Preferred Stockholders to Act Through Protective Committee—Plans to Refund Bank Loans
Providence, R. I., Nov. 17.—General interest is being manifested in financial and commercial circles, as well as in the jewelry and silversmithing industries, in the present status and the future of the Gorham Mfg. Co. While it has been known that ever since the sudden closing of the World War this corporation has been carefully and conservatively readjusting its affairs, the announcement given in these columns last week that a plan of reorganization was being worked out was of more than passing interest.
In local circles there is also much interest being shown, and commenting upon the situation the Providence Journal's financial writer says: "One of the outstanding events last week in relation to the local stock market was the formation of a protective committee for the preferred stock of the Gorham Mfg. Co. While the action was not unexpected and caused no difference in the price of the stocks, it does add one more step to what must be done before the company's affairs can be put in a profitable condition again. The Silversmiths Co., it will be remembered, controls the Gorham Mfg. Co. through ownership of 99 per cent, of the Gorham Mfg. Co. common stock. In addition, it controls the Whiting Mfg. Co., the William B. Durgin Co. and the William E. Kerr Co. The Gorham Mfg. Co. controls the Gorham Co., of New York city.
"Largely as a result of the poor showing of the Gorham Mfg. Co., The Silversmiths has been in financial difficulties for over three years, and on July 1, 1922, defaulted in the payment of $728,000 certificates of indebtedness and $240,000 secured notes. On Feb. 1; 1923, a noteholders' protective committee was formed. Both the preferred and the common stockholders took similar action at that time, and for the past nine months those committees have been working out a plan for reorganization of The Silversmiths Co.
"The Gorham Mfg. Co. paid off $342,000 first mortgage bonds at maturity last August and has $347,500 of the same issue maturing Feb. 1, 1924. These, it is said by officials closely in touch with the company's affairs, will be paid when due. This assumption is borne out by the current market price of par for such bonds. However, the company has a large amount of bank loans outstanding (the amount was $2,314,125 on Jan. 31. 1923), and to satisfy these a reorganization of the company's finance is necessary. It is because this reorganization is pending that the Gorham Mfg. Co. preferred stockholders last week formal their protective committee, that it might co-operate in any plan suggested and that the preferred stock might be in a position to effectively protect itself when such a scheme is adopted.
"Sale last week by the Gorham Co. of its eight-story building at the corner of 32nd St. and Fifth Ave., New York city, for $3,000,000, approximately half of which it is understood was paid in cash, will put Gorham in a considerably more liquid cash position and should do much to make adjustments of the Gorham Mfg. Co.'s bank loans easier.
"It is said on good authority that the various Silversmiths' committees are working on a plan whereby it will be possible to combine all of the companies now controlled by The Silversmiths Co. into one large concern. It is because it is so difficult to formulate a plan that would be fair and satisfactory to all of the interests concerned that the reorganization has not progressed more rapidly."
Source: The Jewelers' Circular - 21st November 1923