New-York tribune., 1908-04-05
ERIE PROBLEM SOLVED
J. p. MORGAN TO RESCUE.
Road to Issue SO 900 900 Of Three
Year 6 Per Cent Secured Notes.

I ear & FER Cent OoCUr60 y OtcS-
The outlook for the Erie Railroad Company
took on decidedly brighter aspect yesterday
afternoon when it was announced at the office
of ]. P. Morgan 6, Co that the directors had
authorized an issue of s1500o,000 of three-year
s per cent secured notes. OF this amount
s5,500,000 will be used to take up the unsecured
short term notes which mature on Wednesday,
while $5.00o000 has been underwritten at par to
provide cash for the needs of the company The
remaining 81 100000 will be sold as needed, SUBJ
ject to the approval Of d committee of Erie d.
rectors Of which the members are Edward H
Hartman, George F. Baker and Charles Steele.
The firm Of ]. p. Morgan & Co. which has
undeESrfttpn the S5.O000G0 Of notes at par
without commission or cost TO the company
has made it a condition of the underwriting
agreement that ali of the $550o.ooo Of notes
which mature on "Wednesday shall be exchanged
par for par for the new secured per cent notes.
That the holders of the unsecured notes will be
perfectly willing to exchange them for the new
secured s per cent notes seems foregoue con-
clusion
George u. Perkins in commenting on the an
nounCement. said that the Erie directors had
the assurances of a large majority Of the holders
of the unsecured notes that the proposed eX-
change would be acceptable 10 them When
asked
company will receive from the sale of the notes
which have been undervritten would be used
70 settle other outstanding debts. Mr. Perkins
said that the company had no other obligations
70 meet at present Il has been generally sup
posed that the Erie had 4 floating debt of close
TO s5.00oo0o
Though the official announcement Of the plan
was not made until nearlyL$ O'Clock. the news
ked out in part about twenty minutes before
the close Of the stock market. The result was
a sharp rally in the market, with the Erie issues
leading the way, and closing with substantial
net gains Erie common sold up 70 los after
selling as low 1324. and closed at the top
price. net gain of Is points. The first pre-
ferred closed at 3212, up points. while the gee
ond preferred gained Ia points to 21l2- The
convertible \ bonds declined to 4614. against a
closing price of 90 when the last previous sale
was made on Thursday The general Is were
steady at 64 and 64lz. There were no sales Of
the notes which were quoted at 81 bid
The issue Of the new secured notes was
authorized by the Public Service Commission
for the ID District March 81, and at the same
time the company was authorized to issue its
general lien bonds not 70 exceed $9,45700o, and
bonds not to exceed 1900 0G0 under its Penn |
svlvanta collateral irdenture and pledge these
bonds as security for the notes.
The ARRANGEMENTS for refunding extending |
the Erie notes have been the all absorbing topic
of conversation in the financial district for the |
last week and the delay of the Erie directors in
announcing the plan gave rise 10 many IN |
founded r1mors as TO the Eries financial posi- |
ton. The frequent meetings of the directors |
and adiournnents without giving out any news |
have served to keep bankers and brokers in a |
highly nervous state, and the settlement of the
Erie question will be hailed with pleasure on all |
sides.
The official announcement As given out by
7 P Morgan & Co for the Erie Railroad Com
pany follows:
- Company for $55o0,0O0, Now Outstanding and
Maturing April s. 1908:
Ar "a meeting of the board of directors Of the
Erie Railroad Company. held this day. II was
g2ssd 70 an6n9T Of 600 10 be dated April
S, 1908. and 70 be payable on or before april ;.
cured hereinafter stated for the fcilo"ing
frstEs5 500 900 for exchange at par for all of
the above mentioned notes falling due April s.
second-Not less than $1,000 to be sold dat a.
par for cash as ne foT P66 f6TP0FaI@ eree 1
sale and purchase Of these notes al par havlns
been underwritten without commission or cost to
the COMPANY upon the express coEcitIon dand not
otherwise that all Of the & sa5d a6 sgs aTe
been exchanged. par for par, for these new Sc
-ThirdENot exceeding si,5ooo00 he reserved
for and for sale hereafter for corporate pur-
Commission: such reserved notes to ae issued for
such PURPOSES og as 6f aH Rare eae George
having power 10 add its number and TO MI Va
cancies
secured equally and ratably by the deposit and
pledge under a trust indenture Of securities 10
sf2 81 5eS 560 and Of sus additional securities as
with the aPpFoTal or ne e6 s@lG nder fb i
denture-