Evening star., 1941-04-07
u. 6. |. Chief Reveals
He Set S43Limit on
Connecticutlight
Even at That Figure,
Holding Firm Faces
$4,000 Loss
Py the Associated Press.

By the Associated Press.
William w. Bodine of Philadel-
phia, president of the United Gas
Improvement Co.. told the Securi-
ties Commission today that he had
insisted on a price Of $43 g share in
arranging for the sale of 701,253
shares OF common stock of the Con-
necticut Light g. Power Co. to q
group OF underwriters for resale to
the public.
Even at that price, which he con-
sidered high" in view of current
conditions, Bodine testified, U. G. I.
would lost about $4,000 on the orig
inal cost of the stock, which was
$685. share, plus selling expenses,
and Is carried on the books at $780,
000, 1000.
Negotiations Disclosed.
The hearing was called by the s.
z. C. to consider the application
filed by the holding company for
sale Of the stock, which represents a
81 per cent voting interest in the
Connecticut utility. The s. E. c.
had reached a tentative conclusion
that U. G.. I. must dispose of this
controlling interest in compliance
with the so-called death sentence
of the Holding Company Act.
Virtually all of the morning testi-
mony was devoted to the question
of how Bodine instituted discus
sions with Drexel g. Co., Philadel-
phia investment bankers, and how
he arrived at the suggested price
of S43.
John Houser, S. z. C. attorney,
brought out that the underwriters
had not made a firm commitment
as to the price, but that this matter
was to be considered later today in
Philadelphia at meetings of the
underwriters and the U. G. I. di-
rectors.
Bodine left for Philadelphia i'm
mediately after testifying. He said
that Drexel g. Co. had not sug-
geSted a price to him, but that he
had told them that the price had
to be at least S43, with a spread
of So, giving U. G. I. net of $40.
The proposed spread was given as
20 cents to the managers Drexel
& Coz, 81 to the underwriters and
Sl80 to the distributors or selling
group,
Sharp Decline Cited.
Bodine testified that between the
time the S. E. c. issued its tentative
conclusions on u. G. I. on January
% and March Is the over-the-
counter market price for U. G. I.
had declined from So 2-55 to 43-45,
or 10 per cent, while a comparable
stock, that of Hartford Electric
light Co., had declined only 9.5 per
cent.
Bodine. asked whether the di-
rectors had considered disposing of
the Connecticut light interest other
than by direct sail, said they had
rejected proposals for distribution
of the stock to U. G. l. stockholders
dIlu lOi plO-l dJC cIlllS AOl pun
chase by stockholders.
He listed these reasons for turning
down such distribution proposals:
!. The U. G. l. would lose the asset
and income value of the Connecticut
light stock if physical distribution
were made, whereas if 1t were sold
for cash the money could be put to
work elsewhere.
2. Physical distribution would
mean a charge of about $28,00O, 900
against the surplus, which would
then be reduced to about $4,000, 900.
3. U. G. I. would not be able to
declare dividends until its surplus
had been restored, which would work
a hardship on small stockholders
Bodine noted that U. G. I. had payed
dividends every year for SIS years.
High Costs Considered.
He said about $4,000 u. G. I. stock
holders would receive only warrants
for fractional shares of Connecticut
common because of their small hold
ings of U. G.. I. stock, and that