New-York tribune., 1908-01-12
STEEL FOUNDRIES' PL4N.
REORGANIZATION Proposed to Protest.
inc Minority Stockholders.

The directors of the American steer fouil-
dries Company have met the protests of the
minority stockholders against the passing OF all
the dividends of the concern in order to provide
additional surplus for carrying on the business
of the company with proposition for reorgan-
ization. which includes the cancellation of all
the outstanding stock Of the company, common
and preferred. and the issuance in place Of the
present stock of $17,184,0O0 in shares of 500
each. all to be of one kind and class
The directors believe that the smaller
amount of stock dividends can be continuously
earned and distributed to the stockholders at
the same time that the ordinary demands of
the business of the company are met. The
present stock of the company consists of $17,-
216.000 per cent cumulative preferred stock
and S15S10,00O Of common stock, on which no
dividends have ever been paid.
Dividends were declared on the preferred stock
until 1891 when their payment caused a deficit
of several thousand dollars. In the following
wear a deficit of $500 600 shown before the
payment Of the dividends, and consequently
they were not declared. Notwithstanding the fact
that since that time there has been gradual
increase in the earnings of the company until
in 1907 they amounted to $2,S93,6f2, the divi-
dends have still been deferred.
This led to a protest on the part of the mi
nority stockholders who discovered that when
the new management. under which the pros
pe1ity OF the corporation began, elected an
agreement had been made by which President
w Y. Kelley and Robert P. Lamont. W. w.
Butler and George f. Mott, Yce-presidents.
Were to receive bonuses according to the amount
earned yearly and that these bonuses amounted
to SO f-3 per cent of the earnings of the cor
porat.on in case they were more than $2,0OO.OO0.
notwithstanding the protest the stockholders
were not able to bring about the payment Of the
,yl. riro ,1-bjP hold
in October President Kelley said that although
the earnings of the corporation We're good it
frequently had to borrow money, and the future
demands of the business called for the creation
of large surplus. The majority Of the stock
holders favored the creation Of this surplus by
the use of the money that would otherwise have
gone for dividends.
Recently the directors have sent a letter TO
the stockholders proposing a plan under which
il will be possible to pay dividends. The plan
calls for the surrender of all the preferred and
common stock and all rights to accumulated
dividends such stock, for which the stock |
holders are receive II per cent of the pro- |
posed issue namely $13,231 $50, which is at |
the rate of $77 par value of the proposed stock |
for each 500 par value Of the present preferred
stock: debenture bonds dated February !. 1908, |
10 the amount of $40 par value for every 800 !
par value of preferred stock, payable as Il |
principal fifteen years from date and bearing |
interest at per cent. and amount in cash !
equal 10 So for each 500 par value Of preferred |
stock
TO the holders of the common stock the com !
pany proposes to issue in consideration of its |
retirement % per cent of the proposed stock, |
which is equivalent to $3,952,320 the rate |
of So par value for each 500 par value of tie |
present issue OF common stock The $4,000 |
preferred stock and the $72O common stock |
possessed by the company viii not participate |
in the arrangement
For equities in the reduced stock of less than |
one share of 800 par value there will be is |
sued stock scrip which will be entitled to |
share in any dividends but which may be ex- |
changed for stock in amounts of 500 or multi |
pies thereof. The proposed debentures will be |
"a direct obligation Of the company payable to |
bearer, and will contain d stipulation that not |
less than 10 per of the entire issue will |
be paid and cancelled each year, beginning Feb |
ruary l, 1918. They will also provide that any |
or all of the companys accumulated earnings |
may be used 10 retire them at any time For |
debenture equities of less than $lOO there will |
be issued debenture scrip redeemable in de- |
bentures. /
In order that the plan may be considered by |
the stockholders a special meeting has been
called to take place in Jersey City on February
8. All the transfer books for both the common
and preferred stock will be closed January
% In support Of the plan a committee Of the
directors says:
In the opinion many stockholders, the cumu-
ative feature OF the present stock of the company
5 not only value to the holders. intrinSicallY,
out rather. by reason of the failure of the COM
Dany pay dividends for ii term of years and Il |
constantly increasing accumulation OF such diVi-
lends has been detrment and injury the
narket value thereof. Up to August l. 1897, there
nave been accumulated and unpaid, upon the |
standing preferred stock Of the company dividends |
amounting to approximately $3,44000O, equal To 20
per cent of the par Value. Under the proposed |
plan here submitted these accommodations Will be |
and any possible recurrence of such |
,ccumula tiOns avoided.
The common stockholders will be entitled to |
share in any future distribution of earnings in pro-
portion 20 their holdings OF stock in the reduced |
ssue, and will also have pToportionate interest |
n the and property of the company with |
he preferred stockholders instead of only an |
guilty over and above the par value of the pre-
cfn As hnrntnfnra