Evening star., 1939-04-18
Hearing Studies
Proposed Gas
Merger Terms
EIeen Asks Doto
On improvement
Program

Officials of the Public Utilities
Commission today examined sharply
into the claims of the Washington
Gas Light Co. that it would be bet
ter off financially if it were permit
ted to buy the Hyattsville and the
Alexandria gas concerns from the
trust which controls all three.
The Washington company pro-
poses to issue preferred stock valued
at some s1.250000 as payment to its
parent, the Washington e. Suburban
Companies, a Massachusetts COM
mon-law trust, representing the
Chase National Bank and affiliated
financial interests.
Commission Chairman Riley E.
Elgin insistently inquired of Robert
c. Overs, vice president and treas
urer of the Washington company,
how it could provide s128,OOO of
needed additions and betterments
this year with an increase of but
s2460O in additional net income
which Mr.. Overs had estimated
would result from the merger.
Mr.. Overs replied that in addition
to this estimated increase in net in
come there would also be some s25,-
600 in additional retirement reserves,
resulting from merger, which could
be employed.
Would Invest More.
But that still would leave YOU
some $4,000 short in meeting the
prospective additions and better
ments, would it not?" Mr.. Elgen
asked.
In the course of lengthy ex-
planation of the financial picture
Mr.. Overs agreed that lin the course
of time the Washington company
would be obliged to invest additional
sums beyond the original invest
ment." He insisted the prospective
additional earnings would be sufi-
ciently large and added that he knew
of no growing public utility in the
country that financed necessary new
investments out of earnings.
Mr.. Elgen and Commission Vice
President Richmond B. Keech both
brought out the point that the
Washington company would be ex-
pected to pay dividends on the pro-
posed new issue of preferred stock.
Mr.. Overs occupied the witness
stand during the entire day yester-
Gay and was questioned closely by
Mr.. Keech.
Price Said to Be Lowest.
Taking up the price, Mr.. Overs
yesterday told the commission
81 ,250.000 is the lowest price that
the Washington Gas Light Co. would
be able to get sellar to agree to.
This is the third effort of the
company to negotiate the purchase.
In 1896 it offered S1.375,O00. The
commission turned down the appli-
cation saying the price was too high.
A year later the company offered to
pay S1.275,000. but withdrew the
proposition before it was acted on
by the commission.
Mr. Keech was particularly in
quisitive about the payment in pre-
ferred stock. Would not the issu-
ance OF such stock, he asked Mr..
Overs, preempt the field for future
issuance of common stock by the
local company?
Mr.. Overs replied that the low
price at which the companies could
be acquired was contingent on pay
ment in preferred stock. He said
that earnings in excess Of the pre-
ferred dividends are reasonably as
sured because of the low cost price.
He added, however. that he had no
objection to common stock.
Figures filed with the commission
by Mr.. Overs indicated a general
increase in the net earnings of both
companies over a period from 1882
to 1888. The book value of the Sc
curities the company proposes to
acquire is 5000 678 in the case of the
Alexandria company and s71e,2O2
IN the case of the Hyattsville COM
panv.
Mr.. Overs predicted growth of
business at the same rates in Alex
andria. but foresaw lower rates for
the Hyattsville area in the future.