The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-04
ANNOUNCE DENVER
& RIO GRANDE PLAN
Western Pacific Railroad Cor
pOration to Take Over and
Rehabilitate Road.
WILL SPEND S12,000,000
Stockholders Meet November
10 for Voting on Increase
Of Capital.
SPEND 1000, 900


Corporation to take over the Denver and
Rio Grande Railway and to spend s12.-
900, 600 on Its rehabilitation. subject to
the scaling down of the indebtedness OF
the Denver and Rio Grande. were an
nounced yesterday by Alvin w. Krech.
president of the corporation and presi-
dent of the Equitable Trust Company, in
a letter sent to the stockholders calling
ton, Del, on November IS. That meet
Ing is for voting an increase in the COM
panys authorized capital stock from
275.o0o shares of preferred stock to
400. 600 and from 475,00o shares Of COM
mon stock to 100000.
After describing the steps taken In
the process Of collecting the money due
on the judgment of $3s. 270.343 rendered
against the Denver and Rio Grande in
1918, in which the Western Pacific Rail-
road Corporations share Is 94.9 per
cent, Mr.. Krech described the action
proposed by the corporation as follows /:
LAS the remaining assets Of the Dem
yer company--its road and other rail-
way property Except It's claim against
the United States Government) are to be
sold on November 20, and the mini
mum or upset price to be paid at such
sale Is $4,000, 900, II has been necessary
for your directors, to determine whether
to bid for the property at the sale or
to abandon all hope of realizing out Of
the property any more than the corpora
tions proportion Of the amount which
may be bid by some other interest Were
1t not for the fact that the Denver COM
pany Is In grave need of $12, 900, 900 new
money (this amount being urgently
necessary to enable that company to
handle its existing business economically
and efficiently the situation would have
presented no problem, but the purchaser
Of the property will be under necessity
of supplying the money needed, and In
view of the bonded debt of the Denver
company money invested in subordina-
ton thereto cannot be financed with So
curities which will be presently salable
Denver Company's Problem.
"The problem Of the future Of the
Denver company, important as It Is from
the point of view realizing as much as
possible on account of the judgment, Is
yet more important to this company
in another aspect The Denver is the
only eastern connection of the Western
Pacific Railroad not engaged or affiliated
with lines engaged in active competition
with the Western Pacific 1t is the line
of railway on which the Western Pacific
primarily depends for westbound ton
mage, and the present satisfactory earn
ings of the Western Pacific depend
largely upon the continuation of this
westbound tonnage. Your board has,
therefore, determined to acquire the
Denver and Rio Grande unless some
other bidder appears who Is willing to
pay a sum fairly compensatory for the
loss which would be entailed by the con-
troll of that road passing out Of the
hands OF the Western Pacific.
'In view Of these circumstances no
gotiations with the protective commit
Grande 8 per cent. refunding bonds
and the protective committee repre-
senting the Denver and Rio Grande z
per cent. adjustment bonds. have been
resumed. The committee representing
the refunding bonds has agreed to
recommend to its security holders a
reduction OF the bonded debt to the ex-
tent of so per cent. or about SIS. 750,-
900, and the substitution of per cent.
cumulative preferred stock in lieu of
such bonds, together with an arrange
ment providing for future financing of
essential capital expenditures through
the medium or prlor lien ponus the
committee representing the adjustment
bonds (s10.000.000 outstanding) has
agreed to recommend to its security
holders the acceptance of an offer to
exchange for such Of these bonds as
may be rendered per cent. ten year
notes Of the Western Pacific Railroad
Corporation. II the reorganization con-
templated by these negotiations be given
effect new money can be supplied the
reorganized Denver company by this
corporation through the medium OF in
vestment In It's common stock without
more than reasonable business ris'.
md II Is be ieved ~the Investment will
be secure. II. however. these negotia-
lions fail tho pronerty must No an"nced
through the purchase OF bonds secured
by the existing mortgages Of the Dem
ver company. obligations secured by
equipment trusts. &c The execution OF
the plan proposed and the issuance OF
all new securities are subject to the APP
proval of the Interstate Commerce Com
mission and OF such other public au-
thorities as may have Jurisdiction OF
these matters.