17:9A-177. Railroad bonds

A. For the purposes of this section,

(1) "railroad company" shall include predecessor and constituent corporations, and shall mean a railroad company which is not in receivership, bankruptcy, or reorganization, and which, or the corporation or corporations to which it is the successor shall, for the five fiscal years next preceding an investment pursuant to this section, (a) have owned and operated at least five hundred miles of standard gauge railroad line within the United States, exclusive of sidings, or (b) shall have had annual railway operating revenues of not less than ten million dollars;

(2) "eligible railroad company" shall mean a railroad company

(a) which, for the latest three fiscal years preceding an investment pursuant to this section for which the necessary statistical data is available in respect to such railroad company and in respect to all Class I railroads in the United States, shall have had an average annual balance of income available for the payment of fixed charges in such an amount that, when divided by an amount equal to its fixed charges for the last fiscal year of the said three year period, the quotient shall at least equal the quotient obtained by dividing the average annual balance of income available for the payment of fixed charges of all Class I railroads in the United States for the same three year period, by an amount equal to the fixed charges of all such Class I railroads for the last fiscal year of the said three year period; and

(b) whose average annual balance of income available for the payment of fixed charges during the said three year period, exceeds its fixed charges for the last fiscal year of the said three year period by an amount such that, when it is divided by its average annual railway operating revenues for the same three year period, the quotient shall at least equal the quotient obtained by dividing the excess of the average annual balance of income available for the payment of fixed charges of all Class I railroads of the United States for the same three year period, over the fixed charges of all such Class I railroads in the United States for the last fiscal year of such three year period, by the average annual railway operating revenues of all such Class I railroads during the same three year period; and

(c) whose average annual balance of income available for the payment of fixed charges during the same three year period shall not be less than one and one-quarter times its fixed charges for the last fiscal year of such three year period;

(3) "balance of income available for the payment of fixed charges" , "fixed charges" , and "railway operating revenues" shall have the same meaning, except as in this section otherwise provided, as in the accounting reports filed or published by the railroad company pursuant to regulations for common carriers by rail subject to the provisions of the Interstate Commerce Act; and

(4) "balance of income available for the payment of fixed charges" shall be computed before deduction of federal income or excess profits taxes; and, in computing "fixed charges" or "annual requirement for fixed charges" of the railroad company in whose bonds an investment is being made, there shall be excluded interest and amortization charges in respect to debt called for redemption, or which will otherwise mature, within six months from the time of such investment, and for the payment of which funds have been or are being contemporaneously set aside in trust.

B. Subject to the limitations prescribed by section 179.1, a savings bank may invest in

(1) bonds issued, guaranteed, assumed or otherwise agreed to be paid by an eligible railroad company, and which are secured (a) by a first mortgage upon not less than three-fourths of the rail mileage subject to the lien of the mortgage, or (b) by a refunding mortgage under which bonds may be issued for the retirement or refunding of all debts secured by prior lien mortgages on all or any part of the property subject to the lien of the refunding mortgage; or (c) by a mortgage prior in lien to such a refunding mortgage;

(2) bonds secured by a mortgage upon property leased to and operated by an eligible railroad company which has guaranteed, assumed, or otherwise agreed to pay (a) interest upon such bonds, and (b) a sum sufficient to pay dividends of not less than four per centum per annum during the unexpired term of the lease upon the capital stock of the lessor company outstanding at the time of the investment;

(3) bonds secured by a mortgage upon property leased to and operated by a railroad company, not an eligible railroad company, which

(a) has guaranteed or assumed or otherwise agreed to pay (1) the principal and interest of such bonds, and (2) a sum sufficient to pay dividends of not less than four per centum per annum during the unexpired term of the lease upon the capital stock of the lessor company outstanding at the time of the investments; and

(b) for at least four of the five fiscal years preceding the investment for which the necessary statistical data is available, and in the last of such fiscal years, or for at least four of five consecutive twelve-month periods ending within six months next preceding the investment, and in the last of such twelve-month periods, has had (i) a balance of income available for the payment of fixed charges not less than one and one-half times the annual requirement for fixed charges at the time of such investment, and (ii) a balance of income available for the payment of fixed charges as aforesaid, which exceeds the annual requirement for fixed charges at the time of such investment by an amount not less than seven and one-half per centum of the railway operating revenues for the same years or periods;

(4) bonds secured by a mortgage upon leased property which is prior in lien to a refunding mortgage thereon under which bonds may be issued for the retirement or refunding of all debts secured by prior lien mortgages on all or any part of the property covered by the refunding mortgage, provided the bonds secured by such refunding mortgage meet the requirements specified in paragraph (2) or (3) of subsection B of this section;

(5) bonds secured by mortgage upon a railroad terminal, depot, tunnel or bridge used by or leased to and operated by one or more railroad companies which has or have guaranteed, assumed or otherwise agreed to pay the principal and interest of such bonds, and at least one of which shall be an eligible railroad company; or at least two of which shall each meet the requirements specified in subparagraph (b) of paragraph (3) of subsection B of this section; and

(6) bonds of any railway terminal or dock company of this State secured by first mortgage on terminal or dock property (a) which fronts on the Hudson river or New York bay, (b) which is assessed for the purpose of taxation at a value in excess of the aggregate unpaid principal amount of all outstanding bonds secured by a mortgage lien thereon, and (c) which is used as a dock or terminal railroad by a railroad company or its successor operating in this State upon the effective date of this act; provided, that no part of the principal or interest of such bonds is in default at the time of the investment.

L.1948, c. 67, p. 307, s. 177.