Evening star., 1949-06-29
Proposal 70 Buy
Capital Transit
Weighed by SEC
Z StockhoIder Groups
Oppose Sole, Cite
Assets at HEARING

effective control of the Capital
Transit Co. to group of Florida
businessmen was under consider
alton by the Securities and Ex-
change Commission today.
Made issues in the record were
the future of the company's $2,-
495.000 surplus and its $4,000, 900
Glen Echo Park.
A hearing on North Americans S
application to sell 109.458 shares
of Capital Transit stock to group
of nine men headed by L. E. Wolf
son OF Jacksonville. Fla. was COM
pleted yesterday before Examiner
William w. Swift. The shares.
1851 per cent of the company S
240.000 total. would be sold at $50
q share, or 50, ,189. .160.in all.
A representative Of the Florida
group said it had no intention of
changing the company's conserva-
tive dividend policy. But H. Grady
Gore, real estate man who put the
Florida group in touch with North
American and arranged Lfe stock
sale transaction, testified he had
been looking for some one who
would give the stockholders a
break"
Two Groups Oppose Sale.
Two local stockholders groups
opposed the sale to the Florida
group, arguing that the company
itself should buy the stock and
either retire it or hold it in it's
treasury, or that individual stock
holder should be given the oppor-
tunity to purchase it.
e. D. Merrill, president and
chairman of the board Of the
company. testified the company
has a $2,495.0oO surplus not re-
stricted by the provisions Of the
company's bond issue. He also
testified that the cost Of a Is
cents-an-hour wage increase en-
ployes are seeking would Re $4,-
900, 900 a year and would wipe
out the earned surplus as it now
exists"
William ]. Hughes, jr., attorney
for James ODonnell and mis- fam
lily, who own 1880 shares Of
Capital Transit and 1900 shares
of North American, asked:
do you conceive that your
stockholders would rather use this
surplus to purchase the stock than
to let 1t be a pot of gold for a
labor union to shoot at?" =
Mr.. Merrill replied that it was
"quite possible"
The conservative dividend policy
of the company was cited and the
question raised whether different
policy might result in larger
distribution of the company's
assets.
Sees Quick Repayment.
MIR. Hughes asked whether it
would be not long before pur-
chasers of stock at $40 a share
could pay themselves back the
entire amount in dividends. Mr..
Merrill replied that would de-
pend on the earnings.
c. L. McCrea, owner Of 400
Capital Transit share and 200 of
North American, asserted $40 a
share is too low. He said the COM
pany has net value of $50 a
share. plus actual cash on hand
equal to $40 a share. The value
of Glen Echo Park alone would
be equal to the amount offered
for the 100, ,458 shares of stock, he
said.
Mr.. McCrea said he has the
support of the owners of more
than 10000 shares Of Capital
Transit stock as evidenced by $50
letters and telephone calls he re-
ceived after he sent out a letter
stating his position. The stock
holders, he said, built up the COM
pany by foregoing dividends and
blowing back earnings. He re-
ferred to the pending deal as
dumping the company Into the
hands of spectators"
Represented as Investment.
j. A. B. Broadwater, one of the
nine in the Wolfson group Of pur-
chasers. testified the group not
only has no intentions of chang
ing the dividend policy; intact it
has mot even discussed it." He
said the stock is being purchased
as an investment.
Mr.. Gore. who lives in Rockville.
testified he feels a more liberal
dividend policy is necessary. and
that the company has been run
primarily for the benefit of the
public.
He bought maybe 1000 or 1000
shares" in Capital Transit early
this year. he said, and is inter
ested in protecting his invest
ment. He said he does not think
the stockholders have been get
ting a fair break over the last two
years, when they received only
$780, 900 and labor got more than
$30.000.000
Commission Of ia Per Cent.
In seeking a buyer for the
shares held by North American
he confessed he "felt like I might
be getting a commission. His
commission Of Ia per cent, to be
paid by North American, would
amount to $32,837.
Mr.. Broadwater identified HIM
self as president of the Universal
Investment Co. and Of the Uni
versal Pipe Line Co. of Jackson
willie and director of the Broad
way National Bank of Tampa. He
identified Mr.. Wolfson as partner
in Wolfson & Brother, Jackson
willie, the owner of an interest in
theaters in Atlanta. Jacksonville
and Tampa, and formerly the