Word: icc
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Dates: during 1940-1949
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Worked out as a compromise between the claims of the senior bondholders and the loud squawks of the junior holders, the new MOP plan is a thorough rehash of the ICC plan issued three years ago. First & foremost it allows for the snappy rise in MOP earnings since 1938, would use cash to pay off more than $50,000,000 top-ranking bonds (the ICC plan would distribute $2,700,000 cash). This fat payoff permits the new plan to give a much better deal to junior security holders and at the same time stay within the framework erected...
Promoter of this deft plan is scrappy, flash-quick Robert Ralph Young (TIME, Dec. 28), whose rambling Alleghany Corp. owns 60% of MOP common and $11,000,000 in 5½% convertible bonds. Usually a rooter for rail debt reduction, Bob Young boiled over when he first saw the ICC plan: Alleghany's huge holdings in MOP common were tossed out entirely, its 5½% bonds were treated almost as badly. When he took another look he got madder still: the big insurance companies (holding the topflight bonds) would control the road...
...conversely, that U.S. Government credit is no stronger than that of the railroads which in times past have gone through a bankruptcy. Moreover, while last year the rails earned about 5% on their total property investment of some $28 billions, their earnings from 1930 to 1940, according to ICC, averaged about...
...underwriters Morgan, Stanley & Co. would handle a $14,000,000 Erie bond issue. Up rose peppery, dollar-minded Cyrus Stephen Eaton, boss of Cleveland's Otis & Co. and a Midwestern underwriter, who believes that New York financiers get far too much of the underwriting business. He demanded that ICC stop the sale, open the bidding to all comers...
Despite the uproar, Morgan, Stanley calmly advertised the issue, sold the bonds at 97½ subject to ICC approval. This was a nice contrast to Erie's September 1941 financing, when three underwriters scrapped for the issue. The winning underwriter then offered the bonds at 102½, took a drubbing because the price sagged seven points during the offering period...