Evening star., 1944-12-21
Bonds
Continued From First PAGE


proval of the two commissions.
In view of its rejection, the next
move apparently was up to the COM
pany, which presumably had the
right to entertain new bids and SUBJ
init them. A company spokesman
said officials were comforting with
attorneys and 1t was not yet known
what would be done.
At the SEC offices in Philadelphia
it was indicated that the imme-
diate question before the Fedora
agency had been disposed of with
the order of disapproval. and moth
ing further was before it.
Can Consider Later Bids.
A spokesman for PUG pointed out
that the company had been granted
permission to issue the bonds, and
the price to be paid for them was
the only matter requiring approval
There was nothing to prevent con-
Sideration of further bids, he indi-
Gated.
The bids were advertised under
the competitive regulations of the
SEC. The commission, after re-
jecting the one bid in brief order,
said complete opinion, giving in
full reasons for the conclusions,
would be issued later.
Under the bid the syndicate would
have paid $3.50 for the bonds and
sold them to the public at par value
of 500, with the difference, referred
to by the SEC as the spread" used
to finance the transfer of securities
through brokers and banks.
Wide local interest had been ex-
pressed in the issue, with many
prospective purchasers making in
quiries
Pool Expresses Surprise.
Officers of the investment firms
which formed the pool to buy the
bonds expressed great surprise al
the order of the two commissions
but withheld further comment.
Managers of a number of the
firms testified before the SEC in
Philadelphia. But the hearing was
executive and the brokers were
questioned individually by Robert
Krause, SEC general counsel, with
the others barred from the hearing
| room.
E. D. Merrill, president of the
Capital Transit Co., who also was
witness, said the company had ex-
pected higher bid, but decided to
accept the single one offered be-
cause "the bid is known and 1t
might be hard to get another"
The company's Board of Directors
took up the bid Monday and voted
to approve it. Although not en-
tirely satisfied, Mr.. Merrill said, he
was inclined to 60 along with
this bid.
Dillon, Read &. Co. was retained
by the utility as financial adviser
and their idea of a price was a
little lower than mine," Mr.. Merrill
added. Alexander Brown & Sons
had been slated to act along with
Dillon in advising the company, Mr..
Merrill told the commission, but
was dropped when 1t was learned
that the Baltimore company might
be interested in offering a bid.
Many Questioned by SEC.
Those who appeared before the
SEC included Y. E. Booker of WASH
ington and Charles S. Garland of
Baltimore, partners Of Alexander
Brown g. Sons; Amyas Ames of
Kidder, Peabody g. Co., New York;
James Nolan of Folger Nolan, Inc,
Washington; A. H. Wenzell of the
First Boston Corp, New York;
George j. Leness of Merrill, Lynch,
Pierce, Fenner g. Beane, New York,
and F. T. McChntock of Hartman,
Ripley & Co., New York.
Other witnesses included Frank
H. Heiss, special counsel for the
Capital Transit Co., and j. E. Her
berle, vice president and comptrol-
ler.
Issuance of the new bonds to re-
tire outstanding securities would re-
suit in saving the company $136, ,0OC
annually in interest payments, Mr.
Herberle said.