The CIT Group Holdings, Inc.
Debt Securities
----------
The CIT Group Holdings, Inc. (the "Corporation") intends to issue from time
to time, in one or more series, debt securities (the "Debt Securities"), which
may be either senior ("Senior Securities") or senior subordinated (the "Senior
Subordinated Securities") in priority of payment, with an aggregate initial
offering price not to exceed $5,461,000,000 (or (i) if the principal of the Debt
Securities is denominated in a foreign currency, the equivalent thereof at the
time of offering, or (ii) if the Debt Securities are issued at an original issue
discount, such greater principal amount as shall result in an aggregate initial
offering price of $5,461,000,000). Each Debt Security will be a direct,
unsecured obligation of the Corporation and will be offered to the public on
terms determined by market conditions at the time of sale. The Corporation may
sell its Debt Securities (i) directly to purchasers, (ii) through agents
designated from time to time, (iii) to dealers, or (iv) through an underwriter
or a group of underwriters. The Debt Securities may be issued in one or more
series with the same or various terms. The specific designation, aggregate
principal amount, currency of payment, authorized denominations, purchase price,
maturity, rate and time of payment of any interest, any redemption terms, the
designation of each Trustee acting under the applicable Indenture, any listing
on a securities exchange, or other specific terms of the Debt Securities in
respect of which this Prospectus is being delivered (the "Offered Debt
Securities") will be set forth in the accompanying supplement to the Prospectus
(the "Prospectus Supplement"), together with the terms of offering of the
Offered Debt Securities. The Corporation reserves the sole right to accept and
either in its sole discretion or together with its agents from time to time to
reject, in whole or in part, any proposed purchase of Offered Debt Securities.
If any agents of the Corporation or any dealers or underwriters are
involved in the sale of the Offered Debt Securities in respect of which this
Prospectus is being delivered, the names of such agents, dealers, or
underwriters and any applicable agent's commission, dealer's purchase price, or
underwriter's discount will be set forth in or may be calculated from the
Prospectus Supplement. The net proceeds to the Corporation from such sale will
be (i) the purchase price of such Offered Debt Securities less such commission
in the case of an agent, (ii) the purchase price of such Offered Debt Securities
in the case of a dealer, or (iii) the public offering price less such discount
in the case of an underwriter and less, in each case, other applicable issuance
expenses. See "Plan of Distribution" for possible indemnification arrangements
with agents, dealers, and underwriters.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 11, 1994.
<PAGE>
No salesman or any other person has been authorized by the Corporation or
any dealer, agent, or underwriter to give any information or to make any
representation, other than as contained in this Prospectus, the Prospectus
Supplement or the documents incorporated by reference, in connection with the
offer contained in this Prospectus and the Prospectus Supplement and, if given
or made, such information or representation must not be relied upon. This
Prospectus and the Prospectus Supplement do not constitute any offer by any
dealer, agent or underwriter to sell, or a solicitation of an offer to buy,
securities in any state to any person to whom it is unlawful for such dealer,
agent or underwriter to make such offer or solicitation in such state. Neither
the delivery of this Prospectus and the Prospectus Supplement nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Corporation and its subsidiaries since the
date of the information contained herein.
----------
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the offices of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission, at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Certain of the Corporation's securities are listed on the New York Stock
Exchange and reports and other information concerning the Corporation can also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Corporation are
incorporated by reference in this Prospectus:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1993;
(b) The Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994; and
(c) The Corporation's Current Reports on Form 8-K dated January 14, 1994,
February 28, 1994 and April 12, 1994.
All documents filed by the Corporation pursuant to Sections 13(a) and (c),
14, or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Corporation will provide without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the foregoing
documents described above which have been or may be incorporated by reference in
this Prospectus other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such request should
be directed to:
Corporate Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(212) 536-1950
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<PAGE>
THE CORPORATION
The CIT Group Holdings, Inc. (the "Corporation"), a Delaware corporation,
is a successor to a company founded in St. Louis, Missouri on February 11, 1908.
It has its principal executive offices at 1211 Avenue of the Americas, New York,
New York 10036, and its telephone number is (212) 536-1950. The Corporation,
operating directly or through its subsidiaries primarily in the United States,
engages in financial services activities through a nationwide distribution
network. The Corporation provides financing primarily on a secured basis to
commercial borrowers, ranging from middle-market to larger companies. While
these secured lending activities reduce the risk of losses from extending
credit, the Corporation's results of operations can also be affected by other
factors, including general economic conditions, competitive conditions, the
level and volatility of interest rates, concentrations of credit risk, and
government regulation and supervision. The Corporation does not finance the
development or construction of commercial real estate. The Corporation has eight
strategic business units, seven of which offer corporate financing, dealer and
manufacturer financing, and factoring products and services to clients, and an
eighth strategic business unit which commenced operations in the last quarter of
1992 offering consumer second mortgage financing and which is planning to offer
home equity lines of credit to consumers in early 1994.
Effective at year-end 1989, The Dai-Ichi Kangyo Bank, Limited ("DKB")
purchased sixty percent (60%) of the issued and outstanding shares of common
stock of the Corporation from Manufacturers Hanover Corporation ("MHC"). MHC
retained a forty percent (40%) common stock interest in the Corporation.
Effective March 29, 1990, MHC transferred its forty percent (40%) common stock
interest in the Corporation to MHC Holdings (Delaware) Inc., a wholly-owned
subsidiary of MHC ("MHC Holdings"). On December 31, 1991, MHC and Chemical
Banking Corporation merged in a stock-for-stock transaction. The merged
corporation is called Chemical Banking Corporation ("CBC"). CBC retains a forty
percent (40%) common stock interest in the Corporation through MHC Holdings.
In accordance with a stockholders agreement among DKB, CBC, as successor to
MHC, and the Corporation (the "Stockholders Agreement"), the Corporation amended
its Certificate of Incorporation and its By-Laws in conformity therewith.
Pursuant to the Stockholders Agreement, immediately after MHC sold the sixty
percent (60%) interest in the Corporation to DKB, the stockholders elected a new
Board of Directors comprised of the President and Chief Executive Officer and
the Vice Chairman of the Corporation, six nominees designated by DKB, and two
nominees designated by MHC. The Stockholders Agreement also contains provisions
for the management of the Corporation, majority voting by DKB on the
Corporation's Executive Committee, consent of MHC Holdings with respect to major
corporate and business changes, and restrictions with respect to the transfer of
the stock of the Corporation to third parties.
Corporate Finance Group
The Corporation's Corporate Finance Group is comprised of Business Credit,
Capital Equipment Financing and Credit Finance.
The CIT Group/Business Credit offers revolving and term loans secured by
accounts receivable, inventories and fixed assets to medium and larger-sized
companies. Such loans are used by clients primarily for acquisitions and
refinancings. It also offers specialty financing for companies in the paper,
printing and chemical industries and debtor-in-possession and workout financing
for turnaround situations. The CIT Group/Business Credit sells participation
interests in such loans to other lenders and will occasionally purchase
participation interests in such loans originated by other lenders. Business is
developed through direct calling efforts and through other sources originated by
individual new business development officers. The CIT Group/Business Credit is
headquartered in New York City, with sales offices in New York, Chicago, Dallas,
Los Angeles, and Atlanta.
The CIT Group/Capital Equipment Financing specializes in customized secured
financing and leasing of equipment in larger transactions, including single
investor leases and the debt and equity portions of leveraged leases for major
capital equipment such as aircraft, rail cars, maritime shipping, and containers
and chassis, for its own account and for syndications. Such business is
developed directly with large companies and through third parties. The CIT
Group/Capital Equipment Financing also provides secured financing and leasing
3
<PAGE>
products to middle-market and larger companies seeking medium and longer term
financings. Such transactions are developed through direct calling efforts and
financial intermediaries. Financing products include direct secured loans, sale
and leaseback arrangements, and project financings. Two business groups within
The CIT Group/Capital Equipment Financing augment its marketing efforts and
provide services relating to its areas of expertise. The first group, The CIT
Group/Capital Investments, acts as an agent, broker, and advisor in financing
and leasing transactions. The CIT Group/Capital Investments is a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc. The second group, The CIT Group/Asset Management, received approval in
December 1992 from the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") to provide asset management services to financial
institutions and certain non-financial institutions for equipment financing
transactions and portfolios. The CIT Group/Capital Equipment Financing is
headquartered in New York City, with sales offices in eight cities, including
New York, Chicago and Los Angeles.
The CIT Group/Credit Finance offers revolving and term loans to small and
medium-sized companies secured by accounts receivable, inventories, and fixed
assets. Such loans are used by clients for working capital and in refinancings,
acquisitions, and leveraged buyouts. The CIT Group/Credit Finance also offers
financing for reorganizations, restructurings, and Chapter 11 situations.
Business is developed through direct calling efforts and through other sources
developed by individual new business development officers. The CIT Group/Credit
Finance is headquartered in New York City, with sales offices in ten cities,
including New York, Chicago and Los Angeles.
Dealer and Manufacturer Financing Group
The Corporation's Dealer and Manufacturer Financing Group is comprised of
Industrial Financing, Sales Financing, and Consumer Finance.
The CIT Group/Industrial Financing offers secured equipment financing
products, including direct secured loans, leases, secured lines of credit, sale
and leaseback arrangements, vendor financing for manufacturers, wholesale and
retail financing for dealers/distributors, acquisition of chattel paper and
other installment receivables, and acquisition of portfolios originated by
others. It has a nationwide network of local offices and business aircraft,
intermediary and national accounts financing units. The CIT Group/Industrial
Financing is headquartered in Livingston, New Jersey, with sales offices in
twenty cities, including Berwyn, Pennsylvania, Tempe, Arizona, Atlanta, Georgia
and Irving, Texas, which also serve as regional offices.
The CIT Group/Sales Financing, working through dealers and manufacturers,
provides retail secured financing on a nationwide basis for the purchase of
recreational vehicles, recreational boats and manufactured housing. The CIT
Group/Sales Financing also purchases portfolios of these assets from banks,
savings and loans, investment banks and others and provides servicing for
portfolios owned by other financial institutions and securitization trusts. The
CIT Group/Sales Financing is headquartered in Livingston, New Jersey with an
asset service center in Oklahoma City, Oklahoma, and covers the United States
from sales offices in 13 cities (which are in the process of being consolidated
into five regional sales centers located in Atlanta, Boston, Kansas City,
Sacramento and Seattle).
In December 1992, The CIT Group/Consumer Finance, a newly formed strategic
business unit, began offering loans secured primarily by a first or second
mortgage on residential real estate. The CIT Group/Consumer Finance generates
business through direct marketing efforts and, to a lesser extent, through
brokers. It also acquires "home equity" portfolios originated by others. In
early 1994, The CIT Group/Consumer Finance plans to introduce home equity lines
of credit to consumers. This strategic business unit is headquartered in
Livingston, New Jersey with 35 sales offices serving 23 states, two of which
originate mortgage loans for resale to third parties in addition to originating
mortgage loans for the business unit's own portfolio. Administrative support is
provided by the Sales Financing asset service center located in Oklahoma City,
Oklahoma.
Factoring
The CIT Group/Commercial Services (formerly The CIT Group/Factoring) offers
a full range of factoring services providing for the purchase of accounts
receivable, including credit protection, bookkeeping, and collection activities.
Financing is also provided in the form of revolving and term loans, and letter
4
<PAGE>
of credit support. The CIT Group/Commercial Services is headquartered in New
York City, with sales offices in New York, Los Angeles, Charlotte, Atlanta and
Hong Kong. Bookkeeping and collection functions are located in a service center
in Danville, Virginia.
On February 28, 1994, the Corporation acquired Barclays Commercial
Corporation ("BCC"), a company of The Barclays Group. BCC had total assets of
approximately $700.0 million at December 31, 1993 and total factoring volume of
approximately $5.00 billion for the year then ended. The business and acquired
assets of BCC were transferred to The CIT Group/BCC, Inc., a wholly-owned
subsidiary of The CIT Group/Commercial Services, Inc., a wholly-owned subsidiary
of the Corporation. BCC is engaged in the same lines of business as The CIT
Group/Commercial Services, with BCC adding a significant geographical presence
in the Southeastern United States. BCC is headquartered in Charlotte, with five
sales offices in Charlotte, New York, Dallas, Louisville and Los Angeles.
Equity Investments
The CIT Group/Equity Investments provides capital to medium-sized companies
and emerging growth companies through the purchase of private issuances of
common stock, preferred stock, and subordinated debt. Capital is used by clients
to make acquisitions and to finance growth. Business is developed through
referrals from the Corporation's other business units and from venture capital
and regional investment banking firms. In June 1992, The CIT Group/Venture
Capital, a wholly-owned subsidiary of The CIT Group/Equity Investments, received
approval from the U.S. Small Business Administration for a license as a small
business investment company. The CIT Group/Equity Investments is headquartered
in Livingston, New Jersey.
Multi-National Marketing
Supplementing the Corporation's marketing efforts, the Corporation's
Multi-National Marketing Group promotes the services of the Corporation's
various business units to the U.S. subsidiaries of foreign corporations in need
of asset-based financing. Business is developed through referrals from DKB and
through direct calling efforts. The Multi-National Marketing Group is located in
the Corporation's offices in New York City.
Regulation
Both DKB and CBC are bank holding companies within the meaning of the Bank
Holding Company Act of 1956 (the "Act"), and each is registered as such with the
Federal Reserve Board. As a result, the Corporation is subject to certain
provisions of the Act. In general, the Act limits the activities in which a bank
holding company and its subsidiaries may engage to those of banking or managing
or controlling banks or performing services for their subsidiaries and to
continuing activities which the Federal Reserve Board has determined to be "so
closely related to banking or managing or controlling banks as to be a proper
incident thereto." The Corporation's current principal business activities
constitute permissible activities for a subsidiary of a bank holding company.
The operations of the Corporation and its subsidiaries are subject, in
certain instances, to supervision and regulation by governmental authorities and
may be subject to various laws and judicial and administrative decisions
imposing various requirements and restrictions, including among other things,
regulating credit granting activities, establishing maximum interest rates and
finance charges, regulating customers' insurance coverages, requiring
disclosures to customers, governing secured transactions, and setting
collection, repossession, and claims handling procedures and other trade
practices. In most states the consumer sales finance and loan business and the
consumer second mortgage and home equity line of credit businesses are subject
to licensing or regulation. In some states the industrial finance business is
subject to similar licensing or regulation. The consumer second mortgage, home
equity line of credit, sales finance, and loan businesses, including those
conducted by the Corporation, are also subject to a number of Federal statutes,
including the Federal Consumer Credit Protection Act, which requires, among
other things, disclosure of the finance charge in terms of an annual percentage
rate, as well as the total dollar cost.
In the judgment of management, existing statutes and regulations have not
had a materially adverse effect on the business conducted by the Corporation and
its subsidiaries. However, it is not possible to forecast the nature of future
legislation, regulations, judicial decisions, orders, or interpretations, nor
their impact upon the future business, earnings, or otherwise, of the
Corporation and its subsidiaries.
5
<PAGE>
SUMMARY OF FINANCIAL INFORMATION
The following is a summary of certain financial information of the
Corporation and its subsidiaries. The data for the years ended December 31,
1993, 1992 and 1991 were obtained from the Corporation's audited consolidated
financial statements contained in the Corporation's 1993 Annual Report on Form
10-K. The data for the years ended December 31, 1990 and 1989 were obtained from
audited consolidated statements of the Corporation that are not incorporated by
reference in this Prospectus. This summary should be read in conjunction with
the financial information of the Corporation included in the reports referred to
under "Documents Incorporated By Reference."
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Interest and fees earned ........................... $ 1,181,914 $ 1,174,796 $ 1,278,617 $ 1,196,000 $ 1,135,147
Interest expense ................................... 508,006 552,017 709,373 711,645 694,280
----------- ----------- ----------- ----------- -----------
Net interest revenue ............................. 673,908 622,779 569,244 484,355 440,867
----------- ----------- ----------- ----------- -----------
Gains on asset sales ............................... 23,945 13,883 25,626 25,675 20,112
Salaries and employee benefits ..................... 152,139 137,914 127,060 113,612 110,856
Other operating expenses ........................... 130,043 123,721 119,273 101,615 90,188
Provision for restructuring costs .................. -- -- -- -- 10,600
----------- ----------- ----------- ----------- -----------
Operating expenses before provision for credit
losses ......................................... 282,182 261,635 246,333 215,227 211,644
----------- ----------- ----------- ----------- -----------
Provision for credit losses ........................ 104,874 103,175 97,052 98,099 50,457
----------- ----------- ----------- ----------- -----------
Total operating expenses ....................... 387,056 364,810 343,385 313,326 262,101
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes,
extraordinary item and cumulative
effect of a change in accounting
for income taxes ................................ 310,797 271,852 251,485 196,704 198,878
Provision for income taxes ......................... 128,489 105,311 100,032 76,995 72,722
----------- ----------- ----------- ----------- -----------
Income before extraordinary item and cumulative
effect of a change in accounting for income taxes 182,308 166,541 151,453 119,709 126,156
Extraordinary item--loss on early extinguishment of
debt, net of income tax benefit ................. -- (4,241) (1,325) (5,937) --
Cumulative effect of a change in accounting for
income taxes .................................... -- -- -- 20,350 --
----------- ----------- ----------- ----------- -----------
Net income ......................................... $ 182,308 $ 162,300 $ 150,128 $ 134,122 $ 126,156
=========== =========== =========== =========== ===========
</TABLE>
The following table sets forth the ratio of earnings to fixed charges for
each of the periods indicated.
<TABLE>
Ratios of Earnings to Fixed Charges
Year Ended December 31,
-------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ................. 1.60 1.49 1.35 1.27 1.28
</TABLE>
The ratios of earnings to fixed charges have been computed in accordance
with requirements of the Commission's Regulation S-K. Earnings consist of income
from continuing operations before income taxes; fixed charges consist of
interest on indebtedness and the portion of rentals considered representative of
an appropriate interest factor.
6
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will
provide additional working funds for the Corporation and its subsidiaries and
will be used initially to reduce short-term borrowings (presently represented by
commercial paper) incurred primarily for the purpose of originating and
purchasing receivables in the ordinary course of business. The amounts which the
Corporation itself may use in connection with its business and which the
Corporation may furnish to particular subsidiaries are not now determinable.
From time to time the Corporation may also use the proceeds to finance the bulk
purchase of receivables and/or the acquisition of other finance-related
businesses.
DESCRIPTION OF DEBT SECURITIES
General
The Debt Securities will constitute either Superior Indebtedness (as
defined below) or Senior Subordinated Indebtedness (as defined below) of the
Corporation. Senior Securities may be issued from time to time in one or more
separate, unlimited series under one or more separate indentures, each
substantially in the form of a global indenture (each such indenture and
indentures supplemental thereto are hereinafter referred to as a "Senior
Indenture", and collectively as the "Senior Indentures"), in each case between
the Corporation and a banking institution organized under the laws of the United
States or one of the states thereof (each such banking institution is
hereinafter referred to as a "Senior Trustee", and collectively as the "Senior
Trustees"). The Senior Subordinated Securities may be issued from time to time
as either (i) one or more separate, unlimited series of Debt Securities
constituting senior subordinated indebtedness under one or more separate
indentures, each substantially in the form of a global indenture (each such
indenture and indentures supplemental thereto are hereinafter referred to as a
"Senior Subordinated Indenture", and collectively as the "Senior Subordinated
Indentures"), in each case between the Corporation and a banking institution
organized under the laws of the United States or one of the states thereof (each
such banking institution is hereinafter referred to as a "Senior Subordinated
Trustee", and collectively as the "Senior Subordinated Trustees"), or (ii) one
or more separate, unlimited series of Debt Securities constituting senior
subordinated indebtedness under the Senior Subordinated Indentures which is
intended to qualify as "Tier II Capital" under the rules and regulations of the
Ministry of Finance of Japan and the risk-based capital guidelines of the
Federal Reserve Board, if such series have the limited rights of acceleration
described under "Description of Debt Securities--Senior Subordinated Securities"
and "Description of Debt Securities--Events of Default". The Senior Indentures
and the Senior Subordinated Indentures are sometimes herein referred to as the
"Indentures", and the Senior Trustees and the Senior Subordinated Trustees are
sometimes herein referred to as the "Trustees".
The statements under this heading are subject to the detailed provisions of
each Indenture. A form of global Senior Indenture and a form of global Senior
Subordinated Indenture are filed as exhibits to the Registration Statement of
which this Prospectus is a part. Wherever particular provisions of an Indenture
or terms defined therein are referred to, such provisions or definitions are
incorporated by reference as a part of the statements made and the statements
are qualified in their entirety by such reference.
The Debt Securities to be issued pursuant to this Prospectus, comprised of
the Senior Securities and the Senior Subordinated Securities, are limited to an
aggregate initial offering price of $5,461,000,000 (or (i) if the principal of
the Debt Securities is denominated in a foreign currency, the equivalent thereof
at the time of offering, or (ii) if the Debt Securities are issued at an
original issue discount, such greater principal amount as shall result in an
aggregate initial offering price of $5,461,000,000). The Senior Subordinated
Securities to be offered pursuant to this Prospectus are limited to an aggregate
initial offering price of $5,364,000,000 (or (a) if the principal of the Debt
Securities is denominated in a foreign currency, the equivalent thereof at the
time of the offering, or (b) if the Debt Securities are issued at an original
issue discount, such greater principal amount as shall result in an aggregate
initial offering price of $5,364,000,000). The Senior Indentures do not limit
the amount of Debt Securities or other unsecured Superior Indebtedness which may
be issued thereunder or limit the amount of subordinated debt, secured or
unsecured, which may be issued by the Corporation. Except as described herein
under "Description of Debt Securities--Certain Restrictive Provisions", the
Senior Subordinated Indentures do not limit the amount of Debt Securities or
other unsecured Senior Subordinated Indebtedness which may be issued thereunder
or limit the amount of Junior Subordinated Indebtedness, secured or unsecured,
which may be issued by the Corporation. Certain other agreements by which the
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<PAGE>
Corporation is bound relating to outstanding debt limit the amount of Senior
Subordinated Indebtedness the Corporation may issue. At March 31, 1994, under
the most restrictive of such provisions in any such agreement, the Corporation
could issue up to approximately $1.72 billion of Senior Subordinated
Indebtedness, of which approximately $300.0 million was issued and outstanding
as of March 31, 1994. The Debt Securities will be issued in fully registered
form and, with regard to each issue of Offered Debt Securities in respect of
which this Prospectus is being delivered, in the manner and in the denominations
set forth in the accompanying Prospectus Supplement.
The Debt Securities may be issued in one or more series of Senior
Securities and/or one or more separate series of Senior Subordinated Securities,
in each case with the same or various maturities at par or at a discount.
Offered Debt Securities bearing no interest or interest at a rate which at the
time of issuance is below market rates ("Original Issue Discount Securities")
will be sold at a discount (which may be substantial) below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (i) the designation, aggregate principal amount,
and authorized denominations of the Offered Debt Securities; (ii) the percentage
of their principal amount at which such Offered Debt Securities will be issued;
(iii) the date or dates on which the Offered Debt Securities will mature; (iv)
the rate or rates (which may be fixed or variable) per annum, if any, at which
the Offered Debt Securities will bear interest, or the method of determining
such rate or rates, or the original issue discount, if applicable; (v) the times
at which any such interest will be payable and the date from which any such
interest shall accrue; (vi) provisions for a sinking, purchase, or other
analogous fund, if any; (vii) any redemption terms; (viii) the designation of
the office or agency of the Corporation in the Borough of Manhattan, The City of
New York, where the Offered Debt Securities may be presented for payment and may
be transferred or exchanged by the registered holders thereof or by their
attorneys duly authorized in writing; (ix) if other than U.S. dollars, the
currency (including composite currencies) in which the principal of, premium, if
any, and/or interest on the Offered Debt Securities will be payable; (x) any
currency (including composite currencies) other than the stated currency of the
Offered Debt Securities in which the principal of, premium, if any, and/or
interest on the Offered Debt Securities may, at the election of the Corporation
or the holders, be payable, and the periods within which, and terms and
conditions upon which, such election may be made; (xi) if the amount of payments
of principal of, premium, if any, and/or interest on the Offered Debt Securities
may be determined with reference to an index, the manner in which such amounts
will be determined; (xii) whether the Offered Debt Securities are Senior
Securities or Senior Subordinated Securities, or include both; and (xiii) other
specific terms.
Principal, premium, if any, and interest, if any, less applicable
withholding taxes, if any, will be payable at the office or agency of the
Corporation maintained for such purpose in the Borough of Manhattan, The City of
New York, provided that payment of interest, if any, less applicable withholding
taxes, if any, may be made at the option of the Corporation by check mailed to
the address of the person entitled thereto as it appears on the register of the
Corporation. (Section 2.04.)
The Indentures provide that the Debt Securities will be transferable by the
registered holders thereof, or by their attorneys duly authorized in writing, at
the office or agency of the Corporation maintained for such purpose in such
cities as will be designated in the Prospectus Supplement, in the manner and
subject to the limitations provided in the Indentures, and upon surrender of the
Debt Securities. No service charge will be made for any registration of transfer
or exchange of the Debt Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge in connection
therewith. (Section 2.06.)
"Indebtedness", when used in the definition of the terms "Superior
Indebtedness", "Senior Subordinated Indebtedness", and "Junior Subordinated
Indebtedness", means all obligations which in accordance with generally accepted
accounting principles should be classified as liabilities upon a balance sheet
and in any event includes all debt and other similar monetary obligations,
whether direct or guaranteed.
"Superior Indebtedness" means all Indebtedness of the Corporation that is
not by its terms subordinate or junior to any other indebtedness of the
Corporation. As discussed below, the Senior Securities constitute Superior
Indebtedness.
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"Senior Subordinated Indebtedness" means all Indebtedness of the
Corporation that is subordinate only to Superior Indebtedness. As discussed
below, the Senior Subordinated Securities constitute Senior Subordinated
Indebtedness.
"Junior Subordinated Indebtedness" means all Indebtedness of the
Corporation that is subordinate to both Superior Indebtedness and Senior
Subordinated Indebtedness.
Senior Securities
The Senior Securities will be direct, unsecured obligations of the
Corporation, and will constitute Superior Indebtedness issued on a parity with
the other Superior Indebtedness of the Corporation. At March 31, 1994,
approximately $12.6 billion of outstanding Superior Indebtedness was reflected
in the Corporation's consolidated audited balance sheet. The Senior Securities
will be senior to all Senior Subordinated Indebtedness, including the Senior
Subordinated Securities, which at March 31, 1994 totaled $300.0 million
outstanding, and Junior Subordinated Indebtedness, none of which was outstanding
at March 31, 1994. The subordination provisions applicable to the Senior
Subordinated Securities are discussed below under "Description of Debt
Securities--Senior Subordinated Securities".
Senior Subordinated Securities
The Senior Subordinated Securities will be direct, unsecured obligations of
the Corporation subordinated as to principal, premium, if any, and interest to
the prior payment in full of all Superior Indebtedness of the Corporation,
including the Senior Securities. In the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization, or similar proceedings or proceedings
for voluntary liquidation, dissolution, or other winding up of the Corporation,
whether or not involving insolvency or bankruptcy proceedings, the holders of
Superior Indebtedness will first be paid in full before any payment on account
of principal, premium, if any, or interest is made on the Senior Subordinated
Securities. An event of default under and/or acceleration of Superior
Indebtedness does not in itself result in the suspension of payments on Senior
Subordinated Securities. However, in the event the Senior Subordinated
Securities are declared due and payable before their expressed maturity because
of the occurrence of one of the events of default specified in the Senior
Subordinated Indentures, holders of the Senior Subordinated Securities will be
entitled to payment only after payment in full of Superior Indebtedness or
provision for such payment is made.
By reason of the foregoing subordination, in the event of insolvency,
holders of Superior Indebtedness may recover more, ratably, than the holders of
the Senior Subordinated Securities. The Senior Subordinated Securities are
intended to rank in all respects on a parity with all other Senior Subordinated
Indebtedness, including the Corporation's outstanding Senior Subordinated
Securities, and superior in right of payment to all Junior Subordinated
Indebtedness and all outstanding capital stock.
Senior Subordinated Securities of certain series may meet the requirements
necessary for such series to be considered "Tier II Capital" under the rules and
regulations of the Ministry of Finance of Japan and the risk-based capital
guidelines of the Federal Reserve Board. If it is intended that any series be
considered Tier II Capital, such series of the Senior Subordinated Securities
may provide that the maturity date of any such series so designated by the
Corporation in a supplement hereto will be subject to acceleration only in the
event of certain circumstances related to the insolvency of the Corporation.
Certain Restrictive Provisions
Except as set forth in the next sentence, no Indenture limits the amount of
other securities which may be issued by the Corporation or its subsidiaries, but
each contains a covenant that neither the Corporation nor any subsidiary will
create or incur any mortgage, pledge, or other lien on any of its properties,
except intercompany pledges from a subsidiary to the Corporation or to another
wholly-owned subsidiary of the Corporation; purchase money liens or liens
existing on properties hereafter acquired; liens on properties of subsidiaries
existing at the time of acquisition of the subsidiary; liens created in the
ordinary course of business by subsidiaries for money borrowed, if such
subsidiaries prior to becoming such had borrowed on a secured basis; liens
created in the ordinary course of business by subsidiaries operating outside the
territorial limits of the United States, if in the countries in which such liens
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are created it is necessary or appropriate to borrow on a secured basis or to
deposit collateral to secure all or any of its obligations; renewals or
refundings of any of the foregoing; consensual liens in the ordinary course of
business that secure indebtedness which would not be included in total
liabilities as shown on the Corporation's consolidated balance sheet; sales of
securitized assets or property of the Corporation or its subsidiaries; liens
that secure certain other indebtedness which, in an aggregate principal amount
then outstanding, does not exceed 10% of the Corporation's consolidated tangible
net worth; and certain other minor exceptions. (Section 6.04.) In addition, the
Senior Subordinated Indentures provide that the Corporation will not permit (i)
the aggregate amount of Senior Subordinated Indebtedness outstanding at any time
to exceed 100% of the aggregate amount of the par value of the capital stock
plus the surplus (including retained earnings) of the Corporation and its
consolidated subsidiaries or (ii) the aggregate amount of Senior Subordinated
Indebtedness and Junior Subordinated Indebtedness outstanding at any time to
exceed 150% of the aggregate amount of the par value of the capital stock plus
the surplus (including retained earnings) of the Corporation and its
consolidated subsidiaries. (Senior Subordinated Indenture Section 6.05.) Under
the more restrictive of such tests in the Senior Subordinated Indentures, as of
March 31, 1994, the Corporation could issue up to approximately $1.42 billion of
additional Senior Subordinated Indebtedness. For information as to restrictions
in other agreements on the Corporation's ability to issue Senior Subordinated
Indebtedness, see "Description of Debt Securities--General" above.
The holders of at least a majority in principal amount of the outstanding
Debt Securities of any series may, on behalf of the holders of all Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Corporation with the foregoing restrictions. (Senior Indenture
Section 6.06, Senior Subordinated Indenture Section 6.07.)
Each Indenture provides that, subject to the restrictions described in the
first sentence of the first paragraph under this caption, nothing contained in
such Indenture will prevent the consolidation or merger of the Corporation with
or into any other corporation, or the merger into the Corporation of any other
corporation, or the sale by the Corporation of its property and assets as, or
substantially as, an entirety, or otherwise. Notwithstanding the foregoing: (i)
in the event of any such consolidation or merger in which the Corporation is not
the surviving corporation, the surviving corporation must succeed to and be
substituted for the Corporation and must expressly assume by an indenture
executed and delivered to the applicable Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest, if any, on all Debt
Securities then outstanding and the performance and observance of every covenant
and condition of such Indenture which is required to be performed or observed by
the Corporation, and (ii) as a condition to any sale of the property and assets
of the Corporation as, or substantially as, an entirety, the corporation to
which such property and assets will be sold must (a) expressly assume, as part
of the purchase price thereof, the due and punctual payment of the principal of
(and premium, if any) and interest, if any, on all Debt Securities and the
performance and observance of every covenant and condition of such Indenture
which is required to be performed or observed by the Corporation, and (b)
simultaneously with the delivery to it of the conveyances or instruments of
transfer of such property and assets, execute and deliver to the applicable
Trustee a proper indenture in form satisfactory to such Trustee, pursuant to
which such purchasing corporation will assume the due and punctual payment of
the principal of (and premium, if any) and interest, if any, on all Debt
Securities then outstanding and the performance and observance of every covenant
and condition of such Indenture which is required to be performed or observed by
the Corporation, to the same extent that the Corporation is bound and liable.
(Senior Indenture Section 15.01, Senior Subordinated Indenture Section 16.01.)
Compliance by the Corporation with the foregoing restrictions may be waived by
or on behalf of the holders of the outstanding Debt Securities. For information
as to the modification of each Indenture, see "Description of Debt
Securities--Modification of Indenture" below.
Other than the foregoing restrictions, no Indenture contains covenants of
the Corporation or provisions which afford additional protection to holders of
outstanding Debt Securities in the event of a highly leveraged transaction
involving the Corporation.
Modification of Indenture
Each Indenture contains provisions permitting the Corporation and the
Trustee thereunder to add any provisions to or change in any manner or eliminate
any of the provisions of such Indenture or any indenture supplemental thereto or
to modify in any manner the rights of the holders of any series of Debt
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Securities with the consent of the holders of not less than 66-2/3% in aggregate
principal amount of such series of Debt Securities at the time outstanding,
except that no such amendment or modification may (i) extend the fixed maturity
of any Debt Security, reduce the rate or extend the time of payment of interest
thereon, reduce the amount of the principal thereof, or premium, if any, payable
with respect thereto, or reduce the amount of an Original Issue Discount
Security payable upon the acceleration of the stated maturity thereof, without
the consent of the holder of such Debt Security, or (ii) reduce the aforesaid
percentage of any series of Debt Securities, the holders of which are required
to consent to any such amendment or modification, without the consent of the
holders of all the Debt Securities of such series then outstanding. (Section
14.02.)
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent, or waiver under any Indenture, (i) the principal
amount of an Original Issue Discount Security that will be deemed to be
outstanding for such purposes will be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof upon an event of default and (ii) the
principal amount of a Debt Security denominated in a foreign currency or
currencies will be the U.S. dollar equivalent, determined on the date of
original issuance of such Debt Security, of the principal amount. (Section
1.02.)
Events of Default
Each Indenture defines an "event of default" with respect to any series of
Debt Securities as being any one of the following events and such other events
as may be established for the Debt Securities of a particular series: (i)
default for thirty days in any payment of interest on such series; (ii) default
in any payment of principal of, and premium, if any, on such series when due;
(iii) default in the payment of any sinking fund installment of such series when
due; (iv) default for thirty days after appropriate notice in performance of any
other covenant in such Indenture (other than a covenant included in the
Indenture solely for the benefit of another series of Debt Securities); (v)
certain events in bankruptcy, insolvency, or reorganization; or (vi) default in
the payment of any installment of interest on any evidence of indebtedness of,
or assumed or guaranteed by, the Corporation (other than indebtedness
subordinated to such series), or in the payment of any principal of any such
evidence of indebtedness, and with respect to which any period of grace shall
have expired, after appropriate notice. (Section 7.01.) Each Indenture provides
that the Trustee may withhold notice of any default (except in the payment of
principal of, premium, if any, or interest, if any, on any series of Debt
Securities) if it considers such withholding in the interests of the holders of
such series of Debt Securities issued thereunder. (Section 11.03.)
Except as set forth below, each Indenture provides that the Trustee
thereunder or the holders of not less than 25% in principal amount of any series
of Debt Securities then outstanding may declare the principal of all Debt
Securities of such series to be due and payable on an event of default. (Section
7.02.) Notwithstanding the foregoing, any series of Senior Subordinated
Securities which will be considered "Tier II" may provide that the Senior
Subordinated Trustee or the holders of at least 25% in aggregate principal
amount of the Senior Subordinated Securities of that series which are then
outstanding may declare the principal of all Senior Subordinated Securities of
that series to be due and payable immediately only if an event of default
pursuant to (v) above shall have occurred and be continuing. Any such series
will be designated by the Corporation in a supplement hereto.
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an event of default and the continuation thereof.
Within 120 days after the close of each fiscal year, the Corporation must
file with each Trustee a statement, signed by specified officers, stating
whether or not such officers have knowledge of any default, and, if so,
specifying each such default, the nature thereof and what action, if any, has
been taken to cure such default. (Senior Indenture Section 6.05, Senior
Subordinated Indenture Section 6.06.)
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Subject to provisions relating to its duties in case of default, no Trustee
is under any obligation to exercise any of its rights or powers thereunder at
the request, order, or direction of any holders of any series of Debt
Securities, unless such holders shall have offered to such Trustee reasonable
indemnity. (Section 11.01.) Subject to such provisions for indemnification, the
holders of a majority in principal amount of any series of Debt Securities
outstanding may direct the time, method, and place of conducting any proceeding
for any remedy available to the Trustee thereunder, or of exercising any trust
or power conferred upon such Trustee.
(Section 7.08.)
Defeasance of the Indenture and Debt Securities
The Corporation at any time may satisfy its obligations with respect to
payments of principal of, premium, if any, and interest, if any, on the Debt
Securities of any series by irrevocably depositing in trust with the Trustee
money or U.S. Government Obligations (as defined in the Indenture) or a
combination thereof sufficient to make such payments when due. If such deposit
is sufficient, as verified by a written report of a nationally recognized,
independent public accounting firm, to make all payments of (i) interest, if
any, on the Debt Securities of such series prior to and on their redemption or
maturity, as the case may be, and (ii) principal of, and premium, if any, on the
Debt Securities of such series when due upon redemption or at the designated
maturity date, as the case may be, then all the obligations of the Corporation
with respect to the Debt Securities of such series and the Indenture insofar as
it relates to the Debt Securities of such series will be satisfied and
discharged (except as otherwise provided in the Indenture). In the event of any
such defeasance, holders of the Debt Securities of such series would be able to
look only to such trust fund for payment of principal of, premium, if any, and
interest, if any, on the Debt Securities of such series until the designated
maturity date or redemption. (Sections 12.01, 12.02 and 12.03)
Such a trust may only be established if, among other things, (i) the
Corporation has obtained an opinion of legal counsel (which may be based on a
ruling from, or published by, the Internal Revenue Service) to the effect that
holders of the Debt Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred and (ii) at that time, with
respect to any series of Debt Securities then listed on The New York Stock
Exchange, the rules of The New York Stock Exchange do not prohibit such deposit
with the Trustee.
Information Concerning the Trustees
The Corporation from time to time may borrow from each of the Trustees, and
the Corporation and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions with some of the Trustees. A Trustee under a
Senior Indenture or a Senior Subordinated Indenture may act as trustee under any
of the Corporation's other indentures.
PLAN OF DISTRIBUTION
The Corporation may sell the Debt Securities being offered hereby (i)
directly to purchasers, (ii) through agents, (iii) to dealers, or (iv) through
an underwriter or a group of underwriters.
Offers to purchase Offered Debt Securities may be solicited directly by the
Corporation or by agents designated by the Corporation from time to time. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment (ordinarily five
business days or less). Agents may be entitled under agreements which may be
entered into with the Corporation to indemnification by the Corporation against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
If a dealer is utilized in the sale of the Offered Debt Securities in
respect of which this Prospectus is delivered, the Corporation will sell such
Offered Debt Securities to the dealer, as principal. The dealer may then resell
such Offered Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. Dealers may be entitled under agreements
which may be entered into with the Corporation to indemnification by the
Corporation against certain civil liabilities, including liabilities under the
Securities Act.
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If an underwriter or underwriters are utilized in the sale, the Corporation
may enter into an arrangement with such underwriters at the time of sale to them
providing for their indemnification against certain liabilities, including
liabilities under the Securities Act. The names of the underwriters and the
terms of the transaction will be set forth in the Prospectus Supplement which is
intended for use by the underwriters to make resales of the Offered Debt
Securities in respect of which this Prospectus is delivered to the public.
If an affiliate or subsidiary of the Corporation participates in the offer
and sale of the Debt Securities, such participation will comply with the
requirements of Schedule E of the By-Laws of the National Association of
Securities Dealers, Inc. regarding the underwriting of securities of an
affiliate.
The underwriters, dealers, and agents may be deemed to be underwriters and
any discounts, commissions, or concessions received by them from the Corporation
or any profit on the resale of Offered Debt Securities by them may be deemed to
be underwriting discounts and commissions under the Securities Act. Any such
person who may be deemed to be an underwriter and any such compensation received
from the Corporation will be described in the Prospectus Supplement.
Underwriters, dealers, and agents may be customers of, engage in transactions
with, or perform services for the Corporation in the ordinary course of
business.
If so indicated in the Prospectus Supplement, the Corporation will
authorize underwriters and agents to solicit offers by certain institutions to
purchase Offered Debt Securities from the Corporation at the public offering
price set forth in the Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date stated in
the Prospectus Supplement. Each Contract will be for an amount not less than,
and unless the Corporation otherwise agrees the aggregate principal amount of
Offered Debt Securities sold pursuant to Contracts will be not less nor more
than, the respective amounts stated in the Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but shall in all cases be
subject to the approval of the Corporation. Contracts will not be subject to any
conditions except that the purchase by an institution of the Offered Debt
Securities covered by its Contract must not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject. A commission indicated in the Prospectus Supplement will
be granted to underwriters and agents soliciting purchases of Offered Debt
Securities pursuant to Contracts accepted by the Corporation. Underwriters and
agents will have no responsibility in respect of the delivery or performance of
Contracts.
The place and time of delivery for the Offered Debt Securities in respect
of which this Prospectus is delivered will be set forth in the Prospectus
Supplement.
EXPERTS
The financial statements and schedule listed under the heading "Exhibits,
Financial Statement Schedule and Reports on Form 8-K" in the Corporation's 1993
Annual Report on Form 10-K incorporated by reference herein have been
incorporated by reference herein in reliance upon the reports of KPMG Peat
Marwick, independent certified public accountants, also incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick covering the December 31, 1993
consolidated financial statements refers to a change in the method of accounting
for post-retirement benefits other than pensions in 1993.
LEGAL OPINIONS
The legality of the Debt Securities to which this Prospectus relates has
been passed upon for the Corporation by Schulte Roth & Zabel, 900 Third Avenue,
New York, New York 10022. Paul N. Roth, a director of the Corporation, is a
partner of Schulte Roth & Zabel.
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