Pricing Supplement No Euro H012 Dated June 24, 1998 Rule 424(b)(2)
(To Prospectus dated December 1, 1997 and File No. 333-38931
Prospectus Supplement dated December 5, 1997)
This Pricing Supplement consists of 9 page(s)
SALOMON SMITH BARNEY HOLDINGS INC.
Medium-Term Notes, Series H
(Bearer Notes)
Due More Than Nine Months from Date of Issue
Principal Amount or Face Amount: 14,000,000,000 Korean Won("KRW")
Issue Price: 100.00%
Proceeds to Company on original issuance: 100%
Commission or Discount on original issuance: 0.00
Salomon Brothers International Limited's capacity on original issuance:
|X| As agent | | As principal
If as principal
| | The Bearer Notes are being offered at varying prices related
to prevailing market prices at the time of resale.
| | The Bearer Notes are being offered at a fixed initial public
offering price of % of Principal Amount or Face Amount.
Original Issue Date: June 25,1998
Stated Maturity: December 29, 1999
Specified Currency: KRW
(If other than U.S. Dollars)
Authorized Denominations: 5,000,000 KRW
(If other than as set forth in the Prospectus Supplement)
Interest Payment Dates: December 29,1999.
Accrue to Pay: | | Yes |X| No
Indexed Principal Note: |X| Yes (See Attached) | | No
Type of Interest on Note: | | Fixed Rate | | Floating Rate |X| Indexed Rate
(See Attached)
Interest Rate (Fixed Rate Notes): N.A.
Initial Interest Rate (Floating Rate Notes): N.A.
Base Rate: | | CD Rate | | Commercial Paper Rate | | Federal Funds Rate
| | LIBOR Telerate | | LIBOR Reuters | | Treasury Rate
| | Treasury Rate Constant Maturity | | Other (See Attached)
Calculation Agent (If other than Citibank): | | Salomon Brothers
|X| Other (See Attached)
Computation of Interest: | | 30 over 360 | | Actual over Actual
| | Actual over 360 |X| Other (See Attached)
(If other than as set forth in the Prospectus Supplement)
Interest Reset Dates: N.A.
Rate Determination Dates: See attached
(If other than as set forth in the Prospectus Supplement)
Index Maturity: N.A.
Spread (+/-): N.A.
Spread Multiplier: N.A.
Change in Spread, Spread Multiplier or Fixed Interest Rate prior to
Stated Maturity: | | Yes (See Attached) |X| No
Maximum Interest Rate: N.A.
Minimimum Interest Rate: N.A.
Amortizing Note: | | Yes (See Attached) |X| No
Optional Redemption: | | Yes |X| No
Optional Redemption Dates:
Redemption Prices:
Redemption: | | In whole only and not in part | | May be in whole or in part
Optional Repayment: | | Yes |X| No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: | | Yes |X| No
Total Amount of OID:
Yield to Maturity:
Listed on Luxembourg Stock Exchange: |X| Yes | | No
Common Code: 8830169
ISIN: XS0088301691
Cusip: N.A.
Pricing Supplement No. Euro H 012 dated June 24, 1998
(to Prospectus Supplement dated December 5, 1997
to Prospectus dated December 1, 1997)
DESCRIPTION OF THE NOTES
The description in this Pricing Supplement of the
particular terms of the Currency Indexed Bearer Notes offered
hereby (the "Notes") supplements, and to the extent inconsistent
therewith replaces, the descriptions of the general terms and
provisions of the Bearer Notes set forth in the accompanying
Prospectus and Prospectus Supplement, to which descriptions
reference is hereby made. The Notes offered hereby are Indexed
Rate Notes and Indexed Principal Notes, each as described under
"Description of Bearer Notes" in the accompanying Prospectus
Supplement, to which description reference is hereby made.
RISK FACTORS
Indexed Notes; Korean Exchange Rate Risk
The Notes are Indexed Notes. Although the Notes are
nominally denominated in Korean Won, all payments in respect of
interest or principal on the Notes will be made in U.S. dollars.
As described more fully below under "Indexed Principal" and
"Indexed Interest", both the amount in respect of principal with
respect to a Note that a Holder will receive at Stated Maturity
and the amount of interest payable with respect to a Note at
Stated Maturity will each be determined by reference to the
exchange rate between the U.S. Dollar and the Korean Won on the
second Business Day prior to Stated Maturity.
As described more fully below under "Indexed Principal", if
the applicable exchange rate at the time of Stated Maturity is
greater than 1390 Korean Won per 1 U.S. Dollar, the amount in
respect of principal with respect to a Note that a Holder will
receive at Stated Maturity will be less than the U.S. dollar
equivalent of the Face Amount of such Note, based on the
reference rate of 1390 Korean Won per 1 U.S. Dollar set at the
time of pricing of the Notes. HOLDERS OF THE NOTES SHOULD BE
PREPARED TO RECEIVE LESS THAN THE FACE AMOUNT OF A NOTE IN
RESPECT OF PRINCIPAL ON ANY SUCH NOTE.
As described more fully below under "Indexed Interest", if
the applicable exchange rate with respect to Stated Maturity is
greater than 1390 Korean Won per 1 U.S. Dollar, the rate of
interest payable in respect of the Notes will be less than the
nominal interest rate of 23.0% per annum. HOLDERS OF THE NOTES
SHOULD BE PREPARED TO EARN LESS THAN THE NOMINAL INTEREST RATE OF
23.0% PER ANNUM ON THEIR PRINCIPAL.
Recent Developments Regarding the Republic of Korea;
Depreciation of the Won
Recent developments in the Republic of Korea (the
"Republic") involve a financial crisis that has affected all
aspects of the Republic's economy. Elements of the crisis include
financial difficulties of Korean companies, including the
conglomerates (known as "chaebols") that dominate the economy,
and deteriorating financial condition and liquidity of Korean
banks and
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other financial institutions. The seriousness of these
developments has been exacerbated by excessive prior investment
by Korean companies in certain sectors of the economy that have
not produced adequate returns and by large amounts of
indebtedness (including indebtedness denominated in foreign
currencies) and high leverage of Korean companies, as well as
banks and other financial institutions. A significant number of
failures, closings and reorganizations of companies and banks and
other financial institutions have occurred. These recent
developments were accompanied by others that contributed to the
current situation, including a substantial decline in the value
of the Korean Won, substantial increases in interest rates,
decreases in the willingness of foreign banks to extend credits
to Korean borrowers, declines in liquidity in the economy,
volatility in stock prices, declines in the Republic's foreign
currency reserves, downgrading of credit ratings of the Republic
and Korean financial institutions and companies to below
investment grade and an increasing unemployment rate. The impact
of these developments was increased by the economic difficulties
in certain Asian countries (including Japan, Indonesia, Thailand
and Malaysia, beginning in 1997 and continuing into 1998.
In addition to the developements described above, other
developments that may potentially occur in the Republic include
large-scale layoffs which may lead to social and labor unrest and
increase substantially the government's expenditures for
unemployment compensations and other costs for social programs,
increased reliance on exports to service foreign currency debts
which may lead to friction with the Republic's trading partners,
future economic deterioration in neighboring countries, including
Japan, China and countries in Southeast Asia and significant
depreciation in the currency of such countries in the future.
As a result of adverse economic conditions and reduced
liquidity, the value of the Korean Won in relation to the U.S.
dollar and other major foreign currencies declined substantially
in 1997. In response to increasing market pressure, the
Government widened the daily exchange rate fluctuation band and,
beginning on December 16, 1997, allowed the Korean Won to float
freely. The market exchange rate as of June 22, 1998, as
announced by the Korea Financial Telecommunications & Clearings
Institute (the "KFTCI"), was KRW 1,400.00 to US$1.00 compared to
the market exchange rate of KRW 914.80 to US$1.00 on September
30, 1997. This represented a depreciation in the value of the
Korean Won relative to the U.S. dollar of 34.7%.
DEFINITIONS
"Business Day" means any day, other than a Saturday or a
Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in any
of (i) New York, New York, (ii) London, England, and (iii) Seoul,
Republic of Korea.
If any date specified herein for the making of any payment,
calculation, determination or other action with respect to the
Notes would be a day that is not a Business Day, such action
shall be taken on the next succeeding Business Day, provided,
however, that if such Business Day is in the next succeeding
calendar month, such action shall be taken on the immediately
preceding Business Day.
The Calculation Agent will be Salomon Brothers Holding
Company Inc., which is a wholly-owned subsidiary of the Company.
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PAYMENT CURRENCY
Although the Notes are nominally denominated in Korean Won,
all payments in respect of interest or principal on the Notes
will be made in U.S. dollars.
INDEXED PRINCIPAL
The amount in U.S. Dollars payable in respect of principal
on a Note at Stated Maturity (the "Indexed Principal Amount") is
to be determined by the Calculation Agent in accordance with the
formula set out below:
IPA = FA DIVIDED BY FX1; where:
"IPA" means the Indexed Principal Amount payable at
Stated Maturity of the Note, rounded to the nearest cent.
"FA" means the Face Amount of the Note (as stated on
the cover of this Pricing Supplement).
"FX1" means the KRW/USD Spot Rate determined as of the
second Business Day prior to Stated Maturity, calculated to
five decimal places.
INDEXED INTEREST
The amount of interest payable in U.S. dollars on a Note at
Stated Maturity (the "Indexed Interest Amount") is to be
determined by the Calculation Agent in accordance with the
formula set out below:
IIA = 0.23 (FA DIVIDED BY FX2); where:
"IIA" means the Indexed Interest Amount payable on the
Note on the applicable Interest Payment Date, calculated on
the basis of Actual/365 and rounded to the nearest cent.
"FA" means the Face Amount of the Note (as stated on
the cover of this Pricing Supplement).
"FX2" means means the KRW/USD Spot Rate determined as
of the second Business Day prior to the relevant Interest
Payment Date, calculated to five decimal places.
KRW/USD SPOT RATE
The "KRW/USD Spot Rate" will be determined by the
Calculation Agent as follows:
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On the second Business Day prior to Stated Maturity
(the "Rate Determination Date"), the Calculation Agent will
determine the current offered rate for the exchange of
Korean Won into U.S. Dollars (delivery of Korean Won for
receipt of U.S. Dollars) by requesting quotations from each
of the KRW Reference Banks (as defined below) for the
purchase of KRW 18,869,698,630 on such Rate Determination
Date. If at least two such quotations are provided, the
"KRW/USD Spot Rate" for the relevant Rate Determination
Date will be the arithmetic mean of all such quotations
(rounded to the nearest whole number). If fewer than two
such quotations are provided with respect to any Rate
Determination Date, the "KRW/USD Spot Rate" for such Rate
Determination Date will be determined by the Calculation
Agent in its sole discretion on the basis of current market
conditions.
"KRW Reference Banks" means the principal offices in Seoul,
Republic of Korea of each of the following: (i) Citibank,
(ii) Chase Manhattan Bank, (iii) Hong Kong and Shanghai
Banking Corporation, provided, however, that if in the
commercially reasonable judgment of the Calculation Agent,
it becomes necessary to replace any of such named banks
with respect to any calculation of the KRW/USD Spot Rate,
the Calculation Agent may replace any such bank with any
other major bank in the Seoul interbank market.
The following table sets forth, for the hypothetical
KRW/USD Spot Rates indicated, (i) the rate of interest that would
be payable on the Face Amount of the Notes at Stated Maturity and
(ii) the amount of principal and interest that would be payable
at Stated Maturity for KRW 1.39 million Face Amount of the Notes
(the equivalent of $1,000 Face Amount of the Notes, based on the
reference rate of 1390 Korean Won per 1 U.S. Dollar set at the
time of pricing of the Notes). The information presented below is
furnished solely for purposes of illustration, and no
representation is made that any actual KRW/USD Spot Rate will be
equal to, or less than, or greater than, any of the hypothetical
KRW/USD Spot Rates indicated.
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<PAGE>
Interest Interest Payable
Rate for rele- per KRW 1.39
vant Interest million Face Principle Pay-
Period (per Amount at Stated able per KRW
Hypo- annum, calcu- Maturity (calcu- 1.39 million
thetical lated on actual/ lated on actual/ Face Amount at
KRW/USD 365 basis, and 365 basis and Stated Maturity
Spot rounded to two rounded to the (rounded to the
Rate decimal places) nearest cent) nearest cent)
- -----------------------------------------------------------------
1200.00 26.64% $402.91 $1158.33
1250.00 25.58% 386.79 1112.00
1300.00 24.59% 371.92 1069.23
1350.00 23.68% 358.14 1029.63
1390.00 23.00% 347.84 1000.00
1400.00 22.84% 345.35 992.86
1450.00 22.05% 333.44 958.62
1500.00 21.31% 322.33 926.67
1550.00 20.63% 311.93 896.77
1600.00 19.98% 302.18 868.75
1650.00 19.38% 293.03 842.42
1700.00 18.81% 284.41 817.65
1750.00 18.27% 276.28 794.29
1800.00 17.76% 268.61 772.22
1850.00 17.28% 261.35 751.35
1900.00 16.83% 254.47 731.58
The table above shows that both the interest and the
principal return on the Notes will vary as the KRW/USD Spot Rate
varies. In particular, the return on the Notes will decline as
the Korean Won depreciates in value against the U.S. dollar and
will increase as the Korean Won appreciates in value against the
U.S. dollar.
If the Korean Won should depreciate in value against the
U.S. dollar such that the KRW/USD Spot Rate with respect to
Stated Maturity is greater than 1390, the amount of principal
payable to a Holder of the Notes upon Stated Maturity will be
less than the U.S. dollar equivalent of the Face Amount of the
Notes based on the reference rate of 1390 Korean Won per 1 U.S.
Dollar set at the time of pricing of the Notes. In addition, if
the KRW/USD Spot Rate with respect with Stated Maturity, is
greater than 1390, the rate of interest payable with respect to
the Note will be less than the nominal interest rate of 23.00%
per annum.
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PAYMENT DATE
The Stated Maturity of the Notes is December 29, 1999.
EVENTS OF DEFAULT AND ACCELERATION
In case an Event of Default (as described in the
accompanying Prospectus) with respect to the Notes shall have
occurred and be continuing, the amount payable to a Holder of a
Note upon any acceleration permitted by the Notes will be equal
to the Indexed Principal Amount in respect of such Note,
calculated in the manner set forth above as though the date of
early repayment was the Stated Maturity of the Notes. If a case
under the United States bankruptcy code is commenced in respect
of the Company, the claim of a Holder of a Note may be limited,
under Title 11 of the United States Code, to the Face Amount of
such Note.
In case of default in payment at the maturity date of the
Notes (whether at the date of Stated Maturity or upon
acceleration), from and after the maturity date, the Notes shall
bear interest, payable upon demand of the Trustee, at the rate of
6.00% per annum (to the extent that payment of such interest
shall be legally enforceable) on the unpaid amount due and
payable on such date in accordance with the terms of the Notes to
the date payment of such amount is made or duly provided for.
DESCRIPTION OF KOREAN WON
The Won is the national currency of the Republic of Korea.
The Market Average Exchange Rate between the Korean Won and the
U.S. Dollar on June 22, 1998, as announced by KFTCI, was KRW
1400.00 = USD1.00.
The exchange rate between the Korean Won and the U.S.
Dollar is at any moment a result of the supply of and the demand
for the two currencies, and changes in the rate result over time
from the interaction of many factors directly or indirectly
affecting economic conditions in the Republic of Korea and in the
United States, including economic and political developments in
other countries. Of particular importance are rates of inflation,
interest rate levels, the balance of payments (both on capital
and current account) and the extent of governmental surpluses or
deficits in the Republic of Korea and in the United States, all
of which are in turn sensitive to the monetary, fiscal and trade
policies pursued by the governments of the Republic of Korea, the
United States and other countries important to international
trade and finance. In recent years, rates of exchange between the
U.S. Dollar and the Korean Won have been highly volatile.
As a result of adverse economic conditions and reduced
liquidity, the value of the Korean Won in relation to the U.S.
dollar and other major foreign currencies declined substantially
in 1997. In response to increasing market pressure, the
Government widened the daily exchange rate fluctuation band and,
beginning on December 16, 1997, allowed the Korean Won to float
freely. The market exchange rate as of June 22, 1998, as
announced by KFTCI, was KRW 1400.00 to US$1.00 compared to the
market exchange rate of KRW 914.80 to US$1.00 on September 30,
1997. This represented a depreciation in the value of the Korean
Won relative to the U.S. dollar of 34.7%.
6
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Historical Data on the Korean Won/U.S. Dollar Exchange Rate
The following table sets forth for the periods and dates
indicated certain information concerning the base rate under the
market average exchange rate system, announced by the KFTCI in
Seoul (the "Market Average Exchange Rate"), between the Korean
Won and the U.S. Dollar. No representation is made that the
Korean Won or U.S. Dollar amounts referred to herein could have
been or could be converted into Korean Won or U.S. Dollars, as
the case may be, at any particular rate or at all. Such
historical rates of exchange between the Korean Won and the U.S.
Dollar should not be taken as an indication of future
performance.
Exchange Rate
(Number of KRW equal to One USD)
At End Average Highest Lowest
of Period Rate (1) Level Level
--------- -------- ------- ------
1994 ............. 788.70 802.00 813.40 788.40
1995 ............. 774.70 769.10 794.80 774.70
1996 ............. 844.20 806.90 844.30 774.70
1997 ............. 1415.20 961.10 1950.00 842.70
1998 (through
June 22) ......... 1400.00 1455.10 1805.30 1335.20
- --------------
(1) The average of the Market Average Exchange Rates on the last
day of each month during the period.
The Market Average Exchange Rate between the Korean Won and
the U.S. Dollar on June 22, 1998, as announced by KFTCI, was KRW
1400.00 = USD1.00.
7
