The Leader, enterprise and press. (Fitzgerald, Ga.) 1915-1921, 1921-03-11
Col. Bugg Refutes Charge of Ex-
orbitant Commissions From
Sale Of Bonds.

t(h lNlClFNd iIlOl lIlllS lIOUl wi
Bugg ex-president and receiver of the
| A. B. & A., in which Col Bugg ex-
plains the financial operation involved
in reorganizing the road in 1916. The
letter follows:
Atlanta, March 9, 1921
| Mr.. Isador Gelders, Editor,
Fitzgerald, Leader Enterprise,
Fitzgerald, Ga.
Mr.. Isidor Gelders, Editor,
have just seen an item from your
issue of March End headed "Confi-
dence in Bugg as Receiver" and thank
you for your straight forward state
ment with respect to having misquo-
ted me.
With reference to the last para
graph OF the clipping ] have in which
you say, 1T was stated by one of the
labor leaders in Chicago before the
Labor Board that out of large bond
issue the road really received approx
imately one-third of the amount, the
two-thirds going as underwriting char
ges and commissions" While l do
not think that such a statement was
made before the Labor Board at the
| hearing, at the same time there was
statement sent out to the newspapers
by Mr. w. S. Carter, headed. "To be
released when Mr. w. S. Carter APP
pears Before the Railway Wage Board
in Chicago probably Tuesday or We'd
nesday, Januory Is or 10Th" In that
advance copy (Which | understand
was furnished the newspapers gener-
allyn there was a statement substan-
tually to the effect that you mention.
am writing you for your infor-
nation, not asking you to publish it,
although there is no objection if you
desire 10 do SO. | simply want to give
you the facts about the erroneous
statement which is going around.
The present operating company, the
Atlanta, Birmingham and Atlantic
Railway Company, was organized and
took over the properties operated by
the Receiver of the A. b. and A. Rail
way January |, 1916. In this reorgan-
lzation all the capital stock of the A.
Il. and A. Railway Company, amount
ing to$25, 100000, all of the preferred
stock amounting to $10,000,000, and
the first mortgage gold coupon bonds
amounting to $14,443,000 were wiped
out, leaving only the underlying issue
OF first mortgage A. B. & A. Railway
bonds of $4,090,000.
In this reorganization the holders of
receivers certificates accepted for
their holdings an issue of first NOR
tage bonds of the new company par
for par, this issue amounting to S.
100000, and the holders Of the first
mortage gold coupon bonds of the A.
b. and A. Railroad Company were
permitted to buy stock in new Com
pany par for par upon payment of
$1,000 per share of stock. Before the
Receivership this stock was quoted on
the New York Stock Exchange at
about 5000 per share now The new
company as organized is as follows:
Common Stock ------- $4,000, 900
Is year income mortage bonds -
-------------------S %, ZUU,UUU
A. and B, Underlying bonds
-------------------- 100000
The amount received from the sale
of the stock at $500 per share-$3 600,-
OO0-was applied to the payment of
equipment of the A. b. and A. Railway
Company then due or past due, togeth-
err with equipment notes of the old
company due at later date, and to
payment of interest due on underly-
ing bonds, to the payment of legal ex-
penses of the receivership incurred
during several years, interest charges
and the fee to the underwriting syndi-
cate referred to by Mr.. Carter, the
com missions in question amounting
to $4,000 and $l44,000 respectively,
the balance of the amount received be-
ing turned over to the new company
for working capitol
The amount of $4,000 paid to the
financial agents and $144000 to the
underwriting syndicate were the only
fees paid for the flotation of the stock
issue and are considered very reason
able.
This was one of the most drastic
reorganizations of railroad properties
in the history of the country, the fixed
charges under this reorganization
amounting to only $204, 500, or annual
fixed charge per mile of road operated
of 1921 ,000 The A. B. & A. Railway
Company earned interest on the under
lying bonds, and on the Is year in
come mortage bonds and small sur
plus besides up to the time it was taken
under federal control January /, 1918.
Very truly yours,
i B. L. Bugg,
Receiver