The issue price will bs between 80 and
par. All the costs and expensee incidental to
the placing OF this loan will be borne by the
French banks interested and the Pennsylvania
company Will have to pay no part OF the ex-
overcome to conform with the French laws be-
fore the affair was entirely closed up. Having
overcome all these obstacles we feel rather proud
OF the success Of the undertaking.
The overcoming OF these legal difficulties has
mace the closing Of the transaction necessarily
slow The loan has had to obtain the sanction
Of the French Ministers of Finance Foreign
Affairs and the Interior, and has had to meet
the severe and complex requirements of the
French Else. or the local conditions OF French
law as 10 the floating and issue of securities.
Tha task has- been. .the greater. as this loan is
the first of its sorc TO be placed in France.
The bonds have already been listed on the
Paris bourse. All Of the expenses incident to
this step, including taxation and the listing fee,
are met by the French bankers. The initial ex-
pense, II is estimated, Is little over per cent.
and the annual expense hereafter will be trife
less than per cent.
In the negotiations which have been going on
here for several weeks Horace Finally, who came
over from Paris especially to take part In them,
has represented the Banque de Paris ct des
Pays Bas. and ]. G. Buchanan. the New York
representative of the Credit Lyonnais. has rep
resented that institution. William Nelson
Cromwell has acted the legal adviser OF the
two French banks. and Paul D. Cravath has
represented Kuhn, Leob & Co. The final confer
ence, at which the last details were arranged and
the contract signed, was held yesterday af-
ternoon in the office OF Sullivan & Cromwell.
1t is now a full month since announcement
was first made that the Pennsylvania Railroad
Company negotiating for the placing in
Paris of loan of S5OOOOOOO. That news
closely followed the announcement that there
had been sold through Kuhn Loeb & Co. S50-
100000 AZ per cent eighteen-month collateral
trust notes of the Pennsylvania Company,
guaranteed by the Pennsylvania Railroad
Company. The bonds, which it designed to
place in Paris 1t was learned, were to be Sc
cured upon water and equipment bonds and
notes now held in the Pennsylvana's treasury.
the water bonds having been issued to equip
the line with complete water supply between
Pittsburg and New York.
Pennsylvania under heavy pressure in the
stock market yesterday, declining 213 points on
rumors that the loan had failed. The sales OF
the stock were large. aggregating about 1S4,OOO
shares out Of the days total transactions of
1.0S0,000 shares. The conclusion Of the negO-
tiations for the loan has been long delayed
and the situation in Russia, in which country
an enormous amount of French capital is in
vested, is threatening that the report of fall
ure of the loan arrangement found credence in
various quarters, although it had been known
days ago that practically all details preliminary
to the actual signing OF the contract had been
arranged.