cation further contemplates annual fixed charges and appropriations of income and surplus for the calendar years 1933 to 1936, inclusive, of $2,113, exclusive of interest on the loan under discussion. With respect to its present and prospective ability to repay the loan and discharge its obligations in regard thereto, the applicant declares that it relies on its earnings as previously detailed, the estimated savings to be effected in the proposed equipment changes, and proceeds of sale of its steam locomotive. In estimating $23,408, as the amount which will be available for repayment of the loan within a 3-year period, the applicant includes $2,000 to be realized from the sale of the locomotives now in service, and for each year the sum of $2,936, its net income for 1932, and $4,200, anticipated saving in operating costs resulting from the installation of the new equipment. Subsequent to the filing of the application, efforts were made to determine the applicant's ability to finance part of its requirements through local banks and the equipment builders. The extent to which the applicant has been able to procure such assistance does not convince us that we should approve a loan by the Finance Corporation of the remainder of the applicant's requirements. Conclusions. Upon consideration of the application and investigation thereof, we conclude that the prospective earning power of the applicant and the security offered are not such as to afford reasonable assurance of its ability to repay the loan. We are unable to find that the Finance Corporation would be adequately secured. Approval of the application is, accordingly, denied. An appropriate order will be entered. 193 I.C.C. FINANCE DOCKET No. 9615 ST. LOUIS, BROWNSVILLE & MEXICO RAILWAY COMPANY ABANDONMENT Submitted June 9, 1933. Decided July 27, 1933 Certificate issued permitting the St. Louis, Brownsville & Mexico Railway Company to abandon a branch line of railroad in Matagorda County, Tex. Herbert Fitzpatrick, Frank Andrews, Robert H. Kelley, and Harry R. Jones for applicant. A. Harris, H. A. Clapp, Eugene J. Wilson, W. E. Davant, and A. R. Stout for protestants. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS MEYER, BRAINERD, AND MAHAFFIE BY DIVISION 4: No exceptions were filed to the report proposed by the examiner. The St. Louis, Brownsville and Mexico Railway Company, on September 6, 1932, applied for permission to abandon a branch line of railroad extending from a connection with its main line at or near the station of Buckeye, southerly and southwesterly, to Collegeport, 16.9 miles, all in Matagorda County, Tex. A hearing has been had, at which testimony in opposition to the proposed abandonment was offered by numerous persons residing in the territory tributary to the branch. All points mentioned herein are in the State of Texas. The applicant is an operating carrier subsidiary to the New Orleans, Texas & Mexico Railway Company. The latter is a subsidiary of the Missouri Pacific Railroad Company, hereinafter called the Missouri Pacific. The branch serves the villages of Beadle, Simpsonville, Citrus Grove, and Collegeport. The latter, having between 100 and 200 inhabitants, is located on the eastern shore of Matagorda Bay. There are no agency stations in the other villages above mentioned, the largest of which has less than 25 inhabitants. The territory traversed by the branch, described as a flat coastal plain, has an area of about 200 square miles and a population of less than 1,600, which has remained stationary for the past 15 years. The chief industries did not become a party to the "marshaling and distributing plan, 1931", of the Railroad Credit Corporation. Transportation properties and operations.-The applicant owns and operates 5.37 miles of single-track standard-gage railroad, extending from Union Center to Hillsboro, all in the State of Wisconsin. It also owns yard tracks and sidings totaling 1.02 miles, and interchanges all traffic with the Chicago & North Western Railway at Union Center. Owned equipment consists of one steam locomotive, one combination passenger car, and three box and four flat cars. There are no industrial plants on the applicant's line of railroad with the exception of one milk condensery. Prior to the present economic condition the applicant originated an appreciable amount of forest products, but its present originated tonnage is restricted to agricultural products, embracing evaporated milk, butter, and livestock. Tonnage received from its connection is confined principally to coal, petroleum products, animal feeds, tin cans, and building material. A statement of revenue freight carried during the 6-year period ended December 31, 1932, discloses an average of 32,903 tons per year, of which 13,845 tons originated with the applicant and 19,058 tons were received from its single connection. Necessities of applicant.-At the present time the applicant is performing service with a secondhand Baldwin locomotive constructed in 1905, type 2-6-0, and having a total light weight of 67 tons. This locomotive must be retired under the requirements of our Bureau of Locomotive Inspection not later than September 1, 1933, unless expenditures are made thereon in the amount of approximately $3,000. It is asserted that expending such a sum in repairing this locomotive would not be in the interest of efficiency and economy, due principally to the fact that the applicant is without funds with which to make the requisite repairs, and if made it will be faced with the necessity of borrowing the required amount. As previously indicated, the applicant, with the proceeds of the present loan proposes to acquire a gasoline locomotive for use in handling carload traffic, and a mechanically driven automotive type of rail coach for passenger, mail, express and less-than-carload traffic. It insists that the contemplated change in power would permit it to inaugurate sufficient economies to liquidate the cost of the proposed equipment within a period of four years. Security. As collateral security for the loan the applicant offers a first lien in the form of an equipment trust, chattel mortgage, or other lien of equal dignity upon the equipment intended to be acquired with the proceeds of the loan. It also offers an additional mortgage on its railroad and property, which mortgage will be subject to a first deed of trust dated June 1, 1927, and executed January 13, 1930. This trust deed, securing an authorized issue of $60,000 of first-mortgage 6 percent gold bonds bearing a nominal date of issue of June 1, 1927, maturing June 1, 1947, was made pursuant to our order in Securities of Hillsboro & North-Eastern Ry., 124 I.C.C. 191. A total of $27,000 of bonds has been issued under this trust deed, of which $25,000 was actually outstanding at the date of the application. We are informed by the applicant that bonds under this authorization in the amount of $27,000 were authenticated by the trustee and delivered to the applicant between January 18 and May 31, 1930. They were all disposed of by the applicant on the dates of delivery, on the basis of par value plus accrued interest, in exchange for short-term notes aggregating $20,300 and in payment of traffic balances totaling $6,700. In Hillsboro & North-Eastern Ry. Co., 103 I.C.C. 573, division 1 found the value for rate-making purposes of the property owned and used by the applicant, as of June 30, 1917, to be $103,895. There is included in the value stated the sum of $6,395 on account of working capital, consisting wholly of material and supplies. Since valuation date, and to and including December 31, 1931, net additions and betterments to the applicant's property have been reported to the Commission costing $35,053. If the figure previously stated be added to these costs, and working capital be deducted, the total becomes $132,553. As of June 30, 1917, the applicant also owned land and improvements thereon having a value of $585, which was classified as noncarrier. Net additions and betterments to this property to December 31, 1931, aggregated $62. The applicant's balance sheet as of March 31, 1933, shows investment in road and equipment $151,406, outstanding capital stock $81,700, and funded debt unmatured $25,000. Its current assets aggregated $20,284, current liabilities $13,221, and corporate surplus $45,104, as of the same date. There are also total unadjusted credits of $10,062 recorded in the balance sheet, including accrued depreciation of $9,900, distributed $2,262 to road and $7,638 to equipment. A comparative income statement which accompanied the application discloses that, during the 11-year period ended December 31, 1931, railway operating revenues averaged $40,273, railway operating expenses $33,381, net railway operating income $4,294, and nonoperating income $44. Income available for payment of interest averaged $4,312, interest on funded and unfunded debt $1,913, and net income $2,398. For the calendar year 1932 the applicant's net income was $2,936. Premised upon actual income for the first three months of 1933, and estimated for the remaining nine months, the applicant anticipates net income for the year of $3,087. The appli cation further contemplates annual fixed charges and appropriations of income and surplus for the calendar years 1933 to 1936, inclusive, of $2,113, exclusive of interest on the loan under discussion. With respect to its present and prospective ability to repay the loan and discharge its obligations in regard thereto, the applicant declares that it relies on its earnings as previously detailed, the estimated savings to be effected in the proposed equipment changes, and proceeds of sale of its steam locomotive. In estimating $23,408, as the amount which will be available for repayment of the loan within a 3-year period, the applicant includes $2,000 to be realized from the sale of the locomotives now in service, and for each year the sum of $2,936, its net income for 1932, and $4,200, anticipated saving in operating costs resulting from the installation of the new equipment. Subsequent to the filing of the application, efforts were made to determine the applicant's ability to finance part of its requirements through local banks and the equipment builders. The extent to which the applicant has been able to procure such assistance does not convince us that we should approve a loan by the Finance Corporation of the remainder of the applicant's requirements. Conclusions. Upon consideration of the application and investigation thereof, we conclude that the prospective earning power of the applicant and the security offered are not such as to afford reasonable assurance of its ability to repay the loan. We are unable to find that the Finance Corporation would be adequately secured. Approval of the application is, accordingly, denied. An appropriate order will be entered. 193 I.C.C. |