THE CUBA REVIEW 



CUBAN RAILROAD MATTERS 



CUBAN CENTRAL RAILWAY AGREEMENT 

 WITH UNITED RAILWAYS OF HAVANA 



Circulars issued by the United Railways 

 of Havana and the Cuban Central Railway 

 Companies give the terms of the arrange- 

 ment reached between the two undertak- 

 ings. Negotiations, says the Cuban Central 

 circular, "have lately taken place which 

 have resulted in a proposal by the United 

 Railways Company that, subject to con- 

 firmation by the shareholders of that com- 

 pany, it should purchase the whole of the 

 ordinary shares in your company on the 

 following terms : That for every ilO- Ordi- 

 nary share of the Cuban Central Company 

 held by you, there will be given you in ex- 

 change il 10s. nominal of ordinary capital 

 of the United Railways Company. The 

 buyers will be entitled to the dividends on 

 the Cuban Central Company's shares as 

 from the 1st of July last, whilst you will 

 be entitled to receive the dividends from 

 the same date upon the Stock of the United 

 Railways Company to be given you in 

 exchange. 



"The market value of the Cuban Central 

 Company's shares on the 21st inst. was £o 

 15s., whilst the market value of the stock 

 of the United Railways Company to be 

 given you in exchange was on the same 

 date i6 3s. The dividend upon the Ordi- 

 nary stock of the United Railways Com- 

 pany, offered in exchange for your shares, 

 based upon the last dividend paid by that 

 company — namelj', 5 per cent — is equivalent 

 to a dividend on the Cuban Central Com- 

 pany's shares of 3% per cent, or % per 

 cent more than the proprietors received for 

 the past year. It is reasonable to an- 

 ticipate that the profits of the United Rail- 

 ways Company will show a steady advance, 

 due to the growing prosperity of the island 

 and the advantages resulting from the ar- 

 rangement now prooosed. 



"The United Railways Company are pre- 

 pared to purchase the whole of the Ordi- 

 nary shares of your company upon the 

 above basis, but they will not proceed with 

 the purchase unless three-fourths of the 

 Ordinary shareholders of your company as- 

 sent to the proposal. In the event of the 

 proposal being carried through, the Board 

 of your company will retire in favor of 

 nominees of the United Railways Com- 

 pany, the present Board and the members 

 of the staff whose services are not contin- 

 ued being compensated by the United Rail- 

 ways Company on their retirement." 



The scheme is recommended by the 

 Boards of both companies. 



The capital of the Cuban Central Line 

 consists of i900,000 in £lO ordinary shares. 



with £1,200,000 of £lO o^i; per cent cumu- 

 lative preference shares, and il,698,600 of 

 debenture capital at present outstanding. 

 While the railway is still largely dependent 

 upon the sugar crop for its revenue, earn- 

 ings have never been fully distributed, so 

 that the financial position of this concern 

 is a sound one, a reserve fund of £60,000, 

 with a renewal and casualty and fire insur- 

 ance fund of a further £90,655, being shown 

 in the balance-sheet as at the end of June 

 last. The dividends on the ordinary shares 

 have never been large, for the board have 

 preferred to set aside substantial amounts 

 to improving the financial position. For the 

 three years to June, 1912, 2 per cent per 

 annum was paid, while for 1912-13 3 per 

 cent was forthcoming, which required 

 £27,000, but as £30,000 w^as placed to re- 

 newal and casualty fund, £l0,000 to general 

 reserve, £7,000 to permanent way suspense 

 account, and £7,000 for balance of premium 

 on 6 per cent debenture stock written off, 

 it will be seen that £54,000 was here used, 

 which would have paid 6 per cent on the 

 share capital and have made the dividend 

 for the past year 9 per cent had all the 

 profits been distributed. 



As a matter of fact, in the last five years 

 a total of £140,000 had been set aside out 

 of the profits for improving reserve, etc., 

 which means that instead of no dividend 

 for the year 1908-9, and 2 per cent for each 

 of the next three years, with 3 per cent 

 for 1912-13, an average of something like 

 4^4 per cent per annum was earned, and 

 as the company's financial position is now 

 such that it is no longer necessary to so 

 liberally set aside part of the earnings, it 

 maj' reasonably be expected that, even with 

 no further improvement in the earnings, 

 the dividends will advance. 



These facts account for the recent rise 

 in the price of the £l0 Ordinary shares, 

 which are likely to go very much higher 

 when the deal is arranged. — London Stock 

 Exchange Gazette. 



The new consolidation means that one 

 company now controls the railways of 

 half of Cuba from Guane in Pinar del Rio 

 Province to Placetas in Santa Clara Prov- 

 ince. The Western Railways, the Havana 

 Central, the United Railways, the Terminal 

 Company, represented by the union depot 

 in Havana, certain wharves along the bay 

 front and the ferry system and the Cuban 

 Central, are now one concern, the biggest 

 portion of which, in the point of influence 

 and control, is the United Railways. 



In respect of the year ended June 30th 

 last the Cuban Central Railways Company 

 has recently declared a dividend of 3 per 

 cent on its Ordinary shares, as against 2 



