The Washington herald., 1907-09-22
EXPLAIN PHONE DEAL
Combine Claimed to Be in
Interest of Economy.
BENEFIT TO LOCAL COMPANY
Merger with the Philadelphia and
Pennsylvania Companies Expected
to Put Chesapeake and Potomac
stock on n DiVideud-payinE Basis.
Indebtedness to BE Assumed.

The merger Of the Chesapeake and Po-
tomac Telephone Company with the lines
of Philadelphia and other Easten com-
panies was the subject Of much comment
yesterday in financial circles. The mer-
ger and its announced plans for re-
organization and capitalization We're con-
drmed by Charles J. Bell and othe-s
prominently connected with the local
company.
In the main the merger is interpreted
to mean a strong combination Of te!e-
phone interests In the hope Of inducing
economy in the larger management, and
of working out some plan for the fnan-
cial relief. especially of the Chesapeake
and Potomac Company.
According to the official announcement
of the company, the corporations 10 be
included in the merger are: The Bell
Telephone Company Of Philadelphia, the
Pennsylvania Telephone Company, and
the Chesapeake and Potomac Telephone
Company, all licensees Of the American
Bell Telephone Company, now occupying
and operating. directly or through con-
trolled companies, contiguous territory in
Southern New Jersey. Eastern Pennsyl-
vauia, Delaware, Maryland, the District
Of Columbia, Northern Virginia, and
West Virginia.
These companies operate over 100000
telephones, and are in no sense compeu-
tors. as they do not operate anywhere
lines The object
Of the consolidation is stated 10 be 20
secure greater economy and efficiency In
administration and operation. and greater
facility I'm financing future extensions
and enlargements. The issued capital OF
the combined companies upon completion
OF the transaction. II is said, wIl be less
than the aggregate capital stock and
floating debt Of the present companies.
According % the plan OF the merger,
the shareholders of the Philadelphia COM
pany and OF the Pennsylvania company
respectively. viii receive anssquai amount
OF new stock for old stock surrendered.
The dividend rate in each of these com
paules is 6 per cent. The shareholders Of
the Chesapeake and Potomac Company
viii receive two shares of new stock for
each three shares of old stock sUTren-
dered.
Capital stock sec, 100000.
The authorized capital stock OF the new
company VIII be S590l0O00- This viii re-
tire tEe old stock, discharge the floating
Indebtedness Of all the companies, and
provide for several years growth. The
directors Of the several companies have
approved the plan, and a sufficient num-
Der OF stockholders have indorsed IL 10
assure its formal ratification.
II is understood 10 be the intention Of
the directors Of the new company 90 refer
the question Of merger. and an subsidiary
questions relative 10 the issue Of stock
the election of permanent directors, and
other details of complete organization 20
the stockholders. When such reference
viii be made IS not stated IN the an
uOuuCemeut Of the merger.
For some time past there have been
rUm0rs Of some deal In the local tclc-
phone company. whereby it would better
itself for tho vast outlay made IN placing
its wires under ground and the improve
meuts made necessary in the way OF new
exchanges and the enlargement OF the
service In Washington and Baltimore.
For the past five years the stockholders
Of the Washington end Of the Chesapeake
and Potomac company have received no
dividends upon their holdings. Some Of
them who studied the announcement of
the company, yesterday expressed salts
faction with the plan They figure 1t out
that by the end Of the first quarter of 1905
they viii be receiving 6 per cent upon
their stock of the new issue. which, aC-
cOrding 10 the terms Of the merger, VIII
be equivalent to about per cent upon
their present holdings.
II was not possible yesterday 20 ascer-
tain much as 20 the details OF the merger
The American Bell Telephone Company,
1t Is said. owns the control OF the local
company. with offices in Philadelphia, and
Is in possession to dominate its affairs in
the plan of the merger. The effect viii
be that the Indebtedness Of the local
company viii be assumed by the new
company and pooled with its general La
buities. The new issue Of stock viii
cover this and the Indebtedness Of the
other companies. and all will be placed
on a new basis of capitalization. What
the effect upon the telephone service viii
be remains TO be seen.
Assets and capitalization.
According TO the official announcements
Of the several companies 10 the merger
the assets and capitalization are as fol-
lows:
The capital stock OF the Chesapeake and
Potomac Company is S265Q,e)0. The par
value Of the stock is 500 The company
controls the telephone territory Of the
District of Columbia and Maryland. and
owns a telephone service extending 10
Martiusburg and Piedmont. W. Va. The
company has an issue of bonds Of Sl.J00
900 AT D per cent due in 1929. They are
subject to the call OF the company at 100
and interest after July I. 1909.
The Bell Telephone Company, Of Phil
adelpi1ia. has an authorized capital stock
Of $30.060.000 and stock outstanding
amounting to S24,g3l.O50. The par value
of the stock Is $50 and the company pays
an annual 6 per cent dividend, payable
quarterly The pennsylvania Telephone
Company controls the telephone district
throughout a large part of the States Of
Pennsylvania and New Jersey. 1t has an
authorized capital stock of 6.000000 and
outstanding stock amounting TO s.. so 000
with a par value Of $50 a share. It pays
a 6 per cent dividend annually.
ARMY AND NAVY NEWS.