E. H. Hatcher, direct payments to be received $2,000; $26,000 relieved of secondary liabilities. Gaylord Shaw, no direct payments; $290,453 relieved of secondary liabilities. Burnett Estes, no direct payments; relieved of secondary liabilities, $290,453. Ronnie B. Smith, direct payments $147,183; relieved of secondary liabilities, $728,286. Forrester A. Clark, trustee, no direct payments; relieved of secondary liabilities, none. H. W. Snowden, no direct payments; relieved of secondary liabilities, $349,465. Jack Frost again, direct payments, $241,734; relieved of secondary liabilities, $620,486. Then I find members of the syndicate listed: John P. Chase, direct payments to be received, $39,949; extent to which relieved of secondary liabilities, $150,000. R. E. Morse, direct payments, $33,890; relieved of secondary liabilities, $200,000. Henry I. Harriman, direct payments, $5,624; relieved of secondary liabilities, $451,000. J. Dudley Clark, no direct payments; relieved of secondary liabilities, $200,000. Robert G. Stone, direct payments, $24,950; relieved of secondary liabilities, $50,000. Are those statements correct? Mr. HELLER. The statements are correct and so represented by the company. Senator FULBRIGHT. At this point I would like to offer for the record a summarization prepared by the staff, of this material which has been read. I think it will help clarify it. It pulls it all together and condenses it. (The summarization referred to follows:) Reconstruction Finance Corporation Statement of proposed application of proceeds of load to Texmass Petroleum Co. Senator DOUGLAS. May I go into this Massachusetts Mutual and John Hancock situation a little bit more thoroughly? Do I understand that the amount for Massachusetts Mutual is $4,980,000 against Texmass? Mr. HELLER. That is correct. Senator DOUGLAS. And in effect the RFC loan wrote that down to 21⁄2 million dollars? Mr. HELLER. RFC pays 21⁄2 million dollars and the Massachusetts Mutual carries forward as a participant in the first mortgage loan in the aggregate of $2,500,000. Senator DOUGLAS. But formerly they had claims of almost $5,000,000, and the effect of the RFC loan has been to give them 22 million dollars cash and write their claims down to about 21⁄2 million dollars? Mr. HELLER. That is correct. Senator DOUGLAS. And in the case of John Hancock, their claims were formerly $3,331,000, and that has been written down to $1,500,000, and $1,500,000 will be paid off from the RFC loan? Mr. HELLER. That is correct. Senator DOUGLAS. And in the case of Republic Steel, which had a claim of $1,000,000, that has been written down to $350,000, and $850,000 will be paid off from the RFC loan. As to the Fourth National Bank of Wichita, their claim of $592,000 has been written down to $75,000, and $517,547 paid off from the RFC loan. And Jack Frost's claim of $250,000 has been split 50-50 and he gets $125,000 in cash? Mr. HELLER. I believe he will participate in the RFC loan, and the $517,000 is carried over. Senator DOUGLAS. I want to choose my words very carefully: So that, in effect, has the RFC loan tended to make Texmass Petroleum Co. a more efficient operating company, or has it primarily bailed out creditors who formerly had claims against RFC? Mr. HELLER. It has primarily bailed out creditors. I understand that approximately $1,500,000 of the loan, net, will be used for operating purposes. As I understand it, $500,000 of that $1,500,000 can be used only for rehabilitation and $1,000,000 can be used for further development only with the approval of the RFC. Senator FULBRIGHT. Any further questions, Senator? Senator DOUGLAS. Is it not true that the contribution of $1,000,000 from sources other than the two insurance companies now participate on equality with RFC and, in effect, have a first mortgage claim? Mr. HELLER. That is correct. Senator DOUGLAS. And that thereby their equities have been moved up in the scale? Mr. HELLER. I could not say that; no. They had originally senior claims against part of the properties. Senator DOUGLAS. They are now seeking to consolidate the property? Mr. HELLER. Yes, sir. Senator FULBRIGHT. There are a number of properties, I may say, that have not been in Texmass. They were acquired? Mr. HELLER. They are to acquire the Petroleum Reserve Corporation, for example, and properties of the National Cooperative Refineries organization, and some properties from the Smith-Miller people, and the Swiss Oil and Midway Oil properties. It will be a larger enterprise than Texmass. Senator FULBRIGHT. Senator Maybank? Senator MAYBANK. I was a little late. I had another meeting. I have no questions. Senator FULBRIGHT. Do you have any further comment you would like to make, Mr. Heller? Mr. HELLER. No, sir. Senator FULBRIGHT. Mr. Mack? Mr. MACK. No, sir. Senator FULBRIGHT. Thank you very much for coming down. STATEMENT OF HARLEY HISE, CHAIRMAN, BOARD OF DIRECTORS, Senator FULBRIGHT. Mr. Hise, we appreciate your coming down this morning. Do you have a prepared statement you wish to read? Mr. HISE. NO, Mr. Chairman, I do not. I appreciate the opportunity of answering some of the criticisms that have been heard this morning. As you know, the first information I had was through a telephone call the day before yesterday. I did not get a copy of General Warren's letter until yesterday. I have not yet seen a copy of the letter that you wrote to the general but that is in the record now and we will have a chance to study that. Senator FULBRIGHT. I may say that the reason I did not send you my letter is that the Comptroller General's letter restates practically everything in my letter, in substance. Mr. HISE. The reason I mention that, Senator; I merely want to get the record straight and I would like to ask permission of the committee to put in a written statement answering the points brought out by General Warren and I would like to have it inserted at this point. Senator FULBRIGHT. That will be perfectly all right. (The statement referred to will be found beginning on p. 57.) Mr. HISE. As far as the Texmass loan itself is concerned, our board of directors feel-and did feel at the time it was approvedthat the loan authorization came within the authority of the RFC Act. We still feel it does come within that authority. We are here today without any prepared statement as I have said to you, but we are willing and anxious to answer any questions that you may care to ask us about it. I have had not only our own staff present but I have also asked Mr. Glidden, the manager of our Dallas agency, who handled this application from its inception, to be present. He is in a position to answer all of the details that you may require. Senator FULBRIGHT. We will be glad to get information from Mr. Glidden later on. Just to develop the facts in the case now: The RFC is committed to make a loan of $15,100,000? Mr. HISE. That is correct, sir, under certain conditions set out in our resolution. Senator FULBRIGHT. Has the RFC ever before made a loan of any .considerable size to finance the acquisition or rehabilitation of oil and gas producing properties? Mr. HISE. I personally know of no other one. I believe this is the first. Senator FULBRIGHT. Has the first disbursement on this loan been made? Mr. HISE. It has not. Senator FULBRIGHT. When does the RFC plan to make the first disbursement? Mr. HISE. At such time as the applicant is able to comply with the terms of our resolution. How long do you think that will be, Mr. Glidden? Mr. GLIDDEN. Not later than the 25th. Mr. HISE. Not later than the 25th or 26th of this month. Senator FULBRIGHT. Where will the disbursement be made? Mr. HISE. Through the Dallas agency. Senator FULBRIGHT. Will Mr. Glidden check back with the RFC office in Washington before he makes the disbursement? Mr. HISE. He will now because we asked him to do so immediately upon receipt of your telephone call. Senator FULBRIGHT. Do you feel that any circumstances might stand in the way of the disbursement? Mr. HISE. At the moment we know of none, provided they meet all the conditions set forth. Senator FULBRIGHT. What are some of those conditions that are now being considered? Mr. HISE. It is a long three-page resolution. If you like, we would be glad to introduce that at this point. Senator FULBRIGHT. It is not necessary. Is it a question of obtaining the collateral? Mr. HISE. I will have to ask Mr. Glidden to answer that. Senator FULBRIGHT. Mr. Glidden, you better come over here and identify yourself for the record so it is clear who you are and so the reporter can hear you answer. Mr. GLIDDEN. I am L. B. Glidden, manager of the Dallas loan agency of RFC. Senator FULBRIGHT. How long, Mr. Glidden, have you been in the Dallas loan agency? Mr. GLIDDEN. Eighteen years the 19th of this month. Senator FULBRIGHT. Is the only question now remaining to be settled the question of collateral to the loan? Mr. GLIDDEN. The only question remaining now is the detremination that the pledgee has the legal title to the property that they have offered us as collateral, and our attorneys are working on that day and night. Senator FULBRIGHT. Working on it day and night? Mr. GLIDDEN. Yes, sir. Senator FULBRIGHT. Why? Are you in a hurry to complete it? Mr. GLIDDEN. The resolution has a limitation date on disbursement which we are supposed to meet. Senator FULBRIGHT. What is that date? Mr. GLIDDEN. The 27th of April. Senator FULBRIGHT. How many people are working on the problem of clearing up the collateral? Mr. GLIDDEN. We have three attorneys in Dallas and they have title attorneys in various States. This property is located in six different States. Senator FULBRIGHT. Would you estimate how many are working on it? Mr. GLIDDEN. There are seven title attorneys plus the three in Dallas who are working on it. Senator FULBRIGHT. And you are doing everything possible to expedite the clearance of the collateral? Mr. GLIDDEN. Yes, sir. Senator FULBRIGHT. Mr. Hise, assuming that all conditions are not met and that the collateral is not brought together according to your regulations and requirements, would the commitment then expire? Mr. HISE. Unless extended, it would. Senator FULBRIGHT. What was the first expiration date fixed by the Board? Mr. GLIDDEN. I think it was 60 days. I would have to check the files to be sure of that. Senator FULBRIGHT. Let us get back; perhaps we can refresh your memory, Mr. Hise. When was this loan resolution approved by the Board? Mr. HISE. The loan resolution was approved on September 29, 1949. Senator FULBRIGHT. In that resolution, how long did the prospective borrower have to complete the condition? Mr. HISE. Sixty days. Senator FULBRIGHT. Then it would have expired on or about November 28? Mr. HISE. That is right. Senator FULBRIGHT. How often has the expiration date been extended? Mr. HISE. Three times. Senator FULBRIGHT. Can you tell us when it was extended and for how long? Mr. GLIDDEN. I do not have those figures. Mr. HISE. We will have to supply those, Senator. Senator FULBRIGHT. Is it not a fact that on December 1 it was extended from 60 to 150 days? Mr. HISE. That is probably correct. I do not have the figures. If that is the information you have, I assume it is correct. Senator FULBRIGHT. On February 23 it was extended from 150 to 180 days, was it not? Mr. HISE. I do not have those figures available, but I will be glad to confirm it from the record. Senator FULBRIGHT. Does anyone here with your staff who accompanied you have information about this? Mr. GLIDDEN. I cannot be sure of the dates, but those extensions are correct-from 60 to 150 to 180 to 210. Senator FULBRIGHT. On March 20, 1950, it was extended from 180 to 210 days; is that correct? Mr. HISE. It has been extended from time to time until the present extension expires on April 27. We will supply the interim extension dates for you. I do not have them here. |