The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1915-05-12
More Cash Required
For Practical ReOr-
ganiZatiOn Plan
BONDHOLDERS
MUST SACRIFICE
Necessary To Wipe Out
$25,000,000 To Put
Road on Feet

III the Pere Marquette railroad Is
to be recognized the work must
be done on a basis OF s5O,000,OO0 as
a maximum capitalization.
To do this the five groups OF
bondholders must sacrifice approx
mately $25.000,OO0 and possibly
more of their claims.
In addition TO this approximately
100000 OF new money to meet
receivers obligations. back interest
on underlying bonds, defaulted
equipment. obligations and neces-
sary additions and betterments,
must be obtained.
Estimated earnings OF the system
for next year are $2,5o0.000. or Ave
per cent on a maximum capitaliza-
ton of s50,000.000. bearing a fixed
interest charge. This makes neces-
sary the $50,000.00O basis of reor-
ganization mentioned.
The sacrifice OF approximately
s25.000,000 by the bondholders is
made necessary by the fact that
there are now outstanding among
five groups approximately s73,000,-
900 worth OF interest-bearing securl-
ties. TO say nothing OF receivers
certificates notes and creditors bills
approximating ,13, 500 900, which will
be taken care OF by the new cap.
ital.
The five groups OF bondholders
and their approximate holdings in
round numbers are as follows
Underlying bondhoIders or per.
sons holding bonds on the constitu-
ent lines OF the company which were
issued prior 10 consolidation into
the present system. hold paper OF
face value OF s32,000,000.
2-Consolidated mortgage bond
holders or persons holding first
mortgage bonds issued after the or
ganization OF the system as II now
exists, have holdings approximating
$S,000,0Cg
S-Refunding mortgage bondhcId'
ers, whose paper represents a sec.
ond mortgage on the system after
consolidation lin reality q third
mortgage on the system as a whole)
have slO,0O0.00O tied up.
4-Improyement and refunding
mortgage bondholders who accept.
ed paper TO q face value OF &c.
100000 as collateral for trust note
of 100000 have an equity figured
at 100000
5-Debenture holders, mostly
stockholders, who accepted bonds
without security when Receiver Cot
ter estimated that s5,OO0,O00 would
enable him to place the road in a
solvent condition. have an equity OF
$4,000 900.
There is, at present. approximate
ly s2S,o00,0O0 of outstanding Perc
Marquette stock. To effect the re-
organization on the 100000 maxi
mum basis, according TO plans out
lined in a meeting Of consolidated
mortgage bondholders held in New
York recently, IL will be necessary
for the bondholders to get together,
reduce their interest bearing claims
10 $50,000,000 by mutual conces-
sions and accept stock in lieu there
OF. Earnings OF the road, 1t is esti-
mated with a good show Of reason,
will increase and eventually serve
TO retire these bonds, when the
stock will begin to earn dividends.
That the s50,000,000 capitalization
basis is the only workable maximum
Is shown by the fact that present
earning capacity OF the road is 81
100000 net annually. or a sum cap
able of meeting FIVE per cent inter
est charges on $40,000,000.
II was the general opinion, in the
meeting of consolidated mortgage
bondholders. that, in view of pres
ent conditions, the road must be re-
organized at once as, at the close Of
the European war, there will be so
many problems in the financial
world that the Pere Marquette will,
in all probability. be lost in the
shuttle.