The Executive Committee of the Foreign Bondholders Protective Council, Inc., to the Ambassador in Brazil (Gibson)
[New York,] January 24, 1934—[9:17 p.m.]
6. For Keuben Clark: Your cable January 23rd. Extremely gratified results you have achieved which we feel constitute material improvement from bondholders’ viewpoint.
- First: Paragraphs 5 and 6. In view of oversight on our part in not consulting interests responsible for Coffee Realization Loan here regarding our proposal to reduce sinking fund and view reasonableness of representations they have made to us, we are most anxious to revert to original proposal under Plan regarding amortization this loan even if this required some reduction of £1,000,000 fund. View retention £500,000 for special amortization refunding loans sacrifice now proposed for Coffee Loan seems out of proportion that provided for refunding loan and retention original proposal for Coffee Loan [Page 615]would help equalize this situation. If this impossible suggest at least that sinking fund for Coffee Loan be left in alternative form, that is, minimum sinking fund of 5% of Loan as now proposed or maximum sinking fund as originally proposed of half regular sinking fund to the extent that exchange available for the additional amount.
- Second: Sub-paragraph 7 (d). What is meaning of “regularly served”? Does this mean further foreign exchange would be applicable only to bonds on which full service paid, namely only funding bonds? Believe latitude permitted under original paragraph 6 of Plan preferable but if this not possible suggest that at least further exchange be applicable Grade II as well as Grade I.
- Third: For Government to obtain full benefit of Plan, desirable that publication be made here promptly after decree signed rather than permit Plan to leak out through partial press reports from Rio or London. Will publicity be held up until arrival Boucas with whom we will gladly cooperate? Are we free advise interested banking groups here of results achieved?