New Britain herald., 1914-07-22
FEAR OF RISK ENDS ROCK ISLAND PLAN
s# Steps te Rtorganzs Railroad Sys-
 fem Proves Futile.

New York, July 22.-The plan of Ghe stockholders and bondholders' committees of the Rock Island for he reorganization of that system has fallen through. .t
 y According to statements given out u the offices of William A. Read &, G., who headed the stockholders committee, and at the Central Trust company whose president, James N. Wallace, headed the bondholders' . committee, the reason for the failure of the plan was that the stockholders protective committee deemed it in- l advisable to proceed with the plan for the wiping out of 357.000,OOO watered securities and the raising | of $30, 0,O00,0 ,0OO new funds by the issue of preferred stock in view of the fact that the prospects of dividend return on the new money to be invested were | not favora ble.
 The committee for the collateral trust four per cent. bonds in state- i1ieint yesterday expressed fear that the failure of the plan might result In a receivership, but members of the stockholders committee denied that tffe affairs of the railroad would take that turn.
 The failure of the plan, which had been favorably considered in the financial district caused Wall Street to take rather pessimistic view of the Rock Island situation.
 Statement of Committee.
 The statement given. out by the committee for the holders of the four per cent collateral trust bonds is as follows:
 The committee representing the hclders of collateral trust four per cent. bonds of the Chicago, Rock Is E. land and Pacific Railroad company, oe which James IN. Wallace is chair man. announces to the bondholders that the managers of the syndicate formed by the stockholders commit tee for underwriting the cash re- 5uirements of the proposed reorgan- ization have declined to proceed, first. because the earnings of the railway company for the fiscal year ending June 80, 1915, as estimated by the accounting officers of the railway company under the rules for account ing prescribed by the Interstate Com- merce commission, did not make sufficiently satisfactory showing as to dividends upon the proposed issue of preferred stock, and, second, adjust naents must be made in the capital or properties account of the railway company which would largely de- crease or possibly entirely wipe out the surplus shown on the books of Ane railway company.
 c,"F'ailure to underwrite the plan necessarily causes it's abandonment and termination of the agreement reached between the Wallace com tnittee and the stockholders commit tee.
 ..The period of grace in the trust agreement securing the collateral trust bonds will expire on August 1. Foreclosure proceedings thereunder should be instituted immediately thereafter. Concert of action by the holders of collateral trust bonds is essential if the properties are to be " preserved. Rather than to return the deposited bonds to depositors and dissolve the committee the bondhold- CTS committee deems it wise to ask for an Immediate deposit of additional bonds.
 ssJ Outlines New Efforts.
 ssa"When sufficient bonds have been ( deposited and financial conditions Warrant, the committee will prepare AHQ SuUIIlll pldil Ol tiOI based upon the principle of giving the collateral trust bondholders the opportunity, or imposing upon them the necessity of themselves providing the money required,
 .'If by September 15 next sufficient bonds are not deposited to justify the committee in continuing it's ef- forts. for reorganization the commit tee will dissolve and the bonds de- posted may be withdrawn pursuant to the terms of the deposit agree fnent dated February 26 last The committee points out that failure by the collateral trust bondholders to unite may easily result in the ultimate receivership of the railway company and the possible total extinction of @ the stock under sale in proceedings instituted by the holders of obliea- tions of the railway company
 The stockholders protective com mittee made the following statement announcing the dissolution of the underwriting syndicate for the s30,- 100000 new preferred stock:
 .sl.A tentative plan for the reorgan- izatioh of the Chicago, Rock Island and Pacific Railway company was adopted by the bondholders' and stockholders protective committees on June 19, 1914.
 Syndicate Dissolved.
 -;."The plan contemplated that abou SSOO0O, 900 should be raised by sub scriptioR by the collateral trust bond holders of the railroad company anc by the preferred and common stock holders of the Rock Island compan, to a proposed per cent. non-cumu latiye preferred stock of the railway company, 9
 ss.sAt the request of the committee revised balance sheet and estimate O earnings has been prepared by tn,