Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1926-11-16
Big Financial Deal
Continued from Page One

to the regular quarterly payment OF
Csc.
Plans for the offering Of deben-
lures will be perfected within a few
days by the Morgan Banking firm.
which, in accordance with the stand
ard Oil Company's wishes, will give
a preference in the allotment Of
bonds to the preferred stockholders
whose securities will be called for re-
demption on March 3. The bankers
have been deluged with applications
for the bonds, assuring huge over
subscription Of the issue. Tie de-
bentures will be non convertible.
Approximately $3O,OOO,OOO above
the face value of the preferred stock
will be required to defray the cost OF
its redemption at a fifteen point
premium, or $11j a share This will
necessitate the withdrawal of S25.-
100000 or more from the companyis
treasury in addition to the proceeds
from the sale of new common shares
and debentures. The replacement OF
the seven percent preferred stock by
five percent debentures and common
stock will result in a net saving of
roughly $4,000, 900 annually.
Reviewing the history of its pre-
IcTIbu SlOCh Issue anu pIdIlllS tie
reasons for the readjustment of it's
capital structure, the Standard Oil
Company issued the following state
ment:
when the period of rapid COM
mercial expansion following the
war made such extraordinary de
mands upon surplus capital, the
petroleum business was in the same
r,ncifior otb 4 indus
tries in its needs of additional funds
to provide for the increased con-
sumption of products. The Standard
Oil Company of New Jersey faced in
1919 and 1920 the need of large
sums beyond its working capital,
not only to maintain its place in the
industry but also to replenish its
treasury after meeting heavy inroads
made by war taxes. To supply this
need two issues of Z per cent pre-
ferred stock, aggregation 100000
600, were sold to investors.
Conditions at that time justified
a higher rate for money than was
expected to obtain subsequently
when investment funds should be
come more plentiful. Accordingly
the teams of the two issues were
drawn to permit their retirement at
S115 per share on any dividend date
after three years from the date of
issuance.
Dividends on this preferred
stock in the period which has elaps-
ed have been more than covered by
earnings on the new capital supplied.
However, easier money market con-
ditions having now come into play,
the directors deem it in the best in
. - 70 a
vantage of the call feature and retire
the preferred issues.
THE entire benefit of the saving
which will be effected by replacing
the present seven per cent preferred
stock with lower interest bearing de-
bentures will accrue to the holders
of the common stock.
"For one reason the directors OF
the Standard Oil Company of New
Jersey regret the necessity of calling
this issue. There are $4,000 inves-
tors on the Company's books as
holders of the preferred stock and
their association with and interest
in the companys affairs have been
a constant source of satisfaction TO
the management.
premature reports of proposals
to retire this issue have brought
many letters from holders VINO nave
indicated a wish to continue their IN
vestment in some form of security OF
the company. The probability is that
such of these holders as desire TO
reinvest in another Standard Oil
Company of New Jersey security will
be given an opportunity to do so
through an offering of debentures
of the company by ]. P. Morgan and
Company.
1.-THE declaration of the extra
payment upon the common stock
was made possible by fact that earn
ings for the current fiscal period
have exceeded the amounts required
for the regular dividends and for
the necessary expansion of plant
and equipment. The payment of any
extra dividends i'll the future will be
the subject of considerations, but
will depend entirely upon the con-
ditions which have made today's de-
claration possible"