Connecticut western news., 1919-11-20

for third preferred stock. It was con- templated that the company would then be able to use the exchanged bonds as collateral for loans that would furnish sufficient working cap ital. This plan was assented to by large majority in amount of bond holders and stockholders, but before it could be put into effect it became apparent that the finances of the company were in a condition that re- quired more drastic reorganization, and that in the meantime the busi- ness and assets coIld only be con- served thro~gh the appointment of a receiver. Accordingly, on Nov. 12, 1918, on the application of creditor, the di9trict court of the United States for th2 so thern district of Connecti- cut appointed Horace W. Davis re- ceiver, a. AoriZing him to contin Q the bcsiness and to borrow rp to $100,000 on receivers certificates, Dhe -e~'s to be used in part for york. - ~"0i+al and in part to com plete improvements that had already been ber~n. During the early mon h. of the rc ceivatship the con iitions were f rther complicated by the ter mination Of the war and the result ing conf sion in the iron market. The receiver found it inadyisable to ccm- plete c.catr"ction of the ne,3 f-rnace and fond that even with drastic re- duction of operations and cutting down of overhead: expense it was inn possible to run the ,..business at an operating profit. =. F.,
 Although the original plan was abandoned shortly after the receiver ship, the committee continued it's efforts to find satisfactory basis for continuing the b-siness for the ben eft of the creditors and stockhold- CTS, but its effort did not meet with success. The receivership has already been unduly prolonged and should be terminated at an early date. In these circumstances, the only possibilities appear to be an unprotected sale in the pending receivership action or an arrangement with new interests to acquire the property with the CO., operation of the bondholders and creditors. At the urgent request of the committee, the receiver has pre- sente- Shc project to various parties and, as appears from letter from the receiver to the committee, of which a copy is hereto attached, he has succeeded in finding group will. ] ing to acquire the business on the terms set forth in the accompanying plan and agreement. Those terms are substantially that the property shall be acquired by new company which will be in position to borrow or it's notes about $150,000 for working capital; that the first mortgage bond! of the present company shall be rec ognized to the extent of receiving 8( per cent of their face amount in per cent noncumulative preferred stock at par, calling for $172,800 ou of total authorized preferred stocl tissue of at least s400,000; that tn, balance of the preferred stock shal be divided pro rata among the sec ond mortgage bondholders and tn, unsecured creditors, who shall receiv, at least 50 per cent of the principa amount of their claims. Thi amounts to waiver of lien by tn, second mortgage bondholders. N provision is made for preferred ol common stock of the company, tht former of which represents $2o0,OO( actual cash put into the bushes. within the last few years.
 The plan has already been ap proved by the holders of large ma ljority in amount of first and second mortgage bonds, and by substantial amount of the unsecured debt.
 The new group that is to under take the business has agreed to pur chase at least $150,000 of the seria notes of the new company at .95. Il is the opinion of the committee that with this new working capital anc with competent management there is a reasonable prospect that tht notes can be paid as they fall dIt and that the preferred stock vii ultimately be redeemed through oper ation of the sinking fund. We therefore, recommend to the bondhol ders and creditors that they accep the plan and become parties to tn, agreement by promptly depositinl their bonds and claims in the manneI therein indicated.
 We are advised by counsel that i will simplify the procedure and re duce the expense if the bondholder unite in requesting the court to orde sale of the property in the pending receivership proceeding free ant clear of the lien of the mortgages thus obviating the necessity of separ ate mortgage foreclosure proceed ings.
 LARGE AUDIENCE HEAR