O H E 179/ UC-NRLF ^liii'iilliiiJllllli'llllillllllllllllli'l!!! *C IS A57 YF % . REORGANIZATION OF THE Northern Pacific Railroad Company. REORGANIZATION COMMITTEE: EDWARD D. ADAMS, Chait JOHN C. BULLITT, LOUIS FITZGERALD, CHARLES H. GODFREY, J. D. PROBST, JAMES STILLMAN, ERNST THALMANN. LES C. BEAMAN, WM. NELSON CROMWELL, Counsel to the /'. mmittee. ARNOLD MARCUS, Secretary. PROTECTIVE COMMITTEE: BR AVION' IVES, Al GUST BELMONT, l IRGE R. SHELDON, CHARLEMAGNE ("OWER, Jr., SI I AS W. PETTIT, Coin DEPOSITARIES : J. P. MORGAN & CO., New York. DREXEL & CO., Philadelphia. DEUTSCHE BANK, Berlin, AND ITS ISRAV FRANKFORT <>\. MAIN, BREMEN, HAMBURG, MUNICH AND LONDON. FRANCIS LVNDE STETSON, VICTOR MORAWETZ, Counsel to the Reorganization Managers. New York, March 16, 1S96. REORGANIZATION OF THE NORTHERN PACIFIC RAILROAD COMPANY. Announcement by the Reorganization Committee, Pages 3 to 6. Plan of Reorganization, Pages 7 to 16. Statistics of the Northern Pacific Railroad Company, Pages iy to 21. Reorganization Agreement, Pages 23 to 29. • •• -•. V" OFFICE OF THE Northern Pacific Reorganization Committee, Mills Building, New York, March 16th, 1896. To the Holders of the BONDS and STOCKS issued or guaranteed by the NORTHERN PACIFIC RAILROAD COMPANY: The property of the Northern Pacific Railroad Company comprises, in various forms of ownership and control, A Railway System of 4,706 miles; A Land Grant of about 43,000,000 acres, and Sundry Bonds, Stocks and Accounts, representing interests in Terminal, Express, Coal and Navi- gation Companies. This property is represented by fifty-four corporations, which have issued $380,000,000 of Bonds and Stocks, of which all are now outstanding, and $271,949,044, including defaulted interest to December 31, 1896, are owned directly by the public. The present fixed Annual Interest and Sinking Fund Charges amount to $10,905,690 00 The adjusted Net Income from all sources applicable to these Fixed Charges has been: For the Fiscal Year ending June 30, 1 895 6,015,846 62 And during the past five years has averaged 7,801,645 78 THE PLAN FOR INDEPENDENT REORGANIZATION OF THE PROPERTY HAS BEEN DRAWN UPON THE FOLLOWING BASIS : First. — The Abandonment of Chicago as the Eastern Terminus, and the Limitation of the Railway on the East by the Mississippi River and the Great Lakes. The Bonds and Stocks of the Chicago & Northern Pacific Railroad Company and the Chicago & Calumet Company, or their successor companies, remaining as Northern Pacific assets, will be disposed of when they can be sold advantageously, and their proceeds applied to the benefit of the property. Second. — The ultimate Union of Main Line, Branches and Terminal Properties Through Direct Ownership by a Single Company. So far as practicable the ownership in fee, or otherwise, of the Equipment, Branch Line and Ter- minal properties (other than the Portland terminal) will be acquired and vested in the new Company and covered by its new mortgages. M207723 third. — the reduction of the fixed annual charges to less than the minimum Earnings Under Probable Conditions. The Net Income applicable to Fixed Charges has fluctuated from $10,067,408.37 in the fiscal year 1891-92 to $4,449,999.04 in 1893-94. The average of the past five years has been $7,801,645.78. The smallest results were brought about by the well-known combination of currency panic, floods, social disorders and short crops, all of which are unlikely to occur again at any one time. The net income during the last fiscal year, 1894-95, as shown on page 20, was $5,657,483 49 To which should be added allowance for extraordinary expenses of the receiverships, of. . . 358,363 13 Thus making the adjusted Net Income of that year $6,015,846 62 The gross earnings of the present fiscal year show an increase of about 16 per cent, over the gross earnings for the same period of the previous year. The fixed annual charges under the Plan of Reorganization, when fully carried out (exclusive of bonds reserved for new construction), will amount to $6,052,660. Fourth. — Ample Provision for Additional Capital as Required in a Series of Years for the Development of the Property and for the Greater Facilities Necessitated by an Increased Business. In their report of September last, the Receivers state "that provision should be made for extraordinary expenditures in the next five years of $9,000,000, in order to place the property on an equal footing with its rivals for economical operation." RAILWAY SYSTEM AND ITS MORTGAGE LIENS. The railroad of the Northern Pacific system is composed of Main Line, 4573% 2,152.35 miles. Branches, 54-27% 2,554.09 " 100. % 4,706.44 miles. The General First, Second and Third Mortgage Bonds are secured by liens in their respective order upon the Land Grant and upon the Main Line railroad, as above. The Consolidated Mortgage Bonds are secured by a fourth lien upon the Land Grant and upon the Main Line railroad, and also by the pledge of First Mortgage Bonds upon various Branch Lines having an aggregate length of 1,415.85 miles. None of the four mortgages cover (except by leasehold) any of the terminal properties owned by the St. Paul & Northern Pacific Railroad Company, the Northern Pacific Terminal Company of (Portland) Oregon, or the Northern Pacific & Manitoba Terminal (Winnipeg), all of which are owned by separate organizations. There are other branch roads comprising 1,138.24 miles, the bonds of which are directly owned by the public. UNITED STATES LAND GRANT. The Public Lands granted by the United States to the Northern Pacific Railroad Company under its charter July 2, 1864, amounted to 12,800 acres to the mile of track in the States of Minnesota and Oregon, and 25,600 acres per mile in the intermediate Territories. It is estimated that under this grant the Company is entitled to receive about 43,000,000 acres, of which 22,823,115 acres have been selected as belonging to the Northern Pacific Railroad Company. Of these, United States patents, vesting the title to the fee of such lands in the Company, have been received for 15,939,189 acres. The operations of the Land Department, as shown on page 21, during the past five years show that from all sources (exclusive of proceeds of sales applicable to the Preferred Stock, or by Trustees of Prior Mortgages to their interest and sinking funds), the total Income was $3,076,308 37 while the Expenses and Taxes amounted to 1,304, 145 39 leaving for the Sinking Fund of the General First Mortgage only $1,772,162 98 while for the same period the requirements thereunder amounted to 3,272,860 00 This Deficiency in Proceeds from Land Sales, amounting to $1,500,697 02 was supplied from the Net Earnings of the Operating Department of the Railroad Company. Of late the diminution of sales of lands applicable to this and other mortgages, has thrown upon the transportation earnings of the Company the burden of their Sinking Fund charges. These charges, with the other Sinking Fund obligations to the public, amounting to $1,463,763 per annum, will be entirely relieved by the full operation of the Plan of Reorganization. None of the new bonds will be subject to drawing or compulsory redemption prior to their regular maturity, a feature now quite generally recognized by investors as most desirable. At the same time they will, after the retirement of the present General First Mortgage Bonds, receive all the benefits of the land sales through the mortgage provision that one-half the proceeds thereof, not exceeding $500,000 in any one year, shall be used in the purchase, at not exceeding no per cent, and the cancellation, of Prior Lien 4 per cent. Bonds, and when these are not obtainable, then in the purchase, at not exceeding 100 per cent, and the cancellation, of General Lien 3 per cent. Bonds, and that the remainder shall be used for betterments and additions to the mortgaged property. As it now stands, the System in its form of incorporation and capitalization, is a development without method or adequate preparation for growth. Scarcely any single security is complete in itself. The Main Line Mortgages cover neither feeders or terminals. The Terminal Mortgages may be bereft of their Main Line support. The Branch Line Bonds are dependent upon the Main Line for interchange of business, and the Main Line owes a large part of its business to the Branch Lines. The principal object of the Reorganization Committee has been to preserve the integrity of the System. The Plan now presented for the reorganization of the property is founded upon the idea that its unification means its preservation and prosperity, both of which, it is believed, can now be thus permanently accomplished with the best possible security and results for all interests. The conversion of the General First Mortgage Bonds upon the terms set forth in the Plan is recommended by Messrs. J. P. Morgan & Co., August Belmont & Co. and Winslow, Lanier & Co., who originally issued those bonds, as well as by the German Committee of General First Mortgage Bondholders. The Plan has been prepared with the approval and cooperation of Messrs. J. P. Morgan & Co. and the Deutsche Bank. The Plan has received the approval of the representatives of a majority of the Bondholders of the three Main Line mortgages in process of foreclosure (the General Second, General Third and Consolidated Mortgages), and of other important interests affected by the terms of reorganization. It has also received the approval of the interests represented by the Protective Committee. Messrs. J. P. Morgan & Co. and the Deutsche Bank have formed the necessary Syndicate of $45,000,000, and Messrs. J. P. Morgan & Co. will act as Reorganization Managers. EDWARD D. ADAMS, Chairman. JOHN C. BULLITT, LOUIS FITZGERALD, CHARLES H. GODFREY, J. D. PROBST, JAMES STILLMAN, ERNST THALMANN, Reorganization Committee. The undersigned Protective Committee hereby join in recommending the prompt acceptance of the accompanying Plan and Agreement. Brayton Ives, Chairman. August Belmont, George R. Sheldon, Charlemagne Tower, Jr., Protective Committee. Silas W. Pettit, Counsel. New York, March 16th, 1896. PLAN FOR THE REORGANIZATION OF THE NORTHERN PACIFIC SYSTEM CONDITIONS OF PARTICIPATION. Participation under this Plan of Reorganization in any respect whatsoever is dependent on the deposit of securities with one of the Depositaries, Messrs. J. P. MORGAN & CO., 23 Wall Street, New York, Messrs. DREXEL & CO., Fifth and Chestnut Streets, Philadelphia, the DEUTSCHE BANK, Berlin, and its Branches at Frankfort-on-Main, Bremen, Hamburg, Munich and London, within such time as may be fixed by notice, and will embrace only securities so deposited. No securities will be received on deposit unless in negotiable form, and bonds must carry all unpaid coupons. Pursuant to the arrangement with a Syndicate, hereinafter stated : As consideration for shares of the new Company as hereinafter indicated, Depositors of Preferred Stock must also pay $10 per share for new Preferred and Common Stock, and Depositors of Common Stock must pay $15 per share for new Common Stock. The payments by Depositors of such Common and Preferred Stock must be made at the offices of Messrs. J. P. Morgan & Co., New York, or Messrs. Drexel & Co., Philadelphia, or of the Deutsche Bank, Berlin and London, at the option of each depositing stockholder, in not less than three instalments, at least thirty days apart, when and as called for by advertisement in each instance at least twice a week for two weeks in two of the daily papers of general circulation published in the Cities of New York, Philadelphia, London and Berlin, respectively. All payments must be receipted for by one of the Depositaries on the Certificates of Deposit. Failure to pay any installment when and as payable will subject the deposited stock and all rights on account of any prior payments to forfeiture, as hereinafter provided. Holders of Certificates of the Mercantile Trust Company of New York for General Second, General Third and Consolidated Mortgage Bonds, deposited under the existing Bondholders' Agreement of February 19, 1894, will be entitled to the benefits of this Plan without the issue of new receipts or certificates, provided, that if hereafter required by the Managers and within the time limited therefor, such existing certificates be produced to one of the Depositaries and stamped as assenting to this Plan. All holders of General Second, General Third and Consolidated Mortgage Bonds who have not already deposited their bonds with the Mercantile Trust Company of New York under the existing Bond- holders' Agreement, shall, by delivery of their bonds to the Depositaries, be deemed to deposit their bonds under said Bondholders' Agreement, and, for the bonds deposited, will receive Certificates of said Trust Company issued under that agreement, duly stamped by one of the Depositaries as assenting to this Plan. The Depositaries will issue negotiable receipts for all other securities deposited with them. The holders of receipts heretofore issued by the New York Security and Trust Company of New York for General Second Mortgage Bonds, and by the New York Guaranty and Indemnity Company for General Third Mortgage Bonds, must surrender the same to one of the Depositaries and must obtain suitable new certificates hereunder in exchange therefor, in order to entitle them to any benefit of this Plan. Bonds represented by such receipts not actually delivered to the Depositaries will not be entitled to participation herein. 8 NEW RAILROAD COMPANY. At the discretion of the Managers, the various properties will be sold under one or more of the several mortgages in default, or otherwise dealt with, and a successor company will be organized. Pending their use for reorganization purposes, the securities deposited hereunder will be delivered by the Depositaries to one or more Trust Companies, to be held by them respectively subject to the order and control of the Managers. All securities deposited under the Plan are to be kept alive so long as deemed necessary for the purpose of reorganization. NEW STOCKS AND BONDS. The new Company is to authorize the following securities : First. Prior Lien One Hundred Year 4 per cent. Gold Bonds for $130,000,000.* These bonds are to be secured by a mortgage upon the Main Line, Branches, Terminals, Land Grant, Equipment, and other property, embraced in the reorganization as carried out, and also upon all other property thereafter acquired by the use of any of the bonds to be issued under both the nciv mortgages. The present General First Mortgage covers only the main line, land grant and the equipment so far as owned by the Company. The proceeds of the lands applicable to the new bonds after the retirement of the General First Mortgage Bonds (as provided below) will be applied, one-half, but not in any one year exceeding $500,000, to the purchase of the Prior Lien 4 per cent. Bonds at not exceeding 1 10 per cent., and their cancellation, and the remainder, under carefully guarded restrictions in the mortgage, will be used for betterments and additions to the property pledged as security for the bonds. Whenever these bonds cannot be purchased at the maximum price, the unapplied land proceeds for that year will be used to purchase the General Lien 3 per cent. Bonds at not exceeding 100 per cent, and their cancellation. These bonds are to be appropriated approximately as follows : To retire an equal amount of General First Mortgage Bonds $41,879,000 To provide for the conversion and, so far as necessary, for the Sinking Fund of the General First Mortgage Bonds (any amount not so used to be added to the reserve for new construction, etc.) 14,657,650 For the payment of Receivers' Certificates and Equipment Trust, and the conversion of the Collateral Trust Notes and General Second Mortgage Bonds 40,040,350 Total present issue under the Plan $96,577,000 Reserved to provide at their maturity for an equal amount of Bonds of the St. Paul & Northern Pacific Railroad Company 8,423,000 Estimated amount to be reserved for new construction, betterments, equipment, etc., under carefully guarded restrictions in the mortgage, and to the extent of not exceeding $1,500,000 per annum 25,000,000 Total authorized issue $130,000,000 * Bonds will be issued in the following denominations : Coupon Bonds of $500 and $1,000, with privilege of conversion into Regis- tered Bonds of $1,000 and $10,000. All interest will be payable quarterly, and both principal and interest will be payable in United States gold coin of the present standard of weight and fineness, without deduction for any. taxes which the Railroad Company may be required to pay or retain therefrom. 9 Second. GENERAL LlEN 150 YEAR 3 PER CENT. GOLD BONDS*, limited in amount to $60,000,000, in addition to a reserve for the 100 year 4 per cent. Prior Lien Mortgage of $130,000,000. These bonds are to be secured by a mortgage second i n lien to the Prior Lien Mortgage, and covering the same property. They are to be appropriated approximately as follows : For the conversion of the General Third Mortgage Bonds, Dividend Certificates, and the Consolidated Mortgage and Branch Line Bonds under the Plan $56,000,000 Estimated amount to be reserved under carefully guarded restrictions in the mortgage, for new construction, betterments, equipment, etc 4,000,000 Total issue in excess of Prior Lien Bonds 60,000,000 Reserved to provide for the Prior Lien Bonds at their maturity in 100 years 130,000,000 Maximum amount of both Mortgages $190,000,000 Third. Preferred Stock, 4 per cent. Non-cumulative, limited in amount, under this Plan, to not exceeding $75,000,000, which amount can be increased only with the consent of the Preferred and Common Stockholders, as hereinafter set forth. All the Preferred Stock will be in shares of $100 each, and will be registered and transferable, at the option of the holder, either in New York or at the Deutsche Bank, Berlin. Dividends upon stock registered in Berlin may be collected there at the rate of 4.20 marks per dollar. Each share of this Preferred Stock will be entitled to non-cumulative dividends to the extent of four per cent, per annum, payable quarterly out of surplus net earnings in each fiscal year before any divi- dends for such year shall be paid on the Common Stock, and without deduction for any United States, State or municipal taxes that the Railroad Company may at any time be required to pay or retain therefrom. In any fiscal year in which four per cent, dividends shall have been declared on both preferred and common stock, all shares, whether preferred or common, shall participate equally in any further dividends for such year. Provision will be made that after the termination of the Voting Trust hereinafter provided for, the Preferred Stock is to have the right to elect a majority of the Board of Directors of the new Company whenever for two successive quarterly periods the full and regular quarterly dividends upon the Preferred Stock, at the rate of four per cent, per annum are not paid in cash. The right will be reserved by the new Company to retire this stock, in whole or in part, at par, from time to time, upon any first day of January during the next twenty years. The Preferred Stock will be appropriated approximately as follows : For conversion and adjustment of various Main Line and Branch Line Mortgage Bonds and the defaulted interest thereon, and other purposes, as provided in the Plan. . . . $72,500,000 Estimated amount which may be used for reorganization purposes or may be available as a Treasury asset of the new Company 2,500,000 $75,000,000 Fourth. Common Stock to the amount of not exceeding $80,000,000, in shares of $100 each. This stock will be appropriated approximately as follows : For purposes of reorganization, as provided in the Plan $77,500,000 Estimated amount which may be used for reorganization purposes or may be available as a Treasury asset of the new Company 2,500,000 $80,000,000 * Bonds will be issued in the following denominations : Coupon Bonds of $500 and $1,000, with privilege of conversion into Regis- teredJBonds of $1,000 and $io,ooo. All interest will be payable quarterly, and both principal and interest will be payable in United States gold coin of the present standard of weight and fineness, without deduction for any taxes which the Railroad Company may be required to pay or retain therefrom. 10 VOTING TRUST. In furtherance of this independent reorganization and the administration of the property and of the securities, both classes of stock of the new Company (except such number of shares as may be disposed of to qualify directors) are to be vested in the following five Voting Trustees : J. Pierpont Morgan, Georg Siemens, August Belmont, Johnston Livingston and Charles Lanier. In the event of the death of any person designated as a Voting Trustee, prior to the creation of the Voting Trust, the vacancy shall be filled as provided in the Reorganization Agreement hereunto annexed, and which is comprised in and forms part of this Plan, with the same force and effect as though herein set forth at length. The stock shall be held by the Voting Trustees and their successors, jointly (under a trust agreement prescribing the powers and duties to be exercised by them, or by a majority of them, and the method of filling vacancies), for five years, although the Voting Trustees, in their discretion, may deliver the stock at any earlier date. Until delivery of stock is made by the Voting Trustees, they shall issue Stock Trust certificates entitling the registered holders to receive, at the time therein provided, stock certificates for the number of shares therein stated, and in the meanwhile to receive payments equal to the dividends collected by the Voting Trustees upon a like number of shares, which shares, however, with the voting power thereon, shall be vested in the Voting Trustees until the stock shall become deliverable, as provided in such Trust Agreement and certificates of the Voting Trustees. RESTRICTIONS AS TO ADDITIONAL MORTGAGE DEBT AND PREFERRED STOCK. Provision is to be made that no additional mortgage shall be put upon the property to be acquired hereunder, nor the amount of the Preferred Stock authorized under this Plan be increased, except, in each instance, after obtaining the consent of the holders of a majority of the whole amount of the Preferred Stock, given at a meeting of the Stockholders called for that purpose, and the consent of the holders of a majority of such part of the Common Stock as shall be represented at such meeting, the holders of each class of stock voting separately. During the existence of the Voting Trust, the consent of holders of like amounts of the respective classes of beneficial certificates shall also be necessary for the purposes indicated. 11 ESTIMATE OF TOTAL NEW CAPITALIZATION,* UNDER THE PLAN WHEN FULLY CARRIED OUT (Exclusive of bonds and stock reserved for new construction, etc.) Securities. Prior Lien Bondst. . General Lien Bonds. Total Bonds. Preferred Stock $72,500,000 Common Stock 77,500,000 Total Stock Amount. $105,000,000 56,000,000 161,000,000 I 50,000,000 Total Capitalization $31 1,000,000 Total Annual Charges prior to the Common Stock Annual Interest and Dividend. $4,372,660 I,680,0O0 6,052,660 2,900,000 $8,952,660 t Including $8,423, 000 St. Paul and Northern Pacific Bonds. ESTIMATE OF AMOUNT AND CHARGES PER MILE.* Securities. Amount po- ntile. Interest and Divi- dend per mile. Prior Lien Bonds. . . General Lien Bonds , Total Bonds, per mile. Preferred Stock $15,404 Common Stock 16,467 Total Stock, per mile. $22,310 11,899 34,209 31,871 Total Capital per mile $66,080 $929 357 1,286 616 Annual Charges per mile prior to Common Stock $1,902 * These calculations are based upon 4,706.44 miles, and are consequently subject to variation according to the actual mileage finally embraced in the reorganization. 12 APPLICATION OF SECURITIES. The following details show the disposition to be made under the Plan of the securities of the new Company. As a consideration for the property and securities to be conveyed or delivered to the new Company, or which, pursuant to the Plan, the new Company shall acquire, it is contemplated that the new Company shall deliver the new bonds and stock, excepting the new bonds to be reserved to take up such of the existing securities as are not disturbed, and such final amounts as shall be reserved for the future use of the new Company. The requisite deliveries of the new securities to depositors and subscribers under the Plan will thus be provided for. GENERAL FIRST MORTGAGE BONDS. Privilege of Conversion. The present General First Mortgage Bonds mature in 192 1, but are redeemable by compulsory drawings at any time at no per cent, from the proceeds of land sales or the fixed annual contribution by the Company to the Sinking Fund. These compulsory redemptions in the past have been a disturbing factor in all calculations for investment purposes, and the inauguration of a new and vigorous policy for the sale of the lands may be expected from this time forward greatly to increase the amount of such redemptions. In some years these redemptions have required large contributions from the Operating Department, to the extent even of the entire amount of the Sinking Fund, a sum which would provide for the annual interest on about $19,000,000 of Prior Lien Bonds as now proposed. It is manifestly to the benefit of the holders of General First Mortgage Bonds to secure an investment of longer continuance and it is also to the benefit of all subsequent securities to diminish this unnecessarily large burden of annual fixed charge. To relieve the bondholders from these calls for redemption, which prevent their bonds from reaching the high price they would otherwise command, and to relieve the Company from the burden of the Sinking Fund requirements, and permit the use of a portion of the proceeds of land sales for the benefit of the property, Holders of the General First Mortgage Bonds are now offered the privilege of converting or exchanging their bonds for the new Prior Lien 100-year 4 per cent. Gold Bonds, at the rate of $1,000 old bonds (coupon or registered) for $1,350 of new bonds. To avail of this offer, holders must deposit their bonds as provided on page 7 hereof. Bonds deposited for conversion under this privilege will be entitled to receive on April 1st next, a cash payment of $30 per $1,000 bond so deposited in lieu of the six months' interest that would mature July 1 next on such bond. The first coupon on the Prior Lien Bonds offered in exchange for General First Mortgage Bonds will be payable October 1 next, and in case of any delay in the reorganization, payments equal to the amount of such new coupons will be made on that date and quarterly thereafter until the new bonds are delivered. These payments will, in the absence of other provision, be made by the Syn- dicate, which will reimburse itself out of the present General First Mortgage coupons as collected. The right is expressly reserved to modify these terms or to terminate the privilege at any time, and without notice. The old bonds now outstanding are at the rate of about $20,466 per mile. The Prior Lien Bonds, including those reserved for the St. Paul and Northern Pacific Bonds (but not including those to be reserved for new construction, etc.), will, on the basis of 4,706 miles, amount to about $22,310 per mile, and will cover all the Equipment and the Branches and Terminals as proposed under the Plan. It is not sought in any way to enforce a conversion of the present General First Mortgage Bonds, and this offer is made solely upon the belief that on the terms proposed such conversion, while advan- tageous to the Company, is also manifestly to the advantage of bondholders so converting. 13 The fixed charges for interest and sinking funds on the present General First and Divisional Mortgage Bonds are at the rate of $1,618 per mile per annum, while it is estimated that they will amount to only $929 per mile per annum on the Prior Lien Bonds. The advantage is obvious of a mortgage resting upon a complete and entire system, including Main Line and all branches brought into the new Company, together with Terminals, Land Grant and Equip- ment, and having over $200,000,000 of bond and share capital behind it, securing a gold bond run- ning for one hundred years, as compared with a bond at all times liable to compulsory retirement, and secured by only part of the system. NORTHWEST EQUIPMENT COMPANY. The shares deposited under the Plan to be purchased at par flat as of June 1, 1896, payable, with interest from that date at 6 per cent, per annum, at any time, in the discretion of the Managers, on or before completion of reorganization. COLLATERAL TRUST NOTES. Those deposited under the Plan to receive — 3 per cent, in cash May 1, 1896, and 4 per cent, in cash January I, 1897. 100 per cent, in Prior Lien 4 per cent. Bonds. 20 per cent, in Preferred Stock Trust Certificates. GENERAL SECOND MORTGAGE BONDS. Those deposited under the Plan to receive — 4 per cent, in cash within sixty days after the Plan has been declared operative. 118^ per cent, in Prior Lien 4 per cent. Bonds. 50 per cent, in Preferred Stock Trust Certificates. GENERAL THIRD MORTGAGE BONDS. Those deposited under the Plan to receive — 3 per cent, in cash within sixty days after the Plan has been declared operative. \\% x /2 per cent, in General Lien 3 per cent. Bonds. 50 per cent, in Preferred Stock Trust Certificates. DIVIDEND CERTIFICATES. Those deposited under the Plan to receive — 3 per cent, in cash within sixty days after the Plan has been declared operative. 1 18 per cent, in General Lien 3 per cent. Bonds. 50 per cent, in Preferred Stock Trust Certificates. CONSOLIDATED MORTGAGE BONDS. Those deposited under the Plan to receive — 1 ^ per cent, in cash within sixty days after the Plan has been declared operative. 66yi per cent, in General Lien 3 per cent. Bonds. 62yi per cent, in Preferred Stock Trust Certificates. Except as collected out of the coupons, the Managers will have a lien upon deposited securities for cash advanced as above provided, after the Plan shall have been declared operative. 14 Interest on all new Bonds to be delivered in exchange for old securities will, unless otherwise stated, accrue from January I, 1897, and will be payable on or before completion of reorganization. Equitable cash settlements will be made for fractional amounts of new bonds and stocks accruing to depositors. BRANCH ROAD BONDS. Holders of the Bonds issued by the following Companies are requested to communicate with Messrs. J. P. Morgan & Co., New York, or with the Deutsche Bank, Berlin, giving the amount of their holdings, and stating whether held in Bonds or Certificates of Deposit : Central Washington Railroad Company. Cceur d'Alene Railway & Navigation Company. Duluth & Manitoba Railroad Company (Minnesota Division). Duluth & Manitoba Railroad Company (Dakota Division). Helena & Red Mountain Railroad Company. James River Valley Railroad Company. Northern Pacific & Montana Railroad Company. Northern Pacific & Manitoba Railway Company Terminal Bonds. Seattle, Lake Shore & Eastern Railroad Company. Spokane & Palouse Railway Company. None of these Branch Roads (Seattle, Lake Shore & Eastern alone excepted) owns any consider- able amount of equipment ; all require more or less expenditure for the restoration of their track, roadbed, stations, etc., to proper condition; all are deficient in their rights of way; some have general traffic all the year, while others are dependent mainly upon the special business of a few months annually ; and some earn varying rates of interest upon their cost. In order to deal equitably with the holders of these Branch Bonds, it is deemed necessary to consider each case separately, and upon its own individual merits. After hearing from a large proportion of each class of these bondholders, steps will be taken to arrive at some fair basis of adjustment, for which General Lien 3 per cent. Bonds and new Preferred Stock Trust Certificates have been reserved under this Plan. PREFERRED STOCK. Upon completion of the reorganization, the Reorganization Managers in behalf of the Syndicate will deliver to each Depositor of one share ($100) of Preferred stock — $50 in new Preferred Stock Trust Certificates, and 50 in new Common Stock Trust Certificates, in consideration of his payment therefor of $10 per share, as provided on page 7 of this Plan. COMMON STOCK. Upon completion of the reorganization, the Reorganization Managers, in behalf of the Syndicate, will deliver to the Depositor of each share ($100) of old Common Stock one share ($100) of new Common Stock Trust Certificate, in consideration of his payment therefor of $15 per share, as provided on page 7 of this Plan. 15 In addition to the payment of all defaulted interest to January i, 1897, m casn and New Mortgage Bonds, the holders of the three Main Line Mortgage Bonds in default will receive a considerable increase of principal with the following annual income : Old Securities. Fixed Interest. Income contingent upon Prior Lien 4 % Bonds. General Lien 3 % Bonds. Dividends on New 4 % Preferred Stock. Total income. Amount. Per cent. Amount. Per cent. Amount. Per cent. Amount New Securities. Per cent. on Old Securities. $100 Seconds receive* $100 Thirds receive*. $100 Consols receive*. $IOO 4.OO $IOO 50 3.00 I.50 $50 OO 50 OO 62 50 2.00 2.00 2.SO $150 OO 150 OO 112 SO 6.00 S-OO 4.OO * In addition to amounts allowed for coupons. The position of the holders of the Common Stock of the new Company in relation to fixed annual charges for interest and sinking funds under the Plan, as compared with the position of the holders of the Common Stock of the present Company, is as follows : Fixed Charges and Preferred Dividends. Old Company. New Company. Reductions. Amount. Per Cent. Fixed annual charges prior to dividends $10,905,690 2,819,064 $6,052,660 2,900,000 $4,853,030 80,936* 44-SO% 2.87%* Required for annual dividends upon the Preferred Stocks Total fixed charges and dividends upon the Preferred Stocks, prior to dividends $13,724,754 $8,952,660 $4,772,094 34-77% •Increase. The compensation to be paid to Messrs. J. P. Morgan & Co. and the Deutsche Bank for their respective services as Managers and as Depositaries of securities has been fixed at one-quarter {%%) of one per cent, upon the par value of the securities deposited under the Plan and of the new securities issued in exchange therefor, but not, in any event, to exceed $1,000,000 in all for such compensation to both parties. 16 SYNDICATE. A syndicate has been formed by Messrs. J. P. Morgan & Co., of New York, and the Deutsche Bank, of Berlin, to the subscribed amount of $45,000,000, to provide the amounts of cash estimated as necessary (1) to carry out the terms of the Plan of Reorganization, and (2) to furnish the new Company with Cash working capital and with a sum estimated at $5,000,000 for early use in betterment and enlargement of its property. New York, March 16, 1896. 17 MILEAGE OF THE NORTHERN PACIFIC SYSTEM. Main Line 45-73% 2,152.35 miles. Branches 54.27% . . . 2,554.09 miles. Owned 100.00% 4,706.44 miles. First, Second and Third Mortgages. Mileage. Total. Main Line mileage 2, 1 36.46 Cokedale Spur 3.59 Carlton to Duluth, one-half of 24.60 12.30 2,152.35 Consolidated Mortgage. A fourth lien on the above mileage and a first lien on the following mile- age through the ownership of Bonds of the Branch Roads : Little Falls & Dakota R. R 89.08 Northern Pacific, Fergus & Black Hills R. R 1 17.05 Fargo & South-Western R. R 87.41 Sanborn, Cooperstown & Turtle Mountain R. R 36.75 Jamestown & Northern R. R. Co 102.59 Northern Pacific, La Moure & Missouri River R. R 21.30 South-Eastern Dakota R. R 14.84 Jamestown & Northern Extension R. R 18.03 Helena & Jefferson County R.R. Co 20.58 Rocky Mountain R. R. of Montana 52.61 Spokane Falls & Idaho R. R 14-39 Clealum R. R 5-3° Northern Pacific & Cascade R. R 17-37 Green River & Northern R. R 1 1.87 Tacoma, Orting & South-Eastern R. R 7-^5 Rocky Fork & Cooke City R. R 45-43 Northern Pacific & Puget Sound Shore R. R 43-°8 Duluth, Crookston & Northern R. R 44-5 « United Railroads of Washington 1 8 1.93 Northern Pacific & Manitoba R. R 263.54 Spokane & Palouse R. R., Idaho Division 61.61 A proportionate first lien on the following mileage, based on part ownership of the Bonds outstanding: Central Washington R. R 108.54 Northern Pacific & Montana R. R 354-38 462.92 Proportion covered by Consolidated Mortgage 158.93 Total mileage covered by Consolidated Mortgage 1,41 5.85 Branch Road Bonds owned by Public. 18 A first lien on the following mileage : Proportion of- — Central Washington R. R. ) , „„„ „„ Northern Pacific :8c Montana R. R. \ aS above 3 ° 3 " Spokane & Palouse R. R., in Washington 89.33 Cceur d'Alene Railway & Navigation Co 49-59 Helena & Red Mountain R. R 17.08 James River Valley R. R 63.75 Duluth & Manitoba R. R 205.77 Seattle, Lake Shore & Eastern R. R. Co 227.03 St. Paul & Northern Pacific R. R. Co 181.70 Total mileage owned 1,13824 4,706.44 Mileage not owned. Operated by Trackage Rights : Carlton to Duluth 12.30 Tracks and Terminals Rented. St. Paul Union Depot .56 Great Northern Railway 12.12 Minneapolis Union Railway Co 2.60 Minn. & St. Louis Railway Co 1.62 Northern Pacific Terminal Co., of Oregon 1.32 St. Paul & Superior Short Line 2.37 Winnipeg Transfer 1.24 Total miles operated 34-13 4.740.57 The above system of the Northern Pacific Railroad is located as follows : STA TE. Miles of Main Line. Miles of Branches. Total Miles. 78.63 249.4O 376.93 786.68 84.06 537-97 38.68 498.76 484.02 49O.O8 IO5.64 712.05 263.54 78.63 748.16 86O.95 1,276.76 189.7O 1,250.02 38.68 263.54 North Dakota Washington Oregon Manitoba 2,152.35 2,554.09 4,706.44 19 BONDS ISSUED OR GUARANTEED BY THE NORTHERN PACIFIC RAILROAD COMPANY, HELD BY THE PUBLIC, JANUARY I, 1896. TITLE OF BONDS. Northern Pacific Railroad Company. Missouri Division First Mortgage Pend d'Oreille Division First Mortgage General First Mortgage General Second Mortgage Bonds Receivers' Certificates General Third Mortgage Bonds Dividend Certificates Consolidated Mortgage Bonds Collateral Trust Notes Northwest Equipment Company Terminal Bonds. Principal and Interest guaranteed by the Northern Pacific Railroad Company. St. Paul & Northern Pacific Railway : Prior Lien Bonds General Mortgage Bonds Northern Pacific Terminal Co. First Mortgage Bonds Branch Road Bonds. Principal, Interest and Sinking Fund guaranteed by the Northern Pacific Railroad Company. Central Washington Cceur d'Alene .' Duluth & Manitoba (Minnesota) Duluth & Manitoba (Dakota) Helena & Red Mountain James River Valley Northern Pacific & Montana Northern Pacific & Manitoba Terminal Spokane & Palouse Seattle, Lake Shore & Eastern Total Hate of Interest. 6% 6% 6% 6% 5% 6% 7% vo 6% 6% 6% 6% 6% 6% 6% 6% 5% \o/ Principal Due. 1919 1919 1921 1933 1897 1937 I907 I989 I898 1898 I907 1923 1933 1938 1938 1936 1937 1937 1936 1938 1939 1936 1931 Amount Outstanding. $1,815,500 357,000 41,879,000 I9,2l6,000 4,900,000 I I,426,OO0 519,500 45,520,000 9,494,000 3,000,000 420,000 8,003,000 1,440,000* 1,750,000 1,238,000 1,650,000 1,451,000 400,000 963,000 5,381,000 650,000 1,766,000 5,558,000 $168,797,000 ' 40% of $3,600,000 issued. 20 o t-H Bq &5 ^ Sag fc-i *o OS f^ oo ^ *->( Cis te) ►si 3 C^ tag O? to t*> <=> ^ te; t3 ^ ^> E-, co >! ^ >— < cv> 3 fiq 03 fes ^ o h Co in te; ►«H _i b. < o CO ^s U. ^ l S >~n ^ b, b-i ^ IS b~, ttj ^ K F> aq ^ c> Co fe, ^ fts ft* ^ Co 00 ^ (TJvO M w O in n ci 00 N 00 O vO VO ee 00 O CO 00 c M NO •> c, tO"" Oi IT !>. r^ Tf NO r^ On PO O vD Q CO N CO N r> r^ 5 •* Ov CC vo co N POnO "S N PC O^Nm t-> \r- o> iri cN »n Tt" rr $ VO ^ W Ct q O; ■ NNrc CC \f r^ PC 00 in VO On pf no" i^ c *Z oo" t^cS l^ VO rC T? *f Ov rC _7 ~~ lH 4 -* cc inO ci 00 * ir O v$ vO NO o a a 5 oo 5 •"< - - n : i^- u O *f M w ■3- 00 pc o> N » 00 m m N t* oo" " — VO N 00 1^ ^ « 00 00 ox - t> c^ r^ Tt PC \0 c. vo PC >2 N N o N 3 o row mOO w O O o **■ 1-^.^0 "" C o IT 00 f Ov m on -4- -« 8 ci N f f> O nO N o »^ w PC i? 1^ 00 00 On <-h in c* •to 4 iy- VO NO NO 00 vO w N t~* a NO N HH -O nD 00 c cope ^o vO TT00 u- 00 1^. 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