The Western news. [volume] (Libby, Mont.) 1933-current, 1939-06-29
Explains Reorganization
Plan of Power Company

~ A0AA0ff 81 SbetNNtAANAAN -
ceived today from z. E. Merrill.
president of the Mountain States
Power Company, in connection with
the plan of reorganization of Noun
tain States Power Company.
Naturally j am pleased that the
Federal Securities and Exchange
Commission, an agency charged with
protecting the interest of investors
in public utility securities, has APP
proved the plan of reorganization of
Mountain States Power Company as
fair and equitable to the preferred
stockholders and to all classes of
security holders of said company.
The plan approved by the commits
sion was originally filed in approx
mately its present form, jointly by
the company and the committee rep
reSenting the preferred Stockhold
ers. The company, in these proceed
ings. is in effect acting as trustee
under the direction of the federal
court and as such trustee must give
careful consideration to the rights
of all classes of its investors and IS
also charged with the responsibility
of contesting the claims of all cred
i itors whose claims can be justifi
ably questioned.
The present plan of reorganiza
ton provides that new bonds shall
be issued to present bondholders
in exchange for their present sc
and Sc bonds It also provides that
present preferred stockholders will
receive one share Of new $4,000 par
value Sc preferred stock and also
two shares of new no-par common
stock in exchange for each share
of present preferred stock. Pres
ent common stockholders are given
a small amount of new common
stock on basis of one share of new
common stock for 20 shares of pres
ent common.
New common stock is given to
Standard Gas & Electric Company
in settlement-nf its claim against
Mountain States Power Company,
which claim was contested by both
the company and the preferred
stockholders committee and re-
duced by approximately s4,l00O00.
4 TO summarize. the plan provides
that, to the extent of 500 of the
par value of the outstanding pre-
ferred stock all Of which was prev
iously subordinate to the $1,000, 000
claim of Standard Gas & Electric
Company. present preferred stock
holders will rank entirely ahead OF
Standard Gas & Electric Company
and will also receive more than
42i2G Of the new common stock
Inasmuch as both the new preferred
and common stock will have one
vote per share, the stock to be re-
ceived by holders of present pre-
ferred stock will carry more thar
52l2@ of the voting power of the
recognized company. The settle
ment with Standard Gas & Electric
Company includes not only its oper
account claim of 100000 but also
its holdings of more than 62ao of the
present common stock.
During the progress of reorgan.
ization the market price of the pre-
ferred stock has increased more
than five times from low of SIT
per share to the present price of be.
tween $500 and $4,000 per share
I wish to particularly emphasize this
point because of statements which
have been repeatedly made by unin-
formed persons seemingly attempt
ing to alarm and brighten the com
pany's preferred stockholders into
selling their securities for less thar
their true value Unfortunately
some stockholders, regardless of as
surances from the company man.
agement during the past Is month.
that their stock had substantial val
ue, have listened to statements tina
said securities were of questionable
or little value and have disposed
of these SECURITIES ar material loss
Stockholders are again warned
against believing statements of un
informed persons whose only inter
est is in some scheme by which they
; may personally benefit
THE company will Immediately
file its petition with the fedora
court asking for approval of tn,
plan and it is hoped that furthel
proceedings can be consumated il
the shortest possible time. How
ever, | wish to advise that said pro
ceedings are bound to be time con
Stunning and no one can at this tim,
predict just how much time vii
lapse until the plan is finally made
operative.
The commission order provide
that dividends on preferred ant
common stock will be payable onl,
out of earned surplus accruing afte
September 30, 1888, after certain
: deductions are made from salt
/ earned surplus Earnings since Sep
TENDER 30, 1888, are therefore &C
cruing to the benefit of preferred
! and common stockholders and hat
, the plan actually been in effect sine
September 30. 1888, to date, the,
- Mould-h;aNe- been sufficient to per
nit Of the payment of full dividend
for the period Of preferred stool
and a substantial dividend on tn,
common stock for the same period
1t is, therefore, contemplated tina
the company will begin its program
, of payment Of dividends with a sub
, stantial dividend on both the pre-
, ferrcd and common stock immedi
, ately upon consumation Of the re
organization and the plan becom
ing operative Furthermore. til
company will emerge from the re
organization with a much Stronge
cash position than it has ever ha
! since its organization IN 1918.