Evening star., 1925-10-09
NEW ST. PAUL PLAN
NOW IN OPERATION
Great Railroads Finances
Are Completely 0verhauIed.
End of Receivership ip Seen.
Ry the Associated Press.

by the Associated Press.
NEW YORK, October 9-The re-
organization plan of the Chicago, MIL
waukee and 81. Paul Railway, provid-
ing for a complete overhaulinG of the
roads financial structure, has been
declared operative by the reorganiza-
ton managers, Kuhn. Loeb q Co. and
the National City Co. The action
forcShadowS an early termination OF
the reCeivership into which the road
was plunged last March.
Holders of $4,000 900 st. Paul Sc
Curities out of a total of more than
$3.50 900 600, have assented to the re
organization proposals outlined last
June, the bankers announced. Other
holders of bonds and stocks will be
permitted to deposit their securities
without penalty until November 90
after which time penalties will be i'm
posed and applied TO the expenses of
reorganization.
Provisions OF New Plan.
The reorganization plan provides for
a reduction OF the St. Pauls fixed in
tercSt- bearing debt from S469. 52l 1856
TO $242 .069,220 the funding of more
than $3.50. 900 900 of short term bonds
into long term obligations wi,h inter
est contingent upon earnings. Hqui-
dation of a 500 000, 900 debt to the
United States Government and as
sesSments of SIS a share on the pre-
ferred stock and So a share on the
common stock.
or the securities which have as
scented TO the plan, the reorganization
managers stated, approximately $lll,-
100000 represent bonds, or nearly half
or the aggregate amounts of outstand-
ing bonds affected by the reorganiza-
tion. The total includes over Sl9 ,000,-
600 of the Puget Sound extension OBJ
legations. or approximately 13 per
cent of that issue. and more than
S92 800 ,O00, or 40 per cent OF the vari-
utS issues secured under the general
and refunding mortgage. In addition
$50 $500 900 par value of stock has been
deposited
Answer to Opposition.
The announcement that the original
reorga nlzation plan had been declared
operative followed threats of an op.
posing Group, headed by George l..
Roosevelt, to draft an alternative plan
upon failure TO obtain modification
OF the Kuhn Loeb National City pro
posal.
Regarding the statements Of the
Roosevelt committee, the reorganiza-
lion mana gers stated that the modi-
ncations proposed were carefully con
Sidered, both on behalf of the reor-
EanlZatlon ma gers and the bond
holders committee. of which Fred
orlck Ecker is chairman. They were
rejected as not being in the interest
at the hondholderS or preferred stock
holders, as were similar proposals
made on behalf of stockholders dur
jnS the protracted negotiations be-
tween the three committees represent.
ing. respectively, bonds preferred
stock and common stock that preceded
the adoption of the plan.
Effort to Curtail Expense.
IT was their conviction" they
added, that the full discussion of
the past few weeks had failed TO
develop any sound cricticims of the
plan or any improvements in its
structure, together with the broad
support that it had received from
security holders that prompted the
managers 10 declare the plan opera
tive at this time. To delay further
the reorganization would only con
tinue the large additional expense
incident TO receivership, estimated at
more than $1,000 coo a year, all 10
The detriment OF the bondholders
IN commenting on the changes in
the plan proposed on behalf of the
Roosevelt group, the managers pointed
out that the most radical change pro.
posed was that the Government debt
or s5o.0OO.o00 should not be liquidared.
put should be extended, thereby re.
lievlng the stockholders of the Ereater
part of the cash assessment proyided
Tor In the existing plan. II was
further proposed that the extended
government notes shall be secured b,-.
ana eventually paid from the pr,.
ceeds OF, first and refundinc mort
sage bonds, all of which under The
existing plan are reserved for future
financing.
Proposal Turned Down.
Ihis proposal the bankers as
Sertens was wholly unacceptable TO
mo po1ld dhoiders committee. who in
sisted that in return for the bond.
holders concession in accepting in
come bonds IN the place of fixed inter
est bearing bonds. the stock holders
should provide the money to liuuidate
Inc government debt and accent for
THIS money new per cent bonds
junior to the new financing mortgage.
The bondholders COMMITTEES ey.
pressed themselves as unalterably on
poSeu 10 weakening the financial
structure of the new company by ex.
panding the issue OF first and refund.
ing bonds by using bonds of that
lssue to secure the Government debit
and subjectins them TO being sold to
paF II. Such a course would reduce
the investment value of the bonds of
that issue and increase the cost of
financing future capital expenditures
thereby reducing the income available
for interest upon the new income
bonds"
Approval Is Widespread.
Asserting that the plan had met
with widespread approval, the reor-
cation managers said it was doubt
full If in any previous reorga nization
of similar magnitude, SO large q vol
un1e Of securities had been deposited
in so short a time after the promuIga.
lion of the plan.
The deposits actually made only
partially reflect the support that has
been assured" they added 1T is
significant that of the 400, 600 bonds
held by 36 savings banks in the State
of New York, over 3,400, 900 held by
= savings banks already have been