New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-07-21
2 New Bond Issues
In Reorganization
OF 'sKaty" Planned
One Will Provide Method
for Future Financing and
Other Will Take Care of
Overdue Interest, III Is Said

The Missouri, Kansas B. Texas rcor~
ganisaticn plan contemplates the crea-
ton Of at least two new bond issues,
it was learned yesterday. One will be
per cent mortgage bond issue under
which future financing can be done and
the other an adjustment mortgage
bond issue, which will be used for
funding the overdue interest. Definite
details of the reorganization plan have
not been made public and negotiations
are still going on. However, the nego-
tiations have taken definite form so
that the various interests affected can
make some estimate OF what their
position will be.
In all there are twenty-six issues of
securities against Missouri, Kansas &
Texas In statement given out yes
terday j. & W. Seligman g. Co. and
Rallgarten & Co., the reorganization
managers, said that the plan which is
ment of some eighteen different issues.
Originally it was planend to reor-
ganize the katy" under it's first mort
gage. considerable part of the bonds
issued under this first mortgage are
held in Holland and it has been found
impossible to get the Dutch bondhold
ers to come in ON the plan, although it
is hoped that eventually they may join
in some way or other. The present
plan contemplates foreclosure under
the second mortgage and it is the
ond mortgage pondholders are to be
asked to accept as compared with the
securities which junior mortgage bond
holders and equipment trust certificate
holders are to receive that the second
mortgage bondholders object to.
The first mortgage of the Missouri,
Kansas &. Texas is direct lien
against the rails on the principal
part of the main north and south stem
covers the same property. The various
studies which have been made of the
earning power of different portions Of
the property agree in general in find
ing that the property covered by the
first and second mortgages has the
greatest traffic density of the sysem
and the largest independent earning
power.
The original plan for reorganiza-
ton contemplated a drastic reduction
in interest charges and treatment
and other junior securities in some
what the same way as they were
treeted in the Pere Marquette, reor-
ganization. 1t is understood that the
failure of the Dutch bondholders to
participate in the plan somewhat les
sened the drastic measures that could be
used against Junior security holders
and, furthermore, the holders of sec
ond mortgage bonds are widely scat
tered, and up to the present it has
been impossible to get any very large
rrCnOrtior %c 6onncit {bair bonHa with
the reorganization committee.
Not long before the European war
broke out the Missouri, Kansas &
Texas was temporarily saved from
receivership by the voluntary extern
sion of the notes due at that time. The
outbreak of the war and the severe
drop in security prices in the United
States Immediately following made
the Missouri, Kansas & Texas receiver
ship inevitable.
In the present plan, howver, it is
said that in the distribution of new
securities some allowance has been
made for the fact that note holders
and their representativ were will
ing in 1914 to make sacrifices to keep
the property out of receivers hands.
1t is also said that in long drawn out
reorganization negotiation such as
this pressure can be brough to bear to
obtain better treatment for junior
security holders than would have been
the case had the reorganization plan
been driven through within COM
paratively short period.
Efforts are being made by COM
mittee representing the second mort
gage bondholders of the road to get
holders Of the second mortgage issue
to deposit their bonds in an effort to
defeat or modify the pending plan of
reorganization, with which the COM
mittee is dissatisfied. The Central
Union Trust Company is acting as
depositary for the second mortgage
bonds and will accept deposits up to