Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1916-04-03
PRECEDENT IN ISSUING
STOCK DIVIDEND

The Public Utilities Commission in q
decision rendered Saturday has estab-
llshed precedent in authorizing an
electric lighting company to issue q
stock dividend in order to divide it's
accumulated surplus The case at is
sue was that of the Mars Hill and
Blame Electric Light and Water Com
pany and the amount which the COM
mission authorized the company to di-
Vlde is less than the amount of the
surplus which it has gradually created
from earnings by operating up to this
time without the payment of any diyi-
oends or any salaries to officers. This
decision is one Of the most important
made by the public utilities commission
IN this state since it's creation a wear
and half ago.
The decision of the commission is in
part as follows:
Ihe Mars Hill and Blaine Electric
Light q Water Company of Mars Hill
is corporation organized under the
general laws OF this state and engaged
IN the operation Of an electric plant
Its total authorized capital stock. all
common, is $4,000 of which $1,000 has
been issued and is now outstanding. IT
Is now desired to issue the balance. S.
100 and to divide the same among the
present stockholders as a stock divi-
dend. The corporation was organized
August 10, 1904, and entered upon the
construction of it's plant shortly after
that Tune. Its balance sheet February
l. 1916, showed surplus Of $13,7S9.66
THE stockholders paid par for the
stock which has been issued The plant
was constructed very largely on bor-
rowed money. The testimony at the
hearing showed that the assets are
listed at actual cost as nearly as the
same could be arrived at.
The rates have at all times been
reasonable compared with those charg-
ed by such utilities in other communi-
ties. and no complaints have reached
the commission, none exist so far as
the commission has learned The sue
cess OF the company in building up a
surplus of such comparative proper
tons appears to be explained by the
fact that 1t did a profitable business
from the start and has never paid any
dividends to stockholders or salaries
to officers.
III" WloIlCS IL ulSlue These earn
lngs In the form Of a stock dividend
to the face value Of its original author.
lied capitalization. We can see no OBJ
lection to this so far as the public il
concerned. 1t will not mean the with.
drawal of any assets from the corpora
ton; and the stock will still represent
In money actually in the plant more
than Its par value, SO that possible pur.
chasers need not be deceived. 1t will
| not be 'watered stock
III neither the public nor the securit,
holders will suffer in any way from
the contemplated action, whether i
will be OF any real benefit to the stock.
holders Is question with which the,
alone are concerned. 1t is, however
probable that there will be some sub.
stantial advantage in case Of future ex.
tensions requiring additional capital
because new stock can be sold a,
nearer par without injustice to presen,
stock holders. and would thus be NOR,
attractive to the less experienced in.
| weston. That such contingency is MOI
unlikely is shown by recent action OF
the stockholders in voting to increas.
the authorized capital to $4,000 to b
sold as funds may be required for the
extension and improvement Of its lines.
There appears then to be no reason
why the prayer Of the petitioner should
not be granted IL there is legal au.
thority for it. This question is here
presented for the first time. and has
received careful consideration.
Section SO Of the public utilities &C,
provides for the issue Of stocks, bonds
which may be secured by MORTGAGES Of