Missouri Pacific system suggested new plan of reorganization—cash requirements of

plan as of Dec. 31, 1947

Trustee's figures without deducting reserves for subsequent year's improvement program.

* Includes $7,500,000 to be set aside for retirement of securities by tender or for corporate purposes of reorganized company.

Parentheses() indicate red figures.

1 If there is a system reorganization, then these Gulf Coast 4-percent income debentures are to be an obligation of the Missouri Pacific system entitled to interest up to 4-percent
out of segregated earnings of Gulf Coast Line's properties arter deducting interest on $40,000,000 Gulf Coast Line's divisional first mortgage and on such amount of obligations as may
be issued for intercompany claim upon final determination thereof, both of the senior obligations being pledged under the new system mortgages. If 77 proceedings are to be dismissed
with respect to New Orleans, Texas & Mexico and its subsidiaries other than the International-Great Northern, then these Gulf Coast 4-percent income debentures are to be an obli-
gation of the reorganized Missouri Pacific secured by and serviced through the pledge of a like principal amount New Orleans, Texas & Mexico 4-percent income bonds.
and sinking fund on the bonds so pledged will be payable out of available net income of the New Orleans, Texas & Mexico after deducting all prior charges, including interest and
sinking funds on $40,000,000 publicly held New Orleans, Texas & Mexico first-mortgage bonds and interest on such amount of obligations as may be issued by the New Orleans, Texas
& Mexico for the intercompany claim upon final determination thereof, which obligations will be pledged under the new Missouri Pacific mortgages.
2 Cumulative from Jan. 1, 1947.

3 Entitled to 5 percent dividend ahead of B common. After B receives 5 percent both classes share equally.

5 Allocated at $90 per share. These should be no par shares with a stated value of $20 each. This will permit issuance of 1 share for each share of old preferred or 22 shares of old common.

In addition, $7,500,000 is to be set aside for retirement of securities by tender, or for corporate purposes of reorganized company.

7 Represents $3,594,000 ($125 per bond) to be paid at the time of reorganization and $1,780,000 ($62 per bond) already received or authorized for payment in the form of excess interest
payments on International-Great Northern bonds since Jan. 1, 1943, over interest on new bonds for period Jan. 1, 1943, to Dec. 31, 1947.

8 In the event that it proves impossible to include the New Orleans, Texas & Mexico in the reorganized company, the allocations comprised in ths line (total Missouri Pacific
and International-Great Northern) shall constitute the suggested new plan of reorganization.
To Jan. 1, 1947.

NOTE.-Cash payments made since Jan. 1, 1943, shall be credited against interest accruals on new firsts and incomes from that date and cash distribution above.

Senator REED. Will you be good enough to discuss that?

Mr. PURCELL. Yes.

Senator REED. My understanding is that there was reached in the Missouri Pacific case what was substantially a compromise or an agreement between the major owners of securities of different classes and kinds.

Mr. PURCELL. That is correct.

Senator REED. Which failed, however, to get support.

Mr. PURCELL. That is correct. That is exactly what happened, Senator.

Senator HAWKES. Between all the security holders? Mr. PURCELL. All the important groups. I am not going to say there was a final binding agreement. This, I take it, is a final binding agreement between Alleghany and the first and refunding group, of which Mr. Stedman was chairman. I signed it, and he signed it.

Senator HAWKES. Will you tell us what groups were not in the group where the chairman said all groups had agreed?

Mr. PURCELL. I can lead up to that.

Senator HAWKES. What groups were excluded from the agreement? Mr. PURCELL. I shall go into that.

Substantially all groups were in accord with this plan. You see, after the President's veto message and the strong suggestion in it that new legislation should be introduced, we sat down with a view to preparing a plan which would be suitable for adoption by the Missouri Pacific whether or not new legislation were enacted.

And one of the clauses in that contract, you will find, is to the effect that if new legislation makes this plan feasible, both parties would support it under the new legislation as well as under section 77 if new legislation is not adopted.

We sat down with the general mortgage bondholders, with the convertibles, with the New Orleans, Texas, & Mexico first-mortgage bondholder's group, with the International-Great Northern firstmortgage bondholders' group, with the trustee of the secured serial 54's, and I think we had substantial agreement among all those parties.

There was a group of the secured serial 54's that did not agree. There was some I.-G.-N. bondholders who did not agree.

But I felt that we had reached substantial agreement with the larger parties, and so 'l the parties went out to the circuit court of appeals, before whom these 11 appeals from the confirmation order were pending.

Senator REED. That is the eighth circuit?

Mr. PURCELL. That is correct. It is in Kansas City.

Senator REED. Yes.

Senator HAWKES. May I ask you-when you say "we sat down," you mean Alleghany?

Mr. PURCELL. Yes.

Senator HAWKES. How did you sit down, as bondholders or stockholders or what?

Mr. PURCELL. Alleghany Corp. is in all segments of the Missouri Pacific picture, but we have been most predominately identified with the equity interests, although that is by far the least important of our interests in Missouri Pacific.

Senator HAWKES. Now, were the other equity interests in with you on this plan?

Mr. PURCELL. No; they were not.

Senator HAWKES. What part of the equity interest did you represent?

it?

Mr. PURCELL. Common stock.

Senator HAWKES. I understand that; but what part of it? All of

Mr. PURCELL. We own today and we spoke only for our own ownership-we own about 3,325,000 of the Missouri Pacific first and refunding bonds, and we own eleven-million-odd of the Missouri Pacific convertibles. That is the most junior issue.

And we own about four-hundred-and-ninety-thousand-odd shares of Missouri Pacific common stock. We own no Missouri Pacific preferred stock.

Senator REED. What is the total issue of the company?

Mr. PURCELL. Total issue is eight-hundred-thousand-odd common, and they vote equally, and there our ownership represents about 32 percent of the total.

Senator REED. Common and preferred?

Mr. PURCELL. That is correct.

Senator REED. But a majority of the common?

Mr. PURCELL. Just about; yes.

Senator HAWKES. You have got a majority of the common?

Mr. PURCELL. Yes.

Senator HAWKES. But not a majority of the two?

Mr. PURCELL. Correct; and they vote equally.

Senator HAWKES. And the two have equal voting rights?

Mr. PURCELL. That is correct. We have about 32 percent.

Senator HAWKES. What is your picture in the Rock Island situation?

Mr. PURCELL. I am going to develop that.

Senator HAWKES. All right.

Mr. PURCELL. I was going to finish the Missouri Pacific.

Senator HAWKES. All right. I will find out what shares and bonds you have got, and I want to know how far you are in on the stock, and so forth.

Mr. PURCELL. Yes. I am going to develop that in complete detail. We went to the circuit court of appeals and sought to have the appeals dismissed and the matter referred back to the commissioner. I might say that everybody there before the court sought that relief. The court, after deliberation, entered an order denying the motion for referral. Those of us who had been in the negotiations simply could not understand the court's action and felt that it had made a mistake that it did not understand that the people were there trying to get their appeals dismissed-both the appellants and the appellees were seeking that relief.

So we went again and had more discussions with the court, but the court insisted upon hearing the appeals which nobody wanted to take to the court, and that is the way the matter stands today.

Those appeals, in the normal course, will be heard sometime in the future.

Records and briefs are being prepared; and in the meantime, the court made the suggestion that it would like to see what the bondholders thought about these plans-this present plan-so the InterState Commerce Commission has been asked to submit the balance to the security holders.