The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-03-23
BY VINCENT LYONS
lines Financial Editor

lines Financial Editor
II the city Of Indianapolis were
70 take over the Citizens Gas Com
pany TODAY and retire all Of the ex-
isting Indebtedness Of the company
10 would need s7l380o0.
This figure. however. does not give
consideration 10 the 100000 divi-
deud accumulatiOrs on the common
stock and the return which must be
gwen 70 the preferred and bond
holders
Assuming that the municipality
acquired the Citizens Gas Company
on Juv !. the money which would
be needed 10 consummate the deal
would e increased 20 approximately
S77660Ol This would be accounted
for by the addition Of $500 600 divl-
dcuds On the common stock. SIS 900
o. dlv.icuds on the preferred stock
and ilterest OF SOB $50 on the
bonds
Owns $50 Miles Of Mains
The above calculation pertains
exclusively 20 the Citizens Gas
Company and no thought Is given
20 the position OF the indianapolis
Gas Company under It's lease with
the former. That indianapolis Gas
bulks large IN any relationship be-
tween the city and the Citizens Gas
Company rs seen by the fact that il
owns $50 miles Of the 867 miles Of
mains through which gas flows TO
consumers.
Under the vcxatiOus lease ar
rauCcment the Citizens Gas Com
pauy pays indianapolis Gas an an
nusI rental Of sf85 500. which funds
arc utilized for the payment of bond
interest and common stock divi-
dends Under this contract the
Citizens Gas Company is privileged
10 utilize the facilities Of the In
dianapOlis Gas Company for the
general conduct OF its gas business.
Reaction MAY BE Expected
The owners OF the 1881 .OO0 Of
indianapolis Gas Company Securi-
ties. represented by s68Sl .O0l OF
first mort gage bonds and S2O00,aO
OF common stock. occupy a second
arv but most important role IN
Indianapolis contemplated venture
into the gas business. The impOs-
ing question TO them may well be
els the city to continue paying the
annual rental Of s4S5 500, which
guarantees their return2'
II the present annual rental is
not continued these security hold
crs undoubtedly are going to be-
come voluble. Such a reaction may
be expected particularly of the
bond holders because the issue they
own is secured by a first mortgage
on an the property of the Indian
apoliS Gas Company which includes
the $50 miles Of gas mains.
City Negotiating Loan
At present the city is negotiating
a loan of approximately 100000.
Assuming that the loan IS ulti-
mate-v arranged at per cent and
the proceeds are applied to the re-
tiremcnt Of all the bonds and stock
OF the Citizens Gas Company, the
city VIII Immediately reduce its
annual charges from S456900 10
$3.50 900. or a saving OF SlO6,9OO
yearly
No such estimate can be made
or the economies which might be
effected m connection with the In
dianapOlis Gas Company securities
as that CompanyS position in the
whole scheme Is COnleCtural. Under
the lease as It now exists Indian
apolis Gas bondhOlders receive
s344 600 annually in interest and
the stockholders receive 100000 an
nuaIlv in dividends.
In the event that the city takes
up the indianapolis Gas Company
lease in It's present form. which
many consider doubtful. II viii also
saddle itself with the S6.Ssl.0OO
bond issue Of the company which
NAV become troublesome when 1t
natures IN 1852
Tax Problem Important
nus LA LELf CIV AAAANA4AAN ~ = "a
gas 10 the same number OF persons
nov served by the two companies
some ARRANGEMENT viii lave 10 be
made with the Indians polls Gas
COMPANY. Whether TIE annual
rental viii be reduced or whether
some other changes viii q effected
is not known definitely. but there
are many people with their ears TO
the ground
Another important consideration
in the entire situation Is the matter
OF taxes. In the event that the city
takes title 10 the Citizens Gas
Company properties 10 VIII remove
from the scene a company which
paws approximately 100000 annu-
ally ia taxes. = IS doubtful whether
the enterprise SET up by the city
government 10 operate the gas
COMPANY viii be charged the same
tax as Is levied against the Citizens
Gas Company.
Therefore unless some provision
is made for this potential loss IN
tax revenues. the taxpayer Is III
danger Of having a heavier burCen
placed upon HIM.
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