The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-06-20
$S57,OO0,OOO CUT
OUT OF ROCK ISLAND
Bond and Stock Holders Agree
to Squeeze Water From
Securities.
REBUkE TO HIGH FINANCE
Two Holding Companies of ID.
G. Reid and Associates
Eliminated.

Tho Rock Island lines are to be re.
organized on a plan that cuts away
1857 100000 of watered securities, ac.
cording to a tentative agreement announced
yesterday between the bondhoders' and
stockholders committees The accom-
plishment was regarded in Wall Street
yesterday as one of the most significant
events In recent years of railroad finan-
cling and the first staggering and complete
rebuke of the old methods OF gross over
capitalization and intricate holding COM
pany organization that have resulted dis
astrously for security holders.
The plan announced is drastic and
thoroughgoing In Its surgconlke direct
ness In cutting away the masses OF bur-
densome securities that threatened to
stransle the railroad lines. At the same
time 1t is regarded in Wall Street that
the plan as outlined is one OF the fairest
10 all classes OF securities involved that
could be reached and that would at the
same time cure the system of its ills.
Two Companies wiped out.
The chief points OF tho plan are the
~iping out OF the two holding companies,
the Rock Island Company aud the Chi
Cago. Rock Island and Pacific Railroad
mental railroad property, the Chicago.
Rock Island and Pacific Railway Com
pany: tho authorization of $4,000, 900
new per cent non-cumulative preferred
stock. of which $4,000, 900 IL to be
issued. but only for cash and at par. and
the retention OF the present s75,00O.00
railway company common stock
The collateral trust per cent. bond
holders OF the railroad company are to
receive 62R per cent Of their bond hold
ings In the underlying railway company
stock. and in addition are to have the
privilege of subscribing for cash for Is
per cent. OF their bond holdings in the
new preferred and II per cent in the
existing common stock.
These collateral trust per cent. bonds
the only outstanding debt OF the rail-
road company. the lower OF the two
stories OF holding companies which were
built upon the substructure OF tho original
railway company. were issued in cx-
change for the railway company stock
and arc secured by the deposit under the
collateral trust agreement of stock of
the railway company equal to the amount
OF the bonds outstanding
To Pay IL Per Cent. In Cash.
Stockholders OF the Rock Island COM
pany. the topmost story Of the structure
10 retain any interest in tho reorganized
company will have TO pay 10 per cent
OF their holdings in cash. the present pre-
ferred stock holders in the Rock Island
Company receiving in return 10 per cent.
,n the new preferred stock Of the railway
company and IL per cent. In the existing
common stock OF the railway company:
and the present common stock holders in
ths Rock Island Company receiving -
per cent. In the new preferred and i0i.
per cent. in the existing common stock of
the railway company.
a member OF one OF the reorganization
committees, In referring to the cutting
Away uf $4,000. 600 of securities. said
yesterday that tho plan was an entirely
jew method Of financing. that nothing
like " had ever been done before and that
tho reduction of the systems Capitaliza-
ton aud the placing Of the company on
clean basis of worth. dollar for dollar
was 80 thorouGhgong that even the
politicians could not object.
James y. Wallace, chairman Of the
bondholders' committee. and William
A. Read chairman of the stockholders
committee. announced tho plan yesterday
after a joint meeting Of the committees.
Negotiations have been In progress for
moro than two months. The plan Will he
submitted to the Illinois Public Service
Commission next week for approval. and
as soon thereafter as possible il will
be presented TO the security holders for
their approval,
When this II obtained IL is thought
thai tho Two committees viii no amaicas
mated into . smaller co,nmitt.c Which
will urorced vim tho dot,IIs md ox.c,,-
zion of The pl,n.
Tho s,,toucu, Of the ,n,,,,I,,oo. ga,
s,rdnv was ~ follnv,s, go
r..
wv
Tho COMMITTEES reprcscntlnp tho coI-
lateral trust bonds of Chicago Rock
island and Pacific Railroad COMPANY
aud the committc. representinv the
preferred and common stock of the
Roc, Island company. after confer
weeks. have reached II tentative
following is an ou,Iinc. ''N
II was. deemed ,,nr,iec IN co,,i,u.
the nrescnt holding communities or IN
reorganize throuyh a new boIdins
COMPANY ArrorJlnplv tho n,,n ai,m,s
mates both boIdipr cnp,nnnics u,,h :.
gross canIt,I Of about SAT- ooo non
and ia hnsed an tho common Yto.L
of the old ch,capo Rock I.Iana and
pacIn, Railway s,onnanv tn cash
requirements Of the railway comn.ny
80 ,ro,;,,ad Ia. ~. i,.,,o -. .,..si-..,