Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-06-08
PAIR Would GIVE
S1Q,0(D,ODO PROFIT
9Van SWeringens May Be
Forced to Take Huge Sum
by C. & O. Minority.

special Dlspatch 10 Inc star.
NEW YORK June S.--Who is go
ing to reap the profit?
That was the question which faced
Chesapeake & Ohio stockholders to-
dav as a result of the offer of Q. i,
Van Swerngen before the Interstate
Commerce Commission to waive S10,'
O00, 900 in profits to secure the merg'
| ing Of the Chesapeake & Ohio, the
Erie, the Pere Marquette and other
roads
1t is possible that the very people
! who are fighting the Van SWergin-
gems and their merger most bitterly
may force these profits on the CIeve'
land men despite this offer to relin'
! quish them.
Some railroad experts declared to-
day that should the minority inter
! ests in the Chesa pea sc & Ohio he able
to prevent the merger, they would do
themselves and their fellow stoCkhod-
ers out of some 5000 900 in prfts
and see a large portion of that sum
go legitimately into the Van Swerin-
gen rockets. The Van SWerngens
( still would be in possession of the
lines because they actually own a
majority control and would be free to
find some other means to unity those
lines
Increased Share Values.
The profits in question would come
from the increased value in the shares
of the Erie and the Pere Marquette
roads. which the Chesapeake 4 Ohio
already owns or has under option,
and which are estimated at 0.000,-
O00. The Chesapeake & Ohio stock
holders, the Van Sweringen Brothers
among them, have an option at S1l0
a share on roughly 10000 shares of
Pere Marquette common, now selling
at about $140 a share This option
expires July 1 unless the Interstate
Commerce Commission approves acqui-
sition of this stock by the Chesapeake
& Ohio before that time.
There seems no possibility that it
will act before that time because of
the continued opposition of the Chesa-
peake & Ohio minority to the merger.
An extension of the option seems i'm
possible because directors of the
Nickel Plate, which owns control of
Pere Marquette, scarcely would risk
selling property of their stockholders
at $ll0 a share which had appreciated
to $40. There is no prospect of the
option being renewed at $110, if at
all, and S6,0000 900 in profits may thus
slip away from the c. d o. share
holders.
The Van Sweringens have renwed
for 60 days the c. & O. option on the
Erie shares. Here the situation is
much different. The Erie stocks are
the private property Of the Van Swer-
ingens and associates and if they
choose to sell their property below
market value there is no minority
partner to object. But here again if
the Chesapeake & Ohio minority
i blocks the deal, stockholders of that
road will face loss of unrealiZed
profits that run over SIS 900 900. The
Van SWeringen option gives the C.. &
0. the right to buy 345 ,239. shares of
Erie common at $3.50, whereas, the
present market price is around S55.
| The option p. $ the first preferred
at $47.50, while the market is around
| SOL, and the second preferred at $43.75.
while the marhe- is around at $50.
Would Tax Profits.
The dissenting stockholders com.
mittee has been contending that 10
! permit the consolidation would bring
large profits to the Van Sweringens.
NOT only has Q. p. Van Sweringen
| oHefed 10 forego these profits, but he
and his assistants have always con.
tended that tie deal was to the adj
vantage of the C.. & o. IF the cor.
mlttee is successful, however. in block
ing the merger the 400. 900 odd shares
or Erie stock will be turned back TO
the van Sweringens, who will be free
! 10 take profits which the market
makes possible.
Inc shareholders of the Nickel Plate
can now take advantage of opportu
my Tor similar profits in the stocks Of
Ine I. d .. Chesapeake & Ohio com
ilon was bought by the Nickel Plate.
some of it as low as $50 a share r.
Is now around $185 in the Omen mo-
Get. 1t is true that a large portion If
thls profit accrued to the Van Swerin.
gems themselves. since they are the
largest shareholders of the Nickel
rate, but it is equally true that az
per cent of the Nickel Plate stock
Is. held by small investors.