Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1916-02-25
NEWS OF STEELTON
SCHWAB'S PLANS FOR p. S. co.
INVOLVES HUGE EXPENDITURES
wiz Issue Bonds Secured by Mortgages Properties For
Improvements; Millions Already Spent; Graces Rapid Rise

How Charles NJ. Schwab really paid
SSl.90O,O00 for the control of the
Pennsylvania Steel Company; how he
made reservations for the issuance of
mortgage bonds to retire Indebtedness
OF the company and TO pay for pro-
posed improvements: his plans for in
creasing export trade; just what Mr..
Schwab intends to do with his pur-
chases, and other facts which hitherto
have only been supposed are told in a
story relating the inside facts concern
ing the Bethlehem purchase of Penn
sylvania Steel in the current issue of
the Iron Age.
In full the article follows:
Following closely the Midvale ac-
quisition of the Cambria Steel Com
pany and ending the seemingly in
terminable discussion concerning stock
holdings in the Pennsylvania Steel
Company and its ultimate status came
a formal announcement on February
/ that the latter company had passed
to the Bethlehem Steel Corporation.
After meeting of the Bethlehem Steel
Corporation on that day. at which T..
G. Grace, president of the Bethlehem
Steel Company. was elected president
OF the corporation to succeed Charles
NJ Schwab. who had been both presi-
dent and chairman of the board, the
following statement concerning the
Pennsylvania Steel Company purchase
was made:
Schwabs Statement
The purchase price aggregates APP
proNimately S31. 100000. which is at
the rate of par on the preferred and
about S21 per share on the common
stock of the PENNSYLVANIA Steel Com
pany. This amount is to be paid in
. per cent. 20-year purchase money
bonds of the Bethlehem Steel Cor
poration, secured by mortgage upon
the purchased property, with the
reservation of bonds to retire under
lying issues and to provide for im-
provCments and additions.
This acquisition is the outcome
of the determination reached by the
Bethlehem Steel Corporation some
time ago to add to its output bessemer
steel products and other general steel
I lines, such as bridges, frogs and
swift itChes, sirder rails. rail fittings, etc.
For number of reasons it seems
| that il would he better to accomplish
these endorsements by acquiring the
! plant of the Pennsylvania Steel Com
! pany rather than to await the erection
| Of additional plants at Bethlehem. The
| Pennsylvania Steel Company plants
admirably supplement those at Beth
! lehem.
THE Sparrows Point plant gives to
Bethlehem a plant at the Seaboard
which it has long desired for the de-
| Velopment of its export trade. The
! purchase also brings favorable ore
| properties both in this country and
! cuba and also important coal deposits.
| The purchase price named above
! approXimately $4,000, 0,000-represent
/ S1O0 a share for the $50, 0,5S7.500 OF
| preferred stock of the Pennsylvania
/ Steel Company. slightly under S27 a
share for the Sl0,750,000 of common
stock and SS,500,000 to take up in
| dehtedness of the Pennsylvania Steel
/ Company to the Pennsylvania Rail
/ raoad Company existing in the form of
! collateral trust bonds, and represent
/ ing loans made for new construction
! work in recent years The Pennsyl-
| Vania Railroad and Reading Railway
! holdings in Pennsylvania Steel are paid
| for in the > per cent purchase money
| bonds referred to in the above state
ment. other shareholders. including
| W. II. Donner who had 3S per cent,
/ will be paid in cash. In the neGo-
/ tiations of five months ago. in which
| both the Bethlehem Steel Company,
| on the one hand, and W. II. Donner
I figured in turn as a possible purchaser
/ of PENNSYLVANIA Railroad and Reading
| Railway holdings in the steel COM
pany, the Bethlehem interests made il
plain that there was limit TO what
| they would pay to acquire the Penn
/ sylvania Steel COMPANY. The fact that
! the latter and its subsidiaries were
| quite heavily in debt for their Cuban
ore properties and for the improve
ments of recent years at Sparrows
Point and Steelton made it obvious
! that whoever acquired the Pennsyl-
vania Steel Company must reckon OF
providing an additional basis OF credit
for any further expenditures the prop
critics might require. This strong
! company like the Bethlehem Stee
Corporation was able to do.
Until the consummation of all The