The New York herald., 1922-09-05
BANKERS ANNOUNCE |
MEXICO DEBT TERMS
Ratification Of Agreement Is
the Chief Topic Before New
Congress Of Republic.
RECOGNITION EXPECTED
Observers Think Favorable
Action Will Influence
Decision.
RECOGNITION EXPECTED

Coincident with the opening OF the
Mexican Congress the international
Committee OF Bankers of Mexico has
made public summary of the debt
agreement signed. here June 16 last.
Formal ratification of the settlement.
which provides for the resumption of
current interest payments. arrangement
for back payment and specific proposals
concerning the National Railways of
Mexico, Is the chief topic before the
| Legislature
1t is understood the bankers are pre-
pared to issue calls for the deposit of the
twenty-eight different securities affect
ed by the plan Immediately upon favor
able action by the Mexican Congress.
That such action will be forthcoming
shortly is the general belief in inter-
national banking circles.
Prior to the signing of the agreement
1t was said that recognition OF the
Obregon Administration by the United
States played no part in the delibera-
tions of the committee. which met with
Finance Minister de la Huerta. 1t Is
believed, however. that acceptance by
the Obregon Government of the terms
whereby Mexico will discharge its ex-
ternal obligations will have considerable
weight with the State Department. In
some quarters it is felt that recognition
is strong probability in the near
future.
Provisions of Plan.
The chief provisions of the debt plan
are set forth as follows:
CURRENT INTEREST.
The Mexican Government undertakes
to set aside annually toward the pay
ment of such coupons on the current in
terest bonds as mature after January
2, 1929
(a) The entire proceeds OF the oil ex-
port tax;
(b) Ten per cent. of the gross reve-
nues OF the National Railways of
Mexico;
(c) The entire net operating revenues
of such railways.
In any event the Government agrees
to provide for such current interest not
less than 100000 pesos (s15.000 900
United States golD during the calendar
year 1923. and an additional 100000
pesos each year for the ensuing four
years, bringing the fund up to $4,000, 900
pesos in the fifth year
| These cash interest payments on such
coupons maturing after January 2, 1928,
will, during the first year, be made on
a scale varying from so per cent. to 100
per cent. on the external loans: at the
rate of 25 per cent. on the internal
per cent. and S per cent. bonds; so per
cent. on the State bonds, and in gem
eral from so per cent. to 65 per cent.
on the railway loans. except that the
railway notes secured by Government
bonds are to receive 100 per cent
After 1923 the increases in the mini
mum fund provided by the Government
for current interest should permit an
increase in the scale of cash payments
to all bonds receiving less than 100 per
cent. in the first year, and should per-
nit payment of full current interest in
cash in the fourth year upon all bonds
named In the schedule. except the in
ternal per cent. and per cent. bonds
and the State issues guaranteed by the
Mexican Government
4 Retirement Plans.
To make up the difference (during the
Ave year period covered by the agree
ment) between the amounts of current
interest actually due on such bonds and
the cash payments made. scrip or GER
! tificates are to be issued maturing in
twenty years after January 1. 1923, and
bearing interest after January /. 1928.
at the rate of per cent per annunn, pay
able semi-annually, the Government to
have the right of redemption in whole
or iE part at los and accrued interest
at any time before maturity. Any ex-
cess over the minimum fund provided for
current interest payments is to be used
in buying or redeeming such current in
terest scrip or certificates.
ARREARS OF INTEREST.
At or prior to the completion of the
five year period beginning January J..
1923. the interest coupons maturing on
or before January 2. 1923, with respect
a i. l.. al Is..N - L.
tadied by the respective depositaries
and lodged with a special depositary or
depositaries approved by the committee.
1 against the issue of receipts or certifi-
Gates to an equivalent face amount Such
receipts or certificates are to be pur-
chased or redeemed by the Government
| from fund SUFFICIENT to retire them in
fun. extending over period of forty
years. beginning January /, 1928. The
certificates for arrears of interest win be
/ of two lxinds--class a. and class 'B' /:
class "a to be retired completely prior
to class "B."
The respective bonds to which this
plan OF readjustment applies are to re-
ceive certificates for arrears of interest
on the following basis: The secured
debt and the railway notes secured
thereby fNos. l. 2, and 25) are 10 re-
ceive 100 per cent. OF arrears OF interest
II in class "A Certlncates. Inc DalAnce OF
the Government loans with the excep-
/ tion of the internal per cent. and per
cent, loans) and of the railway obliga-
tions (with the exception OF the notes
No. 25 secured by Government bonds)
are TO receive 35 per cent of arrears Of
| interest In "a" certificates and 65 per
| cent. In "B" certificates. The internal
3 per cent. and 5 per cent. bonds are to
receive 100 per cent. OF arrears OF in
terest In "B" certificates. Based on the
amounts OF "A" certificates and "B"
certificates 10 be issued, 1t Is calculated
that the proposed annual payments will
retire all the "A" certificates In little
less than twenty years from January !.
1928. assuming that retirement l.
effected at par.
NATIONAL RAILWAYS SYSTEM.
The Government In to make prompt re-
turn of the National Railways TO private
management and to the control of a
board Of directors agreed upon with the
committee. II recognizes It's obligation
to restore such railways. including roll
ing stock, to their condition ut the time
the Government took over the railway
\ lines.
Provision for Interest.
Holders OF outstanding obligations Of
tho National Railways system, listed