After Acquired Property Clause
this provision nominally appears to be a severe restriction upon additional
borrowing power of mortgages, it may be bypassed by various methods:
Redemption (through exercise of call provision if any) by proceeds
of new refunding issue without such clause.
2. Exchange offer sufficiently attractive of new bonds without
3. Modification offer, to induce bondholders' consent to removal
of the clause.
4. Use of purchase money mortgage in acquisition of new assets.
5. Financing future acquisitions through subsidiaries.
6. Consolidation (new consolidated company not being
subject to such clause).
such as lease or conditional bill of sale, utilized in railroad equipment
trust financing, that avoid taking title to new assets until the new financing
has been fully paid for.