Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-08-29
Early Action Likely
On Pepeo Plan for
Bond Issue
Utilities Commission
And S. {. c. Told Of
Company Needs
BY WILLIAM J. WHEATLEY.

The District Public Utilities Com
mission is expected to consider today
the application Of the Potomac Elec-
trio Power Co. to issue and sell to
the Metropolitan and Mutual Life
Insurance Cos. $l0,0O0,000 in first
mortgage bonds.
The Securities and Exchange Com
mission is expected also to give
prompt consideration to the matter,
which was the subject of a public
hearing yesterday in a precedent
making joint session of the two
bodies.
Increased heavy demands on its
facilities by the Governments ma
tional defense program, augmented
by the private demands due to
rapidly expanding population in
crease, will force the Potomac Electric
Power Co. to borrow next week ST.
250,000 to finance it's immediate
needs, A. G. Neal, president of the
company, told the commissions.
Mr.. Neal said that it would be
necessary to do the short term
financing through banks, unless the
two commissions granted permission
for the issue which is needed to
cover a two-year program for in
creased facilities.
Mr.. Neal explained to the Joint
body that the Board of Directors OF
Pepco had authorized the borrowing
of $2,250,000. OF course, 1t was ex-
plaited, that If the commissions
granted the authority early next
week 1t would not be necessary to
borrow these funds
Plans already have been COM
pleted for selling the entire issue
to the two insurance companies on
what was declared to be an ad-
vantageous contract. He testified
that the part of the bonds would be
delivered Immediately, and the re.
mainder in two additional INSTALL
ments. covering a period of 60 days.
The company would thus save the
interest for this period, he said.
A bond sale was considered more
advantageous than a stock sale,
Robert v. Fleming, president of the
Riggs National Bank and director
OF the company, told the commits
sions. Mr.. Fleming also testified
that he was a director of the
Metropolitan Life Insurance Co., but
that he took no part in the con-
sideration by that company of the
purchase of the bonds. He also said
that he had nothing to do with the
selection of the companies to which
it is proposed TO sell the bonds.
Commissioner Richmond B. Keech
of the local commission asked If it
was not for the present condition of
the stock market whether Mr.. Flem-
ing would favor a stock issue. Mr..
Fleming said that the hazards of
marketing would be to- great at this
time. Pressing the stock issue point.
Commissioner Keech then asked if
Mr.. Fleming would be inclined to
favor an issue of stock as against
bonds, if it did not interfere with
any orderly proceeding to merge the
Washington Railway e. Electric Co.
and the Potomac Co., which is who'll
ly owned by the former Mr.. Flem-
ing responded that If the merger
PROBLEM was out of the way he would
favor an issue of stock.
Further pressed by the stock issue
inquiry, Mr.. Fleming said that be-
fore any one can expect a good mar
ket for stocks, there will have to be
more certainty on the tax policy of
the Nation.
Frederic Brandt Of Dillon, Reed e.
Co., who negotiated for the sale of
bonds, also told the commission that
this was not good time to float a
stock issue.