Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-28
MAYFLOWER HOTEL
CHANGE IS SOUGHT
Saving in Interest Expected
to Result From Financial
Reorganization.

In an effort to forestall possible fu-
ture losses in event of continued bust
ness depression, the Mayhower Hotel
today submitted to the holders of its
second mortgage bonds plan of re-
organization for the hotels financial
structure.
The principal saving, according to
the announcement, will lie in reduced
interest payments on the bonds. The
outstanding issue CT $4,000 600, accord
ing to an original prospectus, calls for
the payment of 61s per cent interest.
The proposed new issue, in like amount,
calls for the payment of per cent in
terest if justified by the earnings of the
property.
Offered New Bonds.
The new plan, it was understood,
also provides for small amortization
paymsnts.
Holders of the present second mort
gage bonds, under the suggested reor-
gdnization, are offered bonds of an
equal par value Of new issue of income
bends to be secured by second mort
gage in the same principal amount as
the present issue by a new corporation
that will acquire title to the property.
The plan does not involve any change
in the existing first mortgage issue Of
S7,5o0,000.
A statement from the hotel read in
part as follows:
1T has been deemed advisable to
effect reorganization at this time that
will reduce fixed charges. in view of the
Nation wide depression and the us7cer-
tainty of future business conditions.
Under the proposed reorganization, the
management is confident that even
under the most adverse general business
conditions its fixed charges will be met. ="
April / Payments Provided For.
1t was understood sinking fund and
interest Payments on the existing issue,
due April l, have been provided for.
The reorganization proposes that m
terest on the new bonds be taken care
of as follows:
Interest on the new bonds for each
calendar year ending December 81 shall
be payable at the rate of not exceeding
per cent per annurn on or before NAV
IN each succeeding year, commencing
with the year 1882, but only out of net
income OF new company available there
Tor during such calendar year ending
december 81, as provided in trust in
denture. After, but not before, Decem-
Der 81, 1882, such interest on new bonds.
to the extent unpaid. shall be cumuIa-
tive at the rate of per cent per an
mum, but no more
Net income of new company avail
able for interest on new bonds in any
calendar year ending on December 81.
after the payment of operating expenses
and all taxes and insurance and all
interest end sinking fund payments in
respect of said first mortgage bonds or
bonds issued to refund the same, and
the cost of this reorganization. but be-
fore depreciation, shall be applied. first,
to the payment of interest on new bonds
at the rate of not exceeding per cent
per annum Tor such calendar year, and
thereafter to the payment of any UNI
raid interest accumulated en- nov bonds,
and the surplus, If any. remaining out
of such net income shall be applied as
follows:
Special Reserve Fund.
"A-Seventy- per cent of such
surplus shall be payable into sinking
fund for the retirement Of new bonds
by purchase or by redemption by lot
"B-Twenty per cent of such sur
plus shall be used to establish and main
tain a special reserve fund of $150.000
to be used as provided in trust inden-
ture, and any excess shall be applied to
the payment of additional interest lover
ana above SAID interest ct the rate OF
4 per cent per annum) on new bonds
for such calendar year at the rate of
not exceeding 2 per centum per annum,
and the balance, if any, shall be pay
able into said sinking fund for the re-
tirement OF new bonds; provided that
after the principal amount of new bonds
outstanding shall have been reduced to
81 100000 the amount payable annually
into said sinking fund for the retire
ment of new bonds shall not exceed !
$4,000, and all remaining income shall |
be applicable to the extent necessary !
10 the maintenance of said reserve fund |
and thereafter to the payment of said |
additional interest on new bonds at a (
rate not exceeding. per centum per /
annum for such calendar year. and any
surplus remaining out Of net income |
may be used for general corporate pur-
poses