Evening star., 1940-08-30
Holders Must Decide
October 10 on
Transit Offer
Anocostiu & Potomac
And City & Suburban
Bonds Affected
By EDWARD C. STONE.

on the compromise offer of new
bonds paying 3&4 per cent interest
made by the Capital Transit and
Washington Railway g. Electric Cos.
The two issues total 3,489 900, are
listed on the Washington Stock Ex-
change and are nearly all held by
Washington investors.
October 10 is the final date for
accepting the modification, assump-
ton and guarantee plan" reached
between the bondholders Protective
Committee and the two utility cor
porations. Before that date the old
bonds must be deposited with desig-
mated banks if the holders wish to
make the exchange. While the new
plan explains at length the status
of the bondholders who accept 1t,
vet little is said about what may hap
pen to investors who do not elect
the compromise.
Few of the bonds were deposited
during the summer months, it was
said in the financial district today.
However, recently, much more in
terest has been displayed and the
bonds are coming in rapidly. Many
are being taken to investment houses
where dealers are transmitting them
to the depository banks, the Riggs
National and the National Metro
politan. These firms have the blanks
which the holders have to fill out.
New Bonds Guaranteed.
While the new bonds will bear a
lower rate of interest, 3A per cent,
they will have the advantage OF the
unconditional guarantee OF the
Washington Railway g. Electric Co.,
as well as the full assumption by the
CAPITAL Transit Co., which will
naturally give them higher rating
than they now carry.
Investment dealers believe they
will enjoy a better market. When
liability for final payment OF the
bonds became questioned, some OF
the leading bond rating houses In
the country lowered their rating
sharply. Under the new plan, 1t is
said that the bonds will become legal
investments for trust funds in the
District and for investment by banks
and trusU companies. To make the
new plan effective, 80 per cent OF
the holders of both issues must as
sent to it. After october 10, If not
accepted by the bondholders, the
companies may abandon the plan.
Suits Pending in Court.
The plan, as announced several
weeks ago. is compromise between
the Protective Committee for the
,bondholders and the officials of the
two companies. Suits are pending
IN court over the liability of the COM
panies for payment of the principal
when due. The companies never
admitted liability for such payment
although they called attention to the
fact that the interest always has
been paid in full when due. All
court action will naturally be
dropped if the new plan goes into
effect.
Many questions have been heard
In the financial district as to what
might happen to holders of the
bonds in case they prefer to insist
on their 5 per cent interest in pref
erence to the securities with the
lower rate. The agreement does not
contain any provisions respecting
the rights of non-assenting holders.
The Capital Transit Co. intends to
meet the interest payments uhtll
maturity of the bonds, the pros
pectus says, but has not determined
what action it will take as to pay
ment of the principal ION nom
asserting bonds of either issue"
Prices of the bonds have varied
greatly. When uncertainty devel-
oped over payment of liability, both
issues took a sharp drop, selling
down into the Cos. When the COM
promise plan was announced, they
moved up rapidly and crossed par.
The last sale in Anacostia bonds was
recorded at 1922. The bid for both
issues now stands at 101, with 103
asked. The guaranteed" Anacostia
per cent issue is quoted 10 points
higher than either of these issues
on the Washington Exchange.
Commodity Hedging Favored.
William Reid, partner of J. S.
Bache & Co., back from two weeks
in Georgia and the Carolinas, said
today:
Cotton mills with few exceptions
reported business good and prices
satisfactory. The cotton crop looked
better than last year. The crop,
however, is late and early frost
could, of course, have considerable
effect.
Cotton, wheat and corn prices
are bound to be sustained in con-
siderable measure by Government
loans. However, as long as conti-
mental Europe is excluded from the
worlds markets it Is difficult to see
how any material rise in commodity
prices generally can be sustained.
I, consequently, favor fully hedged
position"
c. & P. to Spend Sl,391 900.
Expenditures amounting to 1.391,-
600 for the construction of telephone
plant and installation of equipment
in the District of Columbia were
authorized by directors of the Ches-
epeake & Potomac Telephone Co. at
their regular meeting yesterday,
Charles A. Robinson, vice president
and general manager, announced
today.
Approximately s14500O will be
spent to install private branch ex-
change and associated equipment
for six of the company's largest
business subscribers, STAT. 900 for ad-
ditional dial equipment and $500. 900
for underground cable. So far this
year $8,725,000 has been voted for
plant improvements. Mr.. Robinson
said.
May Serve as Secretary.
Philip o. Coffin, vice president
and director of the Chesapeake g.
Potomac Telephone Co. of WASH
ington and the companies in Balti-
more, Virginia and West Virginia,
has been granted the right by the
Federal Communications Commits
sion to hold the additional position