<PAGE> 1
Rule 424(b)(2)
File No. 033-52845
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 22, 1994)
$100,000,000
GFC
GREYHOUND FINANCIAL CORPORATION
FLOATING RATE NOTES DUE APRIL 29, 1997
------------------------
Interest on the Floating Rate Notes Due April 29, 1997 (the "Notes") is
payable on January 29, April 29, July 29 and October 29 of each year, commencing
July 29, 1994. The interest rate for each Interest Period (as herein defined)
will be a rate of .37% 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.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(3)
- ------------------------------------------------------------------------------------------------
Per Note................... 100% .4% 99.6%
- ------------------------------------------------------------------------------------------------
Total...................... $100,000,000 $400,000 $99,600,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</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 $82,600.
------------------------
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 April
29, 1994.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is April 22, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER 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"), is
in the business of providing collateralized financing in focused market niches
primarily in the United States. The Company extends revolving credit facilities,
term loans and equipment and real estate financing to "middle-market" businesses
with financing needs falling generally between $500,000 and $35 million. The
Company also offers financing programs to manufacturers, distributors, vendors
and franchisors which facilitate the sale in the United States of their products
to end-users. The Company currently operates in 15 specific industry or market
niches in which its expertise in evaluating the creditworthiness of prospective
customers and its ability to provide value-added services enables the Company to
differentiate itself from its competitors and to command loan pricing which
provides a satisfactory spread over the Company's borrowing costs.
The Company seeks to maintain a high quality portfolio and to minimize
nonearning assets and write-offs by using clearly defined underwriting criteria,
stringent portfolio management techniques and by diversifying its lending
activities geographically and among a range of industries, customers and loan
products. Because of the diversity of the Company's portfolio, the Company
believes it is better able to manage competitive changes in its markets and to
withstand the impact of deteriorating economic conditions on a regional or
national basis.
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. The Transportation Finance group 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. 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., the Resort
Finance group offers expanded convenience and service to its customers.
Professional receivables collections
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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 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 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 in amounts generally ranging from $500,000 to $3
million 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 certain conditions of closing. 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."
The Company has generally ceased writing new business in Europe and has
begun a managed liquidation of the commercial and consumer loan portfolios of
Greyhound European Financial Group ("GEFG"). In conjunction with the liquidation
of the GEFG portfolio, GEFG surrendered the banking license of its United
Kingdom bank, Greyhound Bank PLC. GEFG operates a finance group that was
primarily involved in lending to individuals in the United Kingdom secured by
second mortgages on residential real estate. GEFG 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 month period ended November 30,
1993. Its customer base primarily consists of small to medium-sized textile and
apparel manufacturers in the factoring operations and similar sized
manufacturers, distributors and wholesalers in its 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).
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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 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 to
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
from the issuance of $300,000,000 of debt securities of the Company on March 25,
1994 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 and there can be no
assurance that any equity offering 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 has obtained such consents and waivers,
which consents and waivers state that they are 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. GFC Financial
has filed a registration statement for an offering of its common stock with the
Securities and Exchange Commission and 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. 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 approximately
$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
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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. 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 commercial finance 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. Equipment and real estate financing and asset
management services targeting the top 2,400 health care providers in the
United States.
- Commercial Equipment Finance. 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. Primarily tax-exempt financing to state and
local governments. Due to tax benefit limitations, TriCon sells a
substantial portion of the tax-exempt assets generated by the Government
Finance group through syndications or securitizations to third parties. In
addition, TriCon has generated fee income by arranging for the sale of
originations of such assets through public offerings.
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 Services. 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. 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. 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 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
assets originated by TriCon but sold to others in securitizations and
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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 with the largest
equipment concentrations being personal computers and individual workstation
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,
collateralized primarily by real estate and equipment 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.
As of December 31, 1993, excluding assets which will not be purchased by
the Company, TriCon's customer base included approximately 70,000 customer
accounts; its largest exposure to any single customer was approximately $33.0
million or approximately 1.5% of the portfolio assets and securitizations.
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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 historical 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, administrative and
other operating
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
includes the historical balance sheet of Ambassador as of November 30, 1993 and
the Pro Forma Statement of Consolidated Income From Continuing Operations for
the year ended December 31, 1993 includes the historical statement of income of
Ambassador for the eleven months ended November 30, 1993.
ACQUISITION OF AMBASSADOR
(2) To record the accrual of various liabilities ($8,800,000) and the
resulting goodwill ($30,400,000) arising from the Ambassador acquisition, the
payment for Ambassador's equity plus a premium ($76,285,000) using a portion of
the proceeds from the sale of GFC Financial's discontinued mortgage insurance
subsidiary and cash generated from operations which previously had been used to
repay debt and the elimination of historical equity ($54,685,000).
(3) To record repayment of Ambassador's intercompany payable to Fleet
($172,000,000), using the proceeds advanced to the Company upon the sale of GFC
Financial's discontinued mortgage insurance subsidiary and cash generated from
operations which previously had been used to repay debt.
(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) To record the estimated interest expense ($3,026,000) arising from the
debt incurred to fund the acquisition and the repayment of the intercompany
payable due to Fleet. The adjustment is partially offset by interest saved as a
result of the $40,000,000 equity contribution in Note (4).
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(6) To record amortization of goodwill ($2,470,000) based on an
amortization period of twenty years and amortization of the covenant not to
compete over one year (see Note (20)).
(7) To record administrative expenses for additional employees and general
overhead ($1,000,000).
(8) To record the income tax effect ($2,598,000) of Notes (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 ($820,000).
ACQUISITION OF TRICON
(10) To record the original capital contribution by Bell Atlantic as part
of the incorporation of TriCon ($135,000).
(11) To transfer assets and the related debt of TriCon ($53,460,000) not
purchased by the Company to Bell Atlantic and reduce interest earned from
financing transactions for the income recorded on such assets in 1993
($7,667,000).
(12) To record issuance of notes payable ($83,900,000) to Bell Atlantic by
TriCon to repay TriCon's deferred tax liability.
(13) To record a dividend from TriCon to Bell Atlantic ($26,757,000) and
the conversion of the remaining short-term borrowings from affiliates of TriCon
($695,094,000) to a note payable to Bell Atlantic ($721,851,000).
(14) To record the goodwill created in the acquisition of TriCon
($69,817,000), elimination of the remaining TriCon equity ($284,733,000), the
elimination of deferred tax assets ($2,800,000), the debt incurred to finance
the acquisition ($153,500,000) and the accrual of various liabilities
($5,000,000). A portion of the additional debt of the Company is assumed to be
replaced with equity raised by GFC Financial ($193,250,000) and such equity,
together with the outstanding preferred stock of the Company held by GFC
Financial ($25,000,000), the remaining intercompany loans due to GFC Financial
from the Company ($90,760,000) and other assets ($2,249,000), 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 Statement of Consolidated Income From Continuing Operations, is
approximately $2,000,000.
(15) To reflect base fees ($1,500,000) and incremental costs ($759,000)
related to an agreement to manage leveraged leases for Bell Atlantic by TriCon.
(16) To record interest expense ($4,905,000) resulting from the additional
debt issued to purchase TriCon and certain debt to Bell Atlantic incurred to
fund the deferred tax payment and dividend referred to in Notes (12) and (13),
reduced by the interest savings applicable to the debt not transferred in the
TriCon acquisition referred to in Note (11) and the equity contribution of the
intercompany loans in Note (14).
(17) To record amortization of goodwill ($3,491,000) based on an
amortization period of twenty years (see Note (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 ($3,244,000).
(19) To record the income tax effect of Notes (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.
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<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 to reduce the
Company's outstanding commercial paper.
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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 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 issuance of the Notes offered hereby, the proposed acquisition
of TriCon, and the issuance of additional debt of the Company to fund the
acquisition of TriCon and the proposed equity contribution from GFC Financial.
There can be no assurance 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
THE COMBINED ADJUSTMENTS FOR WITHOUT FOR
HISTORICAL ACQUISITION COMPANY AND HISTORICAL THE ACQUISITION EQUITY EQUITY
COMPANY OF AMBASSADOR AMBASSADOR(3) TRICON OF TRICON CONTRIBUTION(3) CONTRIBUTION
----------- -------------- ------------- ---------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Senior debt:
Notes payable to
Bell
Atlantic...... $ 611,194 $ 766,705 (4) $ 1,377,899
Other........... $ 1,991,986 $248,285(1) $ 2,240,271 709,508 346,750 (5) 2,587,021 $ (193,250)(9)
(709,508)(4)
----------- -------------- ------------- ---------- --------------- --------------- --------------
Total senior debt... 1,991,986 248,285 2,240,271 1,320,702 403,947 3,964,920 (193,250)
Subordinated debt,
net of unamortized
discount.......... 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)
Deferred income
taxes............. 197,705 (4,592) 193,113 81,100 (81,100)(4) 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)
(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 $ --
----------- -------------- ------------- ---------- --------------- --------------- --------------
----------- -------------- ------------- ---------- --------------- --------------- --------------
<CAPTION>
(C)
WITH
EQUITY
CONTRIBUTION(3)
---------------
<S> <<C>
Senior debt:
Notes payable to
Bell
Atlantic...... $ 1,377,899
Other........... 2,393,771
---------------
Total senior debt... 3,771,670
Subordinated debt,
net of unamortized
discount.......... 86,790
---------------
Total debt.......... 3,858,460(11)
Deferred income
taxes............. 193,113
Redeemable preferred
stock.............
Stockholder's
equity............ 696,550
---------------
Total............... $ 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) 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 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 $100,000,000 aggregate principal amount and
will mature on April 29, 1997 (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 .37% 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 April 29, 1994 payable quarterly in
arrears on January 29, April 29, July 29 and October 29 of each year (each, an
"Interest Payment Date"), commencing July 29, 1994. 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 April 29, 1994 to, but excluding, July 29, 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 .37% 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 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,
S-13
<PAGE> 14
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 by any other Rating Agency selected as
provided above; and "Expiration Date" shall mean the 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
S-14
<PAGE> 15
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.
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 the 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
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<PAGE> 16
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 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 .25% of the
principal amount. The Underwriter may allow, and such dealers may reallow, a
discount not in excess of .125% of the principal amount to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
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
GFC
SENIOR DEBT SECURITIES
Greyhound Financial Corporation ("Company" or "GFC") may offer from time to
time up to $1,000,000,000 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 Offered Securities may be offered through underwriters, agents or
dealers. If underwriters are used, it is expected that the managing underwriters
will include Citicorp Securities, Inc., Goldman, Sachs & Co., Lehman Brothers,
Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated 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 April 22, 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, Current Reports on Form 8-K
dated January 21, 1994 and Current Reports on Form 8-K, 8-K/A and 8-K/A-1 dated
February 14, 1994, and Form 8-K dated April 18, 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"), is
in the business of providing collateralized financing in focused market niches
primarily in the United States. The Company extends revolving credit facilities,
term loans and equipment and real estate financing to "middle-market" businesses
with financing needs falling generally between $500,000 and $35 million. The
Company also offers financing programs to manufacturers, distributors, vendors
and franchisors which facilitate the sale in the United States of their products
to end-users. The Company currently operates in 15 specific industry or market
niches in which its expertise in evaluating the creditworthiness of prospective
customers and its ability to provide value-added services enables the Company to
differentiate itself from its competitors and to command loan pricing which
provides a satisfactory spread over the Company's borrowing costs.
The Company seeks to maintain a high quality portfolio and to minimize
nonearning assets and write-offs by using clearly defined underwriting criteria,
stringent portfolio management techniques and by diversifying its lending
activities geographically and among a range of industries, customers and loan
products. Because of the diversity of the Company's portfolio, the Company
believes it is better able to manage competitive changes in its markets and to
withstand the impact of deteriorating economic conditions on a regional or
national basis.
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. The Transportation Finance group 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. 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., 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 manufacturers,
wholesalers and distributors. The ABF group mainly provides revolving
lines of credit
3
<PAGE> 20
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 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 in amounts generally ranging from $500,000 to $3
million 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 certain conditions of closing. 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.
The Company has generally ceased writing new business in Europe and has
begun a managed liquidation of the commercial and consumer loan portfolios of
Greyhound European Financial Group ("GEFG"). In conjunction with the liquidation
of the GEFG portfolio, GEFG surrendered the banking license of its United
Kingdom bank, Greyhound Bank PLC. GEFG operates a finance group that was
primarily involved in lending to individuals in the United Kingdom secured by
second mortgages on residential real estate. GEFG 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.
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 $1,000,000,000
aggregate principal amount. 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 conditions, if
any, upon which interests in such Global Securities may be exchanged, in
whole or in part, for the individual Securities represented thereby;
5
<PAGE> 22
(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, 1850 N. Central Avenue, Phoenix, Arizona 85004 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).
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
6
<PAGE> 23
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.
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
7
<PAGE> 24
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 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).
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<PAGE> 25
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 any 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).
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).
9
<PAGE> 26
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 Citicorp
Securities, Inc., Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers Inc.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated 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.
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
10
<PAGE> 27
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 the Company incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 have been audited by Deloitte & Touche, independent auditors,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated balance sheets as of December 31, 1993 and 1992 and the
consolidated statements of income and cash flows for each of the three years in
the period ended December 31, 1993 of TriCon Capital Corporation-Predecessor
Business incorporated by reference in this prospectus, have been incorporated
herein in reliance on the report, which includes an explanatory paragraph for
certain accounting changes, of Coopers & Lybrand, independent certified public
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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---------------------------------------------------
$100,000,000
GFC
GREYHOUND FINANCIAL
CORPORATION
FLOATING RATE NOTES
DUE APRIL 29, 1997
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
APRIL 22, 1994
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