The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-06-19
FRENCH LOAN 1OP.R.R MADE.
'VOt ~ st0 mn nm IOST ~ IOV.
rev ~ PIIN
ftsrcr IcNdrfs tssur'e ~ fa,es sud
Whef t~gtrrnmrntat and tiUaactst
'hrrae' a tu,rred q a.taue tsssati
fens Whs, tiunet Wm ~ , cod cse.

1nr lone i%rNtins nesr'is'ions ~ tho
t.uuavlvsuia Railroads. ~ .On ma ttrnch
1000 oor, orrp'r'ol Yesterday m trrns
t.f.r mutr hvutnll' w 'h- railroad coin-
rI,u i'nn tho 'i,ue consumed IN the NJ
.frurnta had lel tho " frr' w lrlirva
ino r.t ~ ~" terms Ia that tho gross 80.
.nr-n II, the conpan u let wcen ~ and
&, Ier cont that all tho provisions n ths
rcrnh law relating 10 taNcs on American
securities nave ls,rn complied with aud that
tho French bankers assume the payment
NJ ull taxes and other Governmental and
financial charges.
The dcal was made In this city. The
's1 French banks principally Interested,
'hn credit f.yonnais and the Bandus de
Paris ct des Pays Has, were represented In a
'ngal capacity by William Nelson Cromwell
Of sullivan h Cromwell and by their agents.
Horace Finally and f.. q. Buchanan. NJ.
Finally came over from Paris a week ago for
the Banuue de Paris ct des Pays Bas, Mr. Z.
buchanan IL the local representative Of the
credit Lyonnais AMI has been engaged
On the negotiations for a month. Tho
Pennsylvania Railroad was represented
by Kuhn, Loeb a Co, its fiscal agents, with
Paul D.. Cravath as counsel for that house.
Yesterdays, the last Of many conferences,
was not terminated until after 7 O'Clock
AT its conclusion this formal statement was
given out:
Kuhn. Loeb q Co. announce that they
ave purchased from the Pennsylvania Rail
rnn1 rpmnanv ok0 OOO DO0 franCa fauunllIn0
about $50. 200. oOOl Pennsylvania company
l.-i5 year 81. pcr cent. French franc loan
OF 1908 guaranteed as to principal and inter-
est by the Pennsylvania Railroad Company.
The entire loan has been placed by Kuhn.
Loeb 4 Co. with a French group under the
management of the Banaue de Paris ct des
PAYS Bias and the Credit Lyonnals. The
issue price will be In the neighborhood OF par.
Payment will be made In about equal monthly
instruments divided over the balance OF the
present year or earlier. at the option OF the
French banks.
The French bankers assume all the ex-
penses Of listing the bonds on the Paris
Bourse and other taxes and charges imposed
by the French fsc. They will sell the bonds
at a price between 90 and par, and, apart
from commissions to bankers, there will be
absolutely no charges upon the railroad
company. Just what these commissions
are wal not disclosed, but it was said that
an estimate Of S per cent. total cost to the
company was too high and that IN estimate
of a. per cent. was altogether too low and
it was intimated that splitting the difference
between these estimates would give a close
approximation. Accordingly it was gener- b
ally taken for granted that the cost was o
trife over ~ per cent. to the company.
No distrust of the credit of the Pennsyl-
vauia on account Of the revelations brought
out by the Interstate Commerce Commission,
1t was said, was responsible for the delay
in completing the negotiations. On the
other hand, the delay was due entirely to
the excessive caution of French bankers
and to the many vexatious questions inter-
POSED by the French laws.
You would be astonished to know"
eaid one of the attorneys who nave had to
do with the negotiations. "how carefully
and ~scrupulously the French bankers
examined into every feature of the loan.
They had never before taken the bonds
or any other security Of an American cor
roration and they had to have explained
with great detail the exact nature Of the
tecurities and the financial condition Of the
lnlS CdutlOn, InOuBn, Mdb uOt eAtIdoT"
binary for them. 1t was simply an ex-
ample Of their usual custom. They deal
more heavily in Government bonds than
in any other foreign security, and besides
their word is law with the small French
investor, who places entire reliance on the
guarantee of such institutions as the two
banks in charge Of this loan and makes
very little If any examination of the securi-
ties himself.
"As the investment in American corporate
securities was a novel and original trans
action for French bankers, it presented also
a multitude of features unique to lawyers.
The terms OF the French fec are most COM
and perplexing and the number Of
legal steps necessary for the completion
of the transaction is remarkable. For
instance, before the bonds could be listed
on the French bourse we had to secure
the consent of the Minister of Foreign AZ
the Minister Of the Interior and the
Of Finance. So many were the
other complications that lawyers have
been working steadily or the matter for a
month. 1t was, Of course, advantageous
for American financiers as well as the French
that all features Of the law be COM
piled with, for neither party wished any
to arise after making the loan
that might retard other future French in
vestment in American securities
The terms Of the loan are somew hat
better than those OF the last loan made by
the Pennsylvania in this country. For
that loan, eighteen months ~ per cent.
notes, the Pennsylvania paid very close
to 6 per cent. The loan was the came
amount, $50 900, 200. 1t was placed through
Kuhn, Loeb d Co. only a few days before
was announced that negotiations for
the Paris loan had been begun. That loan,
as this one, was made to the Pennsylvania
Company, which operates the lines west
Of Pittsburg, on the guarantee OF the Penn
Railroad Company.
The Paris loan can be called at par after
twelve years, at the option OF the company.
The money to be paid by the bankers in
Paris may result in gold imports but 1t was
by one Of those connected with the
transaction that this was a matter de-
largely on the success Of our crops,
as most Of the money will be paid while
crops are moving.
statements made latterly that the decline
N Russian securities had adversely affected
he negotiations were met by the reply