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

apous.
BY VINCENT LYONS
Times Financial Editor
II the city OF indianapolis we're
% take over The Citizens Gas CO.
today su1 retire all Of the ex-
isting Indebtedness Of the company
10 would need s71330O0.
This figure. however. does not give
consideration 70 the dividend accu-
mutation on the common stock
and the return which must be-
given % the preferred and bond
holders.
Assuming that the municipality
acquired the Citizens Gas Co
on july I. the money which would
be needed % COngImmate the deal
would be increased 70 approximately
S7.76600O. This would be accounted
for by the addition Of $500 600 divi-
dcuds on the common stock. SIS 900
o. dividends on the preferred stock
and interest Of SOB $50 on the
bonds
Owns $50 Miles Of Mains
The above calculation pertains
exclusively 10 the Citizens Gas
Co. and no thought is given
10 tho position Of the indianapolis
Cos Co. under its lease with
the former That indianapolis Gas
bu.ks large in any relationship be-
tween the city and the Citizens Gas
Co. is seen by the fact that IL
owns $50 miles OF the 86T miles Of
mains through which gas flows 10
consumers.
Under the vexatious lease ar
rauCcmcut the Citizens Gas
Co. paws indianapolis Gas an an
nual rental az S485 500 which funds
are utilized for the payment Of bond
interest and common stock divi-
dcnds Under this contract the
Citizens Gas Co IS privileged
TO utilize the facilities Of the In
dianapOiis Gas Co. for the general
conduct OF Its gas business
Reaction May BE Expected
The owners OF the 1881 900 of
indianapolis Gas Co. Securi-
ties. represented by S6.88l 900 of
first mortgage bonds and $4,000 900
of common stock. occupy a second
airy but most important role in
Indianapolis contemplated venture
into the gas business. The impOs-
ing question to them may well be
els the city 10 c1ntlud5 paving the
annual renta! OF sis5 30. which
guarantees their rcturn2'
II the present annual rental is
not continued these security hold
Crs undoubtedly are going 10 ne
come v0luDie. 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
ap0is Gas Co. which includes
the $50 miles Of gas mains.
Citv Negotiating Loan
At present the city is negotiating
q loan OF approximately 100000.
Assuming that the loan is ulti-
matcly arranged at ; per cent and
the proceeds are applied to the re-
tirCmcnt Of an the bonds and stock
of the Citizens Gas Co. the
city VIII Immediately reduce its
annual charges from Si56.900 to
$3.50 900. or a saving of SlO6-90O
yearly
No such estimate can be made
OF the economies which might be
effected in connection with the In
dfauapoIiS Gas Co. securities
as that cOmpanv's position in the
whole scheme Is cOnlectural. Under
the lease as It now exists Indian
apOlis Gas bOndhOlders receive
S344OOO annually in interest and
the stockholders receive 100000 an
nualIy in dividends.
In the event that the city takes
M The indianapolis Gas Co.
lease in its present form. which
MANY consider doubtful. 1t Will also
saddle itself with the S6.S6l 600
bond issue OF the company which
may become troublesome when it
natures IN 1852.
Tax Problem Important
Thus. II the city intends TO sell
gas 10 the same number of persons
nov served by the two companies
some arrangement Will have 10 be
made with the Indianapolis Gas
co. Whether the annu- rem
tai Will be reduced or whether
some other changes will be effected
is not known definitely. but there
are many people with their ears to
the ground.
Another important consideration
I'm the entire situation Is the matter
Of taxes. In the event that the city
takes title 20 the Citizens Gas
CO. properties II viii remove
from the scene 2 company which
ravs approximately 100000 annu-
alIv I'M taxes. IL IS doubtful whether
tho enterprise set up by the city
government 10 operate the gas
COMPANY Will be charged the same
tax as is levied against the Citizens
Gas Co
Therefore unless some provision
is made for this potential loss in
tax revenues. the taxpayer Is IN
danger OF having a heavier burden
placed upon him.
~ ETuefuaffur Gas Prices