Omaha daily bee., 1914-06-21
PLAN TO REORGANIZE ROAD
Tentative Agreement Reached in
Regard to Rock Island System.
HOLDERS GIVEN PROTECTION
scheme COntemplRtes Elimination of
Both Holding Companies and Re-
turn 20 the Old C. n. I. q p.
Railway Company.

Committees representing the collateral
trust bonds of the Chicago. Rock Island
Pacific Railroad company and the
committee representing the stockholders
Of the Rock Island company have
reached a tentative agreement for the
| Reorganization of the Rock Island sys-
tenn
The plan contemplates tho elimination
Of both holding companies. return to
the old Chicago, Rock Island & Pacific
Railway company. and the creation Of
non-cumulative per cent preferred
stock Of the railway company. This pre-
ferred stock is to be sold for cash with
part of the existing common stock Of the
railway company.
Both bondholders and stockholders are
protected under the plan, it is stated, and
$50 100000 new money will be obtained.
this money being deemed necessary to
finance the road for the next three years.
The limitations on the mortgage pow
ers of the railway prevented the creation
OF a new mortgage for the purpose OF
raising the $50. 100000 required to finance
the road, it is explained. The plan con-
! templates, therefore, the creation OF the
non-cumulative 7 per cent preferred stock
of the railway company.
| The trust indenture securing the coll
lateral bonds now in default is to be
foreclosed and the pledged common stock
OF the railway company purchased. ac.
cording to the contemplated plan.
| out OF this common stock, collateral
trust bond holders are to retain at par
62h per cent of the face value of their
bonds and the remainder of such COM
mon stock is to be offered for subscrip-
ton with. the preferred stock The bond
holders thus retain 62h per cent of the
stock deposited as collateral for their
present bonds and part only with so
much as is necessary to raise the funds
required to add values to the stock re-
talned
In addition the collateral trust bond
holders are to have the privilege to sub
scribe In cash for an amount equal to Ia
per cent of the face amount of their bonds
in preferred stock and IA per cent of the
face amount of their bonds in existing
common stock of the railway company
The announcement of the plan is:
The stockholders of the Rock Island
company will be recognized through
rights Of subscription on the following
terms:
L
| ing is per cent par value of their stock
in cash. 10 per cent of such par value In
new preferred stock and IA per cent OF
such par value in the existing common
stock OF the railway company.
ITO the holders of common stock, pay.
ing a percent of the par value of theii
stock in cash, 10 per cent of such PAL
value in new preferred stock and 1O& pei
cent OF such par value In the existing
common stock of the railway company.
THE collateral trust bondholders are
also to have the preferential right to sub.
scribe for and receive the preferred and
common stock so offered for subscription
TO bondholders and stockholders and not
taken by them, upon the average terms
so offered to bondholders and stockholders
| provided such subscription right shall be
limited so that the common stock thereby
acquired the disaster with all other com.
mon stock acquired by such bondholder
upon the plan, either through subscription
or allotment, shall not at par value exceed
the face amount of his deposited bonds. -
| The statement of the contemplated
! plan emphasizes that by the elimination
OF the holding companies about $751;.
| O00, 600 par value Of securities are elimi.
mated, but all the equities in these
securities are retained for their holders
under the plan, and S30,0OOO 900 Of new
money is obtained by issue of new
preferred stock for cash"