Evening star., 1940-05-25
Hearing Slated
On Rail Bond
Compromise
Washington Railway,
Capitol Trunsit Seek
To Settle Litigation

WILL IlOlu ucdIllk OIl Ilc pro-
posed compromise agreement by
which the Capital Transit Co. and
the Washington Railway and Elec-
trio CO. plan a modification. as
sumption and guarantee" of more
than 100000 of the per cent
bonds of the Anacostia & Potomac
River Railroad Co., and of the City
& Suburban Railway. A date for
the hearing has not been set.
The proposed agreement, which
must be approved by bondholders
holding 80 per cent of the bonds
before it could be effective, would
provide "a like amount" of Certifi-
Gates of Modification, Assumption
and Guarantee, for $2,097 900 S per
cent first mortgage bonds of the
Anacostia road, and 81 ,342, 900 5 per
cent first mortgage bonds OF the City
and Suburban Road The maturity
date of the Anacostia bonds would
be extended from April /, 1949. to
December l, 1851, and the maturity
date of the City and Suburban
bonds would be extended from
August l, 1948, to December /, 1851.
There would be reduction of in
terest on both from per cent to
324 per cent.
Would Settle Litigation.
The Washington and Capital COM
panieS desire to consummate the
proposed transaction, according to
their application to the Public Util-
tiles Commission yesterday "in order
to obtain a settlement of certain
litigation" Four suits filed by bond
holders against the two companies
would be dismissed under provi-
sions of the agreement.
Norman Frost, of counsel for the
bondholders, said: The plan as
worked out is a good one for the
bondholders and we are recommend
ing to all of our clients (holding
about $500 .000), that they accept 1t.
1t seems a fair compromise, and rail-
road officials have been fair in
helping to work it out. We partici-
pated in preparation of the proposed
compromise agreement Certain
notifications were made at our sug-
gestion. The present proposed
agreement was made with our full
approval and knowledge"
If approved by bondholders, hold
ing at least 80 per cent of the face
value of the bonds, the plan would
become effective as of April /. 1910,
but if conditions laid down in the
companies application are not met
to the satisfaction of the companies
on or before October /, it was said
the plan may be abandoned.
Certain Bondholders Excluded.
Neither the Capital Transit Co.,
as holder of S334000 principal
amount of the suburban bonds, nor
the holders of the s455, 900 principal
amount of Anacostia bonds, which
heretofore have been guaranteed by
Washington Railway g. Electric and
which the Capital Transit has un-
dertaken to pay. will be entitled to
participate in the new plan, which
involves only the "unguaranteed"
bonds.
If the plan becomes effective the
Capital Transit Co. will "uncondi-
tionally assume liability" for prin-
cipal and interest on the Anacostia
and Suburban bonds, the holders of
which have assented to the plan,
and the Washington Railway a.
Electric Co. will Internationally
guarante such assumption.
II the plan becomes effective the
bonds in question, which now are
not legal for trust funds. would be-
come legal for trust funds.
The proposal sets up as depositaries
to receive the old bonds the Riggs
National Bank, the National Metro
politan Bank and Safe Deposit and
Trust Co. of Baltimore.
Procedure for holders of bonds
who agree to the plan is outlined.
They may deposit their bonds with
one of the depositaries on or before
October l. Certificates of deposit
will be issued with respect to the
deposited bonds in maximum
amount Of $3,439,0OO.
PROCEDURE Explained.
Each such certificate of de-
posit," it was explained, will en-
title the holder thereof, upon effec-
tlveness Of the plan, and upon sur
render of such certificate to one of
the depositaries, to the Anacostia or
Suburban bond with respect to
which such certificate was issued,
with a certificate of modification
assumption and guarantee and ap-
purtenant coupons affixed thereto as
provided in the agreement. In the
event that the plan does not become
effective, such certificates of deposit
will entitle the holder to the return
OF the Anacostia or Suburban Bond
with respect to which such certifi-
cate was issued, together with the
sum OF money, if any, deposited with
such bond in connection with the
issue of such certificate of deposit" I"
Each of the unguaranteed bonds
was selling on the Washington
Stock Exchange in the 4O's before
Institution of the litigation. The
price rose until last year Anacostia
reached a high of 97ss with low
OF 81; while suburban reached a
high of 98 and low of SO. This year
Anacostia reached high around
lob, before the break in the market
recently on account of the war.
Yesterdays Quotations.
Yesterday Anacostia bonds on the
local exchange stood at 101 asked,
and 961a bid; while the same bonds
guaranteed drew q bid of 1861
City and Suburban fives stood at 101
asked, and SO bid.
In the suits filed in court, bond
holders contended that the Wash
ington Railway & Electric Co, and
Capital Transit Co., having taken
over the assets of the two old roads
and having disposed of many of the
assets, which were security for the
bonds, should by legal implication
be forced to guarantee the bonds.
Washington Railway g. Electric