The sun., 1919-06-26
B. 80. DISPOSES OF
SS5,OOO,OOO BONDS
Company Suspends Dividends
on the Common, but Pays
on the Preferred.
TO CREATE EXPENSE FUND
Bankers Buy. New Securities,
Which VIII Be Offered
to Public.

The Baltimore and Ohio Railroad Com
pany which yesterday suspended divi-
dsnds, on its common stock. II was an
oounced last night. has sold to Kuhn,
Loeb & Co., Speyer q Co. and the Ma
uonal City Company S35.000.000 face
yalue ten year Q per cent secured gold
bonds, which will be offered at eeh and
accrued interest At that price the bonds
will yield about sh per cent. on the In
ysstment II held to maturity.
The financing takes care Of all matur-
ing funded obligations and repays tenn
porary loans incurred for capital expen-
atures The bonds are secured by Sc
900, 900 par value Reading Company first
preferred, S14,000,000 par value Reading
second preferred and s9,20o.00o par
value Reading common. The Reading
stocks have an estimated market value
Of S30,750,oo0. as well as $4,000, 900
principal amount of the company's gen.
sral and refunding mortgage per cent.
bonds, having an estimated market value
Of sl4,t50,000 A margin of security Of
at least So per cent Ii provided by the
trust indenture.
IN connection with the financing. the
temporary suspension Of dividends on
the common stock and the settlement Of
the Federal rental contract, Daniel will
lard, president OF the company, follow
ing q netting OF the board yesterday
stated that the company had reached an
agreement with the Government con-
corning compensation to be paid by the
Government for the Baltimore and Ohio
Railroad properties while under Federal
control and that a contract had been ex-
ecuted. .t-.. ...- .,r..,..
Company's Income Statement.
Tho annual compensation to be re-
ceiyed from the Goyernment Is s30,03l,-
0os and the company's other income per
annum amounts to approximately S3,-
100000, giving a total annual income
while under Federal control OF approx
mately S33,331.o0s. The annual fixed
charges and corporate expenses of the
company ARE approximately $22.e63. 900,
which will leave approximately $11.-
26s,OO9 available for Federal income
taxes. reserves, dividends, &c
At yesterdays meeting the comany's
directors determined the policy OF set
ting aside. part of its income to be de-
voted to capitai expenditures in order
not to extend the company's credit I'M
der existing conditions and decided tenn
porarily to suspend common stock divi-
dend payments. The board declared the
usual semi-annual dividend OF per
cent. on the preferred stock to holders
Of record en- July TO-. 1t will be paid on
September 2. provided that the necee-
sary funds be received in time from the
Government on account OF compensa-
ton. ".'
New Expenditures Fund.
In a letter to the. bankers made public
last night Mr., Willard said In part: The
company. by resolution of Its directors.
has determined to set aside in each year
part OF Its net Income, after the pay
rent Of it's hxed charges, to be devoted
to Capital expeffdftures p In accordance
with and because of, this policy the
trust indentnre win make provision that
the company in each year. beginning
July /. 1919. after providing for the
payment OF its fixed charges. will set
aside out OF its net income accruing
after that date not less than $500, 900
per ahnum untiI total of s17.500, 900
has been SO set aside, such sums TO be
used solely for capital expenditures
hereafter made, to pay loans incurred
for capital expenditures heretofore made
or to pay maturing funded obligations.
Moneys set aside in any year In excess
Of s3,500,oo0 may be credited against
moneys required TO be set aside in sub
seIuent years - 49,.
The operation OF this company's
properties was taken over by the Rail-
road Administration as of December 81, ,
1871. This company has executed a con-
tract with the Director General OF Rail-
roads under the terms OF which il Is to
receive compensation of sS0,031, 009.l4
annually. 10 this should be added the
other income OF the company, which, for
the year ended December 81, 1918,
amounted to s3,29s.SOs.39, making q
total OF SS3.330.S15.53. while the fixed
charges and corporate expenses of the
company for the same period amounted
70 s22,062.S02,55, leaving a balance of
tll,26S.0lz,sS available for Federal in
come taxes. reserves, dividends, &C.
The issue of the $35. 200 ten year
per cent. secured gold bonds will not
materially increase the fixed charges of
the company, as the proceeds are to be
used. almost entirely to pay of maturing
FUNDED obligations and repay temporary
ioals incurred for capital expenditures.
The company has outstanding $780,
600 900 par value OF per cent. pre-
te7red and sl52,314.S00 par value Of
common
The issuance OF the. 10 year bonds
mas been approved by the Director-Gen-
eEal ard application for approval thereof
Is about TO be made to the Public Ser
wee Commission Of Maryland. Applica-
uon will be made in due course to list
The bonds on the New York Stock Ex-
change"