Word: penphil
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...David C. Bevan, Penn Central's deposed chief financial officer, and Charles J. Hodge, a former partner in the Manhattan investment banking house of Glore. Forgan (now merged to become F.I. duPont, Glore, Forgan & Co.), who was the railroad's chief investment adviser. Their instrument was Penphil, a private investment company formed by Bevan. Hodge and 14 cronies in 1962, which they hoped to build into a large conglomerate holding company. The Patman report charged that Penphil prospered by buying the stock of companies in which the railroad also invested. As the Penn Central poured millions into these...
Wielding Clout. The gravy train took many routes, according to the committee report. For example, in 1963 Penphil paid 165,000 for 10,000 shares of Great Southwest Corp., a Texas-based land developer in which Penn Central was also investing. After the railroad gained control of the company, Penphil sold its stock to Penn Central for $377,500, realizing a profit of $212,500 in less than two years.* Beginning in 1966, Penphil bought 21,380 shares of First Bank & Trust Co. of Boca Raton, Fla., for $332,924. A real estate subsidiary of the Penn Central, Arvida Corp...
...Penphil's growth and continued existence, said the congressional report, was credit an "an unusually favorable basis" provided by the Chemical Bank. In deference to the clout Bevan and Hodge wielded at Penn Central, a major customer of Chemical, the bank loaned Penphil more than $1.8 million over seven years. Until last June, the investment group paid the prime interest rate, which is generally reserved for the most credit-worthy blue-chip companies. Nor was Penphil required to leave a compensating balance-usually 20% of the loan- practice that is normal for almost all corporate borrowers. Charged the report...