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reorganization: 5% Sinking fund income debentures, Series B, due 1986 ($1,740,860 principal amount). $5 Cumulative preferred stock (133,364 shares).

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Indebtedness incurred prior to January 10, 1940 (exclusive of indebtedness, other than for convertible
debentures to Associated Gas and Electric Company, parent company in proceedings for re-
organization):

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Long-term debt

8% eight year bonds, matured March 15, 1940 (less $130,000 in treasury).

7,912,510

Convertible (fixed interest) debentures, due 1973.

24,337,195

7,912,510
24,337,1959

Income debentures, due 1978 (less $50,475,960 authenticated and held in escrow for conversion of fixed interest debentures and $3,601,815 in treasury).

133,590,735

133,590,735

Other indebtedness

Accrued interest on long-term debt (including $202,294 matured)_.

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2,042,501
108,294
58,771

2,042,501

108,294
58,771

Total__

Current and accrued liabilities (incurred by trustees)

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Federal income tax contingency (including $2,821 deposited in escrow)

61,292

61,292

Total liabilities, other credits and reserves, exclusive of (a) liability for interest on indebtedness
accrued subsequent to January 10, 1940, (b) indebtedness to Associated Gas and Electric
Company, and (c) reserve for adjustment of presently stated amounts of investments upon
final determination of values..

Indebtedness (other than convertible debentures) to Associated Gas and Electric Company, parent company, in proceedings for reorganization:

192,581,918

192,581,918

EXHIBIT E-Continued

ASSOCIATED GAS AND ELECTRIC CORPORATION, DEBTOR

(In Proceedings for Reorganization Pursuant to Chapter X of the Bankruptcy Act)

Condensed statement of assets, liabilities and reserves as at December 31, 1944—per books and pro forma giving effect to proposed capital contributions to NY PA NJ Utilities Company

(Exclusive of interest and dividends receivable accrued or declared subsequent to January 10, 1940 but not received at December 31, 1944, and liability for interest on indebtedness accrued subsequent to January 10, 1940, and designating no amount as capital Liability to sole stockholder, Associated Gas and Electric Company)

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Per books

$71,805,120

Pro forma adjustments

Pro forma

Noninterest bearing note, due 1983.

Advance on open account..

Dividend payable.

Accrued interest on 5% cumulative income note through January 10, 1940.

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Excess of assets, on basis stated herein, over liabilities (exclusive of liability for interest on indebted-
ness accrued subsequent to January 10, 1940, treated as reserve for adjustment of presently stated
amounts of investments upon final determination of values, -

Total liabilities, other credits and reserves.

131,654,677
398,518,294

( ) Denote decrease.

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NOTE-NO provision has been made in the above statement for interest on the outstanding bonds and debentures of the corporation, and on its income note held by its parent' Associated Gas and Electric Company, for the period January 11, 1940 to December 31, 1944. Interest on such securities for the said period, computed as provided therein, amounted to $53,032,051.12. For the 12 months ended December 31, 1944, such interest amounted to $10,665,663.84.

EXHIBIT F

ASSOCIATED GAS AND ELECTRIC CORPORATION, DEBTOR (In Proceedings for Reorganization Pursuant to Chapter X of the Bankruptcy Act)

Statement of income, per books, for the 12 months ended December 31, 1944 (on the basis of recording interest and dividends on investments in subsidiary companies, accrued or declared subsequent to January 10, 1940, only as and when received; and before deduction for interest on indebtedness)

Income:

From investments in subsidiary companies:

Dividends on common stock, The United Coach Company. $450,000
Interest on

Convertible obligation, Associated Utilities Corporation_ 780,981
Bonds and debentures, NY PA NJ Utilities Company..
Miscellaneous__

Total income.

Expenses and taxes:

General expenses.

Taxes, other than Federal income tax...

Total expenses and taxes..

Balance before deductions for interest on indebtednessa_

275 16,713

$1,247,969

649,954
10,506

660,460

587,509

• Interest on the outstanding bonds and debentures of Associated Gas and Electric Corporation and on its income note held by its parent, Associated Gas and Electric Company, has not been provided for in the accounts of the Corporation for the period January 11, 1940 to December 31, 1944. The interest for the 12 months ended December 31, 1944, computed as provided in said securities, amounted to $10,665,663.84, and for the period January 11, 1940 to December 31, 1944 amounted to $53,032,051.12

[No. 2407]

IN THE MATTER OF

CHICAGO RAILWAYS COMPANY

Debtor

CHICAGO CITY RAILWAYS COMPANY

Debtor

CALUMET AND SOUTH CHICAGO RAILWAY COMPANY

Debtor
and

THE SOUTHERN STREET RAILWAY COMPANY

Filed August 11, 1945

REPORT OF THE COMMISSION
(On Proposed Plan of Reorganization)

This is an advisory report of the Securities and Exchange Commission on a plan of reorganization for Chicago Railways Company, Chicago City Railway Company and Calumet & South Chicago Railways Company proposed by the city of Chicago pursuant to which the city will bid for the properties of these companies at a public sale, in accordance with the provisions of Section 216 (10) of Chapter X of the Bankruptcy Act, at an upset price of $75,000,000 and pursuant to which the proceeds of the sale together with certain current assets will be distributed to various classes of security holders of these companies. The properties proposed to be acquired under this offer, collectively known as Chicago Surface Lines, include the property of The Southern Street Railway Company in equity receivership and foreclosure proceedings and the proposal of the city is also a plan in that proceeding.

This report also deals with the city's plan for the acquisition of the properties of Chicago Rapid Transit Company under Section 77-B of the Bankruptcy Act at a public sale at an upset price of $12,162,500. The proposed allocation and distribution of the proceeds of this sale among the bondholders of Chicago Rapid Transit Company, however, is not treated in this report.

20 S.E.C.-C.R.-65

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The city's proposal and plan dated February 28, 1945, as subsequently amended, was referred to this Commission by Judge Michael L. Igoe on April 23, 1945 for examination and report pursuant to the provisions of Section 172 of Chapter X of the Federal Bankruptcy Act.

It is the conclusion of the Commission that the proposed upset price for the properties comprising Chicago Surface Lines is less than the minimum of a reasonable range of value for these properties but would be fair if the plan were amended to provide for (1) a waiver by the city of its claims to the "City Compensation Fund," which amounted to $5,263,048 as of January 31, 1945, set aside pursuant to order of the court and, subject to its further order, for the possible payment of compensation for the use of the city streets since July 15, 1938 and (2) the retention by the trustees of net earnings up to the date of transfer of the properties to the city instead of only to April 30, 1945, as presently provided.

It is the conclusion of the Commission that the upset price for the properties of Chicago Rapid Transit Company is fair.

As to the city's suggested allocation of the proceeds of the sale of the Chicago Surface Lines properties, together with certain other assets of the companies, among their security holders, it is the Commission's opinion that

(1) the alternative allocation based upon a payment to first mortgage bondholders of only 95 percent of their principal claims should be deleted from the plan since it is contrary to the rule of absolute priorities;

(2) the proceeds of the sale of the properties of Chicago Railways Company, together with its other assets, will be insufficient to satisfy in full the claims of its 5 percent consolidated mortgage 20-year bonds, Series A, and its purchase money mortgage (5 percent) bonds and, therefore, the 5 percent consolidated mortgage 20-year bonds, Series P, which are junior thereto, should not participate in the distribution, as suggested in the city's plan;

(3) the proceeds of the sale of the properties of Chicago City Railway Company, together with its other assets, will be insufficient to pay its first mortgage bonds in full and hence the stockholders of that company should not participate in the distribution, as suggested in the city's plan; and

(4) the allocation of the proceeds of the sale of the properties of the Surface Lines companies together with their other assets among the various security holders entitled to participate, as suggested in the city's plan, is unfair, but would be fair if modified as hereinafter mentioned.

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