Evening star., 1946-09-08
Amended Wreco Plan
Opposed by Capital
Preferred Holders
By Horold B. Rooers

By Harold B. Rogers
Opposition to the new amended
plan for dissolution Of the WASH
ington Railway & Electric Co.
will be laid before the Securities and
Exchange Commission by an influ-
ential group of Washington holders
of 5 per cent preferred stock of
Wreco, 1t was learned last night.
The SEC is expected to announce
date for a hearing on the proposal
shortly.
Preferred holders. 1t was learned
IN the financial district, contend
the amended plan is very unfair" to
them. They do not intend, a spokes-
man said, TO sit back, and see the
proposal considered without Official
ly presenting vigorous protest to
the SEC"
The company, however. has de-
clared the new plan is fair to stock
holders and hopes it will be ap-
proved by SEC.
Brokers, members of the Washing
ton Stock Exchange, and bank off,
GERS, especially trust officers, were
said to have expressed "amazement"
at terms of the amended plan. They
charge it is much worse" than the
original one, to which the SEC it
self made two objections in an in
terim opinion last February.
Specifically, holders of the per
cent securities claim they would
suffer loss through the plan for
transfer of their investments under
provisions Of the Holding Act Of
1885, which directs dissolution of
Wreco as holding company.
Provisions Outlined.
The amended plan provides there
would be issued for each of the 85,-
600 shares of per cent preferred
stock of the par value of 500:
CAD One share of 3.6 per cent pre-
ferred stock of Potomac Electric
Power Company. par value of $50,
and cumulative dividends at the
annual rate of 3.6 per cent.
(B) Three and one-half shares Of
common stock of Pepco, par value Of
$40.
Co Accrued dividends on the
Wreco per cent preferred stock
to. the date on which the amended
plan Is declared effective less the
amount of dividends accruing on the
3.6 per cent preferred stock prior
to that date.
Under the plan, holders of the
5000 outstanding shares of COM
mon stock of Wreco would receive
40 shares of the new $40 par value
common stock of Pepco for each
share of Wreco. They also would
be afforded the opportunity of pur-
chasing capital stock of the Capt.
tai Transit Co.
Estates Large Holders.
Much of the 5 per cent preferred
noncanable Wreco stock is held in
trust estates, 1t was pointed out, and
spokesmen for estates feel that they
would be receiving only one share
of preferred stock. of a par value
of half their original investment.
Furthermore, many present holders
of such preferred stock could not
legally hold the common stock
which they also would receive in
the refinancing.
Wreco preferred sold last week at
130, while the fractional units OF
Wreco common sold on a falling
market which dropped from around
22 to 221a week ago to 18 on Fri
day. This decline, brokers claimed.
points to the decreased values hold
ers of preferred stock would be ex-
pected to take in accepting 3la
shares OF common stock along with
one share of 3.6 per cent Pepco
preferred in exchange for each share
Of their present S per cent preferred.
There have been no sales of
Wreco common for a long time, but
the bid price dropped during the
past week from around 300 to $50 at
the close Friday.
Regulation w Debated.
Much difference of opinion is be-
ing expressed over the restrictive
revision of the Federal Reserve
Boards regulation w for control of
consumer cerdit, which went into
effect last Tuesday. Banks and
business houses as well as divided
on the matter.
The Consumer Banking Institute,
in publication distributed by the
Morris Plan Bankers Association,
declared regulation w should be
abolished now" Pointing out that
1t is "one of the few wartime con-
trolls which remain intact" the pub
lication said this regulation now
Is almost alone to carry the banner
for Federal control of consumer
markets and consumer spending"
Neither the American Bankers
Association nor the District Bank
ers' Association. however, has taken
any stand, either for or against
this regulation recently. Some bank
ers yesterday expressed opposition
to it, others indicated indifference.
Some stores are known to feel that
in the past the regulation has been
helpful in bolstering collections,
while others have been demanding
its repeal to loosen credit restric-
tions in the postwar period.
The amendment increases from
81, 500 to $4,000 the amount of COM
mercial credit controlled by the
regulation, and cuts back the time
for loan repayment from 18 to Is
months on loans by cash lending
agencies to cover miscellaneous ex-
penditures, except durable goods.
Bank loan provisions of regula-
ton w were not altered by the
effective last week.
Store Inventories Larger.
Washington department store
stocks on July 81 were Is per cent
above year ago, the Federal Re-
serve Bank of Richmond reported
Today.
Outstanding orders were 80 per
cent higher while receivables were
up Al per cent.
Accountants Plan Dinner.
The District of Columbia Institute
" Certified Public Accountants will
1old the first of a series of dinners
or the season at $50 pm. Tuesday
1t the Mayf1ower Hotel.