Evening star., 1938-01-16
Securities Commission Told
of Plan, With Payment
$1,212,7O0 in Stock.
MOVE IS CALLED STEP
IN TRUST DISSOLUTION
Later SAILS to Public Of All Share
Holdings Of Common.law Trust
Embraced in Scheme.

the Securities and Exchange Com
mission yesterday by the Washington
& Suburban Co.'S, the common law
trust which controls all three Of the
operating concerns. The payment to
the trust would be in preferred stock
roughly calculated to have 4 value of
$1,212.7oo.
The move was described as the first
step in . plan offered by the trust for
its own dissolution to meet the terms
OF the "death-sentence" clause of the
Public Utility Holding Company Act
of 1885. This later portion of the
plan would provide for the. sale to
the public or other buyer all Of the
stock holdings Of the trust.
Omcials Of the Washington Gas
Light Co. simultaneously filed the
proposal for the purchase of the two
suburban concerns with the District
Public Utilities Commission. They
said 1t was by pure coincidence" that
the plans were filed with the two COM
missions within a fews hours after
President Roosevelt announced he be-
lieved that all holding companies
should be eliminated.
Long Has Considered Plan.
For about two years the trust has
been considering plans for ending its
control over the local operating plants
or Tor its own dissolution, but from the
first 1t has insisted that the initial
step should be for the WASHINGTON
company to buy from it the Hyatts-
vile and the Alexandria concerns.
The District commission twice has re-
jected these purchase proposals on the
ground the requested price was too
high.
The first proposal by the trust was
for payment Of . total of $l,375, 900
for the suburban concerns. The other
represented total price Of $3.50. 900.
The Washington and Suburban Cos.
IS Massachusetts common-law trust
which represents the Chase National
Bank and associated financial con.
Germs. Its proposal to the S. E. c. is
described Is the first definite plan
to be laid before the Federal agency
calling for ultimate dissolution of
holding companies which come under
the death sentence" provision and
for the substitution of independent
control over "inteerated" operating
companies.
Present Trust Holdings
The trust now owns 327,588 shares,
or 83.9 per cent, of the Washington
company. 1t also owns all the stock of
the washington Suburban Gas Co. of
Hyattsyille, consisting of $500 shares
of no par value, and OF the Alexan-
dria Gas Co. of Alexandria, Va, con-
sisting of $500 shares of no par value.
The trust also controls the Richmond
Gas Co. of Staten Island, N. Y.
The proposal is that the Washing
ton company issue S,l00 shares of $3.50
cumulative, convertible preferred stock
OF no par value, in exchange for the
two suburban concerns, including
1921 900 Of Hyattsville company bonds
due in 1948 and per cent promissory
note for $271, 1927 given the trust by
this concern.
This transaction, however, would
be subject to debt owed to the trust
by the Alexandria company. This is now
. 6 per cent demand note of $675, ,000
The trust proposes to write OH"
$l75,000 Of this sum, and to convert
this obligation into a per cent note
Of 100000, which the Washington
company would have an option on buy
ing within one year in exchange for
400 additional shares of the $3.50 pre-
ferred stock or by the payment Of
$427 900 in cash.
Guide In Calculating Value.
The proposals themselves did not
calculate the value of the proposed
new stock issues, but the Washington
company used recently market prices
for its preferred stock as . guide, or
$97 share. For the proposed issue Of
S,100 for the two properties on the
basis stated above, this would amount
to $7S5, TOO. With the additional issue
Of 400 shares to cover the cost Of
retirement Of the 100000 Alexan-
dria company debt to its parent, there
would be an additional $427, 900.
bringing the prospective total cost to
$1,2l2.700. Ofncials explained that
at the time Of the actual issuance Of
the additional stock the market quo
tations might be somewhat different,
which would change the estimated
price.
The Districts Commission is ex-
pected to order q public hearing on
the plan before it takes any formal
action. Commission members said
they had not yet studied the pro-
pcsal. Whether the District Com
mission or the s. E. c. would act
f1rSt WAR mt detArnined