Evening star., 1936-09-29
S,0)D,01D STOCK
FOR GAS MERGER
SUBJECT TO QUIZ
Commission AnaIyzes Wash.
ington Co. Proposal to
Finance Deal.
HEARING ON SUBURBAN
PURCHASE RESUMED
Overs Says 10000 Debt Will
Be Cancelled if Plan Meets
Approval.
BY DON S. WARREN.


stock to raise funds for the purchase
| OF the Alexandria and Hyattsville gas
companies-all controlled by the same
trust-and for Improvements to its
own plant, was subjected to careful
study today by the Public Utilities
| Commission.
Experts Of the commission were ex-
pected to analyze the proposed stock
deal in testimony before the commits.
sion this afternoon when hearings are
resumed into the requested merger Of
the Washington and suburban con.
| Germs.
The testimony Of commission ex.
perts was awaited with special interest
since the line Of questioning pursued
by commission counsel as well as con-
| mission members themselves has indi.
Gated there are numerous points on
which they are not satisfied as to the
public angles of the financial side Of
the program.
Disclosure Of the details Of the
Washington company plans for
financing the merger came late yes
terday after Hinman D. Folsom, com.
mission counsel, had spent several
hours in pointed cross-examination Of
two company witnesses, E. ]. Boothby,
vice president and general manager.
and Robert c. Overs, treasurer.
Proposes to Pay S1,375,000.
The company has proposed to pay
Sl,375, 900 for the assets of the two
suburban concerns, but the $1,000 900
preferred stock issue Is intended to
cover also certain improvements Of
the Washington plant, which its ON.
cials held would be necessary.
A compelling reason why the trust
seeks to have the Washington COM
pany buy the two suburban concerns
before the trust disposes of its own
ership of "a per cent of the Washing
ton company stock was disclosed today
at the District Building in a search
Of old records in the case.
In the agreement between the Wash.
| ington company and its parent is an
indenture by which it is specified that
the trust must be allowed to buy
enough of any common stock which
may be issued by the Washington
company to perpetuate its "a per cent
! control.
Lack of FundS-or Desire-Citeds
Reports reaching the District Build.
ing are to the effect the trust does
not have funds with which to buy
or has no desire to buy-84. per cent
of a common stock issue which might
otherwise be issued by the Washing
ton company to finance the proposed
purchase by it of the two suburban
| companies.
Therein lies the reason, some ex-
perts say, why the Washington com.
| pany proposes to finance the pur.
chases Of the suburban companies by
sale of preferred stock to the public.
Further, should the trust dispose
Of its 100000 of the 10000 shares
of the common stock of the WASH
ington company before the Wash.
ington company acquires the two sub.
urban companies, the trust would be
left with the two suburban concerns
on its hands.
Experts recall that the Washington
company has been paying dividends
Of l8 per cent on the basis of $40 par
value. The Alexandria company has
never paid dividends. The Hyatts-
vile company paid So per share for
the year Of 1888 and again for the
year 1884, plowed into the company
its profits of 1885. and in 1886 paid
a quarterly dividend of Is cents, or
81 per share for the year.
100000 Debt Cancellations.
A striking feature Of the financial
plans. as drawn from Overs by the
commission counsel, was that the
Washington company proposed to can
Gel s600,000 of a debt of 100000
owned by the Alexandria company
provided the merger plans were ap-
proved by the commission.
This is planned as a means of put
ting the Alexandria company on it's
feet" so that it could pay interest
on the remainder of the debt. but,
Overs explained, the per cent in
terest would not be charged If the
company did not earn enough.
The three operating companies are
controlled by the Washington and
Suburban Cos, a Massachusetts, COM
mon-law trust, which represents the
Chase National Bank and associated
financial interests.
Loans From Outside.
Folsom brought from the company
witnesses that the first step in financ.
ing the proposed purchase of the two
suburban concerns would be to seek
the loan. from Washington banks,
of $1,375,0o0, with which to pay cash
for all the securities of the Alex
andria and Hyattsville companies.
That sum would be borrowed on notes
running Is months and paying per
cent interest.
Later, Overs and Boothby explained,
it is proposed to issue preferred stock
to the maximum Of 100000 to re-
pay the bank loans and to provide
funds for Washington company i'm
provements. The commission was told
the Washington company would need
considerable" money soon some
$500, 900 this year.
The new stock would be issued in
blocks as the money was needed.
Bankers say preferred stock will
find ready market In the District"
Overs said. This is a good time to
sell securities. The stock will sell at
500 par and provide dividends Of
about AZ per cent"
Folsom broke in to ask If the WASH
ington and Suburban Cos, the
holding trust. would accept the pre-
ferred stock as payment for the sale
to the Washington company Of the
Alexandra and Hyattsville companies.
NO" replied Overs.