Evening star., 1922-06-17
BANKERS T0ADJUST
DEBTS # MEXICO
International Agreement
Which Covers Securities
Exceeding $500, 900, 900
By the Associated Press.

adjusting the entire national debt OF
the Mexican government, the National
Railways debt of that country and
certain so-called internal debts held
largely outside of Mexico. was agreed
upon yesterday by the international
committee of bankers on Mexico and
Adolfo de la Huerta. finance minister
of the republic below the Rio Grande.
The agreement, which is subject to
! the approval of President Obregon.
exceeding $500.000.000 in gold. on
which the interest in arrears approx
, mates $500. 100000.
Under the agreement. cash pay
ments on current interest are to begin
after January 2, 1923. out of a spe
j cial fund into which will be paid the
oil export taxes and a surcharge or
railway gross receipts.
Back Interest Waived.
| All cash payments as to back inter
| est are to be waived. Overdue cou-
pons will be deposited with truste'
| and the receipts for the coupons y
| be amortized without interest over Z
period of time, this arrangement, 1 =
| effect. being cancellation of part GO
| the back interest.
The railways of Mexico are to -
|
promptly The government will as !
| sumo. by Endorsement. all raisvEt
| debts. not already guaranteed by 1t.
In order to give time for full re-
| sumption of all cash obligations. az
| classes of bondholders are to agree 1.
| temporary suspension of sinking funu
rights. etc. during fiveyear period.
Committee Issues Statement.
After the agreement had been signed
last night by Mr.. de la Huerta on be-
half of the Obregon administration
and Thomas W. Lamont on behalf of
| the bankers. the international COM
| ment:
| Finance Minister de la Huerta and
the international committee of bank
ers on Mexico this afternoon signed
a comprehensive agreement covering
| the matter of the Mexican govern
ment's external debt. The settlement
arrived at is. IS stated earlier in the
week by the Mexican minister, sub
ject to the approval of President OBJ
,regon.
las preliminary the agreement re-
cites the determination of the Mexi-
can government to fulfill its obliga-
| tions to the full extent of its capa-
city and states that the international
committee recognizing the difficulties
of the situation caused by the revo-
1 anu desiring 10
| with the government in promoting
| the full economic restoration OF
Mexico as rapidly as possible. VIII
recommend that the bondholders
make substantial adjustments Of their
lrights.
Handling OF Current Interest.
1.-THE more important points covered
in the agreement relate to the hand
ling of current interest, arrears Oh
Interest and the railways. The plan
| of adjustment relates to all eXter-
nal Mexican government debt direct
| or guaranteed, the National Railways
debt and certain so-called internal
Igovernment debt largely held OUTSIDE
Of Mexico; the total face value of the
securities covered being over $500
900. 900 gold, on which the interest in
arrears amounts TO approximately
$500, 600, 600.
.As to current interest, cash pay
ments, in varying preparations
among the different bond issues. are
to begun after January =. 1923. out
1 of special fund as PROVIDED Tor III
; the agreement, the schedule OF as
bursements in general to be based on
the relative values and priorities oil
the different issues of bonds. For
such part of current interest as Is
not met in cash. scrip will be issued
and redeemed in due course. certain
| 1undS pelHS iHoue dNdiiooe ASi
"The special fund for current inter
est ETC. will be increased each year
until January l. 1928. when full serv-
ice of the debt will be resumed. The
oil export taxes and surenaree o.
railway gross receipts VIII be paio
into this special fund.
LAS to back interest. all cash pay
ments are to be waived. The matter
will be arranged by the deposit OF
| overdue coupons with a trustee:
Against these coupons receipts will
be issued. to be amortized without in
terest over a period of time. This ar
rangement is. in effect. equivalent TO
cancellation of part of the back IN
terest.
Railways to Private Hands.
LAS to the railways. they are TO be
operated by private mana cement as
before the revolution. The govern,
ment will assume by Endorsement all
railway debt not previously guaran-
teed. The rights of foreclosure hither-
to held by the bonds will be suspend
ed so long as the plan is being carried
out, thereby protecting both the STOCK
ownership of the Mexican govern
ment and other shareholders, as well
as the ultimate rights of the bond
holders.
/, "In general. in order to give time
for full resumption of all cash obllga-
tions, all classes of bondholders are
to agree to temporary suspension OF
sinking fund rights, etc, during a
jfive-year period. after which all con-
itract clauses will again become effec-
tive, Full details of the plan Will be
submitted to the bondholders by the
committee a soon as possible, and de-
posits will be invited by the banking
houses and institutions hitherto
identified with Mexican government
financing"
De In Huerta'x Comment.
| Mr.. De la Huerta in an informal
statement said both sides had made
sacrifices in reaching the agreement.
President Obregon, he added. had
kept in touch with negotiations. step
by step. but there still remain in the
agreement assigned several clauses
to be approved by him.
Mr.. Lamont, commenting on the
settlement. said the best of feeling
had prevailed throughout the nego-
tiations. De la Huerta, he declared.
had handled a difficult situation in
a broad, statesmanlike spirit" He
added that the harmony among the
foreign and American members of the
international committee was COM
plete.
Today's agreement brought to a
successful conclusion negotiations be-
gun last October. when Mr.. Lamont
conferences. The sessions, which
ended last night, in which bankers
from England, France, Belgium and
Germany participated. began two
| weeks ago.
| B. & o. COST EXHIBIT.