Norwich bulletin. [volume] (Norwich, Conn.) 1895-2011, 1909-09-03
ReorganizationofN orWich& Westerly
Bondholders and Creditors Agreed Upon Plan which
will Soon be Submitted Basis of Capitalization Too
Great to Pay Interest from Small Earnings will
be Protected. .s4kS4e

Having understood that the Norwich
and Westerly electric road would be
unable to meet the interest on its bond
issue, there has been under way for
some time a plan for reorganization
whereby the flxed charges can be cut
down and the securities so arranged
that they can be taken care of. The
expensive road which was built one of
the best in the state, with an equip
ment to compare with 1t throughout,
made the basis OF capitalization of the
company so great that it was impossi-
bic to pay the interest on the bonds
and at the time when the interest be-
came due it became necessary to de-
fault the payment. There have been
predictions along this line and there
have been many rumors of change in
control of the road for many months,
new Boston capital being recently Sc
cured and change of officials made.
but the earnings never from the start
came up to what had been expected
and 1t has been realized for some time
that reorganization was the only
thing to be done and with that in mind
an effort has been going on to bring it
about and the defaulting on the bond
interest brought it to light
It was stated on Thursday by one
who is connected with the road that
more than two-thirds of the bondhold-
ers and three -fourths of the creditors
who have been seen have agreed to
plans for reorganization, and there now
remains the task of seeing the remain=
der of the bondholders and creditors
before the reorganization is put into
effect. There will be no foreclosure,
it is believed. The larger interests
having agreed upon a plan, it is not
thought 1t will take a reasonable man
long to make up his mind that a re-
organization is the thing. The local
holdings of the road are small none
of the banks being interested, although
there is about $4,000 Indebtedness and
some of the preferred stock. The road
while suffering from small earnings
also suffered from bad accidents and
heavy losses from suits.
In speaking of the reorganization of
the company, former Treasurer R. w.
Perkins, who is a director, stated on
Thursday that the property is owned
by the United Railways company of
New Jersey, which will probably be
the holding company in the reorgan-
tzation. In the reorganization, he said
that everyone, however interested,
would be looked out for The bond
holders will, Of course, come first, and
.the others must Of course come in
their turn The plan of the larger in
ted. No one will lose his claim in the
reorganization. The bondholders will
get part bonds and part something
else for their present holdings, or else
there may be two, classes of bonds. one
to be in the nature of preferred while
the other will receive its interest If
earned. This will allow the scaling
down of the fixed charges so that the
road can take care of them. This it is
believed will put the road on a sound
financial basis so that there will be
the proper return on the investment,
and no one will be crowded out. Addi-
tional benefit to this road it is believed
will be the Norwich. Colchester and
Hartford line, as the Norwich Wester-
ly road will be on the line from the
Capital to Watch Hill.
1t was stated Thursday that origin
ally about one-third of the total is
sue was held in New Haven. The
amount has been reduced by exchange
for Shore Line bonds so that at the
present time the holdings there are
about $4,000
c. E. Thompson, who sold the bonds
in New Haven, said Thursday he con-
sidered the security ample and that