The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1928-02-29
WRITES MERGER
DIGEST
By RICHARD HATTON

An exhaustive analysis of the
proposed merger Of the local street
railway and bus lines is con-
tanned in a pamphlet just issued
by Y. e. Booker and Company,
investment bankers. The compila-
ton, the work of Y. K. Booker, q
recognized specialist in securities
of Washington corporations, Is OF
interest and value at the present
time regardless of personal views,
for the reason that the figures
cover wide range Of the financial
aspects Of the proposal.
ANY merger which ignores pub
lie interest," states the pamphlet,
cannot, in the ling run, be to
the best interests Of the stock
holders Of the various companies
involved. The public" continues
the statement, ''is interested pri-
marily In two factors-the char
acter of service rendered and the
cost of such service"
After discussing the present and
possible financial situation OF the
several companies involved, g
Booker digest concludes:
1.-THE Capital Traction Company
has outstanding $4,000. 900 of stock.
Under the proposed consolidation
they would be given the right
to receive 1 share Of per cent
cumulative preferred stock in the
new company, for each share OF
CAPITAL Traction they now hold,
or they may elect to accept u
share of the per cent Cllmu-
Iative preferred stock of the new
company and nine.tenths or q share
Of the common stock in lieu OF each
share Of Capital Traction stock.
The Preferred Stock
''Those who elect to take the pre-
ferred stock in exchange for their
present Capital Traction stock would
get Just the dividend return they
are now receiving; namely, per
cent. They could receive DIVIDENDS
in excess OF this per cent only
il the new company should be able
to earn more than z per cent on
its common stock. In this event,
the holders Of the per cent pre-
ferred stock would share equally
with the common stock any earn
ings above this per cent. So far
Is the immediate future is concerned
there would be little likelihood OF
the new company being able to earn
as much as per cent on the com.
mon stock. The Z per cent dividend
On this new preferred would be
more secure, however, than the pres
emit Z per cent dividend on Capital
Traction stock, since It would be
first claim on the combined earn.
ings of the three companies.
'@Those who elect to accept the
one-half share OF cumulative pre-
rerred stock and nine-tenths Of a
share OF the common stock would be
left in some doubt as to what dtvI-
dend they might reasonably be ex-
pected to receive on the new COM
pany's common stock, since the
amount Of this dividend would neces-
sariIy depend upon the degree OF
success which the new company en-
5oyed, and the number OF shares or
this common stock issued.
Based on earnings Of the sepa.
rate companies for the calendar year
1927, it appears reasonably certain
that the new company could pay
minimum Of So q share on 100000
shares Of the common stock, and 1t
might be able to pay moro under
favorable operating conditions.
1.-THE consolidation would not AZ
feet the outstanding bonds Of the
Washington Railway and Electric
Company and the Capital Traction
Company. so far as the present
owners of these securities are con-
cerned