Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-21
Bill Prepared to Combine
Physical Properties of
Two Companies.
PLANS FOR SUBSTANTIAL
CAPITALIZATION GAIN
New Owners Say Service Extensions
Are Impossible Under Exist
ing Conditions.

Definite steps have been taken by the
new owners of the Washington and
Georgetown Gas Light Cos, it was
learned today, to bring about physical
merger of these companies with a view
to carrying out promise voluntarily
to reduce rates and make extensions in
service.
Although the Washington company
now owns the entire capital stock of the
Georgetown company. charter restric-
tons preclude a combination of their
physical properties, which must be au-
thorized by an act of Congress. A bill
providing for such consolidation, it is
understood, already has been prepared
for approval of the Public Utilities
Commission and introduction in Con-
gress.
Says Cut Impossible Otherwise.
without a merger, the new owners, it
was said, have found it would be fnan-
cially impossible, under existing condi-
tons, to cut gas rates and make service
extensions. The principal handicap. it
was explained. is a provision in the
charters of the companies preventing
the issuance of more than 10000
capitalization.
Because of this limitation on capital
ization, it was pointed out, the COM
panies in past years have been forced
to raise funds for extensions and other
improvements in service through the
issuance of bonds, and, as a result,
their financial structure is topheavy in
this respect.
While the details of the bill to au-
thorize the merger have not been re-
vealed. 1t Is understood that it pro-
vides for substantial increase in capt.
talizaticn, making it more equitable
than at present with the valuation of
the companies which totals nearly ST.
100000. The companies are capitalized
at $4,000 900, the 10000 shares of capt.
tai stock having par value of $40
share.
Board Believed Favorable.
The utilities commission is said to
look with favor upon the proposed
merger, feeling that the reduction in
overhead that will follow will benefit
the public in needed extensions in gas
service and probable reduction In
rates.
Negotiations for a physical consolida-
ton of the companies were first started
in 1926 between Mai. w. E. r. Covell,
then an Assistant Engineer Commits
sioner of the District. who aided Lieut..
Col. j. Franklin Bell, Engineer Commits
sioner at that time, with his work on
the commission. The Senate suisse
quently passed a bill authorizing the
consolidation, but it died in the House.
Owners Take Initiative.
The present owners of the companies
who acquired the majority stock last
June, and organized the Seaboard In
vestment Trust to hold it, have taken
the initiative to bring about the merger.
At the time of the purchase of the
stock, it was announced that efforts
would be made to effect economies in
operation and to reduce rates, If pos
sible, as well as extend service. There
was no intimation at the time. how
ever, that steps to bring about a con-
solidation of the two companies were
contemplated.
The move toward merger, it is be-
lieved, was delayed soI-ewhat by an
investigation of the commission and the
Department of Justice to determine
whether the sale of the gas stock con-
stituted a violation Of the La Toilette
anti-merger law.