Wednesday, May 7, 2014

Not a stock or bond but......

click on image to enlarge

.....a trustee's certificate. Reorganized companies with newly issued stock were easy prey to speculators. So to prevent this the common stock sometimes was held in trust for a period of up to five years. Voting rights was held by the trustees and not the common stock owners until the trust period expired. If dividends were issued for the common stock they were paid to the trustee's certificate holders.


History of the company: The company was formerly know as the Omaha Division of the St. Louis, Kansas City and Northern Railway. The line ran from Pattonsburg Missouri to Council Bluffs Iowa a distance of 144 miles with standard gauge. The Omaha Division bonds went in default in April 1. 1885. Foreclosure proceeding were started and in Dec. 28, 1886 the company was sold to a committee of the bond holders. The new company was formed in May 18,1887. In reorganization each holder of $1,000 of the defaulted 7% Omaha Division bonds received $1,140 in new 4% bonds, $960 in 6% non-cumulative preferred stock and a $1,000 in common stock. The common stock was held in trust by the trustees for a 3 year period.

reference:
  • Poor's Manual 1891
  • The Commercial & Financial Chronicle & Hunt's Merchant magazine Jan to June 1887.
  • Railroad Czar by E.H. Harriman