Participating Bond

One which, while secured by a mortgage on a specific property, provides that the holder shall share in the profits accruing to the issuing corporation through ownership of the shares in other corporations, and which may or may not be additionally secured by the deposit of such securities. A good illustration is that of the Oregon Short Line 4% Participating Gold Bonds, which were issued in 1902. These were a direct obligation of the Oregon Short Line Railroad Company, but were additionally secured by the deposit of the stock of the Northern Securities Co., par for par, to the amount of the bonds issued. The bonds themselves were to receive 4% per annum from August 1, 1902, until February 1, 1904, on which date, and on the first day of February of each subsequent year, they were to receive, in addition to the regular payment of 4% per annum, an amount equal to any dividends and interest in excess of 4%, upon the amount of outstanding bonds, that had been paid in cash during the preceding year upon the collateral deposited with the trustee as security against these bonds. This issue was called for payment some time since."