The Monmouth inquirer., 1924-06-05
SERVICE
MERCER OKEHED
Utility Board Declines to Validate
Any Value Other Than Stock
Before Authorized.
TERMINAL SALE ALLOWED
Make First Step In New Financing
Plan of companies-Decision Calls
For Exchange of 5onds-P. s.
Electric Gas Merger Approved.

Trenton of the merger
CT the Public Service Electric Com
pany, United Electric Company of New
Jersey and the Public Service Gas
Company into new corporation to be
known as the Public Service Electric
and Gas Company was given by the
Public Utility Commission.
The Commission likewise granted
the application of the Public Service
Railway Company to issue no par
value stock for outstanding capital
stock. The board approved also the
application of the Public Service Rail.
way Company to sell to the Public
Service Corporation of New Jersey
the Public Service Newark Terminal
for $2,500,000 cash subject to mort
cages and leases
1.-THE merger and consolidation, ap-
prevail of which is sought, is but a
means to an end" the board said In
this particular decision. "The con
solidation is the first step in a larger
plan for reconstruction and the en-
tire plan of financing not only the
merger companies but the parent
company, Public Service Corporation,
and third subsidiary to the latter,
the Public Service Railway Company.
IN the general plan as outlined, :"
the decision continued, sit is pro-
vided that the proposed electric and
gas company is later to pledge its
property under a S12 per cent mort
gage and the bonds contemplated to
be issued Hereunder lin the amount
of $31, 97S, J00) are to be turned over
to the Public Service Corporation; in
exchange therefore, Public Service
Corporation is to turn over to the
proposed consolidated company Sc
curities of underlying companies hav-
ing a market value of $6,S62, 337 81,
and to give its obligation for the diff
ference, unsecured, the latter obliga-
ton to bear interest at the rate of
5 per cent.
Furthermore that the capital stock
of the United Electric Company of
New Jersey, now bearing per cent
guaranteed dividends. is to be ex-
changed for an equal amount of per
cant cumulative preferred stock Of
tina consolidation corporation.
With respect to the excess of one
half per cent in interest rate borne
by the five and one-half per cent
bonds of the proposed consolidated
utility over the interest rate Of five
PER cent proposed to be paid on the
obligation of the Public Service Cor
poration proposed to be exchanged
in part therefor, the board does not
consider this proposition to be reason
able.
"The Public Service Corporation
should pay the same interest rate on
its unsecured obligation to the new
company that the latter binds itself
to pay on the bonds secured by a
mortgage on it own property. The
board finds that the Public Service
Corporation shall pay interest at the
rate of five and one-half per cent per
annum on it's unpaid obligations to
the new electric and gas company if
and when this portion of the plan be-
comes effective.
with respect to the increase of
two per cent in the dividend rate of
the new preferred stock, the board
might hesitate to permit this increase
III dividend to become effective were
it not for the fact that substantially
the only party at interest in this mat
ter is Public Service Corporation,
which owns practically the entire
stock of the three petitioners and a
dividend Is payable only if earned
and is not in the nature Of fixed
obligation, whereas the five per cent
on the present stock is fixed rental
for this property, and as such ceases
TO exist if aud when thu consolidation
effective.
No Bearing on Valuation
with respect to the exchange Of
no par common stock of the proposed
consolidated company for thu $43, $780,
900 of par value of the Public Service
Electric Company and of the $21,000,-
900 par value of capital stock Of the
Public Service Company, upwards Of
$50, 600 900 par value of these stocks
have been authorized to be issued by
this board to reimburse the respect
i've companies for the actual outlay of
capital in extensions and improve
ments of the property of said com
panies held by lease by the respective
utilities.
This is the sole evidence Of value
submitted by the petitioners, to en-
able the board to pass upon this issue
of securities. The board has no facts
showing conclusively the value Of the
entire properties proposed to be
merged and will therefore not pass
upon or validate any values beyond
those to be represented by securities,
approval of which has been already
given, nor is it necessary to do so in
the proceeding.
"JTnder the law future rates must