The Wilmington morning star., 1947-06-01
ACL BOARD MEETS MONDAY
o Discuss Action On ice Order Re Florida Line

SO~
Coast Line, and via Jesup to and
from the West, and via Savannah
to and from the East to and from
other stations on Coast Line in
Florida.
According to Davis, that traffic
agreement gives Southern Railway
company access to traffic Of the
Florida East Coast Railway and,
therefore, when and if the Florida
East Coast Railway property is
merged with Coast Line the situa-
ton of Southern as to east coast
of Florida will be same as it has
been for many years as to central
and west coast of Florida reached
in connection with the Coast Line
south Of Jacksonville.
Davis said the amount Coast
Line would under the commissions
order to be required to pay in
Coast Line cash and Coast Line Sc
curities to acquire the Florida East
Coast Railway property represents
the commissions informed judg-
ment of the value of the FEC prop
erty. The Coast Lines plan, not
however approved by the commits
sion's report and order released
May goth, contained what the Coast
Line considered to be a fair offer,
but the Coast Line recognized that
determination of a fair value of
the FEC property was a matter OF
judgment and, when submitting its
plan, stated it's willingness to give
careful consideration to any modifi-
cation which the commission might
approve.
Davis stated that the plan now
prescribed by the commission
means overall price aggregate of
Coast Line securities and Coast
Line CASH of $40, 500, 900, which
compares with Coast Lines offer
of Coast Line securities and Coast
Line cash aggregating $38, $50, 900.
The plan now approved by the com
mission increases by $3.50, 900 the
amount of new Atlantic Coast Line
Divisional First Mortgage fixed
interest 3 1-2 per cent twenty-five
year bonds, reduces by 81, 1925, 900
the amount of new Atlantic Coast
Line Divisional Income Mortgage
4 IA per cent seventy-five year
bonds, and increases the Coast
Lines cash contribution by 81, 1885,
900, or from 3 1000, 900 to 81, 1885,.
900.
Under the plan prescribed by
the commission, "excess cash. in
the hands of the Trustees will also
be distributed to FEC bondholders.
Davis expressed the view that
the plan prescribed by the commits
sion, acceptance of the terms of
which Coast Line management will
recommend to its Stockholders, will
yield a handsome profit to GER
tainly most of the holders of Flori-
da East Coast Railway First and
Refunding mortgage bonds, espe-
cially those bonds purchased in
past ten years.
Davis pointed out that the ma
jority holder of those bonds had
acquired the preponderance of his
holdings at depression prices, and
has subsequently recouped a sub
stantial part of his investment
through payment of defaulted in
terest coupons.
The record has been inconclu-
sive as to prices paid by St. Joe
Paper company for latter's hold
ings Csc per cent Of total issue)
of Florida East Coast First and
Refunding mortgage bonds because
st. Joe Paper company refused to
have the record show those prices.
However, it is known that a large
part of such holdings was acquired
in 1912, at depressed prices, and
after taking into account the re-
turn represented by payment OF
defaulted interest coupons, it is
hardly likely that st. Joe Paper
company's present investment in
those bonds now stands at much
in excess of 81, 500, 900.
St. Joe Paper company will re-
ceive approximately Sc per cent OF
ne 81, 125, 900 cash required to be
laid by Coast Line, or approx
nately 81, $780, 900, and will there
ore probably recover in Coast Line
cash alone nearly the entire
amount of St. Joe's net cash in
vestment. In addition, St.. Joe
Paper company will receive ap-
proximately Sc per cent of the new
Atlantic Coast Line securities to be
issued in the merger which, in par
or stated value, aggregate $685.
300. Therefore, it may be said
that st. Joe Paper company will
thus receive slightly more than
20, 900, 900 par, or stated value, of
such Coast Line securities at little
or no expense to st. Joe, to say
nothing of the presently undeter-
mined amount of cash to be also
distributed from FEC treasury to
he bondholders.
Davis expressed the opinion that
With probably few exceptions most
If the present holders of the re-
naming bonds had likewise acquir-
ID their holdings at depression
>rices and that the great majority
f the original holders of the bonds
Who purchased same at par, or
lose thereto, when first issued had
probably long since closed out their
lvestment and taken their loss.
For the holder Of the majority of
he bonds and for many other
bondholders the plan prescribed by
The commission (Which will mean
a total of 5000 par, or stated value,
per $1,000 First and Refunding
Mortgage bond in aggregate of par
or stated value of Coast Line Sc
curities and Coast Line CASH will
likely yield to most of the fairly
recent investors in First and Re-
funding Mortgage bonds a return