<PAGE> 1
PROSPECTUS SUPPLEMENT RULE 424(b)(5)
FILE No. 33-52845
(To Prospectus dated June 5, 1995)
$125,000,000
FINOVA
FINOVA CAPITAL CORPORATION
6.45% NOTES DUE JUNE 1, 2000
------------------------
Interest payable June 1 and December 1
------------------------
THE NOTES ARE NOT REDEEMABLE PRIOR TO MATURITY. THE NOTES WILL BE REPRESENTED BY
THE GLOBAL SECURITY REGISTERED IN THE NAME OF THE NOMINEE OF THE DEPOSITORY
TRUST COMPANY, WHICH WILL ACT AS 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
REGISTERED IN THE NAME OF THE DENOMINATION AND TERMS TO BE
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.
------------------------
PRICE 99.834% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
------------ -------------- ---------------
<S> <C> <C> <C>
Per Note......................... 99.834% .500% 99.334%
Total............................ $124,792,500 $625,000 $ 124,167,500
</TABLE>
- ------------
(1) Plus accrued interest, if any, from date of issuance.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $145,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriter and subject to approval of certain legal matters by Brown &
Wood, counsel for the Underwriter. It is expected that delivery of the Global
Security will be made on or about June 9, 1995 through the facilities of The
Depository Trust Company, against payment therefor in immediately available
funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
June 5, 1995
<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.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND ANY INFORMATION
OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN OR THEREIN MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AT ANY TIME NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION
HEREIN OR THEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Finova Capital Corporation............................................................ S-3
Ratio of Income to Fixed Charges...................................................... S-5
Use of Proceeds....................................................................... S-6
Description of Notes.................................................................. S-6
The Underwriter....................................................................... S-8
PROSPECTUS
Available Information................................................................. 2
Incorporation of Certain Documents by Reference....................................... 2
Finova Capital Corporation............................................................ 3
Use of Proceeds....................................................................... 3
Description of Securities............................................................. 3
Plan of Distribution.................................................................. 9
Legal Matters......................................................................... 9
Experts............................................................................... 9
</TABLE>
S-2
<PAGE> 3
FINOVA CAPITAL CORPORATION
The following discussion relates to FINOVA Capital Corporation ("FINOVA" or
the "Company"), a Delaware corporation, formerly known as Greyhound Financial
Corporation, and its subsidiaries. The Company is the primary subsidiary of The
FINOVA Group Inc. ("FINOVA Group"), a Delaware corporation, formerly GFC
Financial Corporation, the common stock of which is listed on the New York Stock
Exchange. Recognizing the substantial increase in the Company's and FINOVA
Group's size and scope of operations, and the use of several names in their
operations, the Company and FINOVA Group effected their name changes on February
1, 1995.
FINOVA Group is the successor to the former financial services businesses
of The Dial Corp ("Dial"). On March 18, 1992, Dial consummated the spin-off of
FINOVA Group, including the Company, to its stockholders. The Company was
incorporated under the laws of the State 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 1850 North Central
Avenue, P.O. Box 2209, Phoenix, Arizona 85002-2209, and its telephone number is
(602) 207-4900.
GENERAL
The Company engages in the business of providing collateralized financing
and leasing products 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 to $35 million. The Company also offers sales
financing programs to manufactures, distributors, vendors and franchisors which
facilitates the sale of their products to customers. 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, although there can be no assurance that competitive changes or
economic conditions will not result in an adverse impact on the Company's
results of operations or financial condition.
The Company generates interest and other income through charges assessed on
outstanding loans, loan servicing, leasing and other fees. The Company's primary
expenses are the costs of funding its loan and lease business (including
interest paid on debt), provisions for possible credit losses, marketing
expenses, salaries and employee benefits, servicing and other operating expenses
and income taxes.
LINES OF BUSINESS
FINOVA's activities currently include the following principal lines of
business:
- Corporate Finance. FINOVA Corporate Finance (which includes the Asset
Based Finance unit acquired in February 1993 from U.S. Bancorp, Inc.)
provides financing, generally in the range of $3 million to $35 million,
focusing on middle market businesses nationally, including distribution,
wholesale, specialty retail, manufacturing and services industries. The
group's lending is primarily in the form of revolving credit facilities
and term loans secured by the assets of the borrower, with significant
emphasis on the borrower's cash flow as the source of repayment of the
secured loan.
- Transportation Finance. FINOVA Transportation Finance 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
S-3
<PAGE> 4
focused on the domestic marketplace, Transportation Finance established a
London, England office in 1992, broadening its product line to include
international aircraft loans and leases.
- Communications Finance. FINOVA Communications Finance 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 recapitalizations,
refinancings or acquisitions. Loan sizes generally are from $3 million to
$35 million.
- Commercial Real Estate Finance. FINOVA Commercial Real Estate provides
cash-flow-based financing primarily for acquisitions and refinancings to
experienced real estate developers and owner/occupants 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. FINOVA Resort Finance 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
FINOVA Portfolio Services, Inc., FINOVA Resort Finance offers expanded
convenience and service to its customers. Professional receivables
collections and cash management give developers the ability of having
loan-related administrative functions performed for them by FINOVA.
- Rediscount Finance. FINOVA Rediscount Finance offers $1 million to $35
million revolving credit lines to regional consumer finance companies,
which in turn extend credit to consumers. FINOVA's customers provide
credit to consumers to finance home improvements, automobile purchases,
insurance premiums and for a variety of other financial needs.
- Factoring Services. On February 14, 1994, FINOVA purchased Fleet Factors
Corp, better known as Ambassador Factors Corporation ("Ambassador") from
Fleet Financial Group, Inc. Ambassador was merged into the Company in
December 1994. FINOVA Factoring Services provides full service factoring
and accounts receivable management services for entrepreneurial and
larger firms, operating primarily in the textile and apparel industries.
- Commercial Finance. FINOVA Commercial Finance offers collateral-oriented
revolving credit facilities and term loans for manufacturers,
distributors, wholesalers and service companies. Typical transaction
sizes range from $500,000 to $3 million.
On April 30, 1994, the Company acquired TriCon Capital Corporation
("TriCon"), formerly an indirect wholly-owned subsidiary of Bell Atlantic
Corporation. TriCon was merged into the Company in May 1994. The acquisition of
TriCon expanded the Company's activities from eight to fifteen principal lines
of businesses.
- Medical Finance. FINOVA Medical Finance offers a full range of equipment
and real estate financing and asset management services for the U.S.
health care industry, targeting the top 2,400 health care providers in
the United States. Transaction sizes typically range from $500,000 to $25
million.
- Commercial Equipment Finance. FINOVA Commercial Equipment Finance offers
equipment leases, loans and "turnkey" financing to the supermarket,
manufacturing, packaging and general aviation industries. Typical
transaction sizes are $500,000 to $15 million.
- Government Finance. FINOVA Government Finance provides primarily
tax-exempt financing to state and local governments and non-profit
corporations. Typical transaction sizes range from $100,000 to $5
million.
S-4
<PAGE> 5
- Manufacturing and Dealer Services. The Company provides 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 $100,000). The equipment which the Company leases to
the ultimate end-user is typically sold to the Company by the vendor
participating in the financing program.
- Franchise Finance. FINOVA offers equipment, real estate and acquisition
financing programs for operators of established franchise concepts. The
equipment which the Company leases to the ultimate end-user is typically
purchased by the Company from the equipment manufacturer, vendor or
dealer selected by the end-user. Typical transaction sizes range from
$500,000 to $15 million.
- Inventory Finance. The Company provides inventory financing, combined
inventory/accounts receivable lines of credit and purchase order
financing for equipment distributors, value-added resellers and dealers.
Transaction sizes generally range from $1 million to $35 million.
- Capital Services Sector. Capital Services 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 the Company leases to
its customers is typically purchased from an equipment manufacturer,
vendor or dealer selected by the customer. This group focuses on
investments generally ranging from $5 million to $25 million.
RECENT DEVELOPMENT
The Company was informed today by one of its transportation finance
customers that the customer intended to file for bankruptcy protection due to a
voluntary grounding of its air fleet following action by the Federal Aviation
Administration. As a result, the customer may not be able to perform on
approximately $34 million carrying amount of secured loans and leases. As of the
date hereof, the Company is unable to assess when, if ever, such assets would be
classified as non-accruing, or whether it will be necessary to establish a
reserve or write-down with respect to such assets. The Company intends to
monitor the progress of this customer and to aggressively protect its rights
with respect to such assets. The Company believes, based on its initial
analysis, that as a result of collateral consisting of 13 aircraft, all or
substantially all of its exposure is covered, but there can be no assurance that
such security will be sufficient to cover all amounts owed to the Company.
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 and the three months ended
March 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED ----------------------------------------
MARCH 31, 1995 1994 1993 1992 1991 1990
- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.44 1.55 1.50 1.37 -- 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, income to cover fixed charges was
inadequate to cover fixed charges by $37,014,000. 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 Dial to FINOVA Group of its financial services and insurance
businesses, including the Company.
S-5
<PAGE> 6
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used for general
corporate purposes, including to reduce the Company's outstanding commercial
paper.
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 $125,000,000 aggregate principal amount and
will mature on June 1, 2000. The Notes will bear interest from the date of
issuance at the rate shown on the front cover of this Prospectus Supplement,
payable semi-annually on June 1 and December 1 in each year, commencing on
December 1, 1995, to holders of record on the preceding May 16 and November 16,
respectively. Interest will be calculated on the basis of a 360-day year of
twelve 30-day months. The Notes will not be redeemable at the option of the
Company prior to maturity and will not be subject to any sinking fund.
GLOBAL NOTES, DELIVERY AND FORM
The Notes will be represented by one global security (the "Global
Security") and will be deposited with, or on behalf of, The Depository Trust
Company, in its capacity as depository (the "Depositary"). Except as set forth
below, the Global Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary to a
successor of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Notes represented thereby, and the Trustee and the Company
are only required to treat the Depositary or its nominee as the legal owner of
the Notes, for all purposes under the Indenture. Except as otherwise provided in
this section, the Beneficial Owners (as defined below) of the Global Security
representing the Notes will not be entitled to receive physical delivery of
certificated Notes and will not be considered the Holders thereof for any
purpose under the Indenture, and no Global Security representing the Notes shall
be exchangeable or transferrable. Accordingly, each person owning a beneficial
interest in the Global Security must rely on the procedures of the Depositary
and, if such person is not a Participant, on the procedures of the Participant
through which such person owns its interest to exercise any rights of a Holder
under the Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Global Security representing the Notes.
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
amount 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")
S-6
<PAGE> 7
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 partnership nominee, Cede & Co. The deposit of the
Global Security with the Depositary and its registration in the name of
Cede & Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners of the Global Security
representing the Notes; the Depositary's records reflect only the identity
of the Direct Participants to whose accounts such Notes are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
by governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Security representing the Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the applicable record date (identified
in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Security representing
the Notes will be made to the Depositary. The Depositary's practice is to
credit Direct Participants' accounts on the applicable payment 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
S-7
<PAGE> 8
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.
THE UNDERWRITER
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, Morgan Stanley & Co. Incorporated (the
"Underwriter") has agreed to purchase, and the Company has agreed to sell to the
Underwriter, $125,000,000 principal amount of Notes.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Notes is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is obligated to take and pay for all the Notes if any are taken.
The Underwriter proposes to offer part of the Notes directly to the public
at the public offering price set forth on the cover page hereof and part to
certain dealers at a price that represents a concession not in excess of .30% of
the principal amount of the Notes. The Underwriter may allow, and such dealers
may reallow, a concession not in excess of .15% of the principal amount of the
Notes to certain other dealers. After the initial offering of the Notes, the
offering price and other selling terms may from time to time be varied by the
Underwriter.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriter that it presently
intends to make a market in the Notes, as permitted by applicable laws and
regulations. The Underwriter is not obligated, however, to make a market in the
Notes and any such market making may be discontinued at any time at the sole
discretion of the Underwriter. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Notes.
S-8
<PAGE> 9
PROSPECTUS
FINOVA CAPITAL CORPORATION
SENIOR DEBT SECURITIES
FINOVA Capital Corporation (formerly Greyhound Financial Corporation,
herein "FINOVA" or the "Company") may offer from time to time up to $1 billion
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 Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citicorp Securities, Inc., Goldman, Sachs & Co., Lehman Brothers,
Lehman Brothers Inc. and Salomon Brothers Inc. If an underwriter, agent or
dealer is involved in the offering of any Offered Securities, the underwriter's
discount, agent's commission or dealer's purchase price will be set forth in, or
may be calculated from, the Prospectus Supplement, and the net proceeds to the
Company from such offering will be the public offering price of the Offered
Securities less such discount in the case of an underwriter, the purchase price
of the Offered Securities less such commission in the case of an agent or the
purchase price of the Offered Securities in the case of a dealer, and less, in
each case, the other expenses of the Company associated with the issuance and
distribution of the Offered Securities. See "Plan of Distribution."
The date of this Prospectus is June 5, 1995.
<PAGE> 10
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 Citicorp 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, 1994, Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1995 and Current Report on Form 8-K
dated April 18, 1995, 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, Senior Vice President-Treasurer, FINOVA
Capital Corporation, 1850 N. Central Avenue, P.O. Box 2209, Phoenix, Arizona
85002-2209, telephone number (602) 207-4900.
2
<PAGE> 11
FINOVA CAPITAL CORPORATION
The following discussion relates to FINOVA Capital Corporation ("FINOVA" or
the "Company"), a Delaware corporation, formerly known as Greyhound Financial
Corporation, and its subsidiaries. The Company is the primary subsidiary of The
FINOVA Group Inc. ("FINOVA Group"), a Delaware corporation, formerly GFC
Financial Corporation, the common stock of which is listed on the New York Stock
Exchange. Recognizing the substantial increase in the Company's and FINOVA
Group's size and scope of operations, and the use of several names in their
operations, the Company and FINOVA Group effected their name changes on February
1, 1995.
FINOVA Group is the successor to the former financial services businesses
of The Dial Corp ("Dial"). On March 18, 1992, Dial consummated the spin-off of
FINOVA Group, including the Company, to its stockholders. The Company was
incorporated under the laws of the State 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 1850 North Central
Avenue, P.O. Box 2209, Phoenix, Arizona 85002-2209, and its telephone number is
(602) 207-4900.
The Company engages in the business of providing collateralized financing
and leasing products 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 to $35 million. The Company also offers sales
financing programs to manufactures, distributors, vendors and franchisors which
facilitates the sale of their products to customers. 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, although there can be no assurance that competitive changes or
economic conditions will not result in an adverse impact on the Company's
results of operations or financial condition.
The Company generates interest and other income through charges assessed on
outstanding loans, loan servicing, leasing and other fees. The Company's primary
expenses are the costs of funding its loan and lease business (including
interest paid on debt), provisions for possible credit losses, marketing
expenses, salaries and employee benefits, servicing and other operating expenses
and income taxes.
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.
3
<PAGE> 12
GENERAL
The Securities offered by this Prospectus will be limited to $1,000,000,000
aggregate principal amount. Prior to the date of this Prospectus, the Company
has issued $552,350,000 aggregate principal amount of such Securities. The
Indenture does not limit the aggregate principal amount of Securities which may
be offered thereunder and provides that Securities may be issued in one or more
series, in each case as authorized from time to time by the Company. The
Securities will be unsecured general obligations of the Company and will not be
subordinated to any other general indebtedness of the Company. Reference is made
to the Prospectus Supplement together with any pricing supplement thereto
relating to the Offered Securities for the following terms thereof:
(1) the title of the Offered Securities;
(2) any limit upon the aggregate principal amount of the Offered
Securities;
(3) the date or dates on which the principal of the Offered Securities
shall be payable;
(4) the rate or rates (which may be fixed or variable) at which the
Offered Securities shall bear interest, or the method by which such rate or
rates shall be determined;
(5) the date or dates from which such interest shall accrue, or the
method by which such date or dates shall be determined, the dates on which
such interest shall be payable and any record dates therefor;
(6) the place or places where the principal of, premium, if any, and
interest on the Offered Securities shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which the Offered Securities may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem, purchase or
repay the Offered Securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which the Offered Securities shall be redeemed, purchased or repaid
pursuant to such obligation;
(9) if other than the principal amount thereof, the percentage of the
principal amount of the Offered Securities payable upon declaration of
acceleration of the maturity of the Offered Securities;
(10) whether the Offered Securities are to be issued in whole or in
part in global form ("Global Securities") and, if so, the identity of the
Depositary for such Global Securities, and the terms and conditions, if
any, upon which interests in such Global Securities may be exchanged, in
whole or in part, for the individual Securities represented thereby;
(11) any deletions from, modifications of, or additions to the events
of default or covenants of the Company with respect to any of the Offered
Securities; and
(12) any other terms of the Offered Securities none of which shall be
inconsistent with the provisions of the Indenture (Section 2.02).
The Company may authorize the issuance and provide for the terms of a
series of Securities pursuant to a resolution of its Board of Directors or any
duly authorized committee thereof or pursuant to a supplemental indenture.
The Securities may be issued in registered form. Securities of a series may
be issued in whole or in part in the form of one or more Global Securities, as
described below under "Global Securities." Unless the Prospectus Supplement
relating thereto specifies otherwise, Securities will be issued only in
denominations of $1,000 or any integral multiple thereof (Section 2.01). One or
more Global Securities will be issued in a denomination or denominations equal
to the aggregate principal amount of Outstanding Securities of the series to be
represented by such Global Security or Securities (Section 3.01).
Securities (other than a Global Security) may be presented for exchange and
registration of transfer (with the form of transfer endorsed thereon duly
executed) at the office of the Company designated for such
4
<PAGE> 13
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, 1850 N. Central Avenue, P.O. Box 2209, Phoenix, Arizona
85002-2209 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 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.
5
<PAGE> 14
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 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;
6
<PAGE> 15
(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).
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
without the consent of the holders of the Securities, to, among other things,
establish the form and terms of any series of the Securities issuable thereunder
by one or more supplemental indentures, and, with the consent of the holders of
not less than 66 2/3% in the aggregate principal amount of the Securities then
outstanding which are affected thereby, to modify and alter the terms of the
Indenture or any supplemental indenture or the rights of the holders of the
Securities of such series to be affected, except that no such modification or
alteration may be made which will (i) extend the fixed maturity of any
Securities, or reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, or reduce any premium
payable upon the redemption thereof, or make the principal thereof or interest
or premium thereon payable in any coin or currency other than that provided in
the Securities, or impair the right to institute suit for the enforcement of any
such payment on or after the maturity thereof, without the consent of the holder
of each Indenture Security so affected, or (ii) reduce the percentage of
Securities of any series, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of all the
Securities then outstanding, or (iii) modify, without the written consent of the
Trustee, the rights, duties or immunities of the Trustee (Sections 13.01 and
13.02).
7
<PAGE> 16
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).
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 revolving credit
agreements 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).
8
<PAGE> 17
PLAN OF DISTRIBUTION
The Company may offer the Securities directly or through underwriters,
dealers or agents.
If underwriters are used in the offering of Offered Securities, the names
of the managing underwriter or underwriters (expected to be or include Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citicorp
Securities, Inc., Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers Inc.
and Salomon Brothers Inc) and any other underwriters, and the terms of the
transaction, including compensation of the underwriters and dealers, if any,
will be set forth in the Prospectus Supplement relating to such offering. Firms
not so named will have no direct or indirect participation in the underwriting
of such Offered Securities, although such a firm may participate in the
distribution of such Offered Securities under circumstances entitling it to a
dealer's allowance or agent's commission. It is anticipated that any
underwriting agreement pertaining to any Offered Securities will (1) entitle the
underwriters to indemnification by the Company against certain civil liabilities
under the Securities Act of 1933, as amended ("Securities Act"), (2) provide
that the obligations of the underwriters will be subject to certain conditions
precedent, and (3) provide that the underwriters generally will be obligated to
purchase all such Offered Securities if any are purchased.
The Company also may sell Offered Securities to a dealer, as principal. In
such event, the dealer may then resell such Offered Securities to the public at
varying prices to be determined by such dealer at the time of resale. The name
of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Securities also may be offered through agents designated by the
Company from time to time. Any such agent will be named and the terms of any
such agency will be set forth, in the Prospectus Supplement or Pricing
Supplement relating thereto. Unless otherwise indicated in such Prospectus
Supplement or Pricing Supplement, any such agent will act on a best efforts
basis for the period of its appointment.
Dealers and agents named in a Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Offered
Securities described therein and, under agreements which may be entered into
with the Company, may be entitled to indemnification by the Company against
certain civil liabilities under the Securities Act. Underwriters, dealers and
agents may engage in transactions with, or perform services for, the Company in
the ordinary course of business.
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters or other agents of the Company to solicit offers by certain
institutions to purchase the Offered Securities from the Company pursuant to
contracts providing for payment and delivery at a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will not
be subject to any conditions except that (1) the purchase of the Offered
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject and (2) if the Offered
Securities are also being sold to underwriters, the Company shall have sold to
such underwriters the Offered Securities not subject to delayed delivery.
The anticipated date of delivery of Offered Securities will be set forth in
the Prospectus Supplement relating to the Offering of such Securities.
LEGAL MATTERS
The legality of the Securities being offered hereby will be passed upon for
the Company by William J. Hallinan, Esq., General Counsel 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, 1994 have been audited by Deloitte & Touche LLP, 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.
9
<PAGE> 18
FINOVA
