Norwich bulletin., 1909-08-17
CENTRAL NEW ENGLAND'S
APPLICATION DENIED
Decision of PubIis Service Commission
Regarding Financial Organization
Plan of New Haven Road.


Albany. n. Y, Aug. 15.-The public
service commission, second district,
has denied the application of the Cen
trail New England Railway company
for consent to execute a mortgage for
$40. 100000 upon it's property and fo-
AUTHORIZATION to issue bonds upon the
security thereof to the amount of $12,-
10000. The application submitted
was the financial organization plan of
the New York, New Haven and Hart
ford Railroad company for this prop
erty.
Central New England Railroad COM
pany has outstanding common stock
$4S00,0 600 preferred stock $3,750, 900,
total $S,550O00 OF this stock the New
York New Haven and Hartford Rail
road company owns common $4415,-
395.3S preferred S3,410, 1850, total. ST.
s25.771.SS. The New Haven company
by reason of such stock ownership
practically owns and controls the Gem
trail New England company. The Gem
trail New England company has out
standing funded and other indebted
ness the principal of which amounts
to 12.320.500. OF this indebtedness
the New Haven company holds $99,-
9S9 1929 and third parties 1881,
37671., Among such Indebtedness are
certain general mortgage income bonds
" St.-JU.UUU Vi MIllCU the
New Haven company owns Sf.329.125
and other parties $920,S76.71. These
bonds have been outstanding ten
years and no interest has ever been
paid thereon. Another issue of income
bonds for which the Central New Eng
land company is liable and which has
been outstanding since 1887 and upon
which no interest has ever been paid
amounts to SLIGO, 500 of which the
q I
and other parties $500. 1t Is pro-
posed to issue interest bearing bonds
bearing 4 per cent in the place of the
income bonds owned by the New Ha-
ven company except said company
proposed not to exchange about 81. 000,-
600 Of its income bonds for interest
bearing bonds at this time. Other
parties have no right under the pro-
posed mortgage to exchange their in
come bonds for interest bearing
bonds. Certain of the outstanding
bonds which applicant desires to re-
fund have paid interest coupons at
tached to them amounting to s409,-
1888. Interest on these coupons from
their due date is claimed to amount
to S131.377.54. All of these bonds and
attached coupons are owned by the
New Haven company and the applicant
asks authorization to issue it's interest
Unpaid coupons and the interest there
on to the amount of s534 660.37. The
proposed mortgage while ostensib!y
drawn to refund all the outstanding
indebtedness of the applicant is so
drawn that no bonds can be issued by
the trustee to refund outstanding
bonds unless such outstanding bonds
are presented by either the applicant
or the New Haven company. This
means the New Haven company only
in practical effect since it wholly con-
trolls the applicant. The amount OF
bonds owned by others which cannot
be refunded as of right issue 1881, =
376.71..
In making its decision the commits
sion in a detailed opinion written by
Chairman Stevens held:
THAT the applicant is not legally
indebted for the interest upon the I'M
paid coupons.
e.-1h-t no sufTi i-n' reason has
been shown why unpaid interest should
be made a capital obligation of the
applicant.
3,-That a refunded scheme which
embraces the securities held by only
one creditor and that creditor in con-
troll of the applicant through stock
ownership cannot be approved.
4.-That under all the circumstances
of the case the conversion of the in
come bonds held by the New Haven
company into fixed rate interest bear
ing bonds cannot be aoprved.
The last paragraph of the opinion
recites that the commission Is willing
to consider and approve any reason
able plan for the readjustment Of the
somewhat complicated financial situa-
ton of the applicant. but the one sub
mitted possesses features so peculiar
that approval cannot be extended
to it,