|Thursday, January 29, 1931||The Financial Post (Toronto)||Page 10, col. 1|
Can. Terminal System sells $1,100,000 bonds and closesABissue
States intention to pay interest unpaid since Jan. 1
Claims assets ample
Plans separate companies for large elevator and coking projects—Ontario bakeries defaults interest
Canadian Terminal System, Ltd., having sold $1,100,000 of SeriesAB6 per cent 20-year collateral trust sinking fund gold bonds, has decided to close the issue and to offer for sale no more bonds int he total issue of $12,500,000 which had first been planned.
Interest due January 1, 1931, on these bonds has not yet been paid, but The Financial Post is informed by officials that arrangements are being made to meet this interest and that the recorded plans of the company for construction of elevators, and modern coking plants will be financed by other means.
In the future, it is stated, The Canadian Terminal System will be become more of a holding company and less of an operating company.
Says bonds better protected
T. A. Neely, president of the company, informed a representative of The Financial Post this week that in his opinion the position of bondholders of the company has been improved by the decision to close the bond issue.
Asked if the company did not have certain contractual obligations with regard to the purchase of control of the Great Lakes Elevator Co., owning a 4,000,000-bushel elevator at Owen Sound, to build a 4,000,000 grain terminal at Kingston and modern coke manufacturing plants and properties in Toronto and Fort William, Mr. Neely said:
Kingston elevator goes on
"The Kingston situation is not prejudiced at all by the delay in paying the interest on the bonds. The necessary payments have been kept up. The substructure is completed and filling which costs about $100,000 has been done. The superstructure cannot be proceeded with until the spring by which time the balance of the financing necessary will be completed.
"So far as the Great Lakes Elevator Co. project is concerned, the agreement to purchase is still in force but full payment has not been made. A satisfactory extension of the agreement has been arranged.
"There are no contractual obligations on the Canadian Terminal System for the other projects, each of which will be operated as a separate subsidiary."
Funded debt totals $2,925,200
The Financial Post representative, after pointing out that the public is not in possesion of a financial statement, asked Mr. Neely what the assets of the company were that protected the bonds. To understand Mr. Neely's answer better, the following issued capitalization and bonded indebtedness of the company is recorded:
Six per cent 20-year mortgage sinking fund gold bonds, series "A," dated June 1, 1928, due June 1, 1948; interest payable June and Dec. 1, authorized $5,000,000, issued $2,500,000; outstanding in hands of public, $1,565,200.
Six per cent collateral trust sinking fund gold bonds, dated July 1, 1930, due July 1, 1950, series "AB"; authorized $50,000,000, issued $12,500,000; outstanding in hands of public $1,110,000.
Six per cent 20-year gold debentures dated June 1, 1928, due June 1, 1948; authorized $2,600,000; outstanding in hands of the public, $250,000.
No par value common stock, authorized and outstanding ?00,000 shares, of which 30,000 shares were offered the public in Jan., 1929, by Willison, Neely Corpt., Toronto, at $35 a share, these 30,000 shares representing approximately the shares owned by the public.
Note:—Security of 6 per cent mortgage bonds series "A" was stated to be by bonds and cash of other companies, 6 per cent collateral trust series "AB" bonds, which were a direct obligation of company, would be, it was said, "upon completion of present financing and construction, secured by a first mortgage and charge on all the assets of the company except balances payable to the municipalities of Owen Sound and Collingwood amounting to $332,800 and $780,000 respectively," 6 per cent debentures were secured, it was stated, by real estate, cash and all the stock in subsidiary companies. The stock is not yet revenue producing.
Bond holdings large
"We have large holdings in current bonds,&qout; said Mr. Neely. "When I say that these A B bonds will remain a first charge on the assets of the Canadian Terminal System, I am including all the bonds, debentures and mortgages now in the hands of the Canadian Terminal System as well as the gas and coke holdings and the elevator stock held. Naturally these securities, and the current bonds are not speculative issues, are a much better protection to bonds already issued than if we had sold the whole $12,500,000."
Will call Bakeries bondholders
Interest due January 2, 1931, on Ontario Bakeries 20-year 6 per cent first mortgage sinking fund bonds has been default. Regarding this Mr. Neely said:
"We have just concluded one of the most difficult years ever experienced by the baking industry in Canada. Early in 1930 all the baking companies contracted heavily for flour at high prices, then wheat and flour came tumbling and on the top of that there came the most severe pricecutting campaign we remember. We feel the bottom has been reached, and we are hopeful for the company. We will not ask the bondholders to take any reduction in the face value of their bonds, but we feel that they should agree to some temporary accommodation until this period is over.
Position of subsidiaries
As there is a large public interest directly in many of the subsidiaries of the Canadian Terminal System as well as indirectly because of interest in the latter's securities, The Financial Post also sought information as the situation of each. Mr. Neely's replies summarized are, with supplementary data, as follows:
Canadian Rail & Harbor Terminal, Toronto: earnings and net profits for 1930 show a good increase over 1929, net profits being $332,207 for first 11 months of 1930 as compared with $294,305 for same period in 1929. The company met interest, taxes and operating expenses approximately which is a substantial advance on 1929. The company has a strong liquid position with $200,000 in cash, Victory bonds and call loans. Funded debt includes $3,500,000 6-1/2 per cent first mortgage bonds due 1951, $2,000,000 7 per cent mortgage bonds due 1945, and 7 per cent debentures due 1956 to the amount of $305,000 outstanding.
Montréal Rail & Water Terminals: business is increasing but plant is not yet in relatively as good a position as Toronto plant. Improvement in 1930 is said, however, to be substantial. There has been a bad rate situation in Montréal which recently appears to have been corrected. Funded debt includes $3,000,000 6-1/2 per cent first (closed) mortgage sinking fund gold bonds due August 1, 1951, $600,000 7 per cent general mortgage sinking fund gold bonds due August 1, 1946, and $200,000 7 per cent 30 year gold debentures (secured) which were not offered to the public. Majority of voting trust certificates represented by common shares are owned by The Canadian Terminal. There are outstanding $600,000 of 7 per cent preferred and $200,000 no par value common shares.
Collingwood Terminals, which operates a 2,000,000 bushel grain elevator in Collingwood, has done exceptionally well. It has earned and paid its preferred stock dividend from its inception. At the present time it shows good earnings from grain in storage. At the end of the season it was filled to capacity but now has only 1,700,000 bushels. As winter progresses company expects considerable portion of this grain to move out, leaving plenty of room for grain brought down in spring movement. The company has in excess of $92,000 accrued earnings on grain now in store.
Town of Collingwood raised $800,000 in form of 5 per cent debentures to build the elevator and agreed to sell to Collingwood Terminals upon completion at cost of construction. Company agreed to pay $100,000 cash with 5 per cent interest on balance of cost of construction and to assume amortization payments over term of 25 years. Cost in excess of $800,000 was to be paid by the company. At the end of 1929 this was done with $141,200 issued in 7 per cent preferred and 25,000 no par value common shares. The construction liability was then shown at $867,404.
National Utilities Corp. stock control was sold in 1920 to Insull interests of Chicago at what is understood to be a satisfactory profit.
Montréal Property Corp., which owns a group of 28 houses under a plan of central heating, is said to be a prosperous concern with present revenue of $73,000.
Municipal Bankers Corp., established in 1920 when returns on first and second mortgages were much higher than at present, has always met its obligations. No bonds have been issued for several years.
Canada Housing Corp., owns more than 100 Toronto houses. The houses are all reported rented at sufficient rentals to enable the company to meet all obligations.
Montréal Debenture Corp., which took over an old Montréal loan company and an old-established savings society, has also met all obligations to date. It owns first and second mortgages which naturally return less than from five and 10 years ago.
Ontario Bakeries, which has defaulted on bond interest, hopes to induce bondholders to grant concessions as to interest until the company has drawn clear of present period of depression in baking industry.
Other subsidiary companies are intended to complete plans for two modern coking industries in Toronto and Fort William, capable of producing 1,500 tons daily. The company has an exclusive franchise for a $1,000,000 coking and gas project at Fort William. Another company will probably be needed to complete Kingston elevator and another possibly to get control of Great Lakes Elevator Co.
Present directors are as follows: Col. Robert Starke, chairman of the board; T. A. Neely, president; H. I. Price, chairman of the executive committee and general manager; P. A. Curry, first vice-president; E. J. S. Wallwork, secretary and comptroller; W. J. Williams, treasurer; W. A. Schofield, assistant secretary; directors, A. E. Warren, John McMillan, Col. Robert Starke, T. A. Neely, Graham Curtis, Harry Price, T. W. Foran, R. B. Hutcheson, A. W. P. Buchanan, director of National Breweries, James Arnold, director of Canada Foundries & Forgings and William Geraghty, president of People's Savings Society, Montréal.
The last three are new directors. The following formerly shown as directors, as not now shown: Hon. E. C. Drury, Louis Cote, K.C., G. L. Laffoley, Col. Frederick McRobie, M. R. Twomey, and John J. Fitzgerald.