Page images
PDF
EPUB

FINANCE DOCKET No. 4133

PURCHASE OF PROPERTIES BY CUMBERLAND TELE

PHONE & TELEGRAPH CO., INCORPORATED

Submitted July 15, 1924. Decided August 22, 1924

Acquisition by the Cumberland Telephone & Telegraph Company, Incorpo

rated, of the properties of the other joint applicants found to be of advantage to the persons to whom service is to be rendered and in the public interest. Certificate issued. Ray W. Clarke for applicants.

J. M. Lassing for Louisville Home Telephone Company and affiliated companies.

REPORT OF THE COMMISSION
DIVISION 4, COMMISSIONERS MEYER, AITCHISON, AND POTTER
BY DIVISION 4:

The Cumberland Telephone & Telegraph Company, Incorporated, hereinafter called the Cumberland Company; the Louisville Home Telephone Company, Incorporated, hereinafter called the Louisville Company; the Central Home Telephone & Telegraph Company, Incorporated; the Bowling Green Home Telephone & Telegraph Company, Incorporated; the Cynthiana Telephone Company, Incorporated; the Maysville Telephone Company, Incorporated; the Nicholas Telephone Company, Incorporated; the Owensboro Home Telephone & Telegraph Company, Incorporated; the Owenton Telephone Company, Incorporated; the Paducah Home Telephone & Telegraph Company, Incorporated; the Paris Home Telephone & Telegraph Company, Incorporated; the Russellville Home Telephone & Telegraph Company, Incorporated; the Frankfort Home Telephone & Telegraph Company, Incorporated; the Carrollton Telephone Exchange Company, Incorporated; the Henry Home Telephone Company, Incorporated; and the Independent Long Distance Telephone & Telegraph Company, Incorporated, on June 24, 1924, filed a joint application under section 407 of the transportation act, as amended, for a certificate that the acquisition by the Cumberland Company of the properties of all of the other joint applicants will be of advantage to the persons to whom service is to be rendered and in the public interest. By an order entered April 15, 1924, the Railroad Commission of Kentucky consented to the proposed acquisitions. A hearing has been had and no objection to the granting of the application has been presented to us.

The Cumberland Company is one of the Bell group. It owns and operates exchanges and toll lines in Kentucky, Tennessee, Mississippi, and Louisiana. The other applicants, members of the socalled independent group, hereinafter collectively referred to as the independent companies, are affiliated with each other and are controlled by the same interests.

The independent companies own and operate 38 switchboards at various points in Kentucky, particularly in the northern and western parts of the State, from which they serve 47,086 subscriber stations, of which 7,913 stations are duplicated by the Cumberland Company. They also own toll lines having a pole mileage of 707 miles, which parallel to a large extent the toll lines of the Bell system. At Louisville, which is the largest municipality involved, the Cumberland Company and the Louisville Company served 19,666 and 32,009 subscriber stations, respectively, as of December 31, 1923, and 5,635 stations were duplicated.

On September 14, 1923, the Cumberland Company contracted to purchase all the properties of the other applicants for $3,750,000 in cash. There is to be deducted from the purchase price $486,308, the estimated value of certain properties of the independent companies located in Indiana. Authority to acquire these properties is not sought in this proceeding. The contract provides that the Cumberland Company will also assume outstanding bonds of the par amount of $1,925,000; will pay the actual cost of extensions and additions to the properties of the independent companies since December 31, 1922; and will assume existing contracts for like extensions and additions in process of construction, but not completed, upon the date of conveyance of the properties. The payments are to be credited by an amount equal to the net accruals to surplus and reserve for depreciation accounts of the independent companies since December 31, 1922. Since the contract was executed bonds to the amount of $70,300, par value, have been retired through sinking funds. The total purchase price, including the bonds and other liabilities to be assumed, will be $6,040,424.30. Funds to pay the purchase price will be borrowed by the Cumberland Company from the American Telephone & Telegraph Company on open account and no additional securities will be issued for that purpose.

An appraisal made by the appraisal engineer of the Cumberland Company finds the reproduction cost new of the properties to be

acquired, less depreciation, to be $6,568,245. The value of the acquired property to be removed upon unification is estimated at $1,658,241, from which the salvage to be realized, after paying the cost of removal, will be $68,133. The value of the present property of the Cumberland Company to be removed is estimated at $946,691, and the salvage therefrom, after paying the cost of removal, is expected to be $110,058. By agreement with the interested municipal authorities the value of the property to be retired from service is to be amortized over a period of 20 years. The cost of consolidating the properties is estimated at $2,268,432. In 1923 the combined operating revenues and operating expenses of the independent companies were $1,815,024.75 and $1,371,196.93, respectively.

It is represented that negotiations for the proposed purchase were instituted upon the urgent representations of the officials of the various municipalities, particularly those of Louisville, who for some time have insisted that the properties be consolidated. The Louisville Company represents that it is unable financially to consider or aid in effecting any consolidation except by the sale of its properties, and it appears that the independent companies can not obtain the capital necessary to furnish adequate facilities to meet the increasing demand for service.

The general council of the city of Louisville has adopted an ordinance authorizing the proposed sale and purchase of the properties of the Louisville Company and prescribing a schedule of rates effective upon the consolidation. The city council or board of trustees of the other municipalities have all consented to the proposed sale of the properties within their respective jurisdictions.

At the hearing, communications from the Acting Governor of Kentucky, various civic and commercial organizations, and other representative telephone users, were introduced in evidence, all favoring the proposed acquisitions.

Subscribers of the independent companies are not connected with the Bell toll lines and have but a limited toll service. They are unable to reach the cities of Cincinnati, Nashville, Evansville, Chicago, and St. Louis, with which the business interests in the territory served have extensive dealings. The proposed acquisitions will eliminate existing duplication, will enable present subscribers of the independent companies to secure access to the Bell toll lines, and apparently should effect a material improvement in service.

The Cumberland Company is, and after the consummation of the proposed transaction will be, subject to the interstate commerce act.

Upon the facts presented we find that the acquisition by the Cumberland Company of the properties of the independent companies located in the State of Kentucky, under the terms of the contract described in the application, will be of advantage to the persons to whom service is to be rendered and in the public interest. A certificate to that effect will be issued.

COMMISSIONER MEYER did not participate in the disposition of this

case.

CERTIFICATE OF ADVANTAGE AND PUBLIC INTEREST

Issued August 22, 1924

A hearing and investigation of the matters and things involved in this proceeding having been had, and said division having, on the date hereof, made and filed a report containing its findings of fact and conclusions thereon, which said report is hereby referred to and made a part hereof:

It is hereby certified, That the acquisition by the Cumberland Telephone & Telegraph Company, Incorporated, of the properties of the Louisville Home Telephone Company, Incorporated; Central Home Telephone & Telegraph Company, Incorporated; Bowling Green Home Telephone & Telegraph Company, Incorporated; Cynthiana Telephone Company, Incorporated; Maysville Telephone Company, Incorporated; Nicholas Telephone Company, Incorporated; Owensboro Home Telephone & Telegraph Company, Incorporated; Owenton Telephone Company, Incorporated; Paducah Home Telephone & Telegraph Company, Incorporated; Paris Home Telephone & Telegraph Company, Incorporated; Russellville Home Telephone & Telegraph Company, Incorporated; Frankfort Home Telephone & Telegraph Company, Incorporated; Carrollton Telephone Exchange Company, Incorporated; Henry Home Telephone Company, Incorporated; and the Independent Long Distance Telephone & Telegraph Company, Incorporated, located within the State of Kentucky, in accordance with the terms of the contract described in the application and report aforesaid, will be of advantage to the persons to whom service is to be rendered and in the public interest.

90 I. C. C.

FINANCE DOCKET No. 4277

SALE OF BONDS BY BUFFALO, ROCHESTER & PITTS

BURGH RY.

Submitted August 19, 1924. Decided August 27, 1924

Authority granted to sell not exceeding $3,000,000 of consolidated-mortgage 412

per cent bonds at not less than 85 per cent of par and accrued interest. Havens, Mann, Strang & Whipple for applicant.

REPORT OF THE COMMISSION
DIVISION 4, COMMISSIONERS MEYER, AITCHISON, AND POTTER
BY DIVISION 4:

The Buffalo, Rochester & Pittsburgh Railway Company, a common carrier by railroad engaged in interstate commerce, has duly applied for authority under section 20a of the interstate commerce act to sell $3,000,000 of consolidated-mortgage 41/2 per cent bonds now held in its treasury. No objection to the granting of the application has been presented to us.

By our order of April 8, 1922, in Bonds of Buffalo, Rochester & Pittsburgh Ry., 71 I. C. C. 432, we authorized the authentication and delivery of $4,269,000 of consolidated-mortgage bonds under section 3 of article 1 of the applicant's consolidated mortgage of May 1, 1907, and by our supplemental order of October 11, 1922, in the same proceeding, 72 I. C. C. 695, we authorized the sale of $2,019,000 of them. There are now in the applicant's treasury $2,250,000 of these bonds.

By our order of December 5, 1923, in Bonds of Buffalo, Rochester & Pittsburgh Ry., 82 I. C. C. 830, we authorized the issue of $1,500,000 of such bonds under section 4 of article 1 of the mortgage, to be pledged as collateral security for any note or notes issued under paragraph (9) of section 20a of the interstate commerce act. All of these bonds are now held by the applicant.

The applicant proposes to sell the entire $2,250,000 of bonds now in its treasury, and $750,000 of the $1,500,000 of bonds held by it, and to apply the proceeds as follows: Repayment of the loan, amounting to $1,000,000, made to the applicant under the provi

« PreviousContinue »