The sun., 1919-02-18
BANKS TO FINANCE
KENNECOTT COPPER
Morgan Group to Purchase
S12,000,00O Of One Year
6 Per Cents.
NO OFFERING TO PUBLIC
Issue Natures in 1920, and
Rate Is 6 1-2-Pay 90 1-2
for Notes.

Kennecott Copper Corporation, II was
announced yesterday. has completed ar
rangements to borrow S12,000.000 on
one year 8 per cent. notes from ]. =.
Morgan Co. and affiliated banking in
situations. The money cost the COM
pany 6h per cent, the bankers paying
e9h for the notes. The banks to whom
j. p. Morgan & Co. granted a particle
patton, are those with whom the Nor
gan firm carries its deposits. They In
clude the First National Bank. the Bank
ers Trust Company, the Liberty Ma
tional Bank and the Guaranty Trust
Company. The purchase OF the notes Is
not syndicate transaction and there
Will be no public offering. The bankers
In the present transaction comprise the
group that lent the company $4,000, 900
In March, 1917. to permit Kennecott to
purchaeo 100000 shares of the Utah
Copper Company's stock.
feature In regard to the financing
Is that several weeks ago when the
matter was preached the participating
banks would have charged per cent
Tor the money. In the meantime money
has softened and n rate of 61s per cent.
was arranged. 1t was the Judgment of
the bankers that It was the best rate
that could be granted prior to the forth
coming Victory Loan
000.0 900 cash on hand. roughly speaking,
and could have taken care of the "a, 0o0,-
600 remainder Of tho sic. 900, 900 original
note issue without financing. had the cop
per market permitted the sale of copper
The directors noting that the company
had between 100000 and 60,oo0,O 900
pounds OF copper on hand, which II did
not wish to sell until the market became
stabilized. that It must pay out cash for
operating expenses necessitated by an
output only large enough to keep the
operating forces intact and that funds
must be provided for the company's use
in connection with new construction and
improvements at the Braden properties
In South America, authorized the new
note issue.
The notes will be dated March /, 1919.
and will mature on March 1, 1920. They
provide. II Is understood, for the COM
panys needs for the coming year. What
effect the new financing will have on its
dividend at the meeting to be held In
about two weeks Is not definitely known.
There are reports that the present 81 a
share dividend win be cut. perhaps to So.
but the amount OF the dividend to be de-
clared by Utah Copper at the next meet
ing will have some bearing on the sub
5ect according to bankers, who point
out that kennecutt owns something more
than 100000 shares OF Utah Copper,
which, it is expected, will reduce its
dividend.
Under ordinary conditions It would
not have been necessary for Kennecott
TO do new financing at this time, but Il
was said yesterday that dulness in the
copper trade, now at its height, has
made obtaining outside assistance neces-
sary. 1t was pointed out that Kennecott
and Braden. as well as practically every
copper company In the country, was
sunering from a superabundance of cop
per without any market for the metal.
That condition was reflected recently by
American Smelling and Refining Com
pany's dividend cut as we'll as by financ-
ing contaminated in January by the
Anaconda company.
The amount of copper on hand at the
mines OF the Kennecott company. I'm
transit, at the smelters, &C.. is under
stood 20 be between $4,000, 900 and
100000 pounds. with a similar amount
above ground for Braden. making be-
tween 100000 and $4,000. 900 pounds
above ground and unsold. That amount
Is expected to increase. This means thai
the company has large amount Of cash
tied up In copper nnsold and Just at
present the demand for the metal is at
an extremely low ebb. Notwithstanding
that prices have been reduced to is
cents a pound or below that figure. Some
interests Identified with the trade take
the position that within a relatively
short time there will develop an i'm.
proved demand for copper. a slightly
bstter inquiry having developed for the
metal, which has not been reflected In
sales