The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1909-01-31
Purchase of Stanislaus Com
pany by United Railroads
May Reach Court
Bond Holders Oppose Sale That
Promises to Be Made
Ultimately
Low Price of Electricity TO Cal
houn Corporation Is One
Objection

OUtSNbiUH
So determined has become the oppo-
sition to the plan of sale by which
the United railways investment COM
pany proposes to take over the Stanis-
laus power company that the predic-
ton was freely made yesterday that
courts. The contamination of the
transaction was set for February 1, but
as the time falls due tomorrow and
the arrangements have not been COM
pIeted, postponement is expected.
While the interests which are pro-
testing against the proposed agreement
feel that it will ultimately go through,
they will nevertheless protect their
holdings by every means known to the
law. The first protest was made by
the banking firm of E. H. Rollins &
Sons and from that house has now
posa1 consists of substitute agree
ment under the terms of which it is
believed that the share owners and
bond holders will receive adequate COM
pensation for their property. This
contract was prepared by Rollins q
Sons in Boston and offered TO the spe-
ciaI eprotective committee through
which the deal is being arranged. Its
contents have not been made public,
but it is understood that it elimi-
mates the objectionable features of the
original plan.
PART PAYMENT IN STOCK
Under the original plan. against
which the protest is directed, the
United Railroads will secure control
of the power company by making pay
ment partly in it's own stock. The
special feature against which the COM
plant is made is the clause which calls
upon the holders of the 100000 of
first mortgage bonds to surrender their
securities and to accept in exchange 40
5 per cent second mortgage bonds
nonforecloseable for five years from
July /, 1909. a further objection has
been raised against the low price at
which the Stanislaus company binds
itself to deliver power to the Calhoun
corporation.
The holders OF the first mortgage
bonds can not be compelled to take
is where the trouble is threatened. a
peculiar clause in the agreement pro-
vides that the consent of every share
and bond holder of the Stanislaus COM
pany to the plan OF sale is taken for
granted and only those will be counted
in the opposition who make formal
protest 1t will require a majority of
the bond and share owners to carry
the agreement into effect, but many
who failed to look into the matter
carefully made no formal objection,
and their silence was taken as a vote
of assent. 1t will not be known until
tomorrow just what percentage has
acquiesced in the scheme. but it is gen
orally believed that under the ruling
that silence gives consent the pro-
ponents of the plan will be able to
show majority.
NAY co INTO COURTS
If the majority ratifies the sale, as
now seems assured, the minority bond
holders will be placed in a peculiar
position. Under the statutes they can
not be forced to give up their hold /
ings for the second mortgage bonds |
In order to force them out, it may be
necessary to institute foreclosure pro-
ceedings This would carry the mat
ter into the courts.
As Rollins & Sons had placed bonds /
of the Stanislaus company to the
amount of 100000, they naturally de-
sired to protect their clients. ), As soon
as they heard Of the plan of sale they
addressed communications to their Gus
toners. advising them to refuse to con- 1
sent. At the same time they forwarded
a protest TO the protective committee
in Boston. This committee which is
made up of eastern bankers, replied to
the Rollins protest and criticised it
on the ground that it offered no sub |
stitutional plan. The Rollins company
has now answered by outlining an
agreement, which they believe would
protect all interests.
1t is true" said E.. N Pearson of
IG. III. Rollins & Sons yesterday. THAT
we have advised against the acceptance
of the plan of sale as proposed. We
did so because We did not believe that
1T was advantageous to the bond hold I
ers of the Stanislaus company. We
had handled 100000 worth of these
bonds and We're naturally disposed to
protect our clients, to whom we had
sold them. We received advices TO-
day from our Boston house that thev
had proposed substitutional agree
ment am not familiar with its !
terms, as our dispatches merely stated |
that copy would be sent us by mail. >
A number of local concerns and in
dividuals interested in the project have
joined with the Rollins company in I
protesting against the terms of the
deal.
MENET III RIFT NOT