Flats Fixed

Last year after Depression deficits of $21,000,000 had frayed the fiscal treads of B. F. Goodrich Co., its president, James Dinsmore Tew, decided it was time for the rubber firm to get a new set of financial tires. He asked his stockholders to approve a new $45,000,000 first mortgage of which $28,000,000 was to be raised immediately. Of this sum $6,000,000 was for working capital to finance increasing business and $22,000,000 was to reduce interest charges by retiring 5 1/2%, 6 1/2% and 7% obligations of Goodrich and its subsidiary, Hood Rubber. This plan was blocked when only 74% instead of the necessary 75% of the stockholders approved. Nigger-in-the-woodpile was Cleveland's once famed banker and utility tycoon Cyrus Stephen Eaton, whose old firm, Otis & Co., having been refused a share in underwriting the proposed issue, circularized Goodrich stockholders to prevent approval of the mortgage (TIME, July 29, 1935). Thus for a whole year that tire went unfixed. Last month, however, New York Referee John Godfrey Saxe finally squelched Otis & Co.'s final objections, approved the mortgage plan.

Meanwhile Goodrich tire repairers took up the problem of accumulated dividends on Goodrich preferred stock, which by last July had piled up to $35 a share, a total of $10,300,000 overdue. In the first half of this year the company made more money--$2,727,000--than in any first half since 1929. However, earned surplus, out of which dividend arrears would have to be paid, still amounted to only about a third of the arrearage. In July Goodrich directors proposed a recapitalization plan by which preferred stockholders would give up their birds in the bushes for birds nearer to hand. Each share of 7% $100 par preferred would get 1.4 shares of new $5 no par preferred, leaving the annual dividend prospect unchanged at $7. For waiving accumulated dividends of $35 a share stockholders would receive half a share of common stock which sold last week for $23 a share.

Goodrich stockholders met last week and overwhelmingly approved the recapitalization. Immediately the company announced that its first quarterly dividend of $1.25 on the new preferred stock would be paid Sept. 30. It also announced that its refunding plan would be carried out in a few weeks. Thus Goodrich rolled on, all flats fixed.

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