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IN RE PENN CENT. TRANSP. CO.

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


May 13, 1971

In the Matter of PENN CENTRAL TRANSPORTATION COMPANY, Debtor (Order No. 253). In re INSTRUCTIONS to TRUSTEES CONCERNING PENN CENTRAL COMPANY

Fullam, District Judge.

The opinion of the court was delivered by: FULLAM

MEMORANDUM

FULLAM, District Judge.

 The Penn Central Company owns all of the outstanding stock of the Debtor, but is not itself in reorganization. In connection with the proposed refinancing of a $50 million obligation of the parent company, the latter proposes to issue certain promissory notes, convertible into common stock of the parent company at the price of $7.16 per share. The proposed refinancing would require approval of the shareholders of the Penn Central Company. A shareholders meeting to vote upon the proposal, originally scheduled for May 28, 1971, has been postponed pending receipt of certain certified financial information pertaining to the Debtor (more specifically, one of its subsidiaries), but is expected to be rescheduled in the near future.

 The refinancing agreement provides that it is further conditioned upon "confirmation by the Trustees in reorganization of Penn Central Transportation Company on or before June 1, 1971, that they have no objection to the issuance of the convertible notes on the terms stated. * * *"

 The Trustees have petitioned the Court for instructions as to whether they should or should not object to the proposed refinancing, or otherwise state a position in the matter.

 While the condition quoted above was apparently inserted in the refinancing proposal in an excess of caution, and as a courtesy to the Trustees, no one has suggested that the Trustees actually have any legal standing to object to the proposed refinancing on the part of the parent company, nor has it been suggested that there is any reason for the Trustees to inject themselves into this issue. This is clearly a matter for decision by the directors and shareholders of the Penn Central Company. Accordingly, I have concluded that the Trustees should be instructed to take no position in the matter.

19710513

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