from underwriters) constituting the selling group, less an amount for expenses, including taxes, not to exceed 121⁄2¢ per share.

The underwriting agreement or so-called purchase contract defines the obligations of Washington and Suburban Companies and the underwriters. The underwriters have made a commitment with respect to 125,000 shares, agreeing to purchase from the trust shares in that amount at a price of $27.50 per share. The initial offering price to the public will be $29.50 per share, thus giving the underwriters, with respect to this block of shares, an underwriting commission or spread of $2. The block of 125,000 shares is to include the 35,000 shares of new common stock to be issued to Washington and Suburban Companies.

With respect to the remaining 237,588 shares the agreement may be paraphrased as follows: This block of shares is distributed among the underwriters in the same proportions as is the 125,000-share block. Washington and Suburban Companies agrees to sell to the several underwriters and the several underwriters agree to purchase such additional number of shares of common stock as Washington and Suburban Companies shall have been advised have been resold by the several underwriters on or before the close of business on September 8, 1939, to customers of the underwriters or to selected dealers. By the term "such additional number of shares that have been resold by the several underwriters to customers or to selected dealers" is meant the number of shares which have been sold by the underwriters to their customers and to selected dealers in cases in which a customer of an underwriter shall have agreed to purchase shares and in cases in which shares shall have been subscribed for and allotted to selected dealers. The obligations of the several underwriters are to be several and not joint and shall not exceed the number of shares (out of the block of 237,588 shares) set opposite their respective names in the underwriting agreement. In the event that the several underwriters shall have resold less than all of such 237,588 shares, the number of shares to be purchased by each underwriter shall bear the same proportion to the total number of shares so resold as the number of shares set opposite the name of each underwriter bears to 237,588.

In the case of the 237,588 shares, or any part thereof, which the underwriters become obligated to purchase, Washington and Suburban Companies is to receive the sum of $28.1212 per share. As in the case of the 125,000-share block the initial offering price will be $29.50 per share. Thus the "spread" as to this block of shares will be $1.375. Both blocks will be offered to the public together.

As has heretofore been noted only 67,412 shares out of a total of 390,000 shares presently outstanding are held outside of Washington

and Suburban Companies. This balance of publicly owned stock appears to be closely held. It is traded on the Washington Stock Exchange, but transactions are infrequent and sales are not such as to give an accurate appraisal of the value of this stock marketwise. In connection with the public offering it is proposed to list the common stock of Washington Gas Light Company on the New York Stock Exchange.

The dividend rate on the common stock is currently $1.50 per share per annum. Earnings per share of common stock for the 12month period ended May 31, 1939, were $2.68. The book value of the common stock (before deducting revaluations) is $35.51 per share. If all known revaluations were deducted the book value per share of comon stock would be $17.18. Earnings and book values are on a pro forma corporate basis.

Supplemental indentures, dated March 1, 1936, and September 1, 1938, supplemental to the refunding mortgage of Washington Gas Light Company, contain certain restrictions on the payment of common dividends.

The following summary of such restrictions is thus summarized in the prospectus of Washington Gas Light Company filed in connection with the registration statement (Registration Statement No. 2-4123) which has been filed in connection with the public offering of the common stock pursuant to the Securities Act of 1933:

"The Supplemental Indenture dated March 1, 1936, supplemental to the Refunding Mortgage of the Corporation, as modified by the Modification dated September 1, 1938, provides that so long as any of the Bonds of the 44% Series due 1956 are outstanding, the Corporation will not declare or pay any dividend (other than dividends payable in common stock of the Corporation) or make any other distribution on, or purchase, redeem, retire, or otherwise acquire for a consideration any of its shares of Common stock, except out of earned surplus (including current earnings not yet carried to surplus account) on a consolidated basis earned subsequent to December 31, 1935: Provided, however, That in the event such earned surplus (including current earnings not yet carried to surplus account) on a consolidated basis earned subsequent to December 31, 1935, shall at any time be insufficient to permit the Corporation to declare and pay a cash dividend on its Common Stock as constituted on September 1, 1938, at the rate of Two dollars ($2.00) per share per annum (subject to proportionate decrease or increase in case of any increase or decrease of the amount of Common Stock then outstanding), the Corporation may, nevertheless, declare and pay cash dividends on its Common Stock at the time outstanding at a rate not in excess of Two dollars ($2.00) per share per annum (subject to decrease or increase as aforesaid) if the consolidated earned surplus of the Corporation and all the subsidiaries is not at the time below, and will not be thereby reduced below, Four million dollars ($4,000,000), and if, as a result of any such declaration and payment, earned surplus on a consolidated basis as of December 31, 1935, shall not have been reduced in the aggregate more than Six hundred sixty thousand dollars ($660,000) by the payment of such dividends on the Common Stock of the Corporation. (Section 5 of Article I of the Supplemental Indenture dated March 1, 1936, and Article 1 of the Modification dated September 1, 1938, copies of which are filed as exhibits with the Registration Statement.) "The Supplemental Indenture dated September 1, 1938, supplemental to the Refunding Mortgage of the Corporation, provides that so long as any of the Bonds of the 4% Series due 1963 are outstanding, the Corporation will not declare or pay any dividend on shares of its Common Stock (other than dividends payable in Common Stock of the Corporation) or make any distribution on, or purchase, redeem, retire, or otherwise acquire for a consideration any shares of its Common Stock (other than with the proceeds of additional stock financing), except, in any fiscal year subsequent to December 31, 1937, out of net income on a consolidated basis earned during such fiscal year, or out of earned surplus on a consolidated basis earned subsequent to December 31, 1937: Provided, however, That in (Footnote 3 continued on p. 588)

A question arises as to whether the fees and expenses incident to the registration statement filed pursuant to the Securities Act of 1933 should be paid by Washington Gas Light Company. This registration statement was filed by Washington Gas Light Company as a "controlled issuer" pursuant to the requirements of the Securities Act of 1933. The Public Utilities Commission of the District has already ordered that the expenses of registration with respect to the 35,000 shares shall be borne by Washington and Suburban Companies. The filing as to the balance of 327,588 shares was in the nature of an accommodation to Washington and Suburban Companies. The respective officers of the two companies have realized that a problem exists with regard to the allocation of the expenses incident to the registration. Total expenses in this connection are estimated at $43,000 which figure includes the estimated sum of $8,600 to defray the expense of listing the stock on the New York Stock Exchange, together with expenses to be paid to registrars and stock transferees. The respective applicants propose that Washington Gas Light Company shall pay the listing fee (estimated at $3,600) and the fees to registrars and stock transfer agents (estimated at $5,000). It is proposed to deduct this estimated sum of $8,600 from the total expenses incident to registration of the common stock and that the balance shall be paid, one-half by Washington and Suburban Companies and one-half by Washington Gas Light Company.

The Commission is aware that certain benefits will accrue to Washington Gas Light Company by the listing of its common stock on the New York Stock Exchange and a public distribution of its securities. On the other hand, Washington and Suburban Companies at the present time is in a position to dictate the terms of any agreement as to allocation. The Commission is of the opinion that the proposed

Footnote 3 continued:

determining the amount of such net income or earned surplus, no deduction shall be made for any direct charges to earnings or to earned surplus not directly and ordinarily, consistent with good accounting practice, arising or resulting from operations of the Corporation and its subsidiaries in the regular conduct of their business, and no deduction shall be made from such earnings or earned surplus in respect of any of the following: (a) charges applicable to periods prior to December 31, 1937; (b) charges for the payment or write-off of unamortized discount, premium, or expense applicable to funded debt of the Corporation or any of its subsidiaries; (c) charges (1) for the write-off of unamortized discount, premium, or expense applicable to preferred stock of the Corporation or of any of its subsidiaries, or (ii) for the write-off of part or all of the difference, if any, between the price at which shares of preferred stock of the Corporation were sold and the amounts payable on such stock on any liquidation of the Corporation; (d) charges covering any loss on the sale or abandonment of property or arising from any revaluation of property of the Corporation or any of its subsidiaries; (e) charges for the creation of enlargement of any reserve accounts of the Corporation or any of its subsidiaries required by law or by regulation of any public authority; and (f) charges for the write-down or write-off of the excess of the cost of any properties constructed or acquired over the original cost of such properties as may be required by law or by regulation of any public authority. (Section 1 of Article III of the Supplemental Indenture, dated September 1, 1938, copies of which are filed as exhibits with the Registration Statement.)"

method of allocation of expenses is under the circumstances inequitable to Washington Gas Light Company. The Commission finds that the fair method of allocation of expenses is as follows: That Washington Gas Light Company shall pay the cost of listing its common stock on the New York Stock Exchange and the sums properly payable to registrars and stock transfer agents; and that all other expenses incident to the registration of these securities including filing fees, and fees payable to accountants, attorneys and other experts should be paid by Washington and Suburban Companies. Our order will contain a condition to this effect. Assuming compliance with this condition, the transaction does not appear to be in other respects inconsistent with the provisions of Rule U-12D-1.

An appropriate order will issue, subject to the following terms and conditions:

(1) That the acquisition of stock and debt obligations of Alexandria Gas Company and Washington Suburban Gas Company, and the issuance of 35,000 shares of common stock in consideration therefor, shall in all respects comply with the order of the Public Utilities Commission of the District of Columbia, dated July 26, 1939 (Formal Case No. 286, Order No. 1807).

(2) All expenses incident to the registration of 362,588 shares of Washington Gas Light Company common stock in registration statement No. 2-4123, pursuant to the Securities Act of 1933, shall be paid by Washington and Suburban Companies, with the exception that Washington and Suburban Companies shall not be required to reimburse Washington Gas Light Company for the services of employees of that company who have received no extra compensation in that connection, and except that Washington Gas Light Company may pay the cost of listing said common stock on the New York Stock Exchange and fees and compensation payable to registrars and stock transfer agents.

(3) Within 10 days after the completion of the public distribution of said 362,588 shares of common stock of Washington Gas Light Company, or such lesser number of shares as may be distributed pursuant to the agreement dated August 1, 1939, between Washington and Suburban Companies and the representatives of the several underwriters, Washington and Suburban Companies and Washington Gas Light Company shall each file a certification of notification, showing the number of shares sold, the consideration received therefor by each applicant, and the disposition of the proceeds of such sale.

(4) That all acquisitions, issues and sales shall be performed in accordance with the terms and conditions represented by the foregoing applications as amended.

[No. 834]

IN THE MATTER OF

WILLIAM W. BATTLES, Chairman, FRANCIS M. BROOKE, and FRANCIS BRAUN, Reorganization Committee for Security Holders of NATIONAL PUBLIC UTILITIES CORPORATION

File No. 34-31. Promulgated August 4, 1939

REPORT OF THE COMMISSION ON A PLAN OF REORGANIZATION

This is a report by the Securities and Exchange Commission on the plan of reorganization of National Public Utilities Corporation (hereinafter sometimes referred to as "National"). This plan has been submitted to the Commission by the reorganization committee which now proposes to submit the plan to the corporation's creditors and to ask their assent to it as required by the Public Utility Holding Company Act of 1935 under which National is registered. A copy of this report must accompany or precede the solicitation of such assents.

As National is in reorganization under Section 77B of the Bankruptcy Act, the plan cannot become effective unless it shall have been approved by this Commission prior to its submission to the court and until it has been accepted in writing by at least two-thirds of each class of creditors. Since National is clearly insolvent, no acceptance by stockholders is necessary.

If the plan is accepted by creditors holding two-thirds of each class of claims and the judge finds that the plan is fair, equitable and feasible and, after hearing, confirms it, it will then be binding upon all creditors including those who do not accept it as well as those who do.

After a hearing, the plan has been approved by the Commission in the form to be submitted to National's creditors. No other plan for the reorganization of National has been submitted to the Commission by any other party.

This Report to Creditors does not Constitute a Recommendation by the Commission of the Plan. It is Designed as an Aid to Creditors in Determining Whether or Not to Consent to the Plan.

5 S. E. C.-35-1689