Evening star., 1944-02-02
Proposed Purchase
Of VPS Is Outlined
To SEC by Wood
President Explains Plan
To Commission at
Philadelphia Hearing
BY the Associated Press.

PHILADELPHIA, Feb. 2.-Willian
E, Wood of Alexandria, Va, presi.
dent of Virginia Public Service Co.
outlined for the Securities and Ex.
change Commission yesterday thu
steps by which Engineers Public
Service Co. proposed the purchase
of Virginia Public Service from
General Gas & Electric for s2,.
100000 and its subsequent merger
into an Engineers subsidiary, Vir.
ginia Electric g. Power Co.
Mr.. Wood said he became presi.
dent of VPS in 1941 after IS year.
of service with Stone & Webster Co
and Engineers Public Service, but
that he knew nothing of a merger
offer until it was presented to him
by Engineers President Donald C
Barnes, last August.
Mr.. Wood presented the offer t
his company's Finance Committee
OF which he was member, but de.
cided to leave the matter to thu
other members because of his previ.
GUS afflliation with Engineers, Mr.
Wood said.
Il refused to break a tie" he testi-
fed.
1t was said that General Gas &
Electric considered Engineers Sep
tember offer of s2,5OO,OOO for its Vir-
ginia subsidiary advantageous" A
Commonwealth Electric Cooperative
inadequate" offer of $3.50, 900 for the
common stock alone, made October
10, was followed by a written pro-
posal offering to pay s1,2O0,oOO fol-
VPS common stock exclusive of an
escrow claim.
On January 20 Commonwealth
Electric Cooperative made thirc
offer - S3,075 900 contingent or
financing through revenue bonds.
Mr.. Barnes said that further econ.
omies would be realized through re-
tiring S26,000,000 principal amount
of VPS 3s4 per cent bonds and $10,.
100000 of its per cent debentures
In their place Virginia Electric
would issue $24,50O,OOO of 31a pei
cent bonds and $5,000,00O of "a pei
cent serial notes, resulting in g
S6l0,051 annual interest saving.
These economies and improve
ments in capital structure will ulti-
mately assure more adequate serv-
ice and lower rates than could be
provided if the two companies were
operated separately but under pres
ent tax laws The bulk of these
economies will have to be paid over
to the Federal Government in in
creased income taxes" Mr.. Barnes
continued.
Postwar Rate Cut Seen.
After the end of the war
it is anticipated that tax rates will
be substantially reduced, and these
savings can then accrue substan-
italy to the benefit of consumers in
reduced rates and in part to invest
ors in increased dividends"
The limited right to be heard
IN proceedings was extended by
Trial Examiner Richard Townsend
to attending representatives of g
Eumper OF virginia municipalities
and individuals, including: T. A.
Jeffries, Culpeper, president of Com
monwealth Electric; Monroe Open.
heimer, Washington, Cooperative
counsel, and c. S. Hooper,, Crewe
secretary treasurer; G.. F. Houl-
singer. Harrisonburg, president ot
the Virginia Farm Bureau Fedora
ton; DR.. j. I. Marquis, Berksville
representing the National Grange
and the State Grange of Virginia
w. E. Moore, an attorney represent
ing Staunton, Waynesboro, Char
lottesville and the Board of Super
visors of Augusta County; J. E
Long, Harrisonburg, representing the
Shenandoah Valley Electric Co., and
H. w. Knoell, town manager OF
Orange.