Prospectus Supplement
(To Prospectus Dated June 6, 1997)
$200,000,000
The CIT Group Holdings, Inc.
6.375% Notes Due August 1, 2002
The Notes will mature on August 1, 2002. Interest on the Notes is payable
semiannually on February 1 and August 1, commencing February 1, 1998. The Notes
are not redeemable prior to maturity and will not be entitled to any sinking
fund. The Notes will be issued only in registered form in denominations of
$1,000 and integral multiples thereof.
The Notes will be represented by one or more permanent global Notes registered
in the name of The Depository Trust Company (the "Depositary") or its nominee.
Beneficial interests in the global Notes will be shown on, and transfers will be
effected only through, records maintained by the Depositary and its
participants. See "Description of Notes--Book-Entry System." Except as described
herein, Notes in definitive form will not be issued. Settlement for the Notes
will be made in immediately available funds. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity, and secondary
market trading activity in the Notes will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Corporation in immediately available funds. See "Description of Notes--Same-Day
Settlement and Payment."
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) Corporation(1)(3)
Per Note ............... 99.704% .300% 99.404%
Total .................. $199,408,000 $600,000 $198,808,000
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from July 28, 1997.
(2) The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of expenses payable by the Corporation estimated at
$125,000.
The Notes are offered by the Underwriters when, as and if issued by the
Corporation, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes, in book-entry form, will be made through the facilities of the Depositary
on or about July 28, 1997, against payment in immediately available funds.
Salomon Brothers Inc
Chase Securities Inc.
UBS Securities
The date of this Prospectus is July 23, 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
PURCHASES OF THE NOTES TO STABILIZE THEIR MARKET PRICE AND PURCHASES OF THE
NOTES TO COVER ANY SHORT POSITION IN THE NOTES MAINTAINED BY THE UNDERWRITERS.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
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RECENT DEVELOPMENTS
THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Amounts in Millions)
Six Months Ended
June 30,
-----------------
1997 1996
------- -------
Finance income ............................................. $ 889.0 $ 806.5
Interest expense ........................................... 456.7 413.8
------- -------
Net finance income ....................................... 432.3 392.7
Fees and other income ...................................... 107.1 125.9
Gain on sale of equity interest acquired in loan workout ... 58.0 --
------- -------
Operating revenue ........................................ 597.4 518.6
------- -------
Salaries and general operating expenses .................... 210.5 193.5
Provision for credit losses ................................ 56.0 54.4
Depreciation on operating lease equipment .................. 66.0 56.3
Minority interest in subsidiary trust holding solely
debentures of the company ............................... 6.7 --
------- -------
Operating expenses ....................................... 339.2 304.2
------- -------
Income before provision for income taxes ................... 258.2 214.4
Provision for income taxes ................................. 94.4 82.2
------- -------
Net income ............................................... $ 163.8 $ 132.2
======= =======
The Corporation's earnings for the first six months of 1997 totaled a
record $163.8 million, up 23.9% from $132.2 million for the same period in 1996.
The improvements reflect growth in net finance income from a higher level of
earning assets and a one time gain on sale of an equity interest acquired in a
loan workout, offset by higher operating expenses (primarily personnel related
costs and a provision for vacant leased office space) and an increase in net
credit losses.
DESCRIPTION OF NOTES
The 6.375% Notes Due August 1, 2002 (the "Notes") are to be issued as a
series of Debt Securities under the Indenture, dated as of May 1, 1994 (the
"Indenture"), between the Corporation and Harris Trust & Savings Bank, as
Trustee (the "Trustee"), which is more fully described in the accompanying
Prospectus. The Trustee is also the Registrar and Paying Agent.
General
The Notes offered hereby will bear interest from July 28, 1997 at the rate
of 6.375% per annum, payable semiannually on February 1 and August 1 of each
year, commencing February 1, 1998, to the persons in whose names the Notes are
registered at the close of business on the fifteenth day next preceding the
applicable interest payment date. The Notes will mature on August 1, 2002. The
Notes are Senior Securities as described in the accompanying Prospectus.
S-2
<PAGE>
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. If an interest payment date or the maturity date falls on a day that is
not a business day, the payment will be made on the next business day as if it
were made on the date such payment was due, and no interest will accrue on the
amount so payable for the period from and after such interest payment date or
the maturity date, as the case may be.
The Notes will be issued in fully registered form only, without coupons.
The Notes will be issuable in denominations of $1,000 and integral multiples
thereof. The Notes will be represented by one or more permanent global Notes
registered in the name of The Depository Trust Company, New York, New York (the
"Depositary"), or its nominee, as described below.
As discussed below, payment of principal of, and interest on, Notes
represented by a permanent global Note or Notes registered in the name of or
held by the Depositary or its nominee will be made in immediately available
funds to the Depositary or its nominee, as the case may be, as the registered
owner and holder of such permanent global Note or Notes. See "Same-Day
Settlement and Payment."
Redemption
The Notes are not redeemable prior to maturity and will not be entitled to
any sinking fund.
Book-Entry System
Upon issuance, the Notes will be represented by a permanent global Note or
Notes. Each permanent global Note will be deposited with, or on behalf of, the
Depositary and registered in the name of a nominee of the Depositary. Except
under the limited circumstances described below, permanent global Notes will not
be exchangeable for definitive certificated Notes.
Ownership of beneficial interests in a permanent global Note will be
limited to institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold interests through participants. In
addition, ownership of beneficial interests by participants in such permanent
global Note will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee for such permanent global Note. Ownership of beneficial interests in
such permanent global Note by persons that hold through participants will be
evidenced only by, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The Depositary has no knowledge of the actual beneficial owners of
the Notes. Beneficial owners will not receive written confirmation from the
Depositary of their purchase, but beneficial owners are expected to receive
written confirmation providing details of the transaction, as well as periodic
statements of their holdings, from the participants through which the beneficial
owners entered the transaction. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in such permanent global Note.
The Corporation has been advised by the Depositary that upon the issuance
of a permanent global Note and the deposit of such permanent global Note with
the Depositary, the Depositary will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts represented
by such permanent global Note to the accounts of participants.
Payment of principal of, and interest on, Notes represented by a permanent
global Note registered in the name of or held by the Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner and holder of the permanent global Note representing such
Notes. The Corporation has been advised by the Depositary that upon receipt of
any payment of principal of, or interest on, a permanent global Note, the
Depositary will immediately credit, on its book-entry registration and transfer
system, accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such permanent global
Note as shown in the records of the Depositary. Payments by participants to
owners of beneficial interests in a permanent global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the sole responsibility of such
participants, subject to any statutory or regulatory requirements as may be in
effect from time to time.
S-3
<PAGE>
None of the Corporation, the Trustee, or any other agent of the Corporation
or the Trustee will have any responsibility or liability for any aspect of the
records of the Depositary, any nominee, or any participant relating to, or
payments made on account of, beneficial interests in a permanent global Note or
for maintaining, supervising, or reviewing any of the records of the Depositary,
any nominee, or any participant relating to such beneficial interests.
A permanent global Note is exchangeable for definitive Notes registered in
the name of, and a transfer of a permanent global Note may be registered to, any
person other than the Depositary or its nominee, only if:
(a) the Depositary notifies the Corporation that it is unwilling or
unable to continue as Depositary for such permanent global Note or if at
any time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(b) the Corporation in its sole discretion determines that such
permanent global Note shall be exchangeable for definitive Notes in
registered form; or
(c) there shall have occurred and be continuing an event of default
under the Indenture, as described in the accompanying Prospectus, and the
Depositary is notified by the Corporation or the Trustee that such global
Note shall be exchangeable for definitive Notes in registered form.
Any permanent global Note that is exchangeable pursuant to the preceding
sentence will be exchangeable in whole for definitive Notes in registered form,
of like tenor and of an equal aggregate principal amount as the permanent global
Note, in denominations of $1,000 and integral multiples thereof. Such definitive
Notes will be registered in the name or names of such person or persons as the
Depositary shall instruct the Trustee. It is expected that such instructions may
be based upon directions received by the Depositary from its participants with
respect to ownership of beneficial interests in such permanent global Note.
Except as provided above, owners of beneficial interests in such permanent
global Note will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the holders thereof for any purpose
under the Indenture, and no permanent global Note shall be exchangeable, except
for another permanent global Note of like denomination and tenor to be
registered in the name of the Depositary or its nominee. Accordingly, each
person owning a beneficial interest in such permanent global Note must rely on
the procedures of the Depositary and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture.
The Corporation understands that, under existing industry practices, in the
event that the Corporation requests any action of holders, or an owner of a
beneficial interest in such permanent global Note desires to give or take any
action that a holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
The Depositary has advised the Corporation that the Depositary is a limited
purpose trust company organized under the laws of the State of New York, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered under
the Exchange Act. The Depositary was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. The Depositary is owned by a
number of its participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers, and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly. The rules applicable to the Depositary and its participants are on
file with the Securities and Exchange Commission.
S-4
<PAGE>
Same-Day Settlement and Payment
Settlement for the Notes will be made by the Underwriters (as defined below
in "Underwriting") in immediately available funds. So long as the Notes are
represented by a permanent global Note or Notes, all payments of principal and
interest will be made by the Corporation in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, so long as
the Notes are represented by a permanent global Note or Notes registered in the
name of the Depositary or its nominee, the Notes will trade in the Depositary's
Same-Day Funds Settlement System, and secondary market trading activity in the
Notes will therefore be required by the Depositary to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
Information Concerning the Trustee
The Corporation from time to time may borrow from the Trustee, and the
Corporation and certain of its subsidiaries may maintain deposit accounts and
conduct other banking transactions with the Trustee.
DIVIDEND POLICY
The Corporation, The Dai-Ichi Kangyo Bank, Limited, the 80% stockholder of
the Corporation ("DKB"), and CBC Holding (Delaware) Inc., a subsidiary of The
Chase Manhattan Corporation and the 20% stockholder of the Corporation ("CBC
Holding"), operate under a policy requiring the payment of dividends by the
Corporation to DKB and CBC Holding equal to and not exceeding 30% of net
operating earnings of the Corporation on a quarterly basis. Such dividends are
paid to DKB and CBC Holding based upon their respective stock ownership in the
Corporation. The Indenture does not require this policy or otherwise directly
limit the Corporation's ability to pay dividends.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), between the Corporation, Salomon Brothers Inc,
Chase Securities Inc., and UBS Securities LLC (the "Underwriters"), the
Corporation has agreed to sell to each of the Underwriters, and each of the
Underwriters has severally agreed to purchase the principal amount of the Notes
set forth opposite its name below. Chase Securities Inc. is an affiliate of the
Corporation. See "Plan of Distribution" in the accompanying Prospectus.
Principal Amount
Underwriter of Notes
----------- ----------------
Salomon Brothers Inc ................................. $ 66,800,000
Chase Securities Inc. ................................ 66,600,000
UBS Securities LLC ................................... 66,600,000
------------
Total ................................................ $200,000,000
============
The Corporation has been advised by the Underwriters that they propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of .200% of the principal amount of
the Notes. The Underwriters may allow, and such dealers may reallow, a
concession to certain other dealers not in excess of .125% of such principal
amount. After the initial public offering, the public offering price and such
concessions may be changed from time to time.
The Notes are a new issue of securities with no established trading market.
The Corporation does not presently intend to list the Notes on any securities
exchange. The Corporation has been advised by the Underwriters that they intend
to make a market in the Notes, but the Underwriters are not obligated to do so
and may discontinue any market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Notes.
S-5
<PAGE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all the Notes if any are purchased.
In connection with this offering, certain Underwriters and their respective
affiliates may engage in transactions that stabilize, maintain or otherwise
affect the market price of the Notes. Such transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
pursuant to which such persons may bid for or purchase Notes for the purpose of
stabilizing their market price. The Underwriters also may create a short
position for the account of the Underwriters by selling more Notes in connection
with this offering than they are committed to purchase from the Corporation, and
in such case may purchase Notes in the open market following completion of this
offering to cover such short position. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Notes at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.
The Underwriting Agreement provides that the Corporation will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
S-6
<PAGE>
No dealer, salesman or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement or the Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Corporation or the Underwriters. This Prospectus Supplement and the Prospectus
do not constitute an offer to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus Supplement or the Prospectus nor any sale made hereunder or
thereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Corporation since such date.
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Table of Contents
Page
----
Prospectus Supplement
Recent Developments ..................................................... S-2
Description of Notes .................................................... S-2
Dividend Policy ......................................................... S-5
Underwriting ............................................................ S-5
Prospectus
Available Information ................................................... 2
Documents Incorporated by Reference ..................................... 2
The Corporation ......................................................... 3
Summary of Financial Information ........................................ 6
Use of Proceeds ......................................................... 7
Description of Debt Securities .......................................... 7
Plan of Distribution .................................................... 12
Experts ................................................................. 13
Legal Opinions .......................................................... 13
$200,000,000
The CIT Group
Holdings, Inc.
6.375% Notes
Due August 1, 2002
THE
[LOGO] CIT
GROUP
Salomon Brothers Inc
Chase Securities Inc.
UBS Securities
Prospectus Supplement
Dated July 23, 1997
