1, 1995, at 1023%, same; thereafter through April 1, 2000, at 1012, 101%; and thereafter to maturity at par. In the event it becomes desirable to issue temporary bonds of series F, they will conform to the requirements of the mortgage, with appropriate amendments, insertions, and additions as prescribed for definitive bonds. In lieu of temporary bonds, temporary receipts may be issued entitling the holders thereof to definitive bonds when ready for delivery. As a sinking fund for the retirement of the series F bonds, the applicant will agree that so long as any of the bonds are outstanding it will pay to the trustee under the mortgage on October 1 of each year beginning October 1, 1945, the sum of $269,175. Sinking-fund payments may be made in cash or in series F bonds at the then applicable sinking-fund redemption price, or at the cost thereof to the applicant, whichever is less, or partly in cash and partly in such bonds. The applicant will have the right from time to time to deliver to the trustee series F bonds, which with the unmatured coupons appertaining thereto, will be canceled forthwith, and will thereafter be applied by the trustee to the satisfaction of sinking-fund payments as they become due at the principal amount of the bonds or at the cost to the applicant, whichever is less. At any time after the receipt of any sinking-fund moneys and until a date 60 days prior to the next ensuing interest-payment date, the trustee will apply such moneys to the purchase for the sinking fund of series F bonds at a price, exclusive of accrued interest and brokerage commisions, not exceeding the sinking-fund redemption price then applicable, plus the amount of interest accrued thereon, such interest to be paid otherwise than from sinking-fund moneys. If upon the date mentioned above the trustee has on hand in the sinking fund $25,000 or more, or any amount less than $25,000 if so requested by the applicant, it will apply such funds on the next interest-payment date to the redemption by lot of series F bonds. All series F bonds acquired by the trustee or delivered to it by the applicant through the operation of the sinking fund, together with unmatured coupons appertaining thereto, will be canceled and cremated by the trustee and the applicant, and no bonds will be issued in lieu thereof. The mortgage provides that the principal, premium if any, and interest on the bonds issued thereunder shall be payable in gold coin of the United States of America of the standard of weight and fineness existing on August 1, 1921, and the series F bonds will comply with the terms of the indenture by including therein this provision, but a legend will be included on the face of the bonds stating that the payments are subject to Public Resolution No. 10 of the Seventy-third Congress, approved June 5, 1933, relating to payment in any coin or currency which at the time is legal tender for public and private debts. A notation calling attention to this legend will also be inserted on the panel of each bond. The bonds will also contain a clause stating that the principal, premium if any, and interest thereon are payable subject to deduction for any tax or governmental charge against any holder thereof which the applicant or the trustee may be required to pay thereon, or to retain or deduct therefrom, under any present or future law of the United States of America, or of any State, county, municipality, or othe taxing authority therein. The applicant invited 213 parties to bid for the purchase of the bonds. In response thereto bids were received from the representatives of 2 groups of prospective purchasers. The better bid, 104.66 and accrued interest, was made by Halsey, Stuart & Company, Incorporated, on behalf of itself and 144 associates, and has been accepted, subject to our approval. On this basis the average annual cost of the proceeds to the applicant will be approximately 3.20 percent. The gross reduction in interest charges from April 1, 1945, to April 1, 2003, the date of maturity of the old and the new bonds, expected to result from the proposed refinancing is estimated at $36,625,202, and the premium on the sale of the new bonds will amount to $2,508,711, making a total of $39,133,913. Expenses and other deductions will total approximately $3,224,948, and will consist of the following: Between August 1, 1921, the date of the first and refunding mortgage, and December 31, 1944, the applicant retired, or provided for the payment and retirement of, $75,443,000 of bonds. Subject to our approval, the applicant is or will become entitled, under the provisions of the mortgage, to request authentication and delivery of bonds issuable thereunder in a principal amount equal to the amount of bonds so retired. By the terms of the proposed supplemental indenture, the applicant will agree that so long as any of the series F bonds are outstanding, or until adequate provision satisfactory to the trustee for their payment in full has been made, it will not (1) request authentication, and delivery of any additional bonds under the first and refunding mortgage on account of, or in reimbursement for, any expenditures made by it prior to January 1, 1944, for any of the purposes for which bonds are issuable as set out in subparagraphs (a), (b), and (c) of paragraph 1 of section 7 or article three of the mortgage, or (2) request authentication and delivery of bonds under the mortgage in excess of $37,500,000 on account of the $75,443,000 of bonds retired, or provision for their payment made, prior to January 1, 1945. The largest amount of the applicant's funded debt actually outstanding was on December 31, 1924, when it amounted to $240,165,735, including $27,622,900 of equipment obligations. As of December 31, 1943, its outstanding funded debt amounted to $206,444,062, which included $21,575,512 of equipment obligations. The decrease in the total debt between December 31, 1924, and December 31, 1943, was $33,721,673, of which $6,047,388 consisted of equipment obligations. The equipment obligations are at present being paid off at the rate of about $4,000,000 a year, and the respective final installments thereon become due and will be paid on or between January 1, 1946, and December 1, 1954. During the period from December 31, 1924, to December 31, 1943, investment in the applicant's road and equipment and improvements on leased property increased $84,436,357. During 1944 the net reduction in funded debt and equipment obligations was expected to amount to $14,500,000. Because of the large sums provided or to be provided from the applicant's free cash for debt reduction, the uncertainties of the future and the necessity of maintaining its cash resources, the applicant is of the opinion that its interests require that bonds be sold in a principal amount equal to the principal amount of the bonds proposed to be redeemed. In our opinion, the continued reduction in the applicant's debt and the use of available funds for the other purposes mentioned above, together with the favorable cost of the new money, warrant the granting of the authority sought. We find that the proposed issue by the Louisville and Nashville Railroad Company of not exceeding $53,835,000 of first and refunding mortgage 3%-percent bonds, series F, as aforesaid, (a) is for a lawful object within its corporate purposes and compatible with the public interest, which is necessary and appropriate for and consistent with the proper performance by it of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose. An appropriate order will be entered. PORTER, Commissioner, dissenting: I am not unmindful of the substantial savings in interest accomplished by this refunding over the period of 58 years the bonds here authorized are to run, which is of course good, but the sinking fund approved fails to meet the requirements we have insisted upon in all of the recent applications of railroad companies comparable with this applicant. As late as September 26, 1944, in F. D. No. 14689, Oregon-W. R. & Nav. Co. Bonds, 257 I. C. C. 831, wherein there were to be issued and sold to the public, bonds guaranteed by its parent company, the Union Pacific, we granted the permission only upon the express condition that the sinking fund be increased to 1 percent. The same condition should be attached to the issue here before us. The financial condition of this applicant is hardly of a character to warrant our becoming fainthearted in insisting upon a compliance with the sound policies which we have adhered to in so many other cases. Let us take a brief glance at the financial situation of the applicant. As of September 30, 1944, the applicant had $41,376,652 of free cash, $36,022,500 of temporary cash investments, or a total of $77,399,152 of quickly available cash, and net current assets of $52,492,040. During the years from January 1, 1939, to December 31, 1943, fixed charges were $9,472,904, $9,203,198, $9,082,035, $9,128,595, and $8,724,329, respectively, or a net reduction of fixed charges during this period of $748,575. In the same period net income was $7,394,231, $9,537,146, $19,475,250, $19,407,582, and $21,213,757. During each of the last four of those years the income available for fixed charges exceeded by more than three times the fixed charges. With more than $23,000,000 available to pay it, the annual interest requirements on funded debt and equipment obligations outstanding in the hands of the public December 31, 1944, after giving effect to financing and redemption of $11,000,000 prior lien bonds, will amount to approximately $6,959,989. The applicant might well have used some of the more than $75,000,000 available cash to reduce the principal of the debt here refunded, but in any event, as in the Union Pacific case, supra, we should here attach a condition that the applicant increase the sinking fund from 2 to 1 percent. The consequent result would be that in place of creating a sinking fund of but $269,175 per annum, or a total of more than $15,000,000 during the term of the bonds, there would be a sinking fund of $538,350 per annum, or a total over the life of the bonds of more than $30,000,000, leaving a debt at the end of the 58 years of only about $23,000,000 to be dealt with at that time. 261 I. C. C. FINANCE DOCKET No. 14571 CHICAGO, ST. LOUIS & NEW ORLEANS RAILROAD COMPANY ET AL. CONSTRUCTION AND OPERATION Submitted December 14, 1944. Decided February 20, 1945 Public convenience and necessity not shown to require construction by the Elmer A. Smith and William B. Browder for applicants. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS PORTER, MAHAFFIE, AND MILLER BY DIVISION 4: Exceptions to the report proposed by the examiner were filed by the intervener and the case has been argued orally. The Chicago, St. Louis & New Orleans Railroad Company and the Illinois Central Railroad Company on May 25, 1944, applied for authority to the former to construct, and to the latter to operate, a line of railroad extending from a connection with their main line at a point about 0.75 mile northeast of Central City in a southeasterly direction for a distance of 7.9 miles in Muhlenberg County, Ky., to serve two mines, one owned by the Kirk Coal Mining Company, hereinafter called the Kirk company, and the other by the W. A. Wickliffe Coal Company, called the Wickliffe company. The application was heard jointly with an application filed in Finance Docket No. 14536 by the Louisville & Nashville Railroad Company for authority to construct a line of railroad from Drakesboro, Ky., to the same mines, 2.1 miles. The applicant in Finance Docket No. 14536 intervened in Finance Docket No. 14571 in opposition to the application. Subsequent to the hearing the Louisville & Nashville filed a motion for separation of the proceedings and the issuance of a final report on its application without a proposed report, which was granted on August 18, 1944. No representations have been made by any State authority. Briefs were filed. Unless otherwise indicated all points hereinafter mentioned are in Kentucky. By our report dated September 23, 1944, in Louisville & N. R. Co. Construction, 257 I. C. C. 805, we granted the application in Finance |