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Ch. 6] REDUCTION IN FIXED CHARGES 1057
with railroad bonds according to the security behind them and
not according to the letter of their legal form.
For example, it was proposed to refund a certain collateral
trust mortgage bond due in five years into a bond of the same
interest rate, due in fifty years. This bond might well be considered
as belonging to the second class, referred to above. Its
security consisted of unimportant main line sections, and important
branches. No sacrifice of either principal or interest
was demanded of the owners, ostensibly, yet in teing required
to refund a 5 per cent bond due in five years into one due in
fifty years, when the credit of the road was not on a 5 per cent
basis, they were being asked to undergo at least a temporary
sacrifice.
"$9,636,000 Missouri Pacific First Collateral Mortgage 5 per cent
Bonds due 1920: These bonds, like the Trust 53 of 1917, are secured
not by direct mortgage but by pledge of smaller bond issues. There
are nineteen of these issues, of various maturities, secured by separate
first mortgages on nineteen sections of the system in Kansas, Nebraska,
Missouri and Tennessee." [Then follows the list of securities securing
the collateral trust issue.] "
"Even portions of the main line indirectly covered might be
omitted from the system of the new company and its traffic cared for
by other means; or the new company might, by paying part of the
pledged bonds of earlier maturities and paying interest on additional
pledged bonds of later maturities and the principal when due, acquire
about one-half of the mileage covered indirectly by this issue, including
all portions of the main line so covered, leaving the Collateral 5s to
realize a large deficiency from pledged bonds in default secured on
branches not taken over by the new company. There would probably
be deductions for expenses of collection of the deficiency, and assessments
upon the Collateral Ss would doubtless be necessary for development
of the branches not taken over by the new company. Considering
these conditions, it is believed that the intrinsic value of the
Collateral Ss, as well as the measure of importance and value to the
system of the properties comprised in their security, is recognized by
the offer of 100 per cent in new First and Refunding 5 per cent Bonds
secured by a system mortgage covering a large mileage with diversified
s This list, with brief comments, is reproduced in Bgok I, Chapter V, note
g (pages 128 and 120).
Beschrijving voorwerp
| Titel | The financial policy of corporations |
| Auteur | Dewing, Arthur Stone |
| Jaartal | 1926 |
| Collectienaam | NIVRA Historisch Archief, UBVU gedigitaliseerd |
| PPN | 344552586 |
| Toegangsgegevens (URL) | http://imagebase.ubvu.vu.nl/getobj.php?ppn=344552586 |
| Signatuur origineel | NIVRAHA149 |
| Evaluatie |
Beschrijving
| Titel | NIVRAHA149_01081 |
| Transcript | Ch. 6] REDUCTION IN FIXED CHARGES 1057 with railroad bonds according to the security behind them and not according to the letter of their legal form. For example, it was proposed to refund a certain collateral trust mortgage bond due in five years into a bond of the same interest rate, due in fifty years. This bond might well be considered as belonging to the second class, referred to above. Its security consisted of unimportant main line sections, and important branches. No sacrifice of either principal or interest was demanded of the owners, ostensibly, yet in teing required to refund a 5 per cent bond due in five years into one due in fifty years, when the credit of the road was not on a 5 per cent basis, they were being asked to undergo at least a temporary sacrifice. "$9,636,000 Missouri Pacific First Collateral Mortgage 5 per cent Bonds due 1920: These bonds, like the Trust 53 of 1917, are secured not by direct mortgage but by pledge of smaller bond issues. There are nineteen of these issues, of various maturities, secured by separate first mortgages on nineteen sections of the system in Kansas, Nebraska, Missouri and Tennessee." [Then follows the list of securities securing the collateral trust issue.] " "Even portions of the main line indirectly covered might be omitted from the system of the new company and its traffic cared for by other means; or the new company might, by paying part of the pledged bonds of earlier maturities and paying interest on additional pledged bonds of later maturities and the principal when due, acquire about one-half of the mileage covered indirectly by this issue, including all portions of the main line so covered, leaving the Collateral 5s to realize a large deficiency from pledged bonds in default secured on branches not taken over by the new company. There would probably be deductions for expenses of collection of the deficiency, and assessments upon the Collateral Ss would doubtless be necessary for development of the branches not taken over by the new company. Considering these conditions, it is believed that the intrinsic value of the Collateral Ss, as well as the measure of importance and value to the system of the properties comprised in their security, is recognized by the offer of 100 per cent in new First and Refunding 5 per cent Bonds secured by a system mortgage covering a large mileage with diversified s This list, with brief comments, is reproduced in Bgok I, Chapter V, note g (pages 128 and 120). |
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