New Battle for Young

Railroad Tycoon Robert R. Young, in the midst of a fight for control of the New York Central, last week got something close to a toe hold on control of another road, the $797 million Missouri Pacific Railroad. The Mopac went bankrupt in 1933, and four times the Interstate Commerce Commission has drawn up reorganization plans for it. Young, whose Alleghany Corp. owns 49% (396,000 shares) of Mopac's common stock, has helped to have the plans overturned every time, either before the ICC or in court. The reason: while the plans called for bailing out the system's bondholders (and the fourth even offered something for the preferred stock), they left nothing for the common. Last week, two ICC examiners recommended a fifth plan, under which bondholders and preferred stockholders would get new securities worth the full value of the holdings, plus accumulated interest and dividends. The preferred stockholders would get control of the road. This time Young and other common stockholders would get, as an ICC staff member said: "Something less than a toe hold."

Under the plan, more than $70 million in overdue bond interest would be paid in cash. Preferred stock (which rose 3 1/8 points to 51 1/4 after the plan was announced) would be exchanged for a new issue of common. Common stock would be turned in for warrants, which could be exchanged for a second issue of common stock only if the Mopac earns at least $76.1 million a year before interest and federal taxes in seven consecutive years out of the next 15. The chances of such earnings, and thus of the common stock's being worth anything, are slight. Only in 1942, 1943 and 1944 were the railroad's earnings as much as $76 million. Since then they have slipped, and last year's earnings before interest and federal taxes are estimated at $44.7 million.

Young, who has long argued that the road's earnings are large enough to give the common stockholders a share in the road, was mum last week on the new plan. But it was safe to bet that his Alleghany Corp. would oppose it. "Less than a toe hold" is hardly enough for the man who wants to sit at the throttle of Mopac.

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