The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-02-01
PLAN TO REORGANIZE
ROCK ISLAND LINES
Leading Interests Would End
Holding Companies and
Restore Old Concern.
PROBLEM Is A HARD ONE
Conservation Of Earnings Ex.
pcctcd to Restore Strength
Of the Property.

Plans for the reorganization OF the
ROCK Island system are being matured
with the purpose OF eliminating the two
holding companies and restoring tho
property TO the original company In the
form OF single organization. The lead
Ing interests in the system have agreed
that reorganization along these lines IL
necessary. but the problem Is 80 intricate
that discussion thus far has not passed
beyond consideration Of possibilities.
The matter Is one OF such extreme
difficulty because OF the obstacles In the
charters and indenturcs OF tho compa.
MES that the only alternative TO n
friendly recc.vciship that has 80 far
suggested Itself is consent by all security
holders TO reorganization outside or
court
Tho leading interests in tho company
az the Phelps Dodge. Reid Moor. groups
and Speyer g. Co. There arc two r,aaors
why the leaders OF the system desire a
rcatt..nserert OF It's affairs.
Elimination or the holding companies
has for several years been recognized
as highly desirable II the new measure
against holding companies proposed by
the Administration becomes law the
holding companies must 20.
or equal Importance In the opinion
or tho leading interests to the rearrangc-
ment Of organization to meet the new
view OF simplicity OF corporation founda.
ton is tho need TO conserve the earn
ings OF the property.
1t Is recognized as fundamentally i'm
portant that earnings be put back into
the property instead OF being spent In
dividends and interest. This would re-
quire n scaling down of present capital
ization OF the combined companies in tho
Ua ~ yaI xs.itl hat s,,si NJ arv
debenture or other conditional obligation
for some of the present direct obliSa-
tons OF the system.
No plan OF change has been decided
upon. hut the matter has been in tn.
hands of attorneys for several months
II is hoped by those most interested that
/ a rcceiNership. even of a friendly nature.
will not have 20 be resorted 20, an
every effort Will be made III this dire, .
tion.
The key security In the system is thu
| issue of 5l.353.5OO collateral trust ~
OF the Chicago Rock Island and Pacific
Railroad. through which control OF the
property OF the system. namely the Chi
| cago Rock Island and Pacific Railway
Company. is held, by virtue of the de-
post OF s7I.3j3.J0o out Of the $74.S77,-
600 stock OF the fundamental property as
security behind the bonds. No reorganiza
ton of the property is possible without
provision for this issue to the full degree
OF It's present security.
One OF the chief obstacles n the way
| OF a reorganization by mutual agreement
is that the key company, tho railway com
pany. Is unable by the terms OF the
railroad collateral trust bond issue to In
crease It's capital stock. This permits
little opportunity for meeting the re
quirements OF Tn" security holders OF IN"
two other companies In a reorganization.
All Rock island securities have heel
weak for a lnnp period hy reason ~
the changes that it ~ known are 10 be
made In the system.
II Is estimated that through = r.ufsani.
zatIon nearly $4,000, 900 year would ns
saved 20 the system.