March 1, 1921 



THE INDIA RUBBER WORLD 



441 



News of the American Rubber Industry 



THE GOODYEAR REFINANCING PLAN 



AFTER several weeks of negotiation between The Goodyear 

 Tire & Rubber Co., Akron, O., and representatives of its cred- 

 itors and its stockholders, a plan for the readjustment of the debt 

 and capitalization of the company has been agreed upon. The 

 plan contemplates the issue of approximately $25,000,000 first 

 mortgage 20-year 8 per cent sinking fund bonds, $25,000,000 10- 

 year 8 per cent sinking fund debentures and $35,000,000 8 per 

 cent prior preference stock. 



The bonds and debentures, or their proceeds, will be used to pay 

 oflf the bank debt, which is largely secured, and for other corpor- 

 ate purposes, including new working capital. General creditors 

 will receive prior preference stock for existing debt and in part 

 paj-ment for future deliveries of materials. Holders of existing 

 preferred stock will receive preferred stock of the reorganized cor- 

 poration having substantially the same rights and preferences as 

 the present preferred stock, share for share, and holders of exist- 

 ing common stock will receive common stock of the reorganized 

 corporation, which will probably be without par value, share for 

 share. The $25,000,000 of debentures, together with 250,000 shares 

 of common stock, and also the $35,000,000 prior preference stock, 

 are to be offered for subscription to existing stockholders. 



The plan will be carried out under the supervision of a bank 

 creditors' committee, composed of Robert C. Schaflfner, Chicago, 

 Illinois ; John Sherwin, Cleveland, Ohio ; and Ralph Van Vechten, 

 Chicago, Illinois ; a merchandise creditors' committee composed of 

 W. E. Bruyn, New York City ; F. L. Jenckes, Providence, Rhode 

 Island ; and Myron C. Taylor, New York City ; a preferred stock- 

 holders' committee composed of George VV. Crousc, Akron, Ohio; 

 Reamy E. Field, Cincinnati, Ohio ; Charles A. Morris, Cleveland, 

 Ohio; A. H. Scoville, Cleveland, Ohio; and J. Herndon Smith, 

 St. Louis, Missouri ; and a common stockholders' committee com- 

 posed of Fred S. Borton, Cleveland, Ohio ; C. R. Erwin, Chicago, 

 Illinois; E. E. Mack, Canton, Ohio; Russel L. Robinson, Akron, 

 Ohio ; and F. A. Seiberling, Akron, Ohio. 



In order to satisfy those who are to furnish the new money and 

 accept prior preference stock for existing indebtedness as to the 

 future management of the company, provision satisfactory to the 

 merchandise creditors' committee is to be made for the future 

 election of directors. 



The refinancing plan agreed upon is based upon a present debt, 

 exclusive of interest, of $65,964,290 including bank indebtedness, 

 merchandise indebtedness and contingent obligations. Present 

 commitments for future deliveries of merchandise on which speci- 

 fications and prices have been fixed total $54,959,503 of which 

 $7,200,740 is for rubber, $5,664,000 is for cotton, $41,879,763 is for 

 cotton fabric, and $215,000 is for other materials. The company's 

 estimate for depreciation covered by commitments not heretofore 

 written off is $18,247,000. 



The approximate present capitalization of the company is $65,- 

 000,000 eight per cent preferred stock and $61,000,000 common 

 stock. Treating the capital stock as a liability at its par value, the 

 estimated deficit on December 31, 1920, exclusive of loss upon com- 

 mitments for merchandise not yet delivered, was approximately 

 $24,400,000. For indebtedness existing January 1, 1921, merchan- 

 dise creditors will receive 125 per cent of the amount in prior 

 preference stocks. For future commitments, that is after January 

 1, 1921, merchandise creditors will receive 75 per cent in cash, 

 payable not later than the 10th of the month following shipment 

 from American point of shipment, and 28 per cent of the amount 

 in prior preference stock to be delivered upon the consummation of 

 the plan of readjustment. Carrying charges with reference to 

 such commitments will be paid in cash, but dividends accrued to 



date of delivery of materials on stock delivered against commit- 

 ments will, when paid, be credited on such charges. 



Contingent creditors holding obligations upon which the com- 

 pany is secondarily liable will receive certificates evidencing their 

 rights. Upon the release of ihe company from its liability to such 

 creditors there will be deposited with a trustee as security for 

 the payment of such obligations— on or before April 1, 1922, if. 

 they mature prior to that date, or at maturity if they mature later 

 ^125 per cent of the principal amount thereof in prior preference 

 stock, the holders of such obligations to have the option to ex- 

 change them at any time prior to maturity for the prior preference 

 stock so deposited. 



The negotiations leading up to the plan have developed a spirit 

 of cooperation by all parties in interest to preserve the valuable 

 good will which the company has built up through the excellence 

 of its product and the efficiency of its sales organization. It is 

 believed that if assented to by the creditors with substantial una- 

 nimity and by the requisite proportion of the stockholders, the plan 

 will not only save the company from its present embarrassment, 

 to the advantage of its creditors as well as itself, but will also 

 put it upon a sound financial basis for future operations. The 

 company has assurances from strong banking interests which it 

 believes justify the expectation that if the necessary assents of 

 creditors and stockholders are forthcoming the bonds and deben- 

 tures can be underwritten and the plan consummated. Holders 

 of a majority of the common stock and the largest creditors have 

 already indicated their assent. 



The proposed stockholders' meeting called for final authorization 

 of this plan was again postponed from February 11 to March 4, 

 owing to inability of the committees to complete arrangements for 

 putting the plan into operation. 



The loan of $18,825,000, which was arranged several months 

 ago by a banking syndicate, headed by Goldman, Sachs & Co., 

 for The Goodyear Tire & Rubber Co., and which matured on 

 February 15, has been extended for thirty days, with an option 

 for a further extension of sixty days. 



FINANCIAL NOTES 



PRELIMINARY REPORT OF THE UNITED STATES RUBBER CO. 



Owing to the unusual prevailing business conditions the United 

 States Rubber Co. has issued to stockholders a detailed pre- 

 liminary statement in advance of the customary annual report 

 in April, showing the volume of business and profits for the 

 year 1920 and the position of the company at the close of that 

 period. Net sales amounted to $255,744,685, an increase of 

 $30,155,220 over 1919, the best previous year. Net profits were 

 $21,275,524, equivalent, after preferred dividends, to $19.82 a 

 share on the $81,000,000 common stock, against $17.59 a share in 

 1919 on the $72,000,000 common stock then outstanding. 



The following table shows the principal items of the income 

 accounts for 1919 and 1920: 



1920 1919 



Net sales $255,744,685 $225,589,465 



Xet income after depreciation and taxes 26.925,173 21,396,099 



Interest 5,649,649 3,665,862 



.\'et profits 21,275,524 17.730,237 



Preferred dividends •5.200,000 5,041,476 



Subsidiary comnanies* dividends 18.718 19,567 



Cnmmon dividends •6,480.000 2,098,576 



.Surplus 9,576.806 10,570,618 



Credit adjustments 460,258 108,506 



Total profit and loss surplus t53, 247,227 52,310,263 



•InrludinE dividends payable January 31, 1921. 

 . tAftcr deduction of $9,000,000 stock dividend paid February 19, 1920. 



Inventories have been written down $11,020,605, the reserves 

 created in past years being adequate to effect this shrinkage with- 

 out using any part of the income for 1920 for the purpose. 



