Evening star., 1945-09-09
Early SEC Decision
Expected on W.R. &E,
SimpIificafion Plan
BY HAROLD B. ROGERS

- A"o AAoAoAii5 SoiAipdiiy oS D.
tenn" which has been pending be-
fore the SEC since June, 1914.
Many informal conferences have
been held between company ano
SEC officials and staff members on
the proposal since the formal hear
ngs on the plan in Philadelphia, in
July 1914.
All stockholders of WRECO are
affected by the plan, it was pointed
out, and there is keen interest
throughout the financial section in
the matter.
Some experts familiar with the
situation are expecting decision by
the SEC in the matter soon. They
point out that the move would be
far reaching in Washington flnan-
cial circles. It would be vital to
WRECO stockholders, clearing up
the uncertainty now due to court
appeals FLED by both the WRECO
and the North American Company
which owns about 80 per cent OF
WRECO common stock, from an or
der of the SEC of April IA. 1912
This order had directed WRECO. Ca
incorporating corcern) to divest it
self of its interests in certain sub
sidiary companies, including the
Potomac Electric Power Co., here
whose common stock is wholly
owned by WRECO.
Preferred Would Be Called.
The plan proposed by WRECO
would involve among other things
calling $7,000000 worth of PEPCO
preferred stock, issuance by PEPCO
Of new ~stock to replace that OF
WRECO, on an exchange basis.
PEPCO would be recapitalized by
increasing its authorized capital
stock from $30.000,O00 to $75 ,0O0,-
900, consisting of 250,000 shares of
serial preferred stock of par value
of Sl00 each and 100000 shares of
common stock of the par value of
$40 each.
Purpose of the plan, in addition
TO meeting requirements of the
holding company act, was said to
be; Ito provide a more readily
marketable common stock of the
Potomac Company, and thus enable
that company to finance its future
capital requirements in part by the
issue and sale of common stock
from time to time, thereby main
tanning a balanced capital struc-
ture and facilitating the procuring
of additional funds by the sale of
senior securities when required
Expressing hope that SEC might
take favorite action soon, A. G. Neal,
president of WRECO yesterday told
The Star, I'VE have utmost faith in
the equity consideration given each
class of security holders"
All outstanding bonds of WRECO
already have been called. he ex-
planned, there are now 65 900 shares
of common stock, and $4,000 shares
of preferred stock of WRECO, a
total of 10000, After the exchange
of securities, he estimates that the
return to investors would be about
the same" as at present.
WRECO common was bid yeSter-
day on the Washington Stock Ex-
change at $40, but there have been
no sales for long time WRECO
per cert preferred was bid yester-
day at 1913. Potomac Electric Power
6 per cent preferred was bid at
10912: and its 512 per cent preferred
at 1081a. Both issues are callable
at 107.
Objection Is Raised.
One point in the proposed plan
has met with objection from COM
mittee representing investors, and
trust departments of local banks
This is the redemption price of the
new per cent preferred stock of the
Potomac Electric Power Co., to be
issued share for share in exchange
for the $4,000 shares of per cent
preferred stock Of WRECO. The
committee from Washington ap-
peared before the SEC at Philadel-
phia. it was explained, objectirlg tc
the price of $120 at which the pei
cent preferred stock is callablt
within the first five years. The COM
nittee felt this price should be SIPS
The WRECO preferred stock is non.
callable, the new PEPCO preferred
would be callable. What the SEC
will do about this difference between
the company's proposal and the re.
quest of investors. remains to bt
seen.
In any case the consummation Of
the plan would require long time
tits believed, even after approval BY
the SEC of the proposal or its mod,
if1cation. The company reserves the
right to abandon" its plan Tc eff
fectuate the plan further action by
SEC, the Public Utilities Commits
sion of the District, and by Congress
enacting new legislation would bt
necessary
In case all this should succeed
the company is on record as beine
willing to voluntarily withdraw it:
pending appeal in the United States
Court of Appeals here from the
April 1912 order of SEC. Still pend
ing in the United States Supreme
Court. however is the North Amer
ican Co.'S appeal from similar
SEC order.
Peoples Drug Sales Rise
Peoples Drug Stores yesterday re.
ported net sales in August this veal
Of S2,907 ,608, as compared witt
S2.810,329 in August 1914. a gain o.
3b per cent. Cumulative sales from
January l to August 81 this veal
were S22 .544,051, compared with S22,'
1Sa.79376, a gain of l.6 per cent
During August this year the com
pany operated 130 stores. as com.
pared with 131 last August.
t Store Volume Unchanged.
department store sales, which
usually increase about Is per cent
from July to August, according tt
the Federal Reserve System showed
little change this year during the
month for the country as whole
although sales In August were abou
6 per cent larger than year ago
The Fifth Federal Reserve distric'
index of sales showed gain of
per cent in sales for the week end
ing September l, as compared will
the comparable week a year ago
Some other districts showed de-
cEeases.
Award Bond Citation.
The Treasury partm n I
through Wilmer j. Waller, chairman
of the District of Columbia Wa
Finance Committee has awarded
citation to Marie K. Vollmer, of tn
Washington Permanent Building
Asciation for meritorious effort il
the recent Seventh War Loan cam
paign. She organized and directe,