Evening star., 1939-06-16
$1,050,O00 Limit
Set as Purchase Of
Gas Firms Is Denied
Utilities Commission
Indicates 1t Would
Approve q New Plan
By DON S. WARREN.

Alexandria gas concerns from its
parent trust, the price must not ex-
ceed $l,050,000 and payment made
by common stock, as against pre-
ferred, the Public Utilities Commits
sion ruled today. The price cut
would amount to l6 per cent.
The commission denied the appli-
cation of the Washington company,
on which public hearings were held
in April, but it indicated it would
approve deal on different basis,
provided such petition is filed by
August l.
The Washington company had
proposed to pay $l,250,000 to the
parent trust in the form of l2,255
shares of $3.50 cumulative preferred
stock. This, the commission denied
on the ground the price was too
high and the method of payment
not desirable.
Stock Would BE Issued.
Payment would be made by is
suance of not more than 5000
shares of common stock. Solely for
the purpose of such deal, the COM
mission figured price of not less
than $50 per share would be ''rea-
sonable."
Spokesman for the Washington
company withheld any formal
statement for the time being.
Marcy L. Sperry. president of the
Washington Gas Light Co., said a
reply certainly would be made by
August Il, that he would place the
proposition before his Board of Di-
rectors and that it would be nee
essary to consult the owners of the
companies. meaning the trust.
Since September, 1886, two other
purchase petitions have been de-
MED, partly on the ground the
price was too high, and a third petit
ton was withdrawn when adverse
action was anticipated.
In the present case the commits
sion agreed with the persistent
claims of the companies that con-
tinuation of common control of the
three was desirable" but in the
same order it cited difficulties it
could, see in the ownership of the
suburban concerns by the WASH
ington company.
Some of Difficulties.
One of these was stated to be the
lack of control the District Com
mission has over either the rates or
capital expenses of the Hyattsville
and Alexandria concerns, which are
under State regulation Another was
the different rates. A third was
that the Washington company would
become responsible for the financial
needs of the suburban concern. In
this connection the commission said,
a if merger were approved, "the bur-
den of financial extensions would
fall upon the Washington company.
The record discloses that $127 900
will be necessary for the purpose in
1939.'
The Washington company and the
two suburban plants are owned by
Washington & Suburban Co.'S, a
Massachusetts common law trust,
representing the Chase National
Bank and affiliated interests. At
the hearing it was disclosed that
the r. F.. C. has some of the shares
Of beneficial interest in the trust.
Duty Is Cited.
In its order the commission en-
phasized that the duty imposed
upon it by Congress lis to safeguard
the interests of the users of utility
service within the District and to
see that no burden be placed upon
a utility that might in any manner
or to any degree imperil, hamper
or lessen the ability of a utility to
secure new capital in order to pro-
vide necessary and adequate service
within the District"
On the controversy over the
method of payment, the commission
said:
"As to the method OF acquiring the
stock and obligations of the two
companies. consideration should be
given to the present and future. It
Is imperative that no undue burden
be placed upon the financial struc-
ture OF the Washington company by
the issuance Of too large an amount
of bonds or preferred stock. Such
procedure would tend to limit the
possibility Of future issuance Of COM
mon stock and might render difi-
cult the issuance of preferred stock
at a reasonable figure. The issuance
OF common stock would, at the time
of favorable common stock market,
permit the Washington company to
utilize that medium for obtaining
necessary capital, whereas, should
there be no market for common
stock, the Washington company
would be In a far better position to
obtain money at reasonable figure
by the issuance of preferred stock.
The testimony clearly indicates that
s,,ch arn,Iisition sho,lld he accnm. .