Clarification on Amtrak

[PJS1]

The suit was filed by American Premier Underwriters Inc, which operates as a susidiary of APU Holding Company.  At the time it filed the suit it held 55.8 per cent of Amtrak's common stock.  It acquired the stock through Penn Central. 

Amtrak does disclose the other owners in its annual report.

[Wizlish]

I'll bet a hat it is the Lindners' American Financial Group (through their acquisition of American Premier Underwriters - that name ring a bell?)

Precisely how they expect to get their damages out of Amtrak, including how the "40+ years of interest" would be defined, is a matter that only the suit itself would likely indicate.

[schlimm]

If 99% of the shares are held by the "Secretary" who holds the 1% and who are they since they are suing?

[PJS1]

At the end of 2014 Amtrak had authorized and issued 109,396,994 preferred shares @ $100 par value per share; it had authorized 10,000,000 common shares @$10 par value per share, of which 9,385,644 have been issued.  

All of the preferred shares are held by the Secretary for the benefit of the Federal Government.  Approximately 99 per cent the issued shares – preferred and common - are held by the Secretary.  

 

Prior to December 2, 1997, the Rail Passenger Service Act (49 U.S.C. 24304) required Amtrak to issue to the Secretary preferred stock equal in par value to all federal operating payments and most federal capital payments received subsequent to October 1, 1981, as well as capital and certain operating payments received prior to that date. 

 

The Amtrak Reform and Accountability Act of 1997 resulted in significant modifications to Amtrak’s capital structure.  It abolished the voting rights and the liquidation preference of the preferred shareholder and established that no additional preferred stock was to be issued by Amtrak in exchange for federal grants. 

 

Each share of preferred stock is convertible into ten shares of common stock at the option of the preferred stockholder.

 

The common shareholders, who acquired their stock from four railroads whose intercity rail passenger operations Amtrak assumed in 1971, have voting rights for amendments to Amtrak’s Articles of Incorporation proposed by the Board of Directors. 

 

The 1997 Act required Amtrak to redeem at fair market value the common stock outstanding as of December 2, 1997, but the common shareholders rejected the offer.  The largest common shareholder sued Amtrak in 2008, claiming it had eroded the value of the common stock.  It is seeking $52 million plus 40 years of interest.  The lawsuit has been dismissed twice, but the shareholder has filed an appeal.  It is ongoing.

 

As noted by Amtrak’s external auditors, Ernst & Young LLP, Amtrak has a history of operating losses and depends on the Federal Government for substantial subsidies to continue operations.  This fact, coupled with the provision that permits the Federal Government to convert all of its preferred shares into common shares, makes it clear who owns and controls Amtrak. 

 

The U.S. Postal Service is a government agency.  It has issued no stock.

 

Amtrak has issued debt.  However, it probably did not do so without an approving nod from the Secretary.   At the end of 2014 it had $788.5 million of long term debt, of which $106.3 million was due currently or within a year.  

 

[CMStPnP]

I am not sure.    Might not be exactly the same because Amtrak has issued stock and the USPS has not issued stock.    In Amtraks case the stock is not on any exchange so it's probably considered a private issue.

[BOB WITHORN]

Isn't that also the way the postal service is setup?

[CMStPnP]

Just wanted to chime in one more time but the other thread was closed due to the sniping on it over...........well I am not sure what exactly.

However, Amtrak is half private and in it's charter is referred to as a quasi-governmental Corporation.     The distinquishing factor here is Amtrak can obtain private loans and private financing without government and/or Congressional approval.   Constitutionally, thats a no-no for companies that are wholly owned by the government.    So in a pure sense it is not a pure socialized or nationalized company.