Job with No Future

Most men take a new job because it has a future. But when Edward O. Boshell took on the presidency of Standard Gas & Electric Co. four years ago, he knew the job had none. Standard Gas, once the biggest U.S. utility combine, with 6,000,000 customers and $1.1 billion properties in 20 states, was under "death sentence" of the New Deal's Holding Company Act. Boshell's task was to work himself out of a job by liquidating the combine, one of the most complicated single reorganizations ever conducted under the act.

Boshell was well equipped. Born in Illinois and educated at the University of Chicago, he was attorney for Chicago's Consolidated Electric & Gas Co. when Manhattan's Stone & Webster took it over in 1933. Boshell went along, rose to vice president of Stone & Webster, and handled the liquidation of some 50 utility companies under the death-sentence clause. Moreover, since Stone & Webster once did a financial study for Standard Gas, he was familiar with the intricacies of its history: its early dominance by Chicago Tycoon H. M. Byllesby, who put the pyramid together, then by Wall Street's Victor Emanuel, later by New Dealers (e.g., Leo Crowley) whom Emanuel brought in to try to work out a plan under the death sentence.

A Mystery. When Boshell came in, previous attempts to liquidate Standard Gas had failed, blocked by stockholders who thought their holdings were worth more than the plans called for. One plan, which would have given all the assets to preferred stockholders and left nothing for the owners of 2,162,607 shares of common, was approved by a federal court and by the SEC, which ordered the New York Stock Exchange to remove Standard Gas common stock from trading, as worthless. In over-the-counter trading, the stock sank as low as 13-c-. But common and $4 preferred stockholders fought the plan, won a court order against its execution.

Boshell thought some value could be recovered for all stockholders. But he was also convinced that nobody knew the real value of Standard's maze of interlocking holdings. He decided that he could not tell until he unscrambled it at the bottom.

At the bottom was a mystery. One of the companies in Standard's system, Pittsburgh Railways, had been bankrupt since 1938, but a 6% return was regularly being paid to stockholders of its 54 subsidiaries. Boshell found that the money was coming from another Standard-controlled company, Duquesne Light, and this was draining away $1,000,000 a year which might otherwise go to Standard stockholders. Boshell set out to reorganize Pittsburgh Railways, but had to unscramble 45 separate security issues and fight off Pittsburgh stockholders who went all the way to the U.S. Supreme Court to try to block him. They argued that since they were still getting dividends the company was not really bankrupt. After he won, Boshell was able to sell off seven other properties, pay off Pittsburgh Railways debts and still have $100 million in cash, plus savings of $1,000,000 a year for Standard. This, plus the fact that the value of all utility stocks began to rise, made it possible for him to draw up a final plan for liquidating the top company.

A Solution. In Wilmington, Del. last week, a federal court approved the first step of his plan: liquidation of the $7 and $6 prior preferred stock with payment of $93 million in stock from Standard's operating companies (Duquesne Light, Wisconsin Public Service, Oklahoma Gas & Electric). In the next two steps, Boshell plans to liquidate the $4 preferred by a similar payoff, and then the common. By mid-1953 he hopes to end Standard's existence--and his own job. Under Boshell's shrewd management, Standard's once "worthless common" is again listed on the Big Board, has shot up from 75-c- to last week's price of 16 3/4. The $7 preferred has more than doubled; the $6 preferred rose from 86 to 188 while the $4 preferred rose from 17 1/2 to 104.

As it turned out, Boshell didn't work himself out of a job after all. For in his handling of the intricate Pittsburgh Railways reorganization, he so impressed Pittsburgh's potent Mellons that they asked him to take on the vacant presidency of famed old Westinghouse Air Brake Co. Last year, at 49, Boshell did so. Last week, as he began winding up what is now his sideline job at Standard, Boshell was busily expanding Westinghouse Air Brake from its traditional railway equipment into such new fields as electronics, pneumatic tools.

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