<PAGE> 1
Rule 424(b)(3)
File No. 33-51216
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 11, 1994)
$150,000,000
G F C
GREYHOUND FINANCIAL CORPORATION
FLOATING RATE NOTES DUE MARCH 27, 1995
------------------------
Interest on the Floating Rate Notes Due March 27, 1995 (the "Notes") is
payable on June 25, 1994, September 25, 1994, December 25, 1994 and March 27,
1995 (each an "Interest Payment Date"). The interest rate for each Interest
Period (as herein defined) will be a rate of .375% per annum above the London
interbank offered rates ("LIBOR") for three-month U.S. dollar deposits
determined two London Business Days before the beginning of each Interest
Period.
The Notes will not be redeemable at the option of the Company prior to
maturity. Following the occurrence at any time prior to the Expiration Date (as
defined herein) of a Rating Decline (as defined herein), holders of the Notes
may require the Company to repurchase all or any portion of their Notes at 100%
of the principal amount thereof plus accrued interest thereon to, but excluding,
the Repurchase Date (as defined herein). See "Description of Notes-Put Right of
Holders Upon a Rating Decline."
The Notes will be represented by one global security (the "Global
Security") registered in the name of the nominee of The Depository Trust
Company, which will act as depository (the "Depositary"). Interests in the Notes
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Except as described herein
under "Description of Notes," owners of beneficial interests in the Global
Security will not be entitled to receive physical delivery of Notes in
definitive form and the Global Security will not be exchangeable except for one
or more other global securities of like denomination and terms to be registered
in the name of the Depositary or its nominee. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity or until the Notes
are issued in definitive form, 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 Company in immediately available
funds. See "Description of Notes" herein.
------------------------
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 TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(3)
- ------------------------------------------------------------------------------------------------
Per Note................... 100% .15% 99.85%
- ------------------------------------------------------------------------------------------------
Total...................... $150,000,000 $225,000 $149,775,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from date of issuance.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $225,000.
------------------------
The Notes are offered by the Underwriter, subject to prior sale, when, as
and if issued to and accepted by it, subject to approval of certain legal
matters by counsel for the Underwriter and certain other conditions. The
Underwriter reserves the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Global
Security will be made through the facilities of the Depositary on or about March
25, 1994.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is March 18, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
GREYHOUND FINANCIAL CORPORATION
Greyhound Financial Corporation, a Delaware corporation (the "Company"),
engages in the business of providing collateralized financing of selected
commercial and real estate activities in the United States and intermediate-term
lending on a secured basis in foreign countries. The Company accomplishes this
through secured loans and leases. The Company is in the process of winding down
the London based financing operations of Greyhound European Financial Group
("GEFG").
The Company generates interest and other income through charges assessed on
outstanding loans, loan servicing, leasing and other fees. The Company's primary
expenses are the costs of funding its loan business (including interest paid on
debt), provisions for possible credit losses, marketing expenses, salaries and
employee benefits, servicing and other operating expenses and income taxes.
The Company's current emphasis is on secured lending to businesses in
specific industry niches, where the Company's expertise in evaluating the needs
and credit worthiness of prospective customers enables it to provide specialized
financing services. The Company's strategy has been to seek to maintain a
high-quality portfolio, using clearly defined underwriting standards in an
effort to minimize the level of nonearning assets and write-offs.
The Company's activities include:
- Corporate Finance. The Corporate Finance group provides financing,
generally in the range of $2 million to $25 million, focusing on middle
market businesses nationally, including distribution, wholesale, retail,
manufacturing and service industries. The group's lending is primarily in
the form of term loans secured by the assets of the borrower, with
significant emphasis on cash flow as the source of repayment of the
secured loan.
- Transportation Finance. Through the Transportation Finance group, the
Company structures secured financings for specialized areas of the
transportation industry, principally involving domestic and foreign used
aircraft, as well as domestic short-line railroads and used rail
equipment. Typical transactions involve financing up to 80% of the fair
market value of used equipment in the $3 million to $30 million range.
Traditionally focused on the domestic marketplace, Transportation Finance
established a London, England office in 1992, broadening its product line
to include international aircraft loans.
- Communications Finance. The Communications Finance group specializes in
radio and television. Other markets include cable television, print and
outdoor media services in the United States. The Company extends secured
loans to communications businesses requiring funds for recapitalization,
refinancing or acquisition. Loan sizes generally are from $3 million to
$35 million.
- Commercial Real Estate Finance. The Commercial Real Estate group
provides cash-flow-based financing primarily for acquisitions and
refinancings to experienced real estate developers and owner tenants of
income-producing properties in the United States and the United Kingdom.
The Company concentrates on secured financing opportunities, generally
between $3 million and $30 million, involving senior mortgage term loans
on owner-occupied commercial real estate. The Company's portfolio of real
estate leveraged leases is also managed as part of the commercial real
estate portfolio.
- Resort Finance. The Resort Finance group focuses on successful,
experienced resort developers, primarily of timeshare resorts, second
home resort communities, golf resorts and resort hotels. Extending funds
through a variety of lending options, the Resort Finance group provides
loans and lines of credit ranging from $3 million to $30 million for
construction, acquisitions, receivables financing and purchases and other
uses. Through its subsidiary, GFC Portfolio Services, Inc. ("GPS"), the
Resort
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Finance group offers expanded convenience and service to its customers.
Professional receivables collections and cash management gives developers
the ability of having loan-related administrative functions performed for
them by the Company.
- Asset Based Finance. Acquired in early 1993, the Asset Based Finance
group ("ABF") offers a full range of nationwide collateral-oriented
lending programs to middle-market businesses including manufacturers,
wholesalers and distributors. The Company's ABF group mainly provides
revolving lines of credit ranging between $2 million and $25 million,
often partnering with the Corporate Finance group to offer convenient
"one-stop" financing to businesses.
- Consumer Rediscount Finance. The Consumer Rediscount Group ("CRG")
offers $2 million to $25 million revolving credit lines to regional
consumer finance companies which in turn extend credit to consumers. The
Company's customers provide credit to consumers to finance home
improvements, automobile purchases, insurance premiums and for a variety
of other financial needs.
- Ambassador Factors. On February 14, 1994, the Company purchased Fleet
Factors Corp., better known as Ambassador Factors, from Fleet Financial
Group, Inc. Ambassador Factors provides accounts receivable factoring and
asset-based lending principally to small and medium-sized textile and
apparel manufacturers and importers. See "Recent Developments."
- TriCon. On March 4, 1994, GFC Financial Corporation ("GFC Financial")
announced the signing of a definitive purchase agreement under which the
Company will acquire TriCon Capital Corporation ("TriCon"), an indirect
wholly-owned subsidiary of Bell Atlantic Corporation ("Bell Atlantic").
The transaction is subject to regulatory approvals and certain other
conditions. TriCon is a $1.8 billion niche-oriented provider of
commercial and equipment leasing services. TriCon's marketing orientation
fits well with the Company's emphasis on value-added products and
services in focused niches of the commercial finance business and further
diversifies the Company's asset base. See "Recent Developments."
In conjunction with the liquidation of the GEFG portfolio, GEFG surrendered
the banking license of its United Kingdom bank, Greyhound Bank PLC, and renamed
the company Greyhound Guaranty Limited ("GGL"). GGL operates a finance group
that was primarily involved in lending to individuals in the United Kingdom
secured by second mortgages on residential real estate. The group ceased writing
new consumer finance business in the first quarter of 1991 but continues to
administer and collect loans previously made.
The Company was incorporated under the laws of Delaware in 1965 and is the
successor to a California corporation which commenced operations in 1954. The
principal executive offices of the Company are located at Dial Tower, 1850 N.
Central Avenue, Phoenix, Arizona 85004, and its telephone number is (602)
207-4900. All of the capital stock of the Company is owned by GFC Financial, the
common stock of which is publicly traded on the New York Stock Exchange. GFC
Financial owns substantially all of the financial services businesses
(principally the Company) previously owned by its former parent, The Dial Corp.
RECENT DEVELOPMENTS
ACQUISITION OF AMBASSADOR
On February 14, 1994, the Company acquired Fleet Financial Group, Inc.'s
("Fleet") factoring and asset based lending subsidiary, Fleet Factors Corp.,
which operates under the trade name Ambassador Factors ("Ambassador"). At
November 30, 1993, Ambassador had a $336 million loan portfolio and generated
$731 million of factoring volume in the eleven months ended November 30, 1993.
Its customer base primarily consists of small to medium-sized textile and
apparel manufacturers in the factoring operation and similar sized
manufacturers, distributors and wholesalers in the asset-based lending business.
The cash purchase price of the acquisition was $248,285,000 and represented
Ambassador's stockholder's equity, including a premium ($76,285,000), and
repayment of the intercompany balance due from Ambassador to Fleet
($172,000,000). In addition, the Company assumed $111,526,000 due to factored
clients, $4,843,000 of accrued liabilities and $8,800,000 of additional
liabilities and transaction costs. The acquisition will be accounted for as a
purchase
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and will create approximately $30,400,000 of goodwill, which will be amortized
on a straight line basis over 20 years.
The Company financed the acquisition with proceeds received from sale of
GFC Financial's discontinued mortgage insurance subsidiary and cash generated
from operations. GFC Financial, simultaneously with the acquisition, increased
its investment in the Company by contributing $40,000,000 of intercompany loans
as additional paid in capital of the Company.
PENDING ACQUISITION OF TRICON
On March 4, 1994, the Company signed a definitive purchase agreement under
which it will acquire all of the stock of TriCon from Bell Atlantic for a cash
purchase price of $344,250,000. In addition, the Company will assume outstanding
indebtedness and other liabilities of TriCon of $1,453,201,000 and additional
accrued liabilities and acquisition costs of $7,500,000. The acquisition is
expected to be accounted for as a purchase and will create approximately
$69,817,000 of goodwill, which will be amortized on a straight line basis over
20 years. The acquisition is subject to regulatory approvals and certain other
conditions, and accordingly there can be no assurance that the acquisition will
be consummated.
The cash purchase price is expected to be financed with the net proceeds of
the offering of Notes made hereby, the net proceeds of one or more additional
offerings of debt securities of the Company and the remainder with internally
generated funds. The Company has been informed by GFC Financial that it intends
to issue approximately $200,000,000 of equity securities in one or more public
or private offerings in the near future and invest the net proceeds of such
offerings in the Company. It is not expected that such equity securities of GFC
Financial will be issued prior to the consummation of the acquisition of TriCon
by the Company. There can be no assurance that any of the above debt or equity
offerings will occur.
The Company's obligation to consummate the acquisition of TriCon is
conditioned upon the receipt of waivers or consents from lenders under certain
of the Company's credit and loan agreements with respect to certain financial
covenants contained therein. The Company is in the process of obtaining such
consents and waivers and will not complete the acquisition until they are
obtained. The Company believes that it has a good working relationship with its
lenders and that it will be successful in obtaining such waivers and consents.
Upon receipt, such waivers and consents will be conditioned upon the receipt by
the Company, not later than 120 days following the consummation of the
acquisition of TriCon, of the $200,000,000 equity investment from GFC Financial
referred to above. The failure of GFC Financial to complete the equity offering
or offerings and invest the required proceeds in the Company by such date would
constitute a default under such credit and loan agreements, unless the Company
could obtain additional waivers, consents or amendments to such credit and loan
agreements. The Company's inability to obtain additional waivers, consents or
amendments to such credit and loan agreements would allow the Company's lenders
thereunder to declare an event of default and could result in the acceleration
of the indebtedness due thereunder. Such default and/or acceleration would
constitute a default under other borrowing arrangements (including the Notes)
and could result in the acceleration of substantially all of the Company's
outstanding indebtedness, which would have a material adverse effect on the
Company's business, financial condition and results of operations. Management of
GFC Financial has informed the Company that it believes GFC Financial will be in
a position to make such equity investment in the Company in a timely manner and
is in the process of preparing an appropriate registration statement for an
offering of its equity securities. However, there can be no assurance that GFC
Financial will complete such equity offering or offerings and make the required
investment in the Company by the required date or at any other date.
The acquisition of TriCon, combined with the acquisition of Ambassador,
would increase the Company's total assets on a pro forma basis to $5 billion
with pro forma 1993 income from continuing operations on a combined basis of
approximately $72 million before the $4.9 million adjustment for deferred taxes
applicable to leveraged leases.
The acquisition of TriCon is expected to give the Company significant
critical mass and important economies of scale. Management believes it puts the
Company among the largest independent commercial finance companies in the United
States and allows it to compete over a greater range of services. TriCon's
marketing orientation fits well with the Company's emphasis on value-added
products and services in focused
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niches of the commercial finance business and further diversifies the Company's
asset base. Following is a brief description of TriCon and the various business
activities in which it engages.
General. TriCon is a niche oriented provider of commercial finance and
equipment leasing services to a segmented group of borrowers and lessees
throughout the United States. TriCon conducts its operations through seven
specialized business groups which provide financial products and services to
three specific market sectors of the finance and leasing industry: the End-User
Sector, the Program Finance Sector and the Capital Services Sector.
The customers in the End-User Sector use the assets which TriCon finances
or leases for the ongoing operation of their businesses. The equipment which
TriCon leases to its customers is typically purchased from an equipment
manufacturer, vendor or dealer selected by the customer. The three specialized
business groups associated with this market sector and the services provided by
TriCon to customers of each business group include:
- Medical Finance Group. Equipment and real estate financing and
asset management services targeting the top 2,400 health care providers in
the United States.
- Commercial Equipment Finance Group. Direct finance leasing of, and
lending for, general business equipment to quality commercial business
enterprises which lack ready access to the public finance markets.
- Government Finance Group. Primarily tax-exempt financing to state
and local governments.
TriCon's business groups in the Program Finance Sector provide financing
programs to help manufacturers, distributors, vendors and franchisors facilitate
the sale of their products or services. The three specialized business groups
associated with this market sector and the services provided by TriCon to
customers of each business group include:
- Vendor Service Group. Point-of-sale financing programs and support
services for regional and national manufacturers, distributors and vendors
of equipment classified as "small ticket" in transaction size (generally
transactions with an equipment cost of less than $250,000). The equipment
which TriCon leases to the ultimate end-user is typically sold to TriCon by
the vendor participating in the financing program.
- Franchise Finance Group. Equipment and total facility financing
programs for the franchise-based food service industry. The equipment which
TriCon leases to the ultimate end-user is typically purchased by TriCon
from an equipment manufacturer, vendor or dealer selected by the end-user.
- Commercial Credit Services Group. Accounts receivable and inventory
lending for manufacturers and major distributors, manufacturer-sponsored
inventory financing for office equipment dealers, and telecommunications
receivables financing for regional providers of long distance operator
services.
The Capital Services Sector has one business group which focuses on the
management and origination of highly structured financing of "large ticket"
commercial equipment (generally transactions involving the sale or lease of
equipment with a cost in excess of $15 million), primarily leveraged leases for
major corporations. The equipment which TriCon leases to its customers is
typically purchased from an equipment manufacturer, vendor or dealer selected by
the customer.
Portfolio Composition. The total assets under the management of TriCon
consist of TriCon's portfolio of owned lease and loan assets (the "Portfolio
Assets") plus certain assets that are owned by others but managed by TriCon and
are not reflected on TriCon's balance sheet. At December 31, 1993, the Portfolio
Assets were approximately $1,800.1 million. At that date, the assets of others
managed by TriCon were approximately $1,319.5 million, consisting of
approximately $343.8 million of securitized assets (the "Securitizations") and
approximately $975.7 million of net lease receivables relating to the leveraged
lease and project finance portfolio of Bell Atlantic.
TriCon's primary financing products are finance leases, operating leases,
collateralized loans and inventory and receivable financing. The Portfolio
Assets are diversified across types of financed equipment
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with the largest equipment concentrations being data processing equipment,
health care equipment, communications equipment, furniture and fixtures, office
machines, and diversified commercial use equipment. The Portfolio Assets also
include real estate-related assets, consisting primarily of real estate held as
collateral in conjunction with its health care and franchise-based food service
equipment financings, and, to a lesser extent, a portfolio of general commercial
real estate mortgages currently being managed for liquidation. TriCon's
investment exposure to both the aircraft-related and energy-related sectors is
less than 1% of the Portfolio Assets.
TriCon's current customer base includes approximately 70,000 customer
accounts; its largest exposure to any single customer is approximately $33.0
million, which constitutes approximately 2% of the Portfolio Assets and
Securitizations. Approximately 80% of the Portfolio Assets and Securitizations
are located in 20 states with the five largest concentrations being California
(15.8%), Texas (10.5%), New Jersey (5.7%), Florida (5.5%) and Pennsylvania
(5.3%).
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PRO FORMA FINANCIAL DATA
AT AND FOR THE YEAR ENDED DECEMBER 31, 1993
The following Pro Forma Consolidated Balance Sheet (unaudited) of the
Company as of December 31, 1993 and Pro Forma Statement of Consolidated Income
From Continuing Operations (unaudited) for the year ended December 31, 1993 have
been prepared to reflect the historical financial position and income from
continuing operations as adjusted to reflect the acquisition of Ambassador and
the pending acquisition of TriCon by the Company. The Pro Forma Consolidated
Balance Sheet has been prepared as if such acquisitions occurred on December 31,
1993 and the Pro Forma Statement of Consolidated Income From Continuing
Operations has been prepared as if such acquisitions occurred on January 1, 1993
and give effect to a proposed equity contribution of $200,000,000 described
under "Recent Developments -- Pending Acquisition of TriCon" above and note (14)
below as if such contribution were made on January 1, 1993. It is expected that
such contribution will not be made until after the consummation of the
acquisition of TriCon and, in any event, there can be no assurance that such
contribution will be made at any time. The pro forma financial information is
unaudited and should be read in conjunction with the accompanying notes thereto
and with the consolidated financial statements of the Company, Ambassador and
TriCon, which are incorporated by reference herein. The pro forma financial
information is not necessarily indicative of either the financial position or
the results of operations that would have been achieved had the acquisitions
been consummated as of the dates referred to above, nor is it necessarily
indicative of the results of future operations.
GREYHOUND FINANCIAL CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA ADJUSTMENTS
--------------------------------------- ---------------------------
COMPANY AMBASSADOR(1) TRICON AMBASSADOR TRICON PRO FORMA
---------- ------------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents............... $ 2,859 $ 7,072 $ 4,483 $ $ 135(10) $ 14,549
---------- ------------- ---------- ---------- --------- ----------
Investment in financing transactions:
Loans and other financing contracts... 2,343,755 334,656 912,964 3,591,375
Direct finance leases................. 71,812 647,055 718,867
Operating leases...................... 147,222 240,057 (53,460)(11) 333,819
Leveraged leases...................... 283,782 283,782
---------- ------------- ---------- ---------- --------- ----------
2,846,571 334,656 1,800,076 (53,460) 4,927,843
Less reserve for possible credit
losses................................ (64,280) (9,207) (43,191) (116,678 )
---------- ------------- ---------- ---------- --------- ----------
2,782,291 325,449 1,756,885 (53,460) 4,811,165
Other assets and deferred charges....... 49,747 5,941 27,091 30,400 (2) 69,817(14) 185,245
2,249(14)
---------- ------------- ---------- ---------- --------- ----------
$2,834,897 $ 338,462 $1,788,459 $ 30,400 $ 18,741 $5,010,959
---------- ------------- ---------- ---------- --------- ----------
---------- ------------- ---------- ---------- --------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable and accruals........... $ 56,855 $ 4,843 $ 75,302 $ 8,800 (2) $ 5,000(14) $ 150,800
Due to factored clients................. 111,526 111,526
Due to GFC Financial.................... 130,760 (40,000 )(4) (90,760)(14)
Due to Fleet............................ 172,000 (172,000 )(3)
Due to Bell Atlantic.................... 611,194 83,900(12)
(695,094)(13)
Debt.................................... 2,079,286 709,508 76,285 (2) (53,460)(11) 3,858,970
172,000 (3) 721,851(13)
153,500(14)
Deferred income taxes................... 197,705 (4,592) 81,100 (83,900)(12) 193,113
2,800(14)
---------- ------------- ---------- ---------- --------- ----------
2,464,606 283,777 1,477,104 45,085 43,837 4,314,409
Redeemable preferred stock.............. 25,000 (25,000)(14)
Stockholder's equity.................... 345,291 54,685 311,355 (54,685 )(2) 135(10) 696,550
40,000 (4) (26,757)(13)
193,250(14)
(284,733)(14)
93,009(14)
25,000(14)
---------- ------------- ---------- ---------- --------- ----------
$2,834,897 $ 338,462 $1,788,459 $ 30,400 $ 18,741 $5,010,959
---------- ------------- ---------- ---------- --------- ----------
---------- ------------- ---------- ---------- --------- ----------
</TABLE>
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PRO FORMA STATEMENT OF CONSOLIDATED INCOME
FROM CONTINUING OPERATIONS
YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS
---------------------------------------- ----------------------- PRO
COMPANY AMBASSADOR(1) TRICON AMBASSADOR TRICON FORMA
----------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest earned from
financing
transactions........... $ 248,700 $35,235 $245,300 $ $ (7,667)(11) $523,068
1,500(15)
Interest expense......... 126,152 5,780 80,211 3,026(5) 4,905(16) 220,074
----------- ------------- -------- ---------- -------- --------
Interest margins
earned................. 122,548 29,455 165,089 (3,026) (11,072) 302,994
Provision for possible
credit losses.......... 5,706 7,177 21,634 34,517
----------- ------------- -------- ---------- -------- --------
Net interest margins
earned................. 116,842 22,278 143,455 (3,026) (11,072) 268,477
Gains on sale of
assets................. 5,439 5,439
----------- ------------- -------- ---------- -------- --------
122,281 22,278 143,455 (3,026) (11,072) 273,916
Selling and
administrative
expenses............... 58,158 8,125 48,128 2,470(6) 3,491(17) 122,131
1,000(7) 759(15)
Depreciation............. 41,582 41,582
----------- ------------- -------- ---------- -------- --------
64,123 14,153 53,745 (6,496) (15,322) 110,203
Income taxes:
Current and deferred... 22,825 6,481 22,164 (2,598)(8) (6,155)(19) 38,653
(820)(9) (3,244)(18)
Adjustment to deferred
taxes................ 4,857 4,857
----------- ------------- -------- ---------- -------- --------
Income from continuing
operations............. $ 36,441 $ 7,672 $ 31,581 $ (3,078) $ (5,923) $ 66,693
----------- ------------- -------- ---------- -------- --------
----------- ------------- -------- ---------- -------- --------
</TABLE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(1) The Pro Forma Consolidated Balance Sheet, as of December 31, 1993 and
the Pro Forma Statement of Consolidated Income From Continuing Operations for
the year ended December 31, 1993 include the historical balance sheet of
Ambassador as of November 30, 1993 and the historical statement of income of
Ambassador for the eleven months ended November 30, 1993.
ACQUISITION OF AMBASSADOR
(2) To record the purchase of Ambassador, including the accrual of various
liabilities and the resulting goodwill, using the proceeds advanced to the
Company upon the sale of GFC Financial's discontinued mortgage insurance
subsidiary and cash generated from operations.
(3) To record repayment of Ambassador's intercompany payable to Fleet,
using the proceeds advanced to the Company upon the sale of GFC Financial's
discontinued mortgage insurance subsidiary and cash generated from operations.
(4) To record the contribution by GFC Financial of $40,000,000 of
intercompany loans from GFC Financial to the Company as additional paid in
capital of the Company.
(5) Adjustments to reflect interest expense of debt repaid in 1993 with
proceeds received from the sale of GFC Financial's discontinued mortgage
insurance subsidiary and cash generated from operations. Such debt is assumed to
be outstanding for the entire pro forma period. The adjustment is partially
offset by interest saved as a result of the $40,000,000 equity contribution in
item (4).
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(6) To record amortization of goodwill based on an amortization period of
twenty years and amortization of the covenant not to compete over one year (see
item (20)).
(7) To record additional administrative expenses for additional employees
and general overhead.
(8) To record the income tax effect of items (5), (6) and (7) at the
Company's effective incremental income tax rate of 40%.
(9) To adjust income taxes for the lower state income tax rate applicable
to the Company.
ACQUISITION OF TRICON
(10) To record the original capital contribution by Bell Atlantic as part
of the incorporation of TriCon.
(11) To transfer assets and the related debt of TriCon, not purchased by
the Company, to Bell Atlantic and reduce interest earned from financing
transactions for the income recorded on such assets in 1993.
(12) To record issuance of notes payable to fund the deferred tax payment
to Bell Atlantic for an amount equal to the deferred taxes of TriCon, exclusive
of deferred tax assets.
(13) To record a dividend from TriCon to Bell Atlantic and the issuance of
a note payable to Bell Atlantic for the remaining principal amount of the
short-term borrowings from affiliates of TriCon.
(14) To record the purchase of TriCon. The acquisition of TriCon is
expected to be financed initially with additional debt of the Company as stated
in "Use of Proceeds," the assumption of outstanding indebtedness of TriCon to
Bell Atlantic, the assumption of TriCon's third party debt and liabilities and
internally generated funds. A portion of the additional debt of the Company is
assumed to be replaced with equity raised by GFC Financial and such equity,
together with the outstanding preferred stock of the Company held by GFC
Financial, the remaining intercompany loans due to GFC Financial from the
Company and other assets, will be contributed to the Company as additional paid
in capital of the Company. The pro forma adjustment assumes the equity
contributions were made at the beginning of the pro forma period. The interest
expense related to the debt that is being replaced with equity and, therefore,
nonrecurring and excluded from the pro forma consolidated statement of income
from continuing operations, is approximately $2,000,000.
Including new debt, the debt assumed, the accrual of various additional
liabilities and acquisition costs, the total purchase price of the acquisition
is estimated to be $1,804,951,000, resulting in $69,817,000 of goodwill. The
purchase will result in a new tax basis of TriCon's assets, eliminating the
remaining deferred tax asset.
(15) To reflect base fees and incremental costs related to agreement to
manage leveraged leases for Bell Atlantic.
(16) To record additional interest expense resulting from additional debt
to Bell Atlantic and the portion of the additional debt of the Company which is
not assumed to be replaced with equity raised by GFC Financial (see item (14)).
The adjustment is partially offset by interest saved on the debt transferred to
Bell Atlantic and interest saved as a result of the equity contribution of the
intercompany loans in item (14).
(17) To record amortization of goodwill based on an amortization period of
twenty years (see item (20)).
(18) To reduce TriCon's income taxes for the effect of increases in income
tax rates for 1993 (principally the increase in the federal tax rate) due to the
deferred tax payment and the new tax basis in assets at the beginning of the pro
forma period.
(19) To record the income tax effect of adjustments (11) and (15) through
(17) at the Company's effective incremental income tax rate of 40%.
(20) Goodwill may be adjusted as the final allocation of the values of the
purchased assets and liabilities is established.
S-9
<PAGE> 10
RATIO OF INCOME TO FIXED CHARGES
The following table sets forth the Company's ratios of income to fixed
charges ("ratio") for each of the past five years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------
1993 1992 1991 1990 1989
- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.51 1.38 -- 1.24 1.23
- ---- ---- ---- ---- ----
</TABLE>
Variations in interest rates generally do not have a substantial impact on
the ratio because the fixed-rate and floating-rate assets are generally matched
with liabilities of similar rate and term.
Income available for fixed charges, for purposes of the computation of the
ratio of income to fixed charges, consists of the sum of income before income
taxes (adjusted for the effect of reduced tax rates on income from leveraged
leases) and fixed charges. Fixed charges include interest and related debt
expense and a portion of rental expense determined to be representative of
interest.
For the year ended December 31, 1991, earnings were inadequate to cover
fixed charges by $35,256,000. This inadequacy was due to certain restructuring
and other charges of $65,000,000 and transaction costs of $13,000,000 recorded
in the fourth quarter of 1991 in connection with the transfer by The Dial Corp
to GFC Financial of its financial services and insurance businesses, including
the Company.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used, along with the
net proceeds of one or more additional offerings of debt securities and
internally generated funds, to pay the cash purchase price of $344,250,000 for
the acquisition of TriCon. Pending consummation of the acquisition of TriCon,
the net proceeds will be used to reduce other debt. The offering of the Notes is
not conditioned on completion of the offering of any other debt securities of
the Company, and there can be no assurance that any such offerings of other debt
securities of the Company will occur. See "Recent Developments" and "Pro Forma
Financial Data".
In the event that the proposed acquisition of TriCon is not consummated,
the net proceeds from the offering of the Notes will be used as stated under
"Use of Proceeds" in the accompanying Prospectus.
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<PAGE> 11
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following unaudited table sets forth the capitalization, including
deferred income taxes, of the Company at December 31, 1993 and as adjusted to
give effect to (a) the acquisition of Ambassador and the issuance of the Notes
offered hereby, (b) the acquisition of Ambassador, the issuance of the Notes
offered hereby, the proposed acquisition of TriCon, and the proposed issuance of
additional debt of the Company to fund the acquisition of TriCon, without the
proposed equity contribution from GFC Financial, and (c) the acquisition of
Ambassador, the proposed acquisition of TriCon, the proposed equity contribution
from GFC Financial and the proposed issuance of additional debt of the Company
to fund the acquisition of TriCon. There can be no assurance that the Company
will issue the additional debt to fund the acquisition of TriCon or that the
Company will receive the equity contribution from GFC Financial. See "Recent
Developments."
<TABLE>
<CAPTION>
PRO FORMA COMBINED
COMPANY, AMBASSADOR AND TRICON
PRO FORMA ---------------------------------------------
ADJUSTMENTS (A) PRO FORMA
FOR PRO FORMA PRO FORMA (B) ADJUSTMENTS (C)
THE COMBINED ADJUSTMENTS FOR WITHOUT FOR WITH
HISTORICAL ACQUISITION COMPANY AND HISTORICAL THE ACQUISITION EQUITY EQUITY EQUITY
COMPANY OF AMBASSADOR AMBASSADOR(3) TRICON OF TRICON CONTRIBUTION CONTRIBUTION CONTRIBUTION
----------- -------------- ------------- ---------- --------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Senior
debt:
Notes
payable
to
Bell
Atlantic... $ 611,194 $ 766,705(4) $1,377,899 $1,377,899
Other... $ 1,991,986 $248,285(1) $ 2,240,271 709,508 346,750(5) 2,587,021 $ (193,250)(9) 2,393,771
(709,508)(4)
----------- -------------- ------------- ---------- --------------- ------------ -------------- ------------
Total
senior
debt... 1,991,986 248,285 2,240,271 1,320,702 403,947 3,964,920 (193,250) 3,771,670
Subordinated
debt, net
of
unamortized
discount... 86,790 86,790 86,790 86,790
----------- -------------- ------------- ---------- --------------- ------------ -------------- ------------
Total
debt... 2,078,776 10) 248,285 2,327,061(10) 1,320,702 403,947 4,051,710(11) (193,250) 3,858,460(11)
Deferred
income
taxes... 197,705 (4,592) 193,113 81,100 (81,100)(4) 193,113 193,113
Redeemable
preferred
stock.. 25,000 25,000 (25,000)(6)
Stockholder's
equity... 345,291 40,000(2) 385,291 311,355 (26,757)(4) 503,300 193,250(9) 696,550
(284,598)(7)
25,000(6)
93,009(8)
----------- -------------- ------------- ---------- --------------- ------------ -------------- ------------
Total... $ 2,646,772 $283,693 $ 2,930,465 $1,713,157 $ 104,501 $4,748,123 $ -- $4,748,123
----------- -------------- ------------- ---------- --------------- ------------ -------------- ------------
----------- -------------- ------------- ---------- --------------- ------------ -------------- ------------
</TABLE>
- ---------------
(1) Proceeds received from the sale of GFC Financial's discontinued mortgage
insurance subsidiary and cash generated from operations, which were used to
fund the acquisition of Ambassador subsequent to December 31, 1993, were
initially used to repay debt in 1993.
(2) To reflect contribution by GFC Financial of $40,000,000 of intercompany
loans from GFC Financial to the Company as additional paid in capital of
the Company.
(3) Pending the acquisition of TriCon, the proceeds of the Notes will be used
to reduce other debt.
(4) To reflect the increase in debt due to Bell Atlantic due to assumption of
TriCon's third party debt, the deferred tax payment to Bell Atlantic for an
amount equal to the deferred taxes of TriCon, and dividend from TriCon to
Bell Atlantic, less debt related to assets not purchased by the Company.
(5) To reflect the proceeds from issuance of the Notes (See (3) above) and the
proposed issuance of additional debt of the Company to fund the acquisition
of TriCon.
(6) To reflect contribution to the Company of preferred stock held by GFC
Financial.
(7) To eliminate the remaining equity of TriCon.
(8) To reflect GFC Financial's contribution to the Company of remaining
intercompany loans and other assets.
(9) To reflect equity proposed to be raised by GFC Financial and contributed to
the Company as additional paid in capital of the Company. See "Recent
Developments."
(10) Includes current maturities of $179,392,000. Current maturities exclude the
amount supported by revolving credit agreements.
(11) Includes current maturities of $1,119,870,000. Current maturities exclude
the amount supported by revolving credit agreements.
S-11
<PAGE> 12
DESCRIPTION OF NOTES
The information herein concerning the Notes should be read in conjunction
with the statements under "Description of Securities" in the accompanying
Prospectus, to which reference is hereby made. The Notes are to be issued as a
separate series of Securities under an Indenture dated as of September 1, 1992
(the "Indenture"), between the Company and The Chase Manhattan Bank, N.A., as
Trustee. A copy of the Indenture has been filed as an exhibit to the
Registration Statement of which the accompanying Prospectus is a part.
GENERAL
The Notes will be limited to $150,000,000 aggregate principal amount and
will mature on March 27, 1995 (the "Maturity Date"). The Notes will not be
redeemable at the option of the Company prior to maturity and will not be
subject to any sinking fund.
The interest rate for each Interest Period will be a rate of .375% per
annum above LIBOR for three-month U.S. dollar deposits determined two London
Business Days before the beginning of each Interest Period, payable quarterly in
arrears as described below under "Interest." Interest on the Notes will be
computed on the basis of the actual number of days in the applicable Interest
Period divided by 360.
"Business Day" means any day that is not a Saturday or Sunday, and that, in
The City of New York, is not a day on which banking institutions are generally
authorized or obligated by law to close.
"London Business Day" means a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
The "Interest Determination Date" pertaining to the beginning of an
Interest Period will be the second London Business Day preceding the Interest
Reset Date.
The "Interest Reset Date" means the first day of any Interest Period.
Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be the
"Calculation Agent" with respect to the Notes. The Calculation Agent will notify
the Company of each determination of the interest rate applicable to the Notes
promptly after such determination is made. The Trustee will, upon the request of
the holder of any Note, provide the interest rate then in effect and, if
different, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination Date.
INTEREST
The Notes will bear interest from March 25, 1994 payable quarterly in
arrears on June 25, 1994, September 25, 1994, December 25, 1994, and March 27,
1995 (each, an "Interest Payment Date"). If any Interest Payment Date would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be postponed to the next day that is a Business Day, except that if such
Business Day falls in the next succeeding calendar month, such Interest Payment
Date will be the immediately preceding Business Day. "Interest Period" means the
period from and including March 25, 1994 to, but excluding, June 25, 1994, and
thereafter each successive period from, and including an Interest Payment Date
to but excluding the next Interest Payment Date. Interest on the Notes will be
paid to the person in whose name the Notes are registered at the close of
business on the fifteenth day next preceding each Interest Payment Date. The
interest payment at maturity will include interest accrued to but excluding the
Maturity Date and will be payable to the person to whom principal is payable.
The rate of interest for each Interest Period shall be .375% per annum
above LIBOR determined by the Calculation Agent in accordance with the following
provisions:
(i) On each Interest Determination Date, LIBOR will be the rate for
three-month deposits in U.S. dollars commencing on the second London
Business Day immediately following such Interest Determination Date, that
appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such
Interest Determination Date. "Telerate Page 3750" means the display on the
Dow Jones Telerate Service on such
S-12
<PAGE> 13
page (or such other page as may replace such page on that service or such
other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates
for U.S. dollars). If no rate appears on Telerate Page 3750, LIBOR in
respect of such Interest Determination Date will be determined as if the
parties had specified the rate described in (ii) below.
(ii) With respect to an Interest Determination Date on which no rate
appears on Telerate Page 3750, LIBOR will be determined on the basis of the
rates at which three-month deposits in U.S. dollars, commencing on the
second London Business Day immediately following such Interest
Determination Date, in a principal amount that is representative for a
single transaction in such market at such time, are offered at
approximately 11:00 a.m., London time, on such Interest Determination Date
by four major banks in the London interbank market selected by the
Calculation Agent to prime banks in the London interbank market. The
Calculation Agent will request the principal London office of each of such
banks to provide a quotation of its rate. If at least two such quotations
are provided, LIBOR in respect of such Interest Determination Date will be
the arithmetic mean (rounded if necessary to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being
rounded to 9.87655% (or .0987655)) of such quotations. If fewer than two
quotations are provided, LIBOR in respect of such Interest Determination
Date will be the arithmetic mean (rounded as aforesaid) of the rates quoted
by three major banks in The City of New York (selected by the Calculation
Agent) at approximately 11:00 a.m., New York City time, on such Interest
Determination Date for loans in U.S. dollars to leading European banks,
commencing on the second London Business Day immediately following such
Interest Determination Date and in a principal amount that is
representative for a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as set forth above, LIBOR will be LIBOR
in effect on such Interest Determination Date.
PUT RIGHT OF HOLDERS UPON A RATING DECLINE
In the event that there occurs at any time prior to the Expiration Date (as
hereinafter defined) a Rating Decline (as hereinafter defined), each Holder of
the Notes shall have the right, at the Holder's option, to require the Company
to purchase all or any part of such Holder's Notes on the Repurchase Date (as
hereinafter defined) following the Rating Decline, at 100% of the principal
amount thereof plus accrued interest thereon to, but excluding, the Repurchase
Date.
On or before the fifth day after the Rating Decline, the Company is
obligated to notify the Trustee of such event, and promptly thereafter the
Company shall mail, or cause to be mailed, to all Holders of record of the Notes
a notice regarding the Rating Decline and the repurchase right (the date of such
notice to the Holders shall be the "Notice Date"). The notice shall state the
Repurchase Date, the date by which the repurchase right must be exercised, the
applicable price for such Notes and the procedure which the Holder must follow
to exercise this right. The Company shall cause a copy of such notice to be
published in an English language newspaper of general circulation in the Borough
of Manhattan, The City of New York. To exercise the repurchase right, the Holder
of such Note must deliver within ten days following the Notice Date written
notice to the Trustee of the Holder's exercise of such right, together with the
Note with respect to which the right is being exercised, duly endorsed for
transfer. Such written notice shall be irrevocable. The Repurchase Date shall be
the fortieth day following the Notice Date, unless such day shall not be a
Business Day, in which event it shall be the next succeeding Business Day.
As used herein, a "Rating Decline" shall be deemed to have occurred if on
any date prior to the Expiration Date the rating of the Notes by either Rating
Agency shall be one Rating Gradation (as hereinafter defined) below the Initial
Rating (as hereinafter defined) of the Notes by such Rating Agency.
As used herein, "Rating Agency" shall mean Standard & Poor's Corporation
and its successors ("S&P"), and Moody's Investors Service, Inc. and its
successors ("Moody's"), or, if S&P or Moody's or both shall not make a rating on
the Notes publicly available, a nationally recognized securities rating agency
or agencies, as the case may be, selected by the Company which shall be
substituted for S&P or Moody's or both, as the case may be; "Initial Rating"
shall mean BBB by S&P and Baa2 by Moody's or the equivalent of either such
rating and by any other Rating Agency selected as provided above; and
"Expiration Date" shall mean the
S-13
<PAGE> 14
earlier of September 25, 1994 (which period shall be extended so long as the
rating of the Notes is under publicly announced consideration for possible
downgrade by a Rating Agency) and the date on which the Company receives the
equity investment from GFC Financial referred to under "Recent Developments --
Pending Acquisition of TriCon."
As used herein, the term "Rating Category" shall mean (i) with respect to
S&P, any of the following categories: BBB, BB, B, CCC, CC and C, (ii) with
respect to Moody's, any of the following categories: Baa, Ba, B, Caa, Ca and C
and (iii) with respect to any other Rating Agency, the equivalent of any such
category of S&P or Moody's used by such other Rating Agency.
As used herein, "Rating Gradation" means, with respect to any Rating
Agency, the gradations applied within the Rating Categories used by such Rating
Agency (e.g., (i) with respect to S&P, "+" or "-" following the letter
designation of a Rating Category and an intermediate gradation indicated by the
absence of either a "+" or "-" following the letter designation of a Rating
Category; (ii) with respect to Moody's, "1", "2" or "3" following the letter
designation of a Rating Category; and (iii) with respect to any other Rating
Agency, the equivalent of any such gradation used by such other Rating Agency).
For example, a decrease of one Rating Gradation (x) in the case of S&P, shall be
from "+" to the intermediate gradation within the same Rating Category (e.g.,
from BB+ to BB) or from the intermediate gradation of a Rating Category to "-"
of such Rating Category (e.g., from BBB to BBB-); (y) in the case of Moody's,
shall be from "1" to "2" within the same Rating Category (e.g., from Baa2 to
Baa3) or from "3" of a Rating Category to the next lower Rating Category (e.g.,
from Baa3 to Ba1); and (z) with respect to any other Rating Agency, the
equivalent of any such decrease.
As long as the Notes are represented by the Global Security, the
Depositary's nominee will be the Holder of the Notes and therefore will be the
only entity that can exercise the repurchase right with respect to the Notes.
Accordingly, Beneficial Owners (as hereinafter defined) must make an election to
exercise such repurchase right through procedures of the Depositary and not by
directly notifying the Company. In order to ensure that the Depositary's nominee
will timely elect to exercise the repurchase right with respect to the Global
Security, the Beneficial Owner of such Note must instruct the broker or other
Participant (as hereinafter defined) or Indirect Participant (as hereinafter
defined) through which it holds an interest in such Note to notify the Trustee
of its desire to exercise the repurchase right with respect to all or a portion
of the Notes represented by such interest. Different firms have different
cut-off times for accepting instructions from their customers and, accordingly,
each Beneficial Owner should consult the broker or other Participant or Indirect
Participant through which it holds an interest in a Note in order to ascertain
the cut-off time by which such an instruction must be given in order for timely
notice to be delivered to the Trustee.
GLOBAL NOTES, DELIVERY AND FORM
The Notes will be represented by one global security (the "Global
Security") and will be deposited with, or on behalf of, The Depository Trust
Company, in its capacity as depository (the "Depositary"). Except as set forth
below, the Global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary to a
successor of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Notes represented thereby, and the Trustee and the Company
are only required to treat the Depositary or its nominee as the legal owner of
the Notes, for all purposes under the Indenture. Except as otherwise provided in
this section, the Beneficial Owners (as defined below) of the Global Security
representing the Notes will not be entitled to receive physical delivery of
certificated Notes and will not be considered the Holders thereof for any
purpose under the Indenture, and no Global Security representing the Notes shall
be exchangeable or transferrable. Accordingly, each person owning a beneficial
interest in the Global Security 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 laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Global Security representing the Notes.
S-14
<PAGE> 15
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Notes. The
Notes will be issued as fully registered securities registered in the name
of Cede & Co. (the Depositary's partnership nominee). One fully registered
Global Security will be issued for the Notes, in the aggregate principal of
the Notes and will be deposited with the Depositary.
The Depositary is a limited-purpose trust company organized under the
New York Banking Law, 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 pursuant to the provisions of Section
17A of Securities Exchange Act of 1934, as amended. The Depositary holds
securities that its participants ("Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depositary is owned by a number of its Direct
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 system is also available to others such as
securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules
applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Notes under the Depositary's system must be made by or
through Direct Participants, which will receive a credit for such Notes on
the Depositary's records. The ownership interest of each actual purchaser
of each Note represented by the Global Security ("Beneficial Owner") is in
turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from the Depositary
of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participants
through which such Beneficial Owner entered into the transaction. Transfers
of ownership interests in the Global Security representing the Notes are to
be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of the Global Security
representing the Notes will not receive certificated Notes representing
their ownership interests therein, except in the event that use of the
book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, the Global Security representing
the Notes which is deposited with the Depositary is registered in the name
of the Depositary's nominee, Cede & Co. The deposit of the Global Security
with the Depositary and its registration in the name of Cede & Co. effects
no change in beneficial ownership. The Depositary has no knowledge of the
actual Beneficial Owners of the Global Security representing the Notes; the
Depositary's records reflect only the identity of the Direct Participants
to whose accounts such Notes are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
by governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Security representing the Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the applicable record date (identified
in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Security representing
the Notes will be made to the Depositary. The Depositary's practice is to
credit Direct Participants' accounts on the applicable payment
S-15
<PAGE> 16
date in accordance with their respective holdings shown on the Depositary's
records unless the Depositary has reason to believe that it will not
receive payment on such date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
Participant and not of the Depositary, the Trustee or the Company, subject
to any statutory or regulatory requirements as may be in effect from time
to time. Payment of principal, premium, if any, and interest to the
Depositary is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
If the Depositary is at any time unwilling or unable to continue as
Depositary and a successor Depositary is not appointed within 90 days, the
Company will issue certificated Notes in exchange for the Notes represented by
the Global Security. In addition, the Company may at any time and in its sole
discretion determine to discontinue use of the Global Security and, in such
event, will issue definitive Notes in exchange for the Notes represented by the
Global Security. Notes so issued will be issued in denominations of $1,000 and
integral multiples thereof and will be issued in registered form only, without
coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriter in immediately
available funds. All payments or principal and interest will be made by the
Company 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, the Notes
will trade in the Depositary's Same-Day Funds Settlement System until maturity
or until the Notes are issued in the definitive form, 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.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Underwriter"), the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase, the entire principal
amount of the Notes.
In the Purchase Agreement, the Underwriter has agreed, subject to the terms
and conditions set forth therein, to purchase all the Notes offered hereby if
any Notes are purchased. The Company has been advised by the Underwriter that
the Underwriter proposes initially to offer the Notes to the public at the
public offering set forth on the cover page of this Prospectus Supplement, and
to certain dealers at such price less a concession not in excess of .1% of the
principal amount. The Underwriter may allow, and such dealers may reallow, a
discount not in excess of .05% of the principal amount to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
In connection with the proposed acquisition of TriCon, the Company and GFC
Financial have agreed to pay investment banking fees aggregating $4.5 million to
the Underwriter and to pay certain related out-of-pocket expenses.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
The Notes are a new issue of securities with no established trading market
and will not be listed on any national securities exchange. The Underwriter has
advised the Company that it may from time to time purchase and sell the Notes in
the secondary market, but that it is not obligated to do so. No assurance can be
given that there will be a secondary market for the Notes.
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<PAGE> 17
PROSPECTUS
GREYHOUND FINANCIAL CORPORATION
SENIOR DEBT SECURITIES
Greyhound Financial Corporation ("Company" or "GFC") may offer from time to
time up to $750 million aggregate principal amount of its senior debt securities
("Securities") on terms to be determined at the time of sale. The Securities may
be issued in one or more series with the same or various maturities at or above
par or with an original issue discount and may be issued in fully registered
form or in the form of one or more global securities (each a "Global Security").
The specific designation, the aggregate principal amount, the maturity, the
purchase price, the rate (which may be fixed or variable) and time of payment of
any interest, any sinking fund, any terms of redemption at the option of the
Company or the holder, and other specific terms of the Securities in respect of
which this Prospectus is being delivered ("Offered Securities") are set forth in
an accompanying prospectus supplement ("Prospectus Supplement"), together with
the terms of offering of the Offered Securities.
------------------------
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 ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
The Offered Securities may be offered through underwriters, agents or
dealers. If underwriters are used, it is expected that the managing underwriters
will include Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citicorp Securities, Inc., Goldman, Sachs & Co., Lehman Brothers,
Lehman Brothers Inc. and Salomon Brothers Inc. If an underwriter, agent or
dealer is involved in the offering of any Offered Securities, the underwriter's
discount, agent's commission or dealer's purchase price will be set forth in, or
may be calculated from, the Prospectus Supplement, and the net proceeds to the
Company from such offering will be the public offering price of the Offered
Securities less such discount in the case of an underwriter, the purchase price
of the Offered Securities less such commission in the case of an agent or the
purchase price of the Offered Securities in the case of a dealer, and less, in
each case, the other expenses of the Company associated with the issuance and
distribution of the Offered Securities. See "Plan of Distribution."
The date of this Prospectus is March 11, 1994.
<PAGE> 18
IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS FOR SUCH OFFERING MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE OFFERED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
------------------------
AVAILABLE INFORMATION
The Company 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 Room 1024 at the public reference facilities maintained
by the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as
the Regional Offices of the Commission at Northwestern Atrium Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661-2511 and 7 World Trade
Center, New York, New York 10048, and copies can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at the prescribed rates. Reports and other information
concerning the Company can also be inspected at the office of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993 and Current Reports on Form
8-K, 8-K/A and 8-K/A-1 dated February 14, 1994 filed pursuant to Section 13 of
the Exchange Act with the Commission.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the Securities shall be deemed to be incorporated by reference in this
Prospectus 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 such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge upon written or oral request by any
person to whom this Prospectus is delivered a copy of any or all of the
documents described above which have been incorporated by reference in this
Prospectus, other than exhibits to such documents. Such request should be
directed to Robert J. Fitzsimmons, Vice President-Treasurer, Greyhound Financial
Corporation, Dial Tower, 1850 N. Central Avenue, Phoenix, Arizona 85004,
telephone number (602) 207-4900.
2
<PAGE> 19
GREYHOUND FINANCIAL CORPORATION
Greyhound Financial Corporation, a Delaware corporation (the "Company"),
engages in the business of providing secured financing of selected commercial
and real estate activities in the United States and intermediate-term lending on
a secured basis in foreign countries. The Company accomplishes this through
secured loans and leases. The Company is in the process of winding down the
London based financing operations of Greyhound European Financial Group
("GEFG").
The Company generates interest and other income through charges assessed on
outstanding loans, loan servicing, leasing and other fees. The Company's primary
expenses are the costs of funding its loan business (including interest paid on
debt), provisions for possible credit losses, marketing expenses, salaries and
employee benefits, servicing and other operating expenses and income taxes.
The Company's current emphasis is on secured lending to businesses in
specific industry niches, where the Company's expertise in evaluating the needs
and credit worthiness of prospective customers enables it to provide specialized
financing services. The Company's strategy has been to seek to maintain a
high-quality portfolio, using clearly defined underwriting standards in an
effort to minimize the level of non-earning assets and write-offs.
The Company's activities include:
- Corporate Finance. The Corporate Finance group provides financing,
generally in the range of $2 million to $25 million, focusing on middle
market businesses nationally, including distribution, wholesale, retail,
manufacturing and service industries. The group's lending is primarily in
the form of term loans secured by the assets of the borrower, with
significant emphasis on cash flow as the source of repayment of the
secured loan.
- Transportation Finance. Through the Transportation Finance group, the
Company structures secured financings for specialized areas of the
transportation industry, principally involving domestic and foreign used
aircraft, as well as domestic short-line railroads and used rail
equipment. Typical transactions involve financing up to 80% of the fair
market value of used equipment in the $3 million to $30 million range.
Traditionally focused on the domestic marketplace, Transportation Finance
established a London, England office in 1992, broadening its product line
to include international aircraft loans.
- Communications Finance. The Communications Finance group specializes in
radio and television. Other markets include cable television, print and
outdoor media services in the United States. The Company extends secured
loans to communications businesses requiring funds for recapitalization,
refinancing or acquisition. Loan sizes generally are from $3 million to
$35 million.
- Commercial Real Estate Finance. The Commercial Real Estate group
provides cash-flow-based financing primarily for acquisitions and
refinancings to experienced real estate developers and owner tenants of
income-producing properties in the United States and the United Kingdom.
The Company concentrates on secured financing opportunities, generally
between $3 million and $30 million, involving senior mortgage term loans
on owner-occupied commercial real estate. The Company's portfolio of real
estate leveraged leases is also managed as part of the commercial real
estate portfolio.
- Resort Finance. The Resort Finance group focuses on successful,
experienced resort developers, primarily of timeshare resorts, second
home resort communities, golf resorts and resort hotels. Extending funds
through a variety of lending options, the Resort Finance group provides
loans and lines of credit ranging from $3 million to $30 million for
construction, acquisitions, receivables financing and purchases and other
uses. Through its subsidiary, GFC Portfolio Services, Inc. ("GPS"), the
Resort Finance group offers expanded convenience and service to its
customers. Professional receivables collections and cash management gives
developers the ability of having loan-related administrative functions
performed for them by the Company.
- Asset Based Finance. Acquired in early 1993, the Asset Based Finance
group ("ABF") offers a full range of nationwide collateral-oriented
lending programs to middle-market businesses including
3
<PAGE> 20
manufacturers, wholesalers and distributors. The Company's ABF group
mainly provides revolving lines of credit ranging between $2 million and
$25 million, often partnering with the Corporate Finance group to offer
convenient "one-stop" financing to businesses.
- Consumer Rediscount Finance. The Consumer Rediscount Group ("CRG")
offers $2 million to $25 million revolving credit lines to regional
consumer finance companies which in turn extend credit to consumers. The
Company's customers provide credit to consumers to finance home
improvements, automobile purchases, insurance premiums and for a variety
of other financial needs.
- Ambassador Factors. On February 14, 1994, the Company purchased Fleet
Factors Corp., better known as Ambassador Factors, from Fleet Financial
Group, Inc. Ambassador Factors provides accounts receivable factoring and
asset-based lending principally to small and medium-sized textile and
apparel manufacturers and importers.
- TriCon. On March 4, 1994, GFC Financial Corporation ("GFC Financial")
announced the signing of a definitive purchase agreement under which the
Company will acquire TriCon Capital Corporation ("TriCon"), an indirect
wholly-owned subsidiary of Bell Atlantic Corporation. This transaction is
subject to regulatory approvals and certain other conditions. TriCon is a
$1.8 billion niche-oriented provider of commercial and equipment leasing
services. TriCon's marketing orientation fits well with the Company's
emphasis on value-added products and services in focused niches of the
commercial finance business and further diversifies the Company's asset
base.
In conjunction with the liquidation of the GEFG portfolio, GEFG surrendered
the banking license of its United Kingdom bank, Greyhound Bank PLC, and renamed
the company Greyhound Guaranty Limited ("GGL"). GGL operates a finance group
that was primarily involved in lending to individuals in the United Kingdom
secured by second mortgages on residential real estate. The group ceased writing
new consumer finance business in the first quarter of 1991 but continues to
administer and collect loans previously made.
The Company was incorporated under the laws of Delaware in 1965 and is the
successor to a California corporation which commenced operations in 1954. The
principal executive offices of the Company are located at Dial Tower, 1850 N.
Central Avenue, Phoenix, Arizona 85004, and its telephone number is (602)
207-4900. All of the capital stock of the Company is owned by GFC Financial, the
common stock of which is publicly traded on the New York Stock Exchange. GFC
Financial owns substantially all of the financial services businesses
(principally the Company) previously owned by its former parent, The Dial Corp.
RATIO OF INCOME TO FIXED CHARGES
The following table sets forth the Company's ratios of income to fixed
charges ("ratio") for each of the past five years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------------------------
1993 1992 1991 1990 1989
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.51 1.38 -- 1.24 1.23
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
Variations in interest rates generally do not have a substantial impact on
the ratio because the fixed-rate and floating-rate assets are generally matched
with liabilities of similar rate and term.
Income available for fixed charges, for purposes of the computation of the
ratio of income to fixed charges, consists of the sum of income before income
taxes (adjusted for the effect of reduced tax rates on income from leveraged
leases) and fixed charges. Fixed charges include interest and related debt
expense and a portion of rental expense determined to be representative of
interest.
For the year ended December 31, 1991, earnings were inadequate to cover
fixed charges by $35,256,000. This inadequacy was due to certain restructuring
and other charges of $65,000,000 and transaction costs of $13,000,000 recorded
in the fourth quarter of 1991 in connection with the transfer by The Dial Corp
to GFC Financial of its financial services and insurance businesses, including
the Company.
4
<PAGE> 21
USE OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement with respect to the
proceeds from the sale of the particular Offered Securities to which such
Prospectus Supplement relates, the net proceeds to be received by the Company
from the sale of the Securities will be added to the Company's general funds and
are intended to be used for general corporate purposes, which may include
without limitation, the reduction of short-term debt or the refinancing of
long-term debt. Subject to the application by the Company of such net proceeds
to general corporate purposes or such other use set forth in such Prospectus
Supplement, the Company will hold such funds in trust.
DESCRIPTION OF SECURITIES
The Securities will be issued under an Indenture, dated as of September 1,
1992, as supplemented and amended from time to time (hereinafter called the
"Indenture"), between the Company and The Chase Manhattan Bank, N.A., as Trustee
(the "Trustee"). A copy of the Indenture is filed as an exhibit to the
Registration Statement. The following statements do not purport to be complete
and are subject to the detailed provisions of the Indenture, to which reference
is hereby made, including the definition of certain terms used herein without
definition.
GENERAL
The Securities offered by this Prospectus will be limited to $750,000,000
aggregate principal amount. Prior to the date of this Prospectus, the Company
has issued $300,000,000 aggregate principal amount of such Securities. The
Indenture does not limit the aggregate principal amount of Securities which may
be offered thereunder and provides that Securities may be issued in one or more
series, in each case as authorized from time to time by the Company. The
Securities will be unsecured general obligations of the Company and will not be
subordinated to any other general indebtedness of the Company. Reference is made
to the Prospectus Supplement together with any pricing supplement thereto
relating to the Offered Securities for the following terms thereof:
(1) the title of the Offered Securities;
(2) any limit upon the aggregate principal amount of the Offered
Securities;
(3) the date or dates on which the principal of the Offered Securities
shall be payable;
(4) the rate or rates (which may be fixed or variable) at which the
Offered Securities shall bear interest, or the method by which such rate or
rates shall be determined;
(5) the date or dates from which such interest shall accrue, or the
method by which such date or dates shall be determined, the dates on which
such interest shall be payable and any record dates therefor;
(6) the place or places where the principal of, premium, if any, and
interest on the Offered Securities shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which the Offered Securities may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem, purchase or
repay the Offered Securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which the Offered Securities shall be redeemed, purchased or repaid
pursuant to such obligation;
(9) if other than the principal amount thereof, the percentage of the
principal amount of the Offered Securities payable upon declaration of
acceleration of the maturity of the Offered Securities;
(10) whether the Offered Securities are to be issued in whole or in
part in global form ("Global Securities") and, if so, the identity of the
Depositary for such Global Securities, and the terms and
5
<PAGE> 22
conditions, if any, upon which interests in such Global Securities may be
exchanged, in whole or in part, for the individual Securities represented
thereby;
(11) any deletions from, modifications of, or additions to the events
of default or covenants of the Company with respect to any of the Offered
Securities; and
(12) any other terms of the Offered Securities none of which shall be
inconsistent with the provisions of the Indenture (Section 2.02).
The Company may authorize the issuance and provide for the terms of a
series of Securities pursuant to a resolution of its Board of Directors or any
duly authorized committee thereof or pursuant to a supplemental indenture.
The Securities may be issued in registered form. Securities of a series may
be issued in whole or in part in the form of one or more Global Securities, as
described below under "Global Securities." Unless the Prospectus Supplement
relating thereto specifies otherwise, Securities will be issued only in
denominations of $1,000 or any integral multiple thereof (Section 2.01). One or
more Global Securities will be issued in a denomination or denominations equal
to the aggregate principal amount of Outstanding Securities of the series to be
represented by such Global Security or Securities (Section 3.01).
Securities (other than a Global Security) may be presented for exchange and
registration of transfer (with the form of transfer endorsed thereon duly
executed) at the office of the Company designated for such purpose or at the
office of any transfer agent or at the office of any Security Registrar, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. Securities may initially be presented for
registration of transfer or exchange at the Company's principal business office,
Dial Tower, Phoenix, Arizona 85077 and at the Principal Office of the Trustee at
4 Chase MetroTech Center, 3rd Floor, Brooklyn, New York 11245. Securities (other
than a Global Security) in the several denominations will be interchangeable
without service charge, but the Company may require payment to cover taxes or
other governmental charges. The Trustee initially will act as authenticating
agent under the Indenture (Sections 1.02, 2.05 and 5.02).
PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, on Securities (other than a
Global Security) will be made against surrender of such Securities at the
Principal Office of the Trustee in The City of New York. Payment of any
installment of interest on Securities will be made to the person in whose name
such Security is registered at the close of business on the record date for such
interest. Unless otherwise indicated in the Prospectus Supplement, payments of
such interest will be made at the Principal Office of the Trustee in The City of
New York, or, at the option of the Company, by check mailed by first class mail
to registered holders of a Security at such holder's registered address
(Sections 2.01 and 5.02).
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest on any Security that remain
unclaimed at the end of three years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the holder
of such Security entitled to receive such payment will thereafter look only to
the Company for payment therefor (Section 11.03).
GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in global
form. A Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
Global Security may be issued in either registered or bearer form and in either
temporary or permanent form. A Security in global form may not be transferred
except as a whole by the Depositary for such Global Security to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor (Section 2.05).
6
<PAGE> 23
If a Depositary for Securities of a series is at any time unwilling or
unable to continue as Depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue Securities of such series
in definitive form in exchange for the Global Security or Securities
representing Securities of such series. In addition, the Company may at any time
and in its sole discretion determine not to have any Securities of a series
represented by one or more Global Securities and, in such event, will issue
Securities of such series in definitive form in exchange for the Global Security
or Securities representing Securities. Further, if the Company so specifies with
respect to the Securities of a series, each Person specified by the Depositary
of the Global Security representing Securities of such series may, on terms
acceptable to the Company and the Depositary for such Global Security, receive
Securities of such series in definitive form. In any such instance, each Person
so specified by the Depositary of the Global Security will be entitled to
physical delivery in definitive form of Securities of the series represented by
such Global Security equal in principal amount to such Person's beneficial
interest in the Global Security (Section 2.05).
If any Securities of a series are issuable in global form, the applicable
Prospectus Supplement will describe the additional circumstances, if any, under
which beneficial owners of interests in any such Global Security may exchange
such interests for definitive Securities of such series and of like tenor and
principal amount in any authorized form and denomination, the manner of payment
of principal of, premium and interest, if any, on any such Global Security and
the material terms of the depositary arrangement with respect to any such Global
Security.
CERTAIN DEFINITIONS
The following terms are defined substantially as follows in Section 1.02 of
the Indenture and are used herein as so defined. For the purposes of the
following terms, all items shall be determined in accordance with generally
accepted accounting principles, unless otherwise indicated.
"Consolidated Net Tangible Assets" means the total of all assets reflected
on a consolidated balance sheet of the Company and its consolidated
Subsidiaries, at their net book values (after deducting related depreciation,
depletion, amortization and all other valuation reserves which, in accordance
with generally accepted accounting principles, should be set aside in connection
with the business conducted), but excluding goodwill, unamortized debt discount
and all other like intangible assets, less the aggregate of the current
liabilities of the Company and its consolidated Subsidiaries reflected on such
balance sheet. For purposes of this definition, "current liabilities" include
all indebtedness for money borrowed, incurred, issued, assumed or guaranteed by
the Company and its consolidated Subsidiaries, and other payables and accruals,
in each case payable on demand or due within one year of the date of
determination of Consolidated Net Tangible Assets, but shall exclude any portion
of long-term debt maturing within one year of the date of such determination,
all as reflected on such consolidated balance sheet of the Company and its
consolidated Subsidiaries.
"Lien" means any lien, charge, security interest, right of another under
any conditional sale or other title retention agreement or any other encumbrance
affecting title to property, including any lease under a sale and leaseback
arrangement.
"Subsidiary" means any corporation a majority of the Voting Stock of which
is owned, directly or indirectly, by the Company or by one or more Subsidiaries
or by the Company and one or more Subsidiaries. "Restricted Subsidiary" is any
Subsidiary a majority of the Voting Stock of which is owned, directly, by the
Company or by one or more Restricted Subsidiaries or by the Company and one or
more Restricted Subsidiaries and which is designated as such by resolution of
the Board of Directors of the Company. "Unrestricted Subsidiary" means any
Subsidiary other than a Restricted Subsidiary.
"Voting Stock" means stock of any class or classes (however designated)
having ordinary voting power for the election of a majority of the members of
the board of directors (or any governing body) of such corporation, other than
stock having such power only by reason of the happening of a contingency.
7
<PAGE> 24
LIMITATION ON LIENS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, create, assume, incur or suffer to be created, assumed
or incurred or to exist any Lien upon any of the properties of any character of
the Company or any Restricted Subsidiary without making effective provision for
securing the Securities equally and ratably with any other obligation or
indebtedness so secured, other than: (i) leases of property in the ordinary
course of business or in the event that such property is not needed in the
operation of the business; (ii) Liens securing indebtedness incurred to finance
the acquisition of the property subject to the Lien, and in respect of which the
creditor has no recourse against the Company or any Restricted Subsidiary except
recourse to such property, or to the proceeds of any sale or lease of such
property or both; (iii) deposits with or security given to a governmental agency
as a condition to the transaction of business or the exercise of a privilege, or
made to enable the Company or a Restricted Subsidiary to maintain self-insurance
or participate in any fund in connection with worker's compensation,
unemployment insurance, old age pensions, or other social security, or as
collateral in connection with any bond on appeal by the Company or any
Restricted Subsidiary from any judgment or in connection with any other judicial
proceedings by or against the Company or any Restricted Subsidiary; (iv) Liens
for taxes or assessments which are not yet due or are payable without penalty or
are being contested in good faith and against which reserves deemed adequate by
the Company or a Restricted Subsidiary have been established, provided that
foreclosure or similar proceedings have not been commenced; (v) Liens of any
judgment, if such judgment shall not have remained undischarged, or unstayed on
appeal or otherwise, for more than six months; (vi) undetermined Liens or
charges incident to construction, mechanics' and other like Liens arising in the
ordinary course of business in respect of obligations which are not overdue or
which are being contested by the Company or any Restricted Subsidiary in good
faith, or deposits to obtain the release of such Liens; (vii) immaterial
encumbrances consisting of zoning restrictions, licenses, easements and
restrictions on the use of real property and minor defects and irregularities in
the title thereto; (viii) other immaterial (in the aggregate) Liens incidental
to the conduct of the Company's or any Restricted Subsidiary's business or the
ownership of its property other than for indebtedness; (ix) banker's liens and
rights of offset in the holders of indebtedness such as commercial paper in the
ordinary course of business; (x) leasehold or purchase rights, exercisable for a
fair consideration, in favor of any Person which arise in transactions entered
into in the ordinary course of business; (xi) Liens on property or shares of
stock of a corporation at the time the corporation becomes a Restricted
Subsidiary or merges into or consolidates with the Company or a Restricted
Subsidiary provided any such Lien is not incurred in anticipation of such
corporation becoming a Restricted Subsidiary or the related merger or
consolidation; (xii) Liens on property at the time the Company or a Restricted
Subsidiary acquires the property; (xiii) Liens in an amount not to exceed in the
aggregate $15,000,000 at any one time outstanding, excluding Liens covered by
clauses (i) through (xii) above; and (xiv) Liens securing the indebtedness of
the Company or a Restricted Subsidiary and the sum of the following does not
exceed 10% of Consolidated Net Tangible Assets: (a) such indebtedness plus (b)
other indebtedness of the Company and its Restricted Subsidiaries secured by
Liens on property of the Company and its Restricted Subsidiaries, excluding
indebtedness secured by a Lien existing as of the date specified in the
Indenture and excluding indebtedness secured by a Lien permitted by one of
clauses (i) through (xiii) above. (Section 5.04).
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Indenture provides that the Company will not consolidate with, sell or
lease all or substantially all its assets to, or merge with or into any other
corporation, or purchase all or substantially all the assets of another
corporation, unless (i) the Company shall be the continuing corporation, or the
successor, transferee or lessee corporation is organized under the laws of the
United States of America or any state thereof and assumes the Company's
obligations under the Securities and the Indenture and (ii) immediately after
giving effect to such transaction, no default will have occurred and be
continuing. A purchase by a Subsidiary of all or substantially all of the assets
of another corporation shall not be deemed to be a purchase of such assets by
the Company (Section 5.06). Notwithstanding the foregoing, if, upon any such
consolidation or merger of the Company with or into any other corporation, or
upon any conveyance of the property of the Company as an entirety or
substantially as an entirety to any other corporation, any properties of any
character owned by the Company
8
<PAGE> 25
immediately prior thereto would thereupon become subject to any Lien,
simultaneously with such consolidation, merger or conveyance, effective
provision will be made to secure the Securities outstanding equally and ratably
with the debt secured by such Lien (Section 14.01).
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
without the consent of the holders of the Securities, to, among other things,
establish the form and terms of any series of the Securities issuable thereunder
by one or more supplemental indentures, and, with the consent of the holders of
not less than 66 2/3% in the aggregate principal amount of the Securities then
outstanding which are affected thereby, to modify and alter the terms of the
Indenture or any supplemental indenture or the rights of the holders of the
Securities of such series to be affected, except that no such modification or
alteration may be made which will (i) extend the fixed maturity of any
Securities, or reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, or reduce any premium
payable upon the redemption thereof, or make the principal thereof or interest
or premium thereon payable in any coin or currency other than that provided in
the Securities, or impair the right to institute suit for the enforcement of any
such payment on or after the maturity thereof, without the consent of the holder
of each Indenture Security so affected, or (ii) reduce the percentage of
Securities of any series, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of all the
Securities then outstanding, or (iii) modify, without the written consent of the
Trustee, the rights, duties or immunities of the Trustee (Sections 13.01 and
13.02).
DEFAULTS
The Indenture provides that events of default with respect to any series of
Securities will be (i) default for 30 days in payment of interest upon any
Indenture Security of such series; (ii) default in payment of principal (other
than on sinking fund redemption) or premium, if any, on any Indenture Security
of such series; (iii) default for 30 days in payment of any sinking fund
instalment when due by the terms of the Securities of such series; (iv) default,
for 90 days after written notice to the Company by the Trustee or the holders of
at least 25% in aggregate principal amount of the Securities of such series then
outstanding, in performance of any other covenant in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series of
Securities other than such series); (v) default under another instrument or in
respect of another series of Securities resulting in acceleration of maturity of
indebtedness of the Company in an amount exceeding $5,000,000 if such
acceleration is not rescinded or annulled, or such indebtedness shall not have
been discharged, within 10 days after written notice by the Trustee or the
holders of at least 10% in principal amount of the Securities of such series;
(vi) certain events in bankruptcy or insolvency; and (vii) the incurrence of any
other event of default with respect to Securities of such series (Section 6.01).
If an event of default with respect to Securities of any series should occur and
be continuing, either the Trustee or the holders of 25% of the principal amount
of outstanding Securities of such series may declare each Indenture Security of
that series due and payable (Section 6.02). The Company will be required to file
annually with the Trustee a statement of an officer as to the fulfillment by the
Company of its obligations under the Indenture during the preceding year
(Section 5.07).
Holders of a majority in principal amount of the outstanding Securities of
any series will be entitled to control certain actions of the Trustee under the
Indenture and to waive past defaults with respect to such series (Sections 6.02
and 6.06). Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee will not be under any obligation to exercise any of the
rights or powers vested in it by the Indenture at the request, order or
direction of any of the holders of Securities, unless one or more of such
holders of Securities shall have offered to the Trustee reasonable indemnity
(Section 10.01).
If an event of default occurs and is continuing with respect to a series of
Securities, any sums held or received by the Trustee under the Indenture may be
applied to reimburse the Trustee for its reasonable compensation and expenses
incurred prior to any payments to holders of Securities of such series (Section
6.05).
9
<PAGE> 26
The right of any holder of Securities of any series to institute action for
any remedy is subject to certain conditions precedent, including a request to
the Trustee by the holders of not less than 25% in principal amount of the
Securities of that series outstanding to take action, and an offer to the
Trustee of reasonable indemnity against liabilities incurred by it in so doing
(Section 6.07).
DEFEASANCE
The Indenture provides that if, any time after the date of the Indenture,
the Company shall deposit with the Trustee, in trust for the benefit of the
holders thereof, (i) funds sufficient to pay, or (ii) such amount of direct
obligations of the United States of America as will or will together with the
income thereon without consideration of any reinvestment thereof be sufficient
to pay, all sums due for principal of, premium, if any, and interest on the
Securities of a particular series, as they shall become due from time to time,
and certain other conditions are met, the Trustee shall cancel and satisfy the
Indenture with respect to such series to the extent provided therein. Such
defeasance is conditioned upon the Company's delivery of an opinion of counsel
that the holders of the Securities of such series will have no federal income
tax consequences as a result of such deposit (Section 11.02).
CONCERNING THE TRUSTEE
The Trustee is one of the banks participating in one revolving credit
agreement with the Company. In addition, the Trustee acts as trustee with
respect to an Indenture dated as of June 1, 1985 (with respect to certain other
of the Company's Medium-Term Notes).
PLAN OF DISTRIBUTION
The Company may offer the Securities directly or through underwriters,
dealers or agents.
If underwriters are used in the offering of Offered Securities, the names
of the managing underwriter or underwriters (expected to be or include Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citicorp
Securities, Inc., Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers Inc.
and Salomon Brothers Inc) and any other underwriters, and the terms of the
transaction, including compensation of the underwriters and dealers, if any,
will be set forth in the Prospectus Supplement relating to such offering. Firms
not so named will have no direct or indirect participation in the underwriting
of such Offered Securities, although such a firm may participate in the
distribution of such Offered Securities under circumstances entitling it to a
dealer's allowance or agent's commission. It is anticipated that any
underwriting agreement pertaining to any Offered Securities will (1) entitle the
underwriters to indemnification by the Company against certain civil liabilities
under the Securities Act of 1933, as amended ("Securities Act"), (2) provide
that the obligations of the underwriters will be subject to certain conditions
precedent, and (3) provide that the underwriters generally will be obligated to
purchase all such Offered Securities if any are purchased.
The Company also may sell Offered Securities to a dealer, as principal. In
such event, the dealer may then resell such Offered Securities to the public at
varying prices to be determined by such dealer at the time of resale. The name
of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Securities also may be offered through agents designated by the
Company from time to time. Any such agent will be named and the terms of any
such agency will be set forth, in the Prospectus Supplement or Pricing
Supplement relating thereto. Unless otherwise indicated in such Prospectus
Supplement or Pricing Supplement, any such agent will act on a best efforts
basis for the period of its appointment.
Dealers and agents named in a Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Offered
Securities described therein and, under agreements which may be entered into
with the Company, may be entitled to indemnification by the Company against
certain civil liabilities under the Securities Act. Underwriters, dealers and
agents may engage in transactions with, or perform services for, the Company in
the ordinary course of business.
10
<PAGE> 27
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters or other agents of the Company to solicit offers by certain
institutions to purchase the Offered Securities from the Company pursuant to
contracts providing for payment and delivery at a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will not
be subject to any conditions except that (1) the purchase of the Offered
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject and (2) if the Offered
Securities are also being sold to underwriters, the Company shall have sold to
such underwriters the Offered Securities not subject to delayed delivery.
The anticipated date of delivery of Offered Securities will be set forth in
the Prospectus Supplement relating to the Offering of such Securities.
LEGAL MATTERS
The legality of the Securities being offered hereby will be passed upon for
the Company by William J. Hallinan, Esq., General Counsel of GFC Financial
Corporation and counsel to the Company. Brown & Wood will act as counsel for any
underwriters or agents.
EXPERTS
The financial statements of Greyhound Financial Corporation and
consolidated subsidiaries incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993
are incorporated in reliance upon the report of Deloitte & Touche, independent
auditors, as experts in accounting and auditing.
The financial statements of TriCon Capital Corporation-Predecessor Business
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 have been audited by Coopers & Lybrand, independent
accountants, as of the dates and for the periods indicated in their report
thereon (which report includes an explanatory paragraph for certain accounting
changes) included therein and incorporated herein by reference. Such financial
statements are incorporated herein in reliance on such report of Coopers &
Lybrand, independent accountants, given on the authority of that firm as experts
in accounting and auditing.
The financial statements of Fleet Factors Corporation (a wholly-owned
subsidiary of Fleet Financial Group, Inc.) appearing in the Company's Current
Report on Form 8-K dated February 14, 1994 have been audited by KPMG Peat
Marwick, independent auditors, as of the dates and for the periods indicated in
their report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated herein in reliance on such report of KPMG
Peat Marwick, independent auditors, given upon the authority of said firm as
experts in accounting and auditing.
11
<PAGE> 28
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
----------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Greyhound Financial Corporation..... S-2
Recent Developments................. S-3
Pro Forma Financial Data............ S-7
Ratio of Income to Fixed Charges.... S-10
Use of Proceeds..................... S-10
Capitalization...................... S-11
Description of Notes................ S-12
Underwriting........................ S-16
PROSPECTUS
Available Information............... 2
Incorporation of Certain Documents
by
Reference......................... 2
Greyhound Financial Corporation .... 3
Ratio of Income to Fixed Charges.... 4
Use of Proceeds..................... 5
Description of Securities........... 5
Plan of Distribution................ 10
Legal Matters....................... 11
Experts............................. 11
</TABLE>
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$150,000,000
G F C
GREYHOUND FINANCIAL
CORPORATION
FLOATING RATE NOTES
DUE MARCH 27, 1995
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
MARCH 18, 1994
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