835.51B861/137: Telegram

The Ambassador in Argentina ( Weddell ) to the Secretary of State

220. Department’s 129, September 25, 2 p.m.26 According to a source believed to be reliable, Argentine State Railways has offered Province of Buenos Aires 85,000,000 pesos for the Meridiano Quinto Railway which it wishes to own together with Central Cordoba Railway to link up these two systems with the State Railway system. [Page 292] Deal not closed as the Province of Buenos Aires is tentatively asking 100,000,000 pesos.

From the State Railway’s viewpoint, the purchase of either railway depends on the purchase of the other. [?] not believed to be favorable to the consummation of these two purchases and their approval by Argentine Congress which is necessary before any transfer of title could be made. Congress adjourns next week.

Regarding second question, according to the published records a mortgage on the Meridiano Quinto Railway was given as security for the 7½ dollar bonds of 1947 of the Province of Buenos Aires. It is assumed that this mortgage was duly registered and consequently the property could not be transferred from the Province to the National Government without the assumption of the mortgage, and therefore, the assumption of liability for the 7½% bonds.

Question regarding “any balance” is not clear. If what is meant is what balance would be left from the 85,000,000 pesos paid to the Province were the sale of the railway to the Argentine State Railways consummated, it is likely that the deal would involve substitution of national bonds instead of bonds of the Province of Buenos Aires. Such is believed to be the plan with respect to the suggested sale of the Central Cordoba Railway. The Meridiano Quinto Railway has shown an operating deficit of 178,000 pesos in 1934; 180,000 pesos in 1933; 547,000 pesos in 1932; and will probably show deficit in 1935.

Regarding last question, Embassy strictly confidentially informed that as far as the Provincial Minister of Finance of Buenos Aires Province is concerned, that offer was made and still holds good, although Minister understood it was never transmitted to the bondholders representative in New York by the Province’s financial representative negotiating there.

Despatch by air mail pouch today.

Weddell
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