The Birmingham age-herald., 1912-06-23
STATEMENT ISSUED BY H. s. MATTHEWS.
Receivership of Company Is
 Only Temporary
BASIS OF THE TROUBLE
Reports of Experts Recommend $2,500,0 900 Additional Capital Be Provided in Reorganization
 Plan for Improvements

H. & Matthews. one of the receivers for tlfe Alabama Consolidated Coal and Iron company. issued a statement last night declaring that the receivership of the company was only temporary and that the step was taken to pro- tect all interests until reorganization is completed. Mir. Matthews states that after the merger of the Alabama Con- solidated and the Southern Iron and Steel company was about to be aban- doned lack of internal cooperation in financial matters brought on the pres ent difficulties. Ills formal statement as issued last night Is as follows.
 "The affairs of the company had reach ed point which made 1t advisable to have the company temporarily put into the hands of receivers in order to fa- oilitate the carrying out of plans now under way for the reorganization and refinancing of the company
 The properties of the Alabama com pany have recently been examined by experts representing large interests in | tho east. These reports recommend that s2,500,000 of additional capital be pro vided in the reorganization plan for
 the purpose of making Improvements and extending the present operations.
 The carrying out of this plan involves
 the improvement of present plants. the construction of additional ones, large 1 " increasing the producing capacity, improving the products and reducing the costs in all cases and particularly the pig iron costs.
 Coal and Ore Lands
 "The company owns several large bodies of coal and ore land, which at present have no operations upon them, and which can. at a comparatively small Initial cost for the opening of mines, be made to pay a very handsome profit on the amount of money necessary to make the Improvements. thus very ma terial1y adding to the earning capacity of the company
 The company owns four modern blast furnaces and the opening of ad- ditional mines will make 1t possible to operate all of these furnaces, If de- sired, which has been impractical here tofore. Also a battery of bi-product ovens Is contemplated to supply the furnaces with cheaper and more uni- loFfn cOke.
 "on account of the contemplated mer- ger of the Alabama Consolidated and the Southern Iron and Steel company no plans had been undertaken for re- financing the Alabama company and the lack of internal cooperation in fnan- cial matters after the merger was about
 to be abandoned brought on the present difficulties. f
 Basis of Trouble
 "The basis of the trouble Is said to date back 10 1904. when the then di- rcctors and large preferred stockhold- CTS exchanged s1.250,000 of preferred stock for an equal amount of bonds The legality of these bonds is seri- ously questioned and Is yet to be fought out in the courts, suit having been brought against Baltimore inter ests for an accounting and the restitu- ton to the treasury of the Alabama company of s1,250,ooo in bonds illegal ly issued. together with the interest and sinking fund paid thereon since July, 1904.
 This exchange weakened the com pany's credit to the extent of $1,250,- COG and created a fixed charge against the company of $62,500, representing per cent interest on the bonds, and an additional amount of $12,500, repre- senting 1 per cent sinking fund, or "a total fixed charge of $75,000 per annum. and placed upon the property S1.250,000 of bonds taking preference over unse- cured creditors, which action has been declared by the attorney general of tue state of New Jersey to be ultra wires.
 "The suit also asks that the per cent dividends paid on the preferred stock. from its organization up to and including the year 1904 be refunded to the treasury of the company for the reason that the earnings of, the com arany were insufficient to pay these div 'idends, making 1t necessary on several occasions to borrow money to pay them"