Evening star., 1938-08-10
MORTGAGE FIRMS
ASK FOR TENDERS
S23,800,G00 Liquidation
Deal to Be Achieved With
Sale of Assets.
Special Dispatch to The Star.

BALTIMORE, Md. Aug 10.-One
OF the largest real estate bond liqui-
detion plans of recent years was an
nounced today when holders of $23,-
100000 Of debentures Of 13 mortgage
companies were asked to submit ten
ders on their holdings before Septem-
Der 9. The tenders have been re-
quested from more than 10000 known
holders in all parts Of the country
by the respective debtor corporations
and by Maryland Casualty Co.. which
is the guarantor Of interest, but not
of principal, on the issues in question.
The corporations whose debentures
are involved are: American Deben-
ture Corp. Calvert Debenture Corp.
Carolina Debenture Corp. Continental
Debenture Corp, Continental Invest
ment Debenture Corp, Franklin De-
benture Corp, National Debenture
Corp Potomac Consolidated Deben-
ture Corp, Potomac Debenture Corp,
Potomac Franklin Debenture Corp,
Potomac Maryland Debenture Corp.
Potomac Realty Atlantic Debenture
Corp ano Standard Debenture Corp.
Issued in 1884.
The debentures of the above named
corporations were issued in 1884
under a mortgage refunding plan in
part exchange for the defaulted mort
gage bonds Of predecessor companies.
Holders at that time received $500 in
cash from the proceeds OF loans
granted by the Reconstruction Finance
Corp ane $700 in debentures for
each 81 900 bond. Twelve Of the l3
companies have subsequently repaid
their r. F. c. loans.
The call now being issued for tenders
of the debentures, which is an impor-
tant step toward final liquidation OF
the 13 corporations. contemplates the
repurchase and cancellation Of de-
bentures through application Of the
proceeds and sale Of real estate and
mortgages now held by the 13 COM
panies. Included with the call for
tenders is a table setting forth the
estimated liquidating values of the
debentures of each Of the 13 COM
panies, based upon current valuation
Of. their cash, mortgages and real
estate holdings.
In requesting tenders, the l3 cor
porations state that the debenture
agreements apparently require the
companies to apply the proceeds from
sale of their assets to the purchase
of debentures at the best prices OBJ
tainable, even though such prices may
be in excess OF liquidating values. The
corporations point out, however, that
if debentures are purchased by them
above liquidating values. the corpora
tions may exhaust all their assets be-
fore all the debentures are acquired.
It is also pointed out that those per-
sons who elect to hold their deben-
lures or who are unsuccessful in dis
corporations might thus receive no
principal payment whatever at ma
turity. The corporations have there
fore undertaken not to pay more than
liquidating value for any debentures
until court ruling has been obtained
on this point.
Does Not Limit Price
The statement to debenture holders
makes it clear, however. that this does
not limit the price that Maryland
Casualty Co. may pay for any de-
bentures rendered. The statement
further makes clear that the corpora
tions, in accordance with any court
ruling that may be obtained, may sub
sequently repurchase from Maryland
Casualty Co. any debentures acquired
by the Maryland on this request for
tenders, regardless of liquidating
values.
j. G. White & Co., Inc. of New
York, and Baker, Watts Il Co., Stein
Bros. & Boyce and Colonial Bond &
Share Corp, all Of Baltimore, will act
as agents to receive tenders from de-
benture holders. Information con-
corning the plan may be obtained from
any of the foregoing firms, two of
which, Baker, Watts & Co. and Stein
Bros. Il Boyce, were sponsors Of the
mortgage refunding plan in 1894.
Tenders must be received before Sep
tember 9.
A joint statement of the 13 deben-
ture corporations. in explanation of
the plan, says: 1.-THE properties which
the corporations still hold include
relatively small number Of business
buildings and apartment houses and
large number Of small, single-family
or duplex homes, all Of which are at
least 10 years old or older. For the
most part these small properties are
in comparatively bad repair. To re-
store them to good condition and
thereby check present severe deprecia-
ton would require funds substantially
In excess OF those which are available
to the corporations.
1T is therefore believed that early
sales are desirable. Within the past
few months, however, sales have felt
the effects of general business condi-
tions and competition from other FORE
closed properties on the market and
from new construction. It is never
theless believed that the corporations
will be able to dispose of all their
properties at approximately the val
ues placed thereon in the computation
of their estimated liquidating values"