New-York tribune., 1922-08-06

ali the property Of the existing Den
yer q Rio Grande Western Railroad
Company retained by 1t or vested in
a new company free from the lien of
these mortgages. Other bonds of the
old D. & X. G. system were not to be
disturbed.
Holders of the SIS were to receive
Tor 90 per cent of their holdings per
cent sinking fund mortgage bonds, due
august /, 1855, and for the remaining
oo per cent per cent cumulative pre-
ferred stock of the new company. A
ike offer was open to holders of the
adjustment rs, who had the alterna-
tive of taking preferred stock only or
preferred stock with less than so per
cent of bonds, as the Western Paci"
might elect.
The Hammond committee app~o.e !
this offer. It's Endorsement was base !
on the belief that the interests of The
oondholders would be fully protected
IL regarded as virtually assured that
interest on the new bonds would be
earned and that dividends on the pre-
ferred stock would be paid. The West
ern Pacific under the plan agreed Ia
put Sl0,000,000 in as new money into
the property within three years in ex-
change for common stock, which would
bring the total behind the bonds and
preferred stock up to S17,5G0 900.
Neso Groups Formed
The default had aroused the bond
holders generally and the offer pre-
cipitated the formation of two new
committees. A committee to represent
the adjustment rs was ltUrched late in
January by Richard Sutro. Of Sutro
Brothers. bankers, and Immediately
thereafter third committee, headed
by James II. Perkins, president of the
Farmers Loan and Trust Company,
called for deposits of both the IS and
ter committee was interested primarily
in the 5s, its interest in the rs being
derived from the fact that approx
mately s7,000,000 of the IS were
pleuged behind the rs.
The Sutro committee inaugurated an
active campaign against the plan. In
terested only in the adjustment rs, it
was already in position because Of the
default to seek a receivership, and
started action to that end. The other
committees would have preferred, per-
haps, to wait until the default on their
bonds became absolute, but, when the
New York Trust Company, as trustee
for the rs, applied for appointment of
"a ASSSl'Sit tlle bdnheIS ITuSL COnl-
pany, in similar capacity for the 5s,
Joined in the application. The appli-
cation was granted something more
than week ago, and the receivership
has been followed by the abandonment
of the Western Pacifc's offer
The attack of the Sutro committee
upon the Western Pacifc's offer was
based primarily upon the ground that
the plan did not restore in full to the
reorganized company the cash, securi-
ties and other assets which the West
ern Pacific-under an unsecured claim
acquired as result of litigation
from the old Denver G. Rio Grande
company. Specifically, it challenged
the right Of the Western Pacific to the
equity in the stock of the Utah Fuel
Company, which, under the plan, would
not be restored. This, the committee
contended, would deprive the re-
organized company of the control of a
part of its fuel supply and of the large
amount of traffic tha thas heretofore
been furnished to it by the Utah Fuel
Company. as we'll as earnings of that
company, which have averaged approx
mately $500,000 per annum" Other
features of the offer were similarly
-;