The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-09-19
BELL SYSTEMS
BOND REFUNDING
EXPECTED SOON
Operations on Large Scale
ForeSeen by Investors
Early in October.
BY CHARLES HUFF
Times Special Writer

NEW YORK, Sept. 19.-With
definite indications that the initial
step in the long awaited refunding
program Of the Bell Telephone sys-
tenn is soon to be taken, conjecture
has become animated as to the eX-
tent to which such operations may
be carried. There is added interest
in the situation, Of course, since it
now becomes evident that the first
OvertureS in these operations so
long considered imminent have been
timed to mark the advent Of the
new Morgan Stanley & Co., Inc.
A survey of the Bell systems po-
tential refunding confirms the be-
lief that they easily may aggregate
financing Of considerable proper
tions, although they are not likely
to be nearly so extensive as might
be specifically imagined from the
mere fact that the consolidated
American Telephone & Telegraph
financial structure involves some
thing more than a billion dollars of
funded debt.
A considerable portion of that
debt, for one reason or another,
does not lend itself to refunding
projects-at least not for the imme-
date future.
Start Likely in October
Official announcement OF negotia-
lions between Morgan Stanley 81
Co. and the Illinois Bell Telephone
Co. presents the prospect that Bell
System refunding may make its be-
ginning early in October with a
S50,000,000O refunding issue of the
Illinois operating unit. Governing
circumstances are held to indicate
that the coupon rate would be cut
down to 315 per cent.
The issue would provide for re-
demption of outstanding 5 per cent
first mortgage bonds, not due I'M
til 1856, but subject to retirement
next Dec. l, if a call is issued by
Oct. /.
With retirement at los the re-
demption would require 51,162,O00.
An annual saving of approximately
100000 in interest charges could be
effected.
Two Comparable Issues
AS further possibilities to make
the entr of Morgan Stanley & Co.
in the underwriting field suspicious,
the Bell System offers two other
items of debt refunding which would
be closely similar to that of the
Illinois company. The Southwest
ern Telephone Co. has an issue of
first IS, due in 1854, outstanding in
the amount of $48,836,OOO, and call
able at 105. The Southern Bell
Telephone and Telegraph Co. has
an issue of first IS of 1871 matu-
rity, $47,070.500 outstanding and
callable at 105.
Peculiarly, the funded debt of the
associated companies does not offer
a great deal more for immediate re-
financing. New England issues are
not callable until 1949 and 1858.
New York Telephone Co. 412s ma
ture in 1899, so that the call price
of 10 might discourage refunding
at this time. Pacific Telephone and
Telegraph has an issue of about
$24,000,OO0 Of IS of 1852 which might
be refunded, but that units first IS
mature in 1887 and also command
a call price Of 10. The same sit
uation prevails with respect to
various other subsidiary issues.
While considerably less than half
of the debt of associated COM
panies in the Bell System appears to
lend itself to refunding at this time,
perhaps refunding on a larger scale
could be made to apply to the fund
ed debt of the parent-American
Telephone and Telegraph Co.
Three issues of debentures, carrying
and 515 per cent coupons, aggre-
gate about 1858 100000, subject to
call at 10. There is further a COL
lateral trust issue of IS amounting
to $65, 627,C00 callable at 105, due in
1916.