Evening star., 1951-03-07
Capital Transit
Defends Plan
ToSp|itStock
Four-to -One Proposal
Is Not Speculative,
Attorney Tells ICC

The Capital Transit Co. told
the Interstate Commerce Commits
sion today that its plan to issue
four shares of new stock for each
share of existing stock is based
neither on speculation nor new
money for refinancing.
Edmund L. Jones, company at
torney, said it would be in the
company's interest and for better
public relations for the commits
sion to authorize the stock split,
The hearing was before Division
of the commission, which con-
siders issuance and approval of
securities. 1t comprises Commis-
sioners Charles D. Mahaffie, John
L. Rogers and Richard F. Mitchell.
The company seeks commission
approval to authorize a capital
stock of $24 million dividend into
100000 shares of the par value of
$25 each, instead of the present
240,000 of the par value of 500.
Opposed by Two Examiners.
Commission Examiners H. c..
Howard and w. L. Fulton have
urged the commission to deny the
application. The examiners held
that the proposed four-for-one
split would not be in the public
iptoreSt mr. necessary
Mr.. Jones argued today that
there is an implication in the ex-
aminers' report that the com
pany is skimping on its mainte-
nance" He denied this. and
pointed out that the Company for
many years has won top safety
awards for the United States and
Canada
Mr.. Jones said some 80 per cent
of the company's stockholders ap-
proved the split. He argued that
the split would result in wider
distribution of the stock and
would tend to have the increased
number of stockholders Use the
company's facilities ard urge
others to do likewise. He also
contended the plan would broad
en- the trade basis OF the stock
and increase its marketability."
Control Discussed.
Commissioner Mahaffie asked:
us it correct the company is
controlled by enc group?"
Mr.. Jones replied it is true that
a group of investors from Florida
purchased more than SO per cent
of the stock to gain control. But
he emphasized that there is no
agreement that these investors
would vote as a unit.
Commissioner Mitchell asked
whether the purposes of the stock
split are speculative. Mr.. Jones
replied: II can assure the COM
mission that the stock splitup is
not for the purposes OF specula-
ton"
The Districts Public Utilities
Commissions approval is required
for the stock split, Mr.. Jones said.
The company has filed petition
for reconsideration of the PUG
denial of its request and is now
awaiting action.
The attorney said a $3.50 900
item listed among intangibles is
the PUG stumbling block. Mr..
Jones explained the PUG thinks
that this item on road and equip
ment unclasSified should be re-
moved from the company's bal
ance sheet. This grows out of an
1895 purchase of the old Washing =
ton & Georgetown Co.
Says Law Has Been Exceeded.
Mr.. Jones said the ICC eX-
aminerS have gone beyond the re-
quirement of law, and seem to feel
that the company must show that
the stock split will improve its pO-
sition and enable it to render bet
ter service to the public. He as
serted that the law does not re-
quire that.
Neither Congress or the law in
tended that the ICC have juris-
diction in stock split, Mr.. Jones
asserted. But he said the practice
has grown up among companies
of coming to the commission in
stock split cases. Capital Transit
is asking 1CC approval due to this
practice and so there will not be
any CLOUD" on the transaction,
he added.