The sun., 1919-03-14
ERIE HASA NOVEL
PLAN OF FINANCING
To Meet Maturing Notes by
Giving Holders Right to
Extend or Be Paid.
ISSUE TOTALS S15,00O,OOO
Balance Not Converted or Sold
Will Be Taken by the War
Finance Corporation.

The Erie Railroad Company, through
It's bankers, J. p. Morgan & Co., an
nounced yesterday a novel method OF
financing TO meet the $15.0oo.o0O of
notes which mature on April 1. It Is
tho first important bit of railroad nnanc-
ing since the railroad predcament be-
came acute. and the method is said TO
indicate the manner in which the War
Finance Corporation can be called upon
TO assist In caring for maturing railroad
obligations
In brief the plan provides that holders
of the notes will have preferential right
to extend their holdings at par into
three year per cent. notes at % and
interest; that new buyers may take
tho new notes at 9s and interest, and that
the balance neither exchanged nor pur-
chased by new buyers will be taken
by the War Finance Corporation. The
present holders, who refuse to take three
year 6 per cent notes in exchange for
their holdings. will be paid Off in cash.
The fact that Erie will dispose OF
S15,0O0,000 three year G per cent. notes
at 9S and interest. where they yield ~
per cent, either in exchange for matur-
ing notes or to new buyers with the
War Finance Corporation holding the
bag" was announced yesterday by ]. +.
Morgan & Co. in the following state
ment:
I'm order to refund its two year per
cent notes which mature April l the
Erie Railroad Company has authorized
new three year 6 per cent. note issue.
which will have as collateral the securi-
ties deposited as collateral for the ma
turing notes and such additional amount
as is necessary to bring the valuation of
the deposited securities up to 125 per
cent. of the amount of the new issue.
THE holders of the maturing notes are
10 be offered the privilege of exchanging
their maturing notes at par for the new
notes at % and interest, at which figure
the yield will be about 6 a per cent. Such
exchanges will be made in preference to
allotments on applications from new buy
ers. The War Finance Corporation has
arranged to make the company three
year loan represented by the company
three year notes ut es 20 the extent
that the new notes are not applied for by
holders of the maturing notes or by
new buyers before April l. This loan
made by tho War Finance Corporation
Is equivalent 10 Its taking the new notes
of the same price as that at which they
are first offered to the public.
NOtt hOluers hhNe Flrst htkhth.
I'm other words. the holders of the
maturing notes will have a preferential
right to extend their holdings, while
those who prefer not to exchange their
notes will DO paid Off in cash, the nee
essary funds for such payment being
supplied by the War Finance Corpora
tlon."
The new method of financing was
also referred to in a letter from Fred
y. Underwood, president OF the Erie
Railroad Company, TO the bankers. the
letter saying In part: I'm connection
with the $4,000, 600 Erie Railroad Com
pany two year per cent. secured gold
notes, maturing April /, 1919, funds for
the payment of these notes at maturity
will be provided by the sale of SIS, 0OO,-
600 three year per cent. secured gold
notes, due April /, 1922. This new note
issue has been approved by the Director
General Of Railroads and application will
he made TO the State commissions for
their necessary consents In connection
herewith.
! Holders Of the maturing per cent
notes will be given a preferential right
VI exchanging their maturing notes at
~ Tor tine new three year per cent.
ties at eS, at which price the new notes
Will net y per cent The balance Of such
notes, not purchased by the holders of
the maturing notes or by new buyers. are
TO be taken at that price by the War
Finance Corporation.
THE new note issue is to be limited 10
S15,0O0,0Oo and Is to be secured by
deposit with Bankers Trust Company OF
New York city as trustee of the follow
ing collateral:
Par value.
Erie Railroad Company first con-
solidsted mortgage general lien
40 gold bonds due 1896. Tooo
Erie Railroad Company general
mortgage. series D. convertible
tg. sold bonds due 1858, 800. s.S71ooo
Columbus and Erie Railroad
Company first MORTGAGE Sc,
nifty year gold bonds. ........ 500 900
Erie Railroad Company refund
ing and Improvement mortgage
$50 twenty year gold bonds.
series B.. OBSERVATION-DISCLOSURES. b.4OO, 900
Total Observation-Disclosures. 32,5so, 900
2Iandard Hefurn RIh E2n na2