DURING the war the art of long distance wireless communication progressed to such an extent as to make it clear that this new means of communication is quite as reliable as the cables. The crowded condition of all communication facilities, particularly cables, is such as to make it necessary, from the point of view of the commercial interests of the country, that this new factor in communication should be developed as rapidly as possible. Political, diplomatic and national reasons require that there should be ample radio facilities in the hands of one or more exclusively American concerns.
Details of the Scope and Purpose of the Radio Corporation of America Which Will Have Behind It the Combined Achievements of the American Marconi Company and the General Electric Company
The principal aim and purpose of the Marconi Wireless Telegraph Company of America, during all the period of its existence, has been the establishment and maintenance of transoceanic communication. Although the Company has done no inconsiderable business in minor branches of the wireless art, such as the equipping of vessels, the operation of ship to shore traffic, the manufacture and sale of wireless apparatus, and the collection of royalties, yet these have by the management been always considered as incidental to the greater and more profitable business of long distance communication.
When the war came your Company had erected, and nearly ready for operation, long distance stations at New Brunswick and Belmar, New Jersey, for co-operation with similar stations of the British Marconi Company in Great Britain. It had long distance stations on the Pacific Coast, near San Francisco, and on the Hawaiian Islands, for communication with Japan; and it had in the course of construction stations at Marion, Mass., and Chatham, on Cape Cod, for communication with Norway. Your Company has recently purchased the station at Tuckerton, New Jersey, intended for communication with France. At the beginning of the war the British Government, for its own use, took over all the British stations, thus preventing any use of our New Brunswick and Belmar stations; and when the United States entered the war our Government took over the Tuckerton station and all of our stations; thus any use of our stations and all development of the business of transoceanic communication has been absolutely suspended and will remain suspended until the Navy Department, under whose administration wireless affairs have been conducted for the Government, permits us to resume operations. This must happen soon; when it does happen your Company will, except for the objections hereinafter mentioned, be free to complete its preparations for engaging in long distance business. The revenue which will be realized from such operations will be particularly necessary because of the cessation of the extraordinary demand for small wireless outfits created by the war.
As you doubtless know, the American Marconi Company was organized as a co-relative of the parent British Marconi Company, receiving a grant of the Marconi patents and inventions for use in the territory of the United States and Cuba only, and under the expectation that it would, under a traffic agreement between it and the British Company, conduct a wireless service between the United States and Great Britain. The British Company has always held a substantial stock interest in the American Company and the plans and policies of the two have contemplated mutual co-operation and control so far as trans-Atlantic service is concerned. Two of the officers of the British Company have been officers of the American Company, viz: Senatore Marconi, as a director and vice-president, and Mr. Godfrey C. Isaacs, who is Managing Director of the British Company, as a director.
Owing, no doubt, to the greatly increased use of wireless by the United States Government, especially during the late war, during which all wireless operations, both of commercial stations and naval stations, have been under the control of the Navy Department, our Government has come to regard the subject as one of very vital importance to this country, especially from a military standpoint.
As you have been informed by means of the report of hearings in Congress which have been mailed to each stockholder along with the annual report of the company, the Navy Department has sought to procure the adoption by Congress of legislation to vest solely in that department the right to operate wireless stations and to carry on wireless commercial business.
Congress has so far refused to pass any such legislation and the Committee of the House of Representatives, to which bills for that purpose have been referred, has in each instance refused to report them, clearly evidencing the opinion of Congress that commercial wireless business should be left in the hands of private companies rather than be made a subject of government ownership and operation. Notwithstanding this, we have found that there exists on the part of the officials of the Government a very strong and irremovable objection to your Company because of the stock interest held therein by the British Company. This objection is shared by the members of Congress to a considerable extent. Consequently your Company has found itself greatly embarrassed in carrying out its plans for an extensive transoceanic traffic, and unless this British Marconi interest in your Company is eliminated your President and Board of Directors believe it will not be possible to proceed with success to the resumption of its preparations for a worldwide service when its stations shall be returned to it, as they will be in the near future. Even in the minor branches of your Company's work, which branches have been quite profitable during the war, the objections above alluded to have been increasingly effective in limiting your Company's activities. For example, the United States Shipping Board recently awarded to your Company contract for the maintenance of wireless outfits on certain ships which it controlled, but required as a condition certain affidavits that a majority of the shares of your Company were owned by American citizens, which affidavits could not under the present conditions be made.
In a word, we are satisfied and convinced that in order to retain for your Company the proper support and good will of our own Government it is necessary that all participation in its stock, as well as in its operations, on the part of any foreign wireless company must be eliminated. The objections of our Government are founded on such reasons of a patriotic nature as to command our respect and compel our compliance with their wishes.
Having these considerations in mind your officers have lately undertaken to remove the objections of the Government and to do away with the threatened embarrassment of which we have spoken.
Certain long distance and other radio devices and systems have been developed by the General Electric Company, a powerful corporation having assets of nearly $200,000,000, extensive factory facilities and connections with a number of manufacturing companies in foreign countries. Some of these devices and systems promise to be of great value in transoceanic radio communication.
A corporation has been formed called The Radio Corporation of America, which is authorized to issue capital stock as follows:
(a) 5,000,000 shares of preferred stock of the par value of $5.00 per share. This stock is entitled to receive preferred dividends of seven per cent. (7%) per annum and no more. In any distribution of the assets it is entitled to be paid off at par prior to any payment to the common shareholders. The preferred dividends are to be cumulative after the end of the Radio Corporation's fiscal year ending in or with the calendar year 1923.
(b) 5,000,000 shares of common stock without par value.
The preferred stock and the common stock have equal voting power, share for share.
The preferred stock may be retired on any day on which a dividend thereon shall be payable, at the price of $5.50 per share and accrued dividends.
The Radio Corporation has entered into an agreement with the General Electric Company concerning present and future patent rights, the manufacture of patented apparatus and devices exclusively by the General Electric Company for the Radio Corporation and the exclusive right to the Radio Corporation to sell patented radio apparatus and devices of the General Electric Company.
The General Electric Company has appropriated $2,500,000, a portion of which is to be used by the General Electric Company under an arrangement satisfactory to your directors in purchasing the shares of stock in your Company now owned and held by Marconi's Wireless Telegraph Company, Limited, of Great Britain, which shares it will hold, the remaining portion of this sum having been paid in cash to the Radio Corporation or expended or agreed to be expended directly for its benefit.
The General Electric Company has made an agreement with Marconi's Wireless Telegraph Company, Limited, which, if the proposed plan goes through, will enable the Radio Corporation to enter into an agreement with Marconi's Wireless Telegraph Company, Limited, which will greatly increase the powers and privileges of your company outside of the United States and Cuba, and which will provide, among other things, for the formation of a South American company managed and operated by the Radio Corporation, which will own the majority of the stock of various companies which will construct stations in South America for communication with the United States and England, and in due course with other countries.
135,174 shares of the preferred stock and 2,000,000 shares of the common stock of the Radio Corporation have been issued to the General Electric Company. The remainder of the shares remain in the treasury. In addition to the above, the General Electric Company contract with the Radio Corporation to furnish to it certain 200 K. W. High Frequency alternators known as the Alexanderson alternators, with accessories, at an agreed price, to be paid for in preferred stock of the Radio Corporation at par.
In accordance with what is understood to be the wishes of the United States Government, effective means have been used to see to it that the actual control of the Radio Corporation shall at all times be in the hands of loyal American citizens or corporations. It is hoped that it will be possible to accomplish this end and at the same time issue a limited number of shares which can be voted if held by foreigners, the certificates for which are to be known as "foreign share certificates." Efforts will be made with the co-operation of the General Electric Company to supply to your company enough of such foreign share certificates so that all or substantially all of your company's stockholders who are foreigners may receive their stock of the Radio Corporation in such certificates.
It is now proposed to enter into a contract with the Radio Corporation by which your company will sell and convey to the Radio Corporation all its assets and property including cash and securities, except its manufacturing plant at Aldene, New Jersey, and its claims against the United States Government and certain private corporations and firms arising from unlicensed use of the apparatus covered by the patents of the Marconi Company, and will receive two million (2,000,000) shares of the common stock of the Radio Corporation and preferred stock of a par value of $10,000,000 in consideration of the transfer of its assets above set forth and its agreement to transfer to the Radio Corporation the first $500,000 derived by it from the claims above referred to or alternatively to transfer to the Radio Corporation its factory at Aldene, N. J. If the net tangible assets thus transferred, not including the claims or the factory, are not reasonably worth $9,500,000 appraised on a going-concern basis the deficit is to be made up in cash realized on the claims above mentioned as and when the claims are settled, but your Company will not guarantee the claims in any respect and will not be liable for any cash deficit except to the extent indicated.
It is intended (after the proposed plan is approved), to declare a dividend on the shares of your Company of 25c. per share, payable on or about January 2nd, 1920, and a sufficient amount for this purpose will be reserved.
It is also proposed to lease the Aldene factory to the General Electric Company.
This plan, as will be seen, does not involve the sale of the whole assets and property of your Company as an entirety, but does radically change the scope of its operations and transfers the conduct of wireless communication and sale of wireless devices to the new Company. Your directors have thought it wise to call a meeting of the stockholders and take their judgment and advice and obtain their approval of the transaction.
Accordingly, a special meeting of the stockholders of the Marconi Wireless Telegraph Company of America is hereby called to be held at the registered office of the Company, 243 Washington Street, in the City of Jersey City, New Jersey, on the twentieth day of November, 1919, at 12 o'clock noon.
It is contemplated and expected that each stockholder of the Marconi Wireless Telegraph Company of America will have the privilege of exchanging his stock in that Company for an equal amount, par for par, of the preferred stock of the Radio Corporation and in addition shares of the common stock of the new Company equal in number to the number of shares held in the present Company. For illustration, for one share of the par value of $5.00 in the present Company, a shareholder will be entitled to receive preferred stock of the par value of $5.00 in the new Company and one share of common stock in the new Company in addition.
Your directors and officers believe that the carrying out of the plan herein outlined will be of great advantage to the stockholders and will relieve the Company from a seriously embarrassing situation, and they unanimously recommend its approval and adoption. Unless new and unforseen obstacles arise, the New Company under its traffic arrangements with the British Company and others will be enabled shortly after its stations are returned by our Government to start traffic with the British Islands, Norway, France and Japan, and, as soon as the necessary stations are built, to open communication with South America, thus attaining under conditions of financial strength, with a departmental staff of exceptional experience, and ability, the great objective that has always bean aimed at, namely, a world-wide system of commercial wireless communication. We believe that such an achievement will not only redound to the advantage of our shareholders, but will be a material and very important benefit to our country.
We, therefore, request stockholders to promptly sign and return to the Secretary in the Woolworth Building, New York City, the accompanying proxy authorizing consent to be given to the sale of the assets of the Company as above outlined and approval of the said plan.
The stock transfer books of your Company will be closed from three P. M. October 31st until ten A. M. December 1st, 1919.
|JOHN W. GRIGGS, |