purchase price of $7,697,033 15 face amount of reorganization securities comprised of $4,398,305 first and refunding bonds, and $3,298,728 income bonds. In this connection we note the statement of the circuit court of appeals in its opinion of January 2, 1945, that "This formal finding might perhaps suffice if the Commission had stated the reasons which lead it to reduce by some $10,000,000 face value of the new securities its prior valuation * **" It is true that the modified purchase price is much smaller in face amount of reorganization securities than the purchase price approved in our report of February 18, 1941. It will be seen, however, that if the probable market value of the total amount of reorganization securities first approved by us as a fair and equitable price be computed at the rates assigned such securities by the expert testimony of record, an aggregate market value of $5,140,000 would result as compared with an aggregate market value of $5,277,966 (computed at the same rates) for the total amount of reorganization securities found by us as a fair and equitable price in our report of October 6, 1942.16

Upon further consideration and taking into consideration the priorlien claim of the principal debtor's estate, the uncertainty to which some of the items comprising the nonoperating assets of Old Colony are subject, the results of the segregation and severance studies, the probable future segregated earnings, and the advantages of the settlement of pending claims; considering also the general public interest; we conclude and find that the price to be paid for Old Colony properties, franchises, and assets upon the terms, and conditions and under the limitations, set forth in the modified plan of reorganization approved by us in our report and order of October 6, 1942, as modified and corrected by our reports and orders of July 13, 1943, and February 8, 1944, should be approved.

We further conclude and find that the petitions of the protective committee for Old Colony bonds and the Pennsylvania Railroad Company for further public hearings should be denied.

An appropriate supplemental order will be entered.

15 As adjusted to reflect Old Colony actual earnings in 1942 and 1943.

16 Computation of market values of securities comprising purchase price approved by report of February 18, 1941.

Computation of market values of securities comprising purchase price approved by report of October 6 1942, as modified and corrected by report of February 8, 1944.

APPENDIX

Supplemental order at a general session of the Interstate Commerce Commission held at its office in Washington, D. C., on the 14th day of May, A. D. 1945. It appearing, That this Commission, on February 8, 1944, made and filed its fifth supplemental report and entered its supplemental order in this proceeding, approving a corrected plan for the reorganization of The New York, New Haven and Hartford Railroad Company, principal debtor, Hartford and Connecticut Western Railroad Company, Old Colony Railroad Company, and Providence, Warren and Bristol Railroad Company, secondary debtors;

It further appearing, That on December 21, 1943, and March 26, 1944, respectively, the District Court of the United States for the District of Connecticut entered its opinions, and on March 26, 1944, entered its order approving the plan; It further appearing, That on January 2, 1945, and January 23, 1945, respectively, the United States Circuit Court of Appeals for the Second Circuit rendered its opinions, and on January 30, 1945, issued its mandate reversing in part and affirming in part the district court's order approving the plan;

It further appearing, That on February 13, 1945, the district court entered its order referring the plan back to the Commission, but only for the following purposes:

(1) For such further action with respect to the price to be paid for the Old Colony property as may be required by the said opinions and mandate of the circuit court of appeals.

(2) For such further action, if any, as this Commission in its discretion may decide to take with respect to sections N (2) and N (3) of the plan.

(3) For such adjustments, if any, as this Commission may deem necessary as a result of its actions under paragraphs (1) and (2) of said order;

It further appearing, That the protective committee for the bonds of Old Colony Railroad Company on March 15, 1945, and the Pennsylvania Railroad Company on April 3, 1945, filed their respective petitions for further hearing; and that the insurance group, mutual savings bank group, and Reconstruction Finance Corporation on March 24, 1945, and the Bankers Trust Company on March 28, 1945, filed replies opposing the granting of the petition of said protective committee, and on April 12, 1945, filed a joint reply opposing the granting of the petition of the Pennsylvania Railroad Company.

It further appearing, That, upon consideration of the aforesaid opinions and order and further consideration of the entire record, this Commission, upon the date hereof, made and filed its supplemental report containing its findings of fact and conclusions thereon, which report (together with the previous reports of March 22, 1940, February 18 and March 25, 1941, October 6, 1942, July 13, 1943, and February 8, 1944, in this proceeding) is hereby referred to and made a part hereof:

It is ordered, That the provisions of the plan as approved in this Commission's reports and orders of July 13, 1943, and February 8, 1944, relating to the price to be paid for acquisition of the property of the Old Colony Railroad Company, and the sections N (2) and N (3) of said plan, be, and they are hereby approved. It is further ordered, That the aforesaid petition of the protective committee for the bonds of Old Colony Railroad Company and the petition of the Pennsylvania Railroad Company be, and they are hereby, denied.

261 I. C. C.

FINANCE DOCKET No. 14806

BALTIMORE & OHIO RAILROAD COMPANY RECONSTRUCTION FINANCING

Submitted May 21, 1945. Decided May 31, 1945

1. The Baltimore & Ohio Railroad Company found reasonably to be expected, on the basis of present and prospective earnings, to meet its fixed charges without a reduction thereof through judicial reorganization, provided the plan of adjustment dated September 20, 1944, as amended, becomes effec tive substantially as approved.

2. Upon application, purchase by the Reconstruction Finance Corporation for itself, at a price not in excess of their face value plus accrued interest, of not exceeding $84,563,276 of Baltimore & Ohio Railroad Company collateral-trust 4-percent bonds due January 1, 1965, approved conditionally. Terms prescribed.

R. L. Snodgrass for applicant.

CORRECTED REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER BY DIVISION 4:

The Baltimore & Ohio Railroad Company on January 3, 1945, filed with the Commission an application requesting, subject to our approval, aid in its financing in the manner and for the purposes hereinafter stated, by the Reconstruction Finance Corporation, hereinafter referred to as the Finance Corporation, under the provisions of section 5 of the Reconstruction Finance Corporation Act, as amended. By the provisions of that act, the Finance Corporation, notwithstanding any limitation of law as to maturity, may, with our approval, including our approval of the price to be paid, to aid in the financing thereof, purchase for itself, or for the account of a railroad obligated thereon, the obligations of railroads engaged in interstate commerce, or, when, in the opinion of the Finance Corporation, funds are not available on reasonable terms through private channels, make loans, upon full and adequate security, to such railroads, provided that in the case of loans to or the purchase of obligations of railroads not in receivership or trusteeship we shall, in connection with our approval thereof, certify that such railroad, on the basis of present and prospective earnings, may reasonably be expected to meet its fixed charges without a reduction thereof through judicial reorganization. We have made the required investigation.

By our previous reports and certificates issued in Finance Dockets Nos. 9268, 9659, 10554, 10774, 11072, 11750, and 11891 we approved loans to the applicant totaling $145,358,000. Baltimore & O. R. Co. Reconstruction Loan, 184 I. C. C. 37 and 395, 187 I. C. C. 323 and 572, 189 I. C. C. 399, 202 I. C. C. 123, 207 I. C. C. 145, 212, I. C. C. 227, 221 I. C. C. 718, and 224 I. C. C. 396. On January 16, 1935, our order was issued without report in Finance Docket No. 9268 reducing the amount of the loan approved in that proceeding by $14,600. Advances of $95,343,399.59 were made on the foregoing loans, of which $13,735,124.07 had been repaid on September 20, 1944, leaving outstanding $81,608,275.52 at that date. By appropriate supplementary reports and certificates the terms of certain of these loans have been extended or modified by us. Baltimore & O. R. Co. Reconstruction Loan, 199 I. C. C. 167, 207 I. C. C. 145, 212 I. C. C. 11 and 227, 221 I. C. C. 6, and 233 I. C. C. 771. The terms and purposes of some of the loans were also modified by our orders issued without report on November 23, 1932, and February 16, 1933, in Finance Docket No. 9268 and on January 7, 1936, in Finance Docket No. 10774.

Of the original advances the sum of $13,355,100 was refinanced through delivery to the Finance Corporation of $13,490,000 of the applicant's 5-year notes due August 1, 1939, issued pursuant to our authorization of $50,000,000 of such notes in Baltimore & O. R. Co. Securities, 202 I. C. C. 118. The remaining notes were sold to the public. Extension of the notes for 5 years was authorized in 233 I. C. C. 771, supra. On account of this transaction, although the advances outstanding were $81,473,375.52 on September 20, 1944, the total obligation of the applicant was actually $81,608,275.52, as heretofore stated, of which $13,490,000 matured on August 1, 1944, and $68,118,275.52 on November 8, 1944.

During 1934 certain proposed maintenance and equipment expenditures were approved by us as desirable for the improvement of the applicant's transportation facilities, Baltimore & O. R. Co. Public Works Improvement, 199 I. C. C. 303, 443, and 729. For these purposes the applicant obtained advances totaling $4,455,000 from the Federal Emergency Administrator of Public Works. This loan later was taken over by the Finance Corporation. The amount outstanding as of November 8, 1944, was $2,955,000.

No equipment obligations of the applicant are now held by the Finance Corporation and the Finance Corporation has received payment in full of its loan to the Alton Railroad Company, a wholly owned subsidiary of the applicant.

The application.-The applicant requests that the Finance Corporation purchase entire issue of collateral-trust 4-percent bonds, for which provision is made in the adjustment plan of the applicant dated

September 20, 1944. The proceeds of the sale would be used to pay the notes of the applicant held by the Finance Corporation. The adjustment plan contemplates that the principal amounts of, and the security for, all existing obligations of the company will remain unchanged, except for the proposed refunding of the notes held by the Finance Corporation in the principal amount of $84,563,276. The Commission's authorization for the issuance of securities to refund and in exchange for certain securities pursuant to the adjustment plan of the applicant is given in Baltimore & O. R. Co. Debt Adjustment, 261 I. C. C. 51, decided March 12, 1945.

The collateral-trust bonds, in the event of our approval would be sold to the Finance Corporation at par and accrued interest subject to certain other adjustments proposed in the plan. The plan would be implemented with respect to the August 1 and November 8 notes by the execution of an indenture in which provision will be made for the issue of the bonds. The bonds would bear secured fixed interest at the rate of 4 percent, payable semiannually on January 1 and July 1 of each year, would mature January 1, 1965, and would be redeemable, in whole or in part, on any interest date on 60 days' notice, at their principal amount and accrued interest. Until the purchase of the new collateral-trust bonds, interest would be paid on the August 1 and November 8 notes at the same rate, 4 percent, and on the same interestpayment dates as at present and, until default in such payments, the Finance Corporation would refrain from exercising its right to enforce the payment of the principal of such notes, unless the plan is abandoned prior to such default.

The total principal amount of the bonds outstanding at any one time would be limited to $84,563,276, except as permitted under the provisions of the indenture in respect of destroyed, lost, or stolen bonds. The bonds would be issuable as coupon bonds and as registered bonds without coupons. The definitive bonds would be issued in the denomination of $1,000. The coupon bonds would be dated as of January 1, 1945, would be payable to bearer, registerable as to principal and when issued, would carry coupons for all unmatured interest, such interest to be payable only upon presentation and surrender of such interest coupons for such interest installments as are evidenced thereby as they severally mature. The registered bonds without coupons would bear the date of authentication and be entitled to interest from the last preceding first day of January or July, as the case might be, to which interest had been paid, unless such date were January 1 or July 1 in which case they would bear interest from such date, or unless such date were prior to July 1, 1945, in which case they would bear interest from January 1, 1945.