Prospectus Supplement FINOVA(R)
(To Prospectus dated March 17, 1998)
$100,000,000 FINOVA Capital Corporation
6.15% Notes Due 1850 N. Central Avenue
March 31, 2003 P.O. Box 2209
Phoenix, Arizona 85002-2209
- --------------------------------------------------------------------------------
TERMS OF NOTES
* Interest paid on March 15 and * Global security held by The
September 15, accruing from the Depository Trust Company,
date we issue the Notes. generally.
* First interest payment date on * No redemption before maturity. No
September 15, 1998. sinking fund.
For more details, see "Note Terms" and "Description of the Securities."
TERMS OF SALE
Underwriting
Price to Discounts and Proceeds to
Public Commissions FINOVA
--------------- --------------- ---------------
Per Note 99.94% 0.500% 99.44%
Total $99,940,000 $500,000 $99,440,000
- ------------
Accrued interest from the issuance date will be added to the price to the
public.
The Notes have not been approved
or disapproved by the SEC or any state
securities commission.
None of those authorities has
determined that the Prospectus or this
Supplement is accurate or complete.
Any representation to the contrary is Book entry delivery of Notes expected
a criminal offense. on March 20, 1998, subject to
conditions.
Citicorp Securities, Inc.
March 17, 1998
<PAGE>
FINOVA CAPITAL CORPORATION
FINOVA Capital Corporation FINOVA's principal lines of
("FINOVA" or "us") is a financial business are detailed more fully in
services company that provides a broad the Prospectus. Those lines include:
range of financing and capital market Commercial Finance
products to mid-size business, * Business Credit
principally in the U.S. We concentrate * Corporate Finance
on lending to midsize businesses and * Inventory Finance
have been in operation for over 43 * Factoring Services
years. * Rediscount Finance
FINOVA extends revolving credit Specialty Finance
facilities, term loans, and equipment * Commercial Equipment Finance
and real estate financing primarily to * Communications Finance
"middle-market" businesses with * Franchise Finance
financing needs falling generally * Healthcare Finance
between $500,000 and $35 million. * Public Finance
* Portfolio Services
We operate in 16 specific * Resort Finance
industry or market niches under three * Specialty Real Estate Finance
market groups. We selected those * Transportation Finance
groups because our expertise in
evaluating the credit-worthiness of Capital Markets
prospective customers and our ability * FINOVA Realty Capital
to provide value-added services enable * FINOVA Investment Alliance
us to differentiate ourselves from our
competitors. That expertise and
ability also enable us to command
product pricing that provides a
satisfactory spread over our borrowing
costs.
NOTE TERMS
The following description rate series of securities under the
supplements the "Description of the Indenture dated as of March 20, 1998,
Securities" section in the Prospectus. between us and The First National Bank
The Notes are to be issued as a sepa- of Chicago, as Trustee.
Maximum Amount: $100,000,000 principal amount
Maturity: March 31, 2003
Interest Rate: 6.15% per year
Interest Payment Dates: March 15 and September 15, accruing from the date
we issue the Notes. First interest payment date is
September 15, 1998.
Interest Calculations: Based on a 360-day year of twelve 30-day months
Redemption or Sinking Fund: None
Form of Note: One global security, held in the name of The
Depository Trust Company, generally
Settlement and Payment: Same-day -- immediately available funds
Secondary Trading Payments: Same-day -- immediately available funds
S-2
<PAGE>
UNDERWRITING
We have entered into an derwriter or those dealers may allow a
Underwriting Agreement dated March 17, discount of 0.125% on sales to certain
1998 with Citicorp Securities, Inc., other dealers. After the initial
as Underwriter. The agreement provides public offering of the Notes, the
that the Underwriter will purchase all Underwriter may change the public
of the Notes if any of the Notes are offering price, concession to dealers
purchased. It need not purchase any and discount.
Notes unless certain conditions are
satisfied. We have agreed to indemnify The Notes are a new issue of
the Underwriter against certain securities with no established trading
liabilities, including civil market. The Underwriter has advised us
liabilities under the Securities Act that it intends to act as market maker
of 1933, or to contribute to payments for the Notes. It is not obligated to
which the Underwriter may be required do so, however, and it may discontinue
to make for those liabilities. any market making at any time without
notice. Neither we nor the Underwriter
We must also pay the expenses of can assure the liquidity of any
this offering, which are expected to trading market for the Notes.
be $150,000. Those expenses will
reduce the proceeds of this offering
received by us. The Underwriter and its
affiliates engage in transactions with
The Underwriter advises us that or perform services for us in the
it proposes to offer the Notes to the ordinary course of business. Those
public initially at the offering price services include investment and
set forth on the cover page of this commercial banking transactions and
Supplement. It may offer the Notes to services, including serving as an
certain dealers at that price less a agent and lender on some of our credit
concession of 0.250%. The Un- agreements.
S-3
<PAGE>
Prospectus FINOVA(R)
- ---------- 1850 North Central Avenue
P.O. Box 2209
Phoenix, Arizona 85002-2209
THE FINOVA(R) GROUP INC.
THE FINOVA(R) CAPITAL CORPORATION
By this prospectus, we may offer up to
$2,000,000,000 of our:
DEBT SECURITIES We will provide the specific terms of
COMMON STOCK (including, for The these securities in supplements to
FINOVA Group Inc., Rights to Purchase this prospectus. You should read this
Junior Participating Preferred Stock) prospectus and the supplements
PREFERRED STOCK carefully before you invest.
DEPOSITARY SHARES
WARRANTS
FINOVA Capital Corporation is a wholly We may offer the securities directly
owned subsidiary of The FINOVA Group or through underwriters, agents or
Inc. dealers. The supplement will describe
the terms of that plan of
distribution. "Plan of Distribution"
below also provides more information
on this topic.
These securities have not been
approved or disapproved by the SEC or
any state securities commission.
None of those authorities has
determined that this prospectus is
accurate or complete.
Any representation to the contrary is
a criminal offense.
The date of this prospectus is March 17, 1998
<PAGE>
Certain persons participating in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities offered
under this prospectus. Those transactions include over-allotment, stabilizing
transactions, short covering transactions and penalty bids. For a description of
those activities, see "Plan of Distribution" in the prospectus. If begun, they
may discontinue those activities at any time.
WHERE YOU CAN FIND MORE INFORMATION
The FINOVA Group Inc. ("FINOVA
Group") and FINOVA Capital Corporation
("FINOVA Capital") file annual,
quarterly and current reports, proxy
and information statements and other * Portions of the Proxy Statements
information with the SEC. You may read on Schedule 14A for FINOVA
and copy any document we file at the Group's Annual Meeting of
SEC's public reference rooms in Shareholders held on May 8, 1997
Washington, D.C., New York, New York and May 14, 1998 (expected to be
and Chicago, Illinois. Please call the filed on March 19, 1998) that
SEC at 1-800- SEC-0330 for more have been incorporated by
information on the public reference reference into our 10-K.
rooms and their copy charges. Our SEC
filings are also available to the * Quarterly Reports on Form 10-Q
public from the SEC's web site at of FINOVA Group and FINOVA
http://www.sec.gov. You may also Capital for the quarters ended
inspect our SEC reports and other March 31, June 30 and September
information at the New York Stock 30, 1997.
Exchange, 20 Broad Street, New York,
New York 10005. * Current Reports on Form 8-K of
FINOVA Group dated January 21,
The SEC allows us to "incorporate April 15, July 15, August 14,
by reference" the information we file and October 1, 1997 and January
with them, which means we can disclose 19, 1998.
information to you by referring you to
those documents. Information * Current Reports on Form 8-K of
incorporated by reference is part of FINOVA Capital dated January 23,
this prospectus. Later information April 17, July 16, and October
filed with the SEC updates and 15, 1997 and January 20, 1998.
supersedes this prospectus.
You may request a copy of those
We incorporate by reference the filings, other than exhibits, at no
documents listed below and any future cost, by contacting us at:
filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of Treasurer
the Securities Exchange Act of 1934 The FINOVA Group Inc.
until this offering is completed: 1850 North Central Avenue
P.O. Box 2209
* Annual Reports on Form 10-K of Phoenix, Arizona 85002-2209
FINOVA Group and FINOVA Capital. (602) 207-6900
THE COMPANIES
FINOVA Group is a financial We operate in 16 specific
services holding company. Through our industry or market niches under three
principal subsidiary, FINOVA Capital, market groups. We selected those
we provide a broad range of financing groups because our expertise in
and capital market products to evaluating the credit-worthiness of
mid-size business. We concentrate on prospective customers and our ability
lending to midsize businesses. FINOVA to provide value-added services enable
Capital has been in operation for over us to differentiate ourselves from our
43 years. competitors. That expertise and
ability also enable us to command
We extend revolving credit pricing that provides a satisfactory
facilities, term loans, and equipment spread over our borrowing costs.
and real estate financing primarily to
"middle-market" businesses with We seek to maintain a high
financing needs falling generally quality portfolio and to minimize
between $500,000 and $35 million. non-earning assets and write-offs. We
use clearly defined underwriting
criteria and
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<PAGE>
stringent portfolio management these companies is generally
techniques. We diversify our lending between $5 million and $25
activities geographically and among a million. This line provides
range of industries, customers and accounts receivable and
loan products. inventory financing and loans
secured by equipment and real
Due to the diversity of our estate.
portfolio, we believe we are better
able to manage competitive changes in * Rediscount Finance offers
our markets and to withstand the revolving credit facilities to
impact of deteriorating economic the independent consumer finance
conditions on a regional or national industry including sales,
basis. There can be no assurance, automobile, mortgage and premium
however, that competitive changes, finance companies. Typical
borrowers' performance, economic transaction sizes range from $1
conditions or other factors will not million to $35 million.
result in an adverse impact on our
results of operations or financial Specialty Finance
condition.
* Commercial Equipment Finance
We generate interest, leasing, offers equipment leases, loans
fee and other income through charges and "turnkey" financing to a
assessed on outstanding loans, loan broad range of midsize
servicing, leasing, brokerage and companies. Specialty markets
other activities. Our primary expenses include the corporate aircraft
are the costs of funding our loan and and emerging growth technology
lease business, including interest industries, primarily
paid on debt, provisions for possible biotechnology and electronics.
credit losses, marketing expenses, Typical transaction sizes range
salaries and employee benefits, from $500,000 to $15 million.
servicing and other operating expenses
and income taxes. * Communications Finance
specializes in term financing to
Business Groups advertising and
We operate the following subscriber-supported businesses
principal lines of business under including radio and television
three market groups: stations, cable operators,
outdoor advertising firms and
Commercial Finance publishers. Typical transaction
sizes range from $1 million to
* Business Credit offers $40 million.
collateral-oriented revolving
credit facilities and term loans * Franchise Finance offers
for manufacturers, distributors, equipment, real estate and
wholesalers and service acquisition financing for
companies. Typical transaction operators of established
sizes range from $500,000 to $3 franchise concepts. Transaction
million. sizes generally range from
$500,000 to $15 million.
* Corporate Finance provides a
full range of cash flow-oriented * Healthcare Finance offers a full
and asset-based term and range of working capital,
revolving loan products for equipment and real estate
manufacturers, wholesalers, financing products for the U.S.
distributors, specialty health care industry.
retailers and commercial and Transaction sizes typically
consumer service businesses. range from $500,000 to $25
Typical transaction sizes range million.
from $2 million to $35 million.
* Public Finance provides
* Inventory Finance provides tax-exempt term financing to
inbound and outbound inventory state and local governments,
financing, combined non-profit corporations and
inventory/accounts receivable entities using industrial
lines of credit and purchase revenue or development bonds.
order financing for equipment Typical transaction sizes range
distributors, value-added from $100,000 to $5 million.
resellers and dealers
nationwide. Transaction sizes * Portfolio Services provides
generally range from $500,000 to customized receivable servicing
$30 million. and collections for time-share
developers and other generators
* Factoring Services offers full of consumer receivables.
service factoring and accounts
receivable management services * Resort Finance focuses on
for entrepreneurial and larger construction, acquisition and
firms, primarily in the textile receivables financing of
and apparel industries. The
annual factored volume of
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<PAGE>
timeshare resorts worldwide as * FINOVA Investment Alliance
well as term financing for provides equity and debt
established golf resort hotels financing for midsize businesses
and receivables funding for in partnership with
developers of second home institutional investors and
communities. Typical transaction selected fund sponsors. Typical
sizes range from $5 million to transaction sizes range from $2
$35 million. million to $15 million.
* Specialty Real Estate Finance Both FINOVA Group and FINOVA
provides term financing for Capital are Delaware corporations.
hotel, anchored retail, office FINOVA Group was incorporated in 1991
and owner-occupied properties. to serve as the successor to The Dial
Typical transaction sizes range Corp's financial services businesses.
from $5 million to $25 million. Dial transferred those businesses to
FINOVA Group in March 1992 in a
* Transportation Finance spin-off. Since that time, FINOVA
structures equipment loans, Group has increased its total assets
leases, acquisition financing from about $2.6 billion at December
and leveraged lease equity 31, 1992 to $8.7 billion at December
investments for commercial and 31, 1997. Income from continuing
cargo airlines worldwide, operations increased from $37 million
railroads and operators of other in 1992 to $139 million in 1997. We
transportation related believe FINOVA Group ranks among the
equipment. Typical transaction largest independent commercial finance
sizes range from $5 million to companies in the U.S., based on total
$30 million. Through FINOVA assets. The common stock of FINOVA
Aircraft Investors LLC, FINOVA Group is traded on the New York Stock
also seeks to use its market Exchange.
expertise and industry presence
to purchase, upgrade and resell FINOVA Capital was incorporated
used commercial aircraft. in 1965 and is the successor to a
California corporation that was formed
Capital Markets in 1954. All of FINOVA Capital's
capital stock is owned by FINOVA
* FINOVA Realty Capital Group.
specializes in providing capital
markets-funded commercial real Our principal executive offices
estate financing products and are located at 1850 North Central
commercial mortgage banking Avenue, P.O. Box 2209, Phoenix,
services. Typical transaction Arizona 85002-2209. Our telephone
sizes range from $1 million to number is (602) 207-6900.
$5 million.
4
<PAGE>
SELECTED FINANCIAL INFORMATION
The following information was Annual Reports on Form 10-K. The
derived from FINOVA Group's financial information is only a summary and You
statements. does not provide all of should read our financial statements
the information contained in our and other information that we have
financial statements, including the filed with the SEC.
related notes, and Management's
Discussion and Analysis. Those items
are part of our
<TABLE>
<CAPTION>
As of and for the Year Ended December 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Interest earned from financing
transactions $ 944,724 $ 797,934 $ 702,116 $ 474,200 $ 255,216
Interest margins earned 455,642 369,105 309,084 227,463 124,847
Provision for credit losses 69,200 41,751 37,568 10,439 5,706
Gains on sale of assets 30,261 12,949 10,889 3,877 5,439
Income from continuing operations 139,098 116,493 93,798 73,770 37,846
Basic earnings from continuing
operations per share $ 2.56 $ 2.14 $ 1.72 $ 1.48 $ 0.96
Basic earnings per share $ 2.56 $ 2.15 $ 1.79 $ 1.49 $ 0.95
Basic adjusted weighted average
outstanding shares 54,405,000 54,508,000 54,633,000 49,765,000 39,277,000
Diluted earnings from continuing
operations per share $ 2.42 $ 2.08 $ 1.69 $ 1.46 $ 0.90
Diluted earnings per share $ 2.42 $ 2.09 $ 1.76 $ 1.47 $ 0.89
Diluted adjusted weighted average
shares 59,161,000 56,051,000 55,469,000 50,436,000 40,552,000
Dividend declared per common
share $ 0.52 $ 0.46 $ 0.42 $ 0.37 $ 0.34
FINANCIAL POSITION:
Investment in financing
transactions 8,399,456 7,298,759 6,348,079 5,342,979 2,846,571
Nonaccruing assets 187,356 155,505 143,127 149,046 102,607
Reserve for credit losses 177,088 148,693 129,077 110,903 64,280
Total assets 8,719,840 7,526,734 7,036,514 5,821,343 2,834,322
Total debt 6,764,581 5,850,223 5,649,368 4,573,354 2,079,286
Company-obligated mandatory
redeemable convertible
preferred securities of subsidiary
trust solely holding convertible
debentures of FINOVA Group
("TOPrS") 111,550 111,550 -- -- --
Shareowners' equity 1,090,454 929,591 825,184 770,252 503,300
</TABLE>
RATIO OF INCOME TO TOTAL FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
FINOVA Group 1.54x 1.50x 1.44x 1.58x 1.53x
FINOVA Capital 1.54x 1.50x 1.44x 1.58x 1.50x
</TABLE>
RATIO OF INCOME TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
FINOVA Group 1.52x 1.50x 1.44x 1.58x 1.50x
FINOVA Capital 1.54x 1.50x 1.44x 1.58x 1.46x
</TABLE>
5
<PAGE>
Variations in interest rates generally continuing operations before income
do not have a substantial impact on taxes plus fixed charges. Fixed
the ratio because fixed-rate and charges consist of interest and
floating-rate assets are generally related debt expense, and a portion of
matched with liabilities of similar rental expense determined to be
rate and term. Income available for representative of interest.
fixed charges, for purposes of
computing the above ratios, consists
of income from
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this * Actions of our competitors and
prospectus and any supplements are our ability to respond to those
"forward-looking," in that they do not actions. FINOVA seeks to remain
discuss historical fact but instead competitive without sacrificing
note future expectations, projections, prudent lending standards. Doing
intentions or other items relating to business under those standards
the future. These forward-looking becomes more difficult, however,
statements include those made in when competitors offer financing
documents incorporated in this with less stringent criteria. We
prospectus by reference. seek to maintain credit quality
at the risk of growth in assets,
Forward-looking statements are if necessary.
subject to known and unknown risks,
uncertainties and other factors that * The cost of our capital. That
may cause FINOVA's actual results or cost depends on many factors,
performance to differ materially from some of which are beyond our
those contemplated by the control, such as our portfolio
forward-looking statements. Many of quality, ratings, prospects and
those factors are noted in conjunction outlook.
with the forward-looking statements in
the text. Other important factors that * Changes in government
could cause actual results to differ regulations, tax rates and
include: similar matters. For example,
government regulations could
* The results of our efforts to significantly increase the cost
implement FINOVA's business of doing business or could
strategy. Failure to fully eliminate certain tax advantages
implement our business strategy of some of FINOVA's financing
might result in decreased market products.
penetration, adverse effects on
results of operations and other * Other risks detailed in our
adverse results. other SEC reports or filings.
* The effect of economic We do not promise to update
conditions and the performance forward-looking information to reflect
of our borrowers. Economic actual results or changes in
conditions in general or in assumptions or other factors that
particular market segments could could affect those statements.
impact the ability of FINOVA's
borrowers to operate or expand
their businesses, which might
result in decreased performance
for repayment of their
obligations or reduce demand for
additional financing needs.
USE OF PROCEEDS
We intend to use the net proceeds financing transactions and capital
from the sale of the securities for expenditures. We will describe in the
general corporate purposes. Those supplement any proposed use of
purposes include the repayment or proceeds other than for general
refinancing of debt, acquisitions in corporate purposes.
the ordinary course of business,
working capital, investment in
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
Debt Securities * FINOVA Capital may discharge the
debt issued in any series at any
The following summary applies time by depositing sufficient
only to the debt securities of FINOVA funds with the Trustee to pay
Capital. If we issue debt securities the obligations when due. All
of FINOVA Group, we will describe amounts due to you on the debt
those securities and the indenture would be paid by the Trustee
under which they are issued in the from the deposited funds.
applicable supplement.
* If FINOVA Capital fails to meet
The debt securities of FINOVA these obligations on the debt,
Capital will be issued under an it will be in default.
indenture (the "Indenture") between
FINOVA Capital and one or more U.S. Events of Default
banking institutions (a "Trustee"). * Principal not paid when due
The Indenture may but need not have
separate Trustees for senior and * Sinking fund payment not made
subordinated debt. when due
The following summary of certain * Failure to pay interest for
provisions of the Indenture is not 30 days after due
complete. You should look at the
Indenture that is filed as an exhibit * Covenants not performed for
to the Registration Statement. To 90 days after notice
obtain a copy of the Indenture, see
"Where You Can Find More Information" * Acceleration of at least
on page 2. $15.0 million in principal
amount of other debt not
All capitalized terms have the rescinded in 10 days after
meanings specified in the Indenture. notice
General Indenture Provisions that * Bankruptcy, insolvency or
Apply to Senior and Subordinated Debt other similar event
* The Indenture does not limit the * Any other event of default in
amount of debt that FINOVA the Indenture
Capital may issue nor provide
holders any protection should * The Indenture gives you the
there be a highly leveraged following remedy if an Event of
transaction involving our Default occurs.
company.
Remedy
* If FINOVA Capital redeems debt * The Trustee or holders of 25%
which is convertible into its of the principal amount
capital stock or other outstanding in a series may
securities, your right to declare principal immediately
convert that debt into capital payable. However, a majority
stock or other securities will in principal amount may
expire on the redemption date. rescind this action.
* The Indenture allows FINOVA General
Capital to merge or to The debt securities of FINOVA
consolidate with another Group and FINOVA Capital offered by
company, or sell all or this prospectus will be limited to
substantially all of its assets $2.0 billion principal amount. The
to another company. If these Indenture does not limit the amount of
events occur, the other company debt securities FINOVA Capital could
will be required to assume offer under it. FINOVA Capital can
FINOVA Capital's issue debt securities in one or more
responsibilities on the debt, series, in each case as authorized by
and FINOVA Capital will be us from time to time. Each series may
released from all liabilities differ as to its terms. The debt
and obligations. securities will be FINOVA Capital's
unsecured general obligations and may
* The Indenture provides that or may not be subordinated to FINOVA
holders of a majority of the Capital's other general
total principal amount of the
debt outstanding in any series
may vote to change our
obligations or your rights
concerning that series of debt.
But to change the payment of
principal or interest, every
holder in that series must
consent.
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<PAGE>
indebtedness. Those that are not issue debt securities only in
subordinated are called "senior debt denominations of $1,000 or integral
securities." The others are multiples of that amount, unless the
"subordinated debt securities." supplement states otherwise.
The supplement will address the Global Securities
following terms of the debt In General. Debt securities in
securities: global form will be deposited with or
on behalf of a depositary. Global
* Their title. securities are represented by one or
more global certificates for the
* Any limits on the principal series registered in the name of the
amounts to be issued. depositary or its nominee. Debt
securities in global form may not be
* The dates on which the principal transferred except as a whole among
is payable. the depositary, a nominee of or a
successor to the depositary and any
* The rates (which may be fixed or nominee of that successor. Unless
variable) at which they shall otherwise identified in the
bear interest, or the method for supplement, the depositary will be The
determining rates. Depository Trust Company ("DTC").
* The dates from which the No Depositary or Global
interest will accrue and will be Securities. If a depositary for a
payable, or the method of series is unwilling or unable to
determining those dates, and any continue as depositary, and a
record dates for the payments successor is not appointed by us
due. within 90 days, we will issue debt
securities of that series in
* Any provisions for redemption, definitive form in exchange for the
conversion or exchange, at our global security or securities of that
option or otherwise, including series. We also may determine at any
the periods, prices and terms of time in our discretion not to use
redemption or conversion. global securities for any series. In
that event, we will issue debt
* Any sinking fund or similar securities in definitive form.
provisions, whether mandatory or
at the holder's option, along Ownership of the Global
with the periods, prices and Securities; Beneficial Ownership. So
terms of redemption, purchase or long as the depositary or its nominee
repayment. is the registered owner of a global
security, that entity will be the sole
* The amount or percentage payable holder of the debt securities
if we accelerate their maturity, represented by that instrument. The
if other than the principal Trustee and we are only required to
amount. treat the depositary or its nominee as
the legal owner of those securities
* Any changes to the events of for all purposes under the Indenture.
default or covenants set forth
in the Indenture. Each actual purchaser of debt
securities represented by a global
* The terms of subordination, if security (a "beneficial owner") will
any. not be entitled to receive physical
delivery of certificated securities,
* Whether the series can be will not be considered the holder of
reopened. those securities for any purpose under
the Indenture, and will not be able to
* Any other terms consistent with transfer or exchange the global
the Indenture. securities, unless this prospectus or
the supplement provide to the
We may authorize and determine contrary. As a result, each beneficial
the terms of a series of debt owner must rely on the procedures of
securities by resolution of our board the depositary to exercise any rights
of directors or one of its committees of a holder under the Indenture. In
or through a supplemental Indenture. addition, if the beneficial owner is
not a direct or indirect participant
Form of Debt Securities in the depositary (each a
The debt securities will be "participant") the beneficial owner
issued in registered form. Unless the must rely on the procedures of the
supplement otherwise provides, debt participant through which it owns its
securities will be issued as one or beneficial interest in the global
more global securities. This means security.
that we will not issue certificates to
each holder. We generally will issue The laws of some jurisdictions
global securities in the total require that certain purchasers of
principal amount of the debt securities take physical delivery of
securities distributed in that series. the securities in certificated form.
We will Those
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<PAGE>
laws and the above conditions may purchases of the debt securities must
impair the ability to transfer be made by or through direct
beneficial interests in the global participants, which will receive a
securities. credit for the securities on the
depositary's records. The beneficial
The Depository Trust Company owner's ownership interest is in turn
The following is based on to be recorded on the direct and
information furnished by DTC and indirect participants' records.
applies to the extent it is the Beneficial owners will not receive
depositary, unless otherwise stated in written confirmations from the
a supplement: depositary of their purchase, but they
are expected to receive them, along
Registered Owner. The debt with periodic statements of their
securities will be issued as fully holdings, from the direct or indirect
registered securities in the name of participants through whom they entered
Cede & Co. (DTC's partnership into the transaction.
nominee). One fully registered global
security generally will be issued for Transfers of interests in the
each $200 million principal amount of global securities will be made on the
debt securities. The Trustee will books of the participants on behalf of
deposit the global securities with the the beneficial owners. Certificates
depositary. The deposit of the global representing the interest of the
securities with DTC and its beneficial owners in the securities
registration in the name of Cede & Co. will not be issued unless the use of
will not change the beneficial global securities is suspended, as
ownership of the securities. provided above.
DTC Organization. DTC is a The depositary has no knowledge
limited-purpose trust company of the actual beneficial owners of the
organized under the New York Banking global securities. Its records only
Law, a "banking organization" within reflect the identity of the direct
the meaning of that law, a member of participants as owners of the
the Federal Reserve System, a securities. Those participants may or
"clearing corporation" within the may not be the beneficial owners.
meaning of the New York Uniform Participants are responsible for
Commercial Code and a "clearing keeping account of their holdings on
agency" registered under the behalf of their customers.
provisions of Section 17A of the
Securities Exchange Act of 1934, as Notices Among the Depositary,
amended. Participants and Beneficial Owners.
Notices and other communications by
DTC is owned by a number of its the depositary, its participants and
direct participants and by the New the beneficial owners will be governed
York Stock Exchange, Inc., the by arrangements among them, subject to
American Stock Exchange, Inc. and the any legal requirements in effect.
National Association of Securities
Dealers, Inc. Direct participants Voting Procedures. Neither DTC
include securities brokers and nor Cede & Co. will give consents for
dealers, banks, trust companies, or vote the global securities. The
clearing corporations and certain depositary generally mails an omnibus
other organizations who directly proxy to us just after the applicable
participate in DTC (each a "direct record date. That proxy assigns Cede &
participant"). Other entities Co.'s consenting or voting rights to
("indirect participants") may access the direct participants to whose
DTC's system by clearing transactions accounts the securities are credited
through or maintaining a custodial at that time.
relationship with direct participants,
either directly or indirectly. The Payments. Principal and interest
rules applicable to DTC and its payments made by us will be delivered
participants are on file with the SEC. to the depositary. DTC's practice is
to credit direct participants'
DTC Activities. DTC holds accounts on the applicable payment
securities that its participants date unless it has reason to believe
deposit with it. DTC also facilitates it will not receive payment on that
the settlement among participants of date. Payments by participants to
securities transactions, such as beneficial owners will be governed by
transfers and pledges, in deposited standing instructions and customary
securities through electronic practices, as is the case with
computerized book-entry changes in securities held for customers in
participant's accounts. Doing so bearer form or registered in "street
eliminates the need for physical name." Those payments will be the
movement of securities certificates. responsibility of that participant,
not the depositary, the Trustee or us,
Participants' Records. Except as subject to any legal requirements in
otherwise provided in this prospectus effect at that time.
or a supplement,
We are responsible for payment of
principal, interest and premium, if
any, to the Trustee, who is
9
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responsible to pay it to the applicable only to senior debt
depositary. The depositary is securities. Those terms are determined
responsible for disbursing those in accordance with generally accepted
payments to direct participants. The accounting principles, unless
participants are responsible for specifically stated otherwise.
disbursing payments to the beneficial
owners. "Consolidated Net Tangible
Assets" means the total of all assets
Transfer or Exchange of Securities reflected on the most recent quarterly
You may transfer or exchange the or annual consolidated balance sheet
debt securities (other than a global of FINOVA Capital and its consolidated
security) without service charge at subsidiaries, at their net book values
our office designated for that purpose (after deducting related depreciation,
or at the office of any transfer agent depletion, amortization and all other
or security registrar identified under valuation reserves), less the
the Indenture. You must execute a aggregate of its current liabilities
proper form of transfer and pay any and those of its consolidated
taxes and other governmental charges Subsidiaries reflected on that balance
resulting from that action. You may sheet. We exclude from assets
transfer or exchange the debt goodwill, unamortized debt discount
securities (other than a global and all other like intangible assets.
security) initially at our offices at For purposes of this definition,
1850 North Central Avenue, P.O. Box "current liabilities" include all
2209, Phoenix, Arizona 85002-2209 or indebtedness for money borrowed,
at our office or agency established incurred, issued, assumed or
for that purpose in New York, New guaranteed by FINOVA Capital and its
York. consolidated subsidiaries, and other
payables and accruals, in each case
Debt securities in the several payable on demand or due within one
denominations will be interchangeable year of the date of determination, but
without service charge, but we may exclude any portion of long-term debt
require payment to cover taxes and maturing within one year of that date
other governmental charges. The of determination, all as reflected on
Trustee initially will act as the consolidated balance sheet of
authenticating agent under the FINOVA Capital and its consolidated
Indenture. subsidiaries.
Same-Day Settlement and Payment "Lien" means any lien, charge,
Unless the supplement otherwise claim, security interest, pledge,
provides, the debt securities will be hypothecation, right of another under
settled in immediately available any conditional sale or other title
funds. We will make payments of retention agreement or any other
principal and interest in immediately encumbrance affecting title to
available funds. property. Lien includes any lease
under a sale and leaseback
Payment and Paying Agent arrangement.
If the debt securities are not
held in global form, we will make "Subsidiary" means any
payment of principal and premium, if corporation a majority of the Voting
any, against surrender of the debt Stock of which is owned, directly or
securities at the principal office of indirectly, by FINOVA Capital or by
the Trustee in New York, New York. We one or more Subsidiaries or by FINOVA
will pay any installment of interest Capital and one or more Subsidiaries.
on debt securities to the record
holder on the record date for that "Restricted Subsidiary" is any
interest. We can make those payments Subsidiary a majority of the Voting
through the Trustee, as noted above, Stock of which is owned directly by
by check mailed by first class mail to FINOVA Capital or by one or more
the registered holders at their Restricted Subsidiaries, or by FINOVA
registered address or by wire transfer Capital and one or more Restricted
to an eligible account of the Subsidiaries and which is designated
registered holder. as a Restricted Subsidiary by
resolution of FINOVA Capital's board
If any payments of principal, of directors.
premium or interest are not claimed
within three years of the date the "Unrestricted Subsidiary" means
payment became due, those funds are to any Subsidiary other than a Restricted
be repaid to us. The beneficial owners Subsidiary.
of those interests thereafter will
look only to us for payment for those "Voting Stock" means stock of any
amounts. class or classes (however designated)
having ordinary voting power for the
Certain Indenture Provisions election of a majority of the members
Certain Definitions. The of the board of directors (or any
following is a summary of certain governing body) of that corporation,
terms defined in the Indenture and other than stock having that power
only by reason of the happening of a
contingency.
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Limitation on Liens. The * Liens on property or securities
Indenture provides that FINOVA Capital existing when an entity becomes
will not create, assume, incur or a Restricted Subsidiary or
allow to be created, assumed or merges with FINOVA Capital or a
incurred or to exist any Lien on any Restricted Subsidiary, provided
of its properties unless FINOVA they are not incurred in
Capital secures the senior debt anticipation of those events.
securities equally and ratably with
any other obligation secured in that * Liens on property or securities
manner. The Indenture contains the existing at the time of
following exceptions to that acquisition.
prohibition:
* Liens in a total amount less
* Leases of property in the than $25 million, excluding
ordinary course of business or Liens covered by the exceptions
if the property is not needed in noted above.
the operation of our business.
* Liens securing indebtedness of
* Purchase money security FINOVA Capital or a Restricted
interests that are non-recourse Subsidiary provided those and
to FINOVA Capital or its similar Liens on indebtedness do
Restricted Subsidiaries except not exceed 10% of Consolidated
to the extent of the property so Net Tangible Assets, excluding
acquired or any proceeds from certain preexisting indebtedness
that property, or both. and those Liens permitted above.
* Governmental deposits or Merger, Consolidation and Sale of
security as a condition to the Assets. FINOVA Capital cannot merge
transaction of business or the with or into, consolidate with, sell
exercise of a privilege, or to or lease all or substantially all of
maintain self-insurance, or to its assets to or purchase all or
participate in any fund in substantially all the assets of
connection with worker's another corporation unless it will be
compensation, unemployment the surviving corporation or the
insurance, pensions, social successor is incorporated in the U.S.
security or for appeal bonds. and assumes all of FINOVA Capital's
obligations under the debt securities
* Liens for taxes or assessments and the Indenture, provided, and if
not yet due or which are payable immediately after that transaction, no
without a penalty or are being default will exist. A purchase by a
contested in good faith and with Subsidiary of all or substantially all
adequate reserves, so long as of the assets of another corporation
foreclosure or similar will not be a purchase of those assets
proceedings are not commenced. by FINOVA Capital. If, however, any of
the transactions noted in this
* Judgment Liens that have not paragraph occurs and results in a Lien
remained undischarged or on any of FINOVA Capital's properties
unstayed for more than six (except as permitted above), FINOVA
months. Capital must simultaneously secure the
senior debt securities equally and
* Incidental or undetermined ratably with the debt secured by that
construction, mechanics or Lien.
similar Liens arising in the
ordinary course of business Modification of the Indenture.
relating to obligations not The Trustee and FINOVA Capital may
overdue or which are being amend the Indenture without consent of
contested by FINOVA Capital or a the holders of debt securities to do
Restricted Subsidiary in good certain things, such as establishing
faith and deposits for releases the form and terms of any series of
of such Liens. debt securities. FINOVA Capital must
obtain consent of holders of at least
* Zoning restrictions, licenses, two-thirds of the outstanding debt
easements and similar securities affected by a change to
encumbrances or defects if amend the terms of the Indenture or
immaterial. any supplemental indenture or the
rights of the holders of those debt
* Other Liens immaterial in the securities.
aggregate incidental to FINOVA
Capital's or the Restricted Unanimous consent is required for
Subsidiary's business or changes to extend the fixed maturity
property, other than for of any debt securities, reduce the
indebtedness. principal, redemption premium or rate
of interest, extend the time of
* Banker's liens and set off payment of interest, change the form
rights in the ordinary course of of currency, limit the right to sue
business.
* Leasehold or purchase rights,
exercisable for fair
consideration, arising in the
ordinary course of business.
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for payment on or after maturity of compensation and expenses incurred out
the debt securities, adversely affect of any sums held or received by it
the right, if any, to convert or before making any payments to the
exchange the debt securities or holders of the debt securities of the
adversely affect the subordination defaulted series.
provisions, if any. Unanimous consent
is also required to reduce the level The right of any holders of debt
of consents needed to approve any such securities of a series to commence an
change. The Trustee must consent to action for any remedy is subject to
changes modifying its rights, duties certain conditions, including the
or immunities. requirement that the holders of at
least 25% of that series request that
Defaults. Events of default under the Trustee take such action, and
the Indenture for any series are: offer reasonable indemnity to the
Trustee against its liabilities
* Failure for 30 days to pay incurred in doing so.
interest on any debt securities
of that series. Defeasance
FINOVA Capital may defease the
* Failure to pay principal (other debt securities of a series, meaning
than sinking fund redemptions) it would satisfy its duties under that
or premium, if any, on debt series before maturity. It may do so
securities of that series. by depositing with the Trustee, in
trust for the benefit of the holders,
* Failure for 30 days to pay any either enough funds to pay, or direct
sinking fund installment on that U.S. government obligations that,
series. together with the income of those
obligations (without considering any
* Violation of a covenant under reinvestment), will be sufficient to
the Indenture pertaining to that pay, the obligation of that series,
series that persists for at including principal, premium, if any,
least 90 days after FINOVA and interest. Certain other conditions
Capital is notified by the must be met before it may do so.
Trustee or the holders of 25% of FINOVA Capital must deliver an opinion
the series. of counsel that the holders of that
series will have no Federal income tax
* Default in other instruments or consequences as a result of that
under any other series of debt deposit.
securities resulting in
acceleration of indebtedness Subordination
over $15 million, unless that The terms and conditions of any
default is rescinded or subordination of subordinated debt
discharged within 10 days after securities to other indebtedness of
written notice by the Trustee or FINOVA Capital will be described in
the holders of 10% of that the supplement relating to the
series. subordinated debt securities. The
terms will include a description of
* Bankruptcy, insolvency or the indebtedness ranking senior to the
similar event. subordinated debt securities, the
restrictions on payments to the
* Any other event of default with holders of the subordinated debt
respect to the debt securities securities while a default exists with
of that series. respect to senior indebtedness, any
restrictions on payments to the
If an event of default occurs and holders of the subordinated debt
continues, the Trustee or the holders securities following an event of
of at least 25% of the series may default and provisions requiring
declare those debt securities due and holders of the subordinated debt
payable. FINOVA Capital is required to securities to remit certain payments
certify to the Trustee annually as to to holders of senior indebtedness.
its compliance with the Indenture.
Because of the subordination, if
Holders of a majority of the FINOVA Capital becomes insolvent,
principal of a series may control holders of the subordinated debt
certain actions of the Trustee and may securities may recover less, ratably,
waive past defaults for that series. than other creditors of FINOVA
Except as provided in the Indenture, Capital, including holders of senior
the Trustee will not be under any indebtedness.
obligation to exercise any of the
rights or powers vested in it by the Conversion
Indenture at the request, order or Debt securities may be
direction of any holder unless one or convertible into or exchangeable for
more of them shall have offered common stock, preferred stock,
reasonable indemnity to the Trustee.
If an event of default occurs and
is continuing, the Trustee may
reimburse itself for its reasonable
12
<PAGE>
other debt securities, warrants or Concerning the Trustee
other of securities of FINOVA Capital, The Trustee may, but need not be,
or securities of any other issuer or one of the banks in one of FINOVA
obligor. Capital's credit agreements and from
time to time may perform other
banking, trust or related services on
behalf of FINOVA Capital or our
customers.
DESCRIPTION OF CAPITAL STOCK
The following summary of certain our preferred stock, if any. The
provisions of the common stock, the holders of common stock do not have
preferred stock, the junior preemptive rights to subscribe for or
participating preferred stock (the purchase any shares of capital stock
"Junior Preferred Stock") and the or other securities of FINOVA Group.
rights to purchase the Junior
Preferred Stock (the "Rights") of Preferred Stock
FINOVA Group is not complete. You Under FINOVA Group's certificate
should refer to the certificate of of incorporation, the board is
incorporation and bylaws of FINOVA authorized, without stockholder
Group, as amended, FINOVA Group's action, to issue preferred stock in
certificate of designations for the one or more series, with the
Junior Preferred Stock and the Rights designations, powers, preferences,
Agreement dated as of February 15, rights, qualifications, limitations
1992, as amended and restated as of and restrictions as the board
September 14, 1995 (the "Rights determines. Thus, the board, without
Agreement"), between FINOVA Group and stockholder approval, could authorize
Harris Trust & Savings Bank, as the issuance of preferred stock with
successor Rights Agent. To obtain voting, conversion and other rights
copies of those documents, see "Where that could adversely affect the voting
You Can Find More Information" on page power and other rights of the holders
2. If we issue capital stock of FINOVA of the common stock or that could make
Capital, we will describe those it more difficult for another company
securities in the applicable to enter into certain business
supplement. combinations with FINOVA Group. See
"-- Certain Other Provisions of the
FINOVA Group is authorized by its Certificate of Incorporation, the
certificate of incorporation to issue Bylaws and Delaware Law -- Preferred
105,000,000 shares of capital stock, Stock" below.
consisting of 5,000,000 shares of
preferred stock, par value $.01 per Shareholder Rights Plan
share, and 100,000,000 shares of In 1992, FINOVA Group issued one
common stock, par value $.01 per Right for each outstanding share of
share. As of October 3, 1997, there common stock. FINOVA Group has and
were 54,441,678 shares of common stock will continue to issue one Right with
outstanding (excluding 2,401,728 each newly issued share of its common
treasury shares held by FINOVA Group) stock (including stock issued on
and no shares of preferred stock conversion of preferred securities).
outstanding. However, FINOVA Group has The obligation to continue to issue
authorized 600,000 shares of Junior the Rights, however, will terminate on
Preferred Stock which have been the expiration, exchange or redemption
reserved for issuance on the exercise of the Rights.
of the Rights.
Each Right entitles the
registered holder to purchase from
Common Stock FINOVA Group 1/200th of a share of the
The holders of the common stock Junior Preferred Stock. The purchase
are entitled to one vote per share. price is $67.50 per 1/200th of a
FINOVA Group's certificate of share, subject to adjustment under
incorporation does not provide for certain circumstances.
cumulative voting in the election of
directors. The board may declare The Rights will trade only with
dividends on the common stock in its the common stock and FINOVA Group will
discretion, if funds are legally not issue separate certificates for
available for those purposes. On the Rights until the "Rights
liquidation, common stockholders are Distribution Date." That date occurs
entitled to receive pro rata any on the first to occur of the following
remaining assets of FINOVA Group, events:
after we satisfy or provide for the
satisfaction of all liabilities as
well as obligations on
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* 10 days after a public the tender or exchange offer, and the
announcement (the "Share consideration is in the same form as
Acquisition Date") that a person that paid in the tender or exchange
or group of persons acting offer. If the requirements of this
together has become the exception are met, then the Rights
beneficial owner of at least 20% will expire.
or more of FINOVA Group's common
stock, directly or indirectly Exchange of Rights. After a
(becoming an "Acquiring person or group becomes an Acquiring
Person"), or Person but before the Acquiring Person
acquires at least half of the
* 10 business days after the start outstanding common stock, our board
or announcement of an intention may exchange all or some of the Rights
to make a tender offer or at an exchange ratio of one share of
exchange offer that would result common stock for 1/200th of a share of
in a person or group acting Junior Preferred Stock per Right,
together beneficially owning 20% subject to adjustment.
or more of FINOVA Group's common
stock, directly or indirectly. Redemption of Rights. We may
The board, however, may extend redeem all the Rights, but not some of
that 10 business day deadline them, for $.005 per Right at any time
prior to the time the person or before the earlier of 15 days after
group becomes an Acquiring the Share Acquisition Date or the
Person. expiration date noted above. The board
may determine the conditions, terms
The Rights may not be exercised and effective date for the redemption.
until the Rights Distribution Date. We may pay the redemption price in
The Rights will expire on February 28, cash, common stock or any other method
2002 unless we extend that date or, selected by the board. Upon
unless we redeem or exchange the redemption, the right to exercise the
Rights before then. Rights will terminate and the holders
will only have the right to receive
The value of each 1/200th the redemption price.
interest in a share of Junior
Preferred Stock is intended to No Rights as a Stockholder.
approximate the value of one share of Rights holders, as Rights holders,
FINOVA Group common stock, due to the have no independent rights as
dividend, liquidation and voting stockholders of FINOVA Group,
rights of the Junior Preferred Stock, including the right to vote or to
although there can be no assurance the receive dividends, until the Rights
value will be the same. are exercised.
How the Rights Work. If a person Antitakeover Effects. The Rights
or group becomes an Acquiring Person, have certain antitakeover effects. The
their Rights become void. The other Rights will substantially dilute the
Rights holders will have the right to ownership interest in our shares of
exercise their Rights, at the then any Acquiring Person. That dilution
current exercise price, for FINOVA would impair the ability of the
Group common stock having a market Acquiring Person to change the
value of two times the exercise price composition of our board. It also
of the Right. That right to purchase, would impact its ability to acquire
however, will not exist if the Rights FINOVA Group on terms not approved by
Distribution Date is due to a tender our board, including through a tender
or exchange offer for all of FINOVA offer at a premium to the market
Group's common stock and the price, other than through an offer
independent members of our board conditioned on a substantial number of
determine that the offer is at a fair Rights being acquired. The Rights
price, on fair terms and is otherwise should not interfere with any merger
in the best interests of FINOVA Group or business combination approved by
and its stockholders. the board, since we may redeem the
Rights before they become exercisable.
The other Rights holders also
will have the same exercise rights Junior Preferred Stock Not
described above if, after a person or Registered. The Junior Preferred Stock
group becomes an Acquiring Person, is not registered with the SEC or any
FINOVA Group is acquired in a merger other securities administrator. If the
or business combination or at least Rights become exercisable, we intend
half of our total assets and earning to register with the SEC the Junior
power are sold. The exception is the Preferred Stock exchangeable for the
same as the one noted in the above Rights.
paragraph, provided that the price
offered to the shareholders for each
share of common stock is not less than
that paid in
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<PAGE>
Certain Other Provisions of the The classification provisions
Certificate of Incorporation, the also could discourage a third party
Bylaws and Delaware Law from initiating a proxy contest,
tender offer or other attempt to
FINOVA Group's certificate of obtain control of FINOVA Group, even
incorporation and bylaws contain though an attempt might be beneficial
certain provisions that could make to FINOVA Group and its stockholders.
more difficult our acquisition by The classification of the board thus
means of a tender offer, a proxy increases the likelihood that
contest or otherwise. This description incumbent directors will retain their
is only a summary and does not provide positions. In addition, because the
all the information contained in classification provisions may
FINOVA Group's certificate of discourage accumulations of large
incorporation and bylaws. To obtain blocks of FINOVA Group's stock by
copies of these documents, see "Where purchasers whose objective is to take
You Can Find More Information" on page control of FINOVA Group and remove a
2. majority of the board, the
classification of the board could
Delaware law permits a reduce the likelihood of fluctuations
corporation to eliminate or limit the in the market price of the common
personal liability of its directors to stock that might result from
the corporation or to any of its accumulations of large blocks.
stockholders for monetary damages for Accordingly, stockholders could be
a breach of fiduciary duty as a deprived of certain opportunities to
director, except (i) for breach of the sell their shares of common stock at a
director's duty of loyalty, (ii) for higher market price than otherwise
acts or omissions not in good faith or might be the case.
which involve intentional misconduct
or a knowing violation of law, (iii) Number of Directors; Removal;
for certain unlawful dividends and Filling Vacancies. FINOVA Group's
stock purchases and redemptions or certificate of incorporation provides
(iv) for any transaction from which that, subject to any rights of
the director derived an improper preferred stockholders to elect
personal benefit. FINOVA Group's additional directors under specified
certificate of incorporation provides circumstances, the number of directors
that no director will be personally will be fixed in the manner provided
liable to FINOVA Group or its in the bylaws. FINOVA Group's bylaws
stockholders for monetary damages for provide that, subject to any rights of
any breach of his or her fiduciary holders of preferred stock to elect
duty as a director, except as provided directors under specified
by Delaware law. circumstances, the number of directors
will be fixed from time to time
Board of Directors. FINOVA exclusively by directors constituting
Group's certificate of incorporation a majority of the total number of
and bylaws divide the board into three directors that FINOVA Group would have
classes of directors, with the classes if there were no vacancies on the
to be as nearly equal in number as board, but must consist of between 3
possible. The stockholders elect one and 17 directors.
class of directors each year for a
three-year term. In addition, FINOVA Group's
bylaws provide that, subject to any
The classification of directors rights of preferred stockholders, and
makes it more difficult for unless the board otherwise determines,
stockholders to change the composition any vacancies will be filled only by
of the board. At least two annual the affirmative vote of a majority of
meetings of stockholders, instead of the remaining directors, though less
one, generally will be required to than a quorum. Accordingly, absent an
change a majority of the board. That amendment to the bylaws, the board
delay may help ensure that FINOVA could prevent any stockholder from
Group's directors, if confronted by a enlarging the board and filling the
proxy contest, tender or exchange new directorships with that
offer or extraordinary corporate stockholder's own nominees.
transaction, would have sufficient
time to review the proposal as well as Under Delaware law, unless
any available alternatives to the otherwise provided in the certificate
proposal and to act in what they of incorporation, directors serving on
believe to be the best interest of the a classified board may only be removed
stockholders. The classification by the stockholders for cause. In
provisions apply to every election of addition, FINOVA Group's certificate
directors, regardless of whether a of incorporation and bylaws provide
change in the composition of the board that directors may be removed only for
would be beneficial to FINOVA Group cause and only upon the affirmative
and its stockholders and whether or vote of holders of at least 80% of the
not a majority of the stockholders voting power of all the then
believe that such a change is
desirable.
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<PAGE>
outstanding shares of stock entitled than 20 days or delayed by more than
to vote generally in the election of 70 days from that anniversary date,
directors, voting together as a single then we must receive the notice
class. between 90 days before the meeting and
the later of the 70th day before the
Stockholder Action by Written meeting or 10 days after the meeting
Consent; Special Meetings. date is first publicly announced.
Stockholders of FINOVA Group must act
only through an annual or special If the board increases the number
meeting. Stockholders cannot act by of directors and if we have not
written consent in lieu of a meeting. publicly announced nominees for each
Only the Chairman or a majority of the open position within 80 days before
whole board of FINOVA Group may call a the first anniversary of the prior
special meeting. Stockholders of year's annual meeting, stockholders
FINOVA Group are not able to call a may nominate directors for the new
special meeting to require that the position, but only those newly created
board do so. At a special meeting, positions, if FINOVA Group's Secretary
stockholders may consider only the receives the notice no later than 10
business specified in the notice of days following public announcement of
meeting given by FINOVA Group. that change.
Preferred stockholders may be given
different rights from those noted Stockholders may nominate
above. directors only at a special meeting by
sending appropriate notice for receipt
The provisions of FINOVA Group's by our Secretary between the 90th day
certificate of incorporation and before the meeting and the later of
bylaws prohibiting stockholder action the 70th day before the meeting or the
by written consent may have the effect 10th day after the first public
of delaying consideration of a announcement of the meeting date.
stockholder proposal until the next
annual meeting, unless a special A stockholder's notice proposing
meeting is called by the Chairman or to nominate a person for election as a
at the request of a majority of the director must contain certain
whole board. These provisions also information, including, without
would prevent the holders of a limitation, the identity and address
majority of stock from unilaterally of the nominating stockholder, the
using the written consent procedure to class and number of shares of stock of
take stockholder action. Moreover, a FINOVA Group beneficially owned by the
stockholder could not force stockholder and all information
stockholder consideration of a regarding the proposed nominee that
proposal over the opposition of the would be required to be included in a
Chairman and the board by calling a proxy statement soliciting proxies for
special meeting of stockholders prior the proposed nominee. A stockholder's
to the time the Chairman or a majority notice relating to the conduct of
of the whole board believes such business other than the nomination of
consideration to be appropriate. directors must contain certain
information about that business and
Advance Notice Provisions for about the proposing stockholder,
Stockholder Nominations and including, without limitation, a brief
Stockholder Proposals. The bylaws description of the business the
establish an advance notice procedure stockholder proposes to bring before
for stockholders to nominate the meeting, the reasons for
directors, or bring other business conducting that business at such
before an annual meeting of meeting, the name and address of such
stockholders of FINOVA Group. stockholder, the class and number of
shares of stock of FINOVA Group
A person may not be nominated for beneficially owned by that stockholder
a director position unless that person and any material interest of the
is nominated by or at the direction of stockholder in the business so
the board or by a stockholder who has proposed. If the Chairman or other
given appropriate notice to FINOVA officer presiding at a meeting
Group's Secretary during the periods determines that a person was not
noted below prior to the meeting. nominated, or other business was not
Similarly, stockholders may not bring brought before the meeting, in
business before an annual meeting accordance with these procedures, the
unless the stockholder has given person will not be eligible for
FINOVA Group's Secretary appropriate election as a director, or the
notice of their or its intention to business will not be conducted at the
bring that business before the meeting, as appropriate.
meeting. FINOVA Group's Secretary must
receive the nomination or proposal Advance notice of nominations or
between 70 and 90 days before the proposed business by stockholders
first anniversary of the prior year's gives the board time to
annual meeting. If FINOVA Group's
annual meeting date is advanced by
more
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<PAGE>
consider the qualifications of the or of any other class or series and
proposed nominees, the merits of the (x) the voting rights, if any, of the
proposals and, to the extent deemed holders of shares of the series.
necessary or desirable by the board,
to inform stockholders about those FINOVA Group believes that the
matters. The board also may recommend ability of the board to issue one or
positions regarding those nominees or more series of preferred stock will
proposals, so that stockholders can provide FINOVA Group with flexibility
better decide whether to attend the in structuring possible future
meeting or to grant a proxy regarding financings and acquisitions, and in
the nominee or that business. meeting other corporate needs which
might arise. The authorized shares of
Although the bylaws do not give preferred stock, as well as shares of
the board any power to approve or common stock, will be available for
disapprove stockholder nominations for issuance without further action by
the election of directors or proposals FINOVA Group's stockholders, unless
for action, these procedures may approval is required by applicable law
preclude a contest for the election of or the rules of any stock exchange or
directors or the consideration of automated quotation system on which
stockholder proposals if the proper FINOVA Group's securities are listed
procedures are not followed, and of or traded. The NYSE currently requires
discouraging or deterring a third stockholder approval in several
party from conducting a solicitation instances, including where the present
of proxies to elect its own slate of or potential issuance of shares could
directors or to approve its own result in an increase in the number of
proposal, without regard to whether shares of common stock, or in the
consideration of such nominees or amount of voting securities,
proposals might be harmful or outstanding of at least 20%, subject
beneficial to FINOVA Group and its to certain exceptions. If the approval
stockholders. of FINOVA Group's stockholders is not
required for the issuance of shares of
Preferred Stock. FINOVA Group's preferred stock or common stock, the
certificate of incorporation board may determine not to seek
authorizes the board to establish one stockholder approval.
or more series of preferred stock and
to determine, with respect to any Although the board has no
series of preferred stock, the terms intention at the present time of doing
and rights of such series, including so, it could issue a series of
(i) the designation of the series, preferred stock that could, depending
(ii) the number of shares of the on its terms, impede a merger, tender
series, which the board may (except offer or other takeover attempt. The
where otherwise provided by the terms board will make any determination to
of such series) increase or decrease issue shares with those terms based on
(but not below the number of shares its judgment as to the best interests
thereof then outstanding), (iii) of FINOVA Group and its stockholders.
whether dividends, if any, will be The board, in so acting, could issue
cumulative or noncumulative and the preferred stock having terms that
dividend rate of the series, if any, could discourage an acquisition
(iv) the dates at which dividends, if attempt in which an acquiror would
any, will be payable, (v) the change the composition of the board,
redemption rights and price or prices, including a tender offer or other
if any, for shares of the series, (vi) transaction. An acquisition attempt
the terms and amounts of any sinking could be discouraged in this manner
fund provided for the purchase or even if some, or a majority, of FINOVA
redemption of shares of the series, Group's stockholders might believe it
(vii) the amounts payable on shares of to be in their best interests or in
the series in the event of any which stockholders might receive a
voluntary or involuntary liquidation, premium for their stock over the then
dissolution or winding up of the current market price of the stock.
FINOVA Group's affairs, (viii) whether
the shares of the series will be Merger/Sale of Assets. FINOVA
convertible into shares of any other Group's certificate of incorporation
class or series, or any other provides that certain "business
security, of FINOVA Group or any other combinations" must be approved by the
corporation, and, if so, the holders of at least 66 2/3% of the
specification of another class or voting power of the shares not owned
series or another security, the by an "interested shareholder", unless
conversion price or prices or rate or the business combinations are approved
rates, any adjustments to the prices by
or rates, the date or dates as of
which the shares shall be convertible
and all other terms and conditions
upon which the conversion may be made,
(ix) restrictions on the issuance of
shares of the same series
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the "Continuing Directors" or meet with any "interested stockholder" for
certain requirements regarding price a three-year period following the date
and procedure. The terms quoted in that the stockholder becomes an
this paragraph are defined in the interested stockholder, unless (i)
certificate of incorporation. prior to that date, the board approved
either the business combination or the
Amendment of Certain Provisions transaction which resulted in the
of the Certificate of Incorporation stockholder becoming an interested
and Bylaws. Under Delaware law, stockholder, (ii) on that date, the
stockholders may adopt, amend or interested stockholder owned at least
repeal the bylaws and, with approval 85% of the voting stock of the
of the board, the certificate of corporation outstanding at the time
incorporation of a corporation. In the transaction commenced (excluding
addition, a corporation's board may certain shares) or (iii) on or
adopt, amend or repeal the bylaws if subsequent to that date, the board and
allowed by the certificate of 66 2/3% of the outstanding voting
incorporation. FINOVA Group's stock not owned by the interested
certificate of incorporation requires stockholder approved the business
a vote of (i) at least 80% of the combination. Except as specified by
outstanding shares of voting stock, Delaware law, an interested
voting together as a single class, to stockholder includes (x) any person
amend provisions of the certificate of that is the owner of 15% or more of
incorporation relating to the the outstanding voting stock of the
prohibition of stockholder action corporation, or is an affiliate or
without a meeting; the number, associate of the corporation and was
election and term of FINOVA Group's the owner of 15% or more of the
directors; and the removal of outstanding voting stock of the
directors; (ii) at least 66 2/3% of corporation, at any time within three
the outstanding shares of voting years immediately prior to the
stock, voting together as a single relevant date, and (y) the affiliates
class, to amend the provisions of the and associates of that person.
certificate of incorporation relating
to approval of certain business Under certain circumstances,
combinations; and (iii) at least a Delaware law makes it more difficult
majority of the outstanding shares of for an "interested stockholder" to
voting stock, voting together as a enter into various business
single class, to amend all other combinations with a corporation for a
provisions of the certificate of three-year period, although
incorporation. FINOVA Group's stockholders may adopt an amendment to
certificate of incorporation further a corporation's certificate of
provides that the bylaws may be incorporation or bylaws excluding the
amended by the board or by the corporation from those restrictions.
affirmative vote of the holders of at However, FINOVA Group's certificate of
least 80% of the voting power of the incorporation and bylaws do not
outstanding shares of voting stock, exclude FINOVA Group from the
voting together as a single class. restrictions imposed under Delaware
These supermajority voting law. These provisions of Delaware law
requirements make the amendment by may encourage companies interested in
stockholders of the bylaws or of any acquiring FINOVA Group to negotiate in
of the provisions of the certificate advance with the board, since the
of incorporation described above more stockholder approval requirement would
difficult, even if a majority of be avoided if a majority of the board
FINOVA Group's stockholders believe approves either the business
that amendment would be in their best combination or the transaction which
interests. results in the stockholder becoming an
interested stockholder.
Antitakeover Legislation. Subject
to certain exceptions, Delaware law
does not allow a corporation to engage
in a business combination
DESCRIPTION OF DEPOSITARY SHARES
The following summary of certain General
provisions of the Deposit Agreement,
the depositary shares and depositary We may offer fractional interests
receipts is not complete. You should in shares of preferred stock, instead
refer to the forms of Deposit of shares of preferred stock. If we
Agreement and depositary receipts do, we will have a depositary issue to
relating to each series of preferred the public receipts for depositary
stock that will be filed with the SEC. shares, each of which will represent
To obtain copies of these documents, fractional interests of a particular
see "Where You Can Find More series of preferred stock.
Information" on page 2.
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<PAGE>
We will deposit shares of any Conversion and Exchange
series of preferred stock underlying
the depositary shares under a separate If any series of preferred stock
Deposit Agreement (the "Deposit underlying the depositary shares is
Agreement") between us and a bank or subject to conversion or exchange,
trust company selected by us having each record holder of depositary
its principal office in the U.S. and receipts may convert or exchange the
having a combined capital and surplus depositary shares represented by those
of at least $50 million. Subject to depositary receipts.
the terms of the Deposit Agreement,
each owner of depositary shares will Redemption of Depositary Shares
be entitled, in proportion to the
applicable fractional interests in If a series of the preferred
shares of preferred stock underlying stock underlying the depositary shares
the depositary shares to all the is subject to redemption, the
rights and preferences of the depositary will redeem the depositary
preferred stock underlying the shares from the proceeds received by
depositary shares. Those rights the depositary in the redemption, in
include dividend, voting, redemption, whole or in part, of the series of the
conversion and liquidation rights. preferred stock held by the
depositary. The depositary will mail
The depositary shares will be notice of redemption within 30 to 60
evidenced by depositary receipts days prior to the date fixed for
issued under the Deposit Agreement. redemption to the record holders of
Individuals purchasing the fractional the depositary shares to be redeemed
interests in shares of the related at their addresses appearing in the
series of preferred stock will receive depositary's books. The redemption
depositary receipts according to the price per depositary share will equal
terms of the offering described in the the applicable fraction of the
supplement. redemption price per share payable on
such series of the preferred stock.
Dividends and Other Distributions Whenever we redeem shares of preferred
stock held by the depositary, the
The depositary will distribute depositary will redeem as of the same
all cash dividends or other cash redemption date, the number of
distributions received for the depositary shares representing the
preferred stock to the record holders preferred stock. The depositary shares
of depositary shares representing the to be redeemed will be selected by lot
preferred stock in proportion to the or pro rata as determined by the
number of depositary shares owned by depositary when less than all
those holders on the relevant record outstanding depositary shares will be
date. The depositary will distribute redeemed.
only the amount that can be
distributed without attributing to any After the redemption date, the
holder of depositary shares a fraction depositary shares redeemed will no
of one cent. The undistributed balance longer be outstanding. When this
will be added to and treated as part occurs, all rights of the holders will
of the next amount received by the cease, except the right to receive
depositary for distribution to record money, securities or other property
holders of depositary shares. payable upon such redemption and any
money, securities or other property
If there is a distribution other that the holders of depositary shares
than in cash, the depositary will were entitled to on the redemption
distribute property received by it to upon surrender to the depositary of
the record holders of depositary the depositary receipts evidencing the
shares, in proportion, if possible, to depositary shares redeemed.
the number of depositary shares owned
by those holders, unless the Voting the Preferred Stock
depositary determines (after
consulting with us) that it cannot Upon receipt of notice of any
make the distribution. If this occurs, meeting at which the holders of the
the depositary may, with our approval, preferred stock are entitled to vote,
sell the property and distribute the the depositary will mail all relevant
net proceeds from the sale to the information to the record holders of
holders of depositary shares. the depositary shares representing the
preferred stock. The record holders
The Deposit Agreement also will may instruct the depositary how to
state how any subscription or similar vote the shares of preferred stock
rights offered by us to holders of the underlying their depositary shares.
preferred stock will be made available The depositary will try, if practical,
to holders of depositary shares. to
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<PAGE>
vote the number of shares of preferred Resignation and Removal
stock underlying the depositary shares of Depositary
according to the instructions, and we The depositary may resign by
will agree to take all reasonable delivering notice to us, and we may
action requested by the depositary so remove the depositary. Resignations or
the depositary may follow the removals will take effect upon the
instructions. appointment and acceptance of a
successor depositary. We must appoint
Amendment and Termination of a successor depositary within 60 days
Depositary Agreement after delivery of the notice of
The form of depositary receipt resignation or removal. The successor
and any provision of the Deposit depositary must be a bank or trust
Agreement may be amended by agreement company having its principal office in
between us and the depositary. the U.S. and having a combined capital
However, any amendment that materially and surplus of at least $50 million.
and adversely alters the rights of the
existing holders of depositary shares Miscellaneous
will not be effective unless approved The depositary will send to the
by the record holders of at least a holders of depositary shares all
majority of the depositary shares then reports and communications from us
outstanding. We or the depositary may that we must furnish to the holders of
only terminate the Deposit Agreement preferred stock.
if (a) all related outstanding
depositary shares have been redeemed We and the depositary will not be
or (b) there has been a final liable if we are prevented or delayed
distribution of the preferred stock of by law or any circumstance beyond our
the relevant series in connection with control in performing our obligations
our liquidation, dissolution or under the Deposit Agreement. Those
winding up and that distribution has obligations will be limited to
been distributed to the holders of the performance in good faith of duties
related depositary shares. set forth in the Deposit Agreement. We
and the depositary will not be
Charges of Depositary obligated to prosecute or defend any
We will pay all transfer and legal proceeding connected with any
other taxes and governmental charges depositary shares or preferred stock
arising solely from the existence of unless satisfactory indemnity is
the depositary arrangements. We will furnished. We and the depositary may
pay associated charges of the rely upon written advice of counsel or
depositary for the initial deposit of accountants, or information provided
the preferred stock and any redemption by persons presenting preferred stock
of the preferred stock. Holders of for deposit, holders of depositary
depositary shares will pay transfer shares, or other persons believed to
and other taxes and governmental be competent and on documents believed
charges and any other charges stated to be genuine.
in the Deposit Agreement to be for
their accounts.
DESCRIPTION OF WARRANTS
We may issue warrants for the solely as our agent for the warrants
purchase of debt securities, preferred and will not act for or on behalf of
stock or common stock. We may issue the holders or beneficial owners of
warrants independently or together warrants. This summary of certain
with debt securities, common stock or provisions of the warrants is not
preferred stock or attached to or complete. You should refer to the
separate from the offered securities. provisions of the Warrant Agreement
We will issue each series of warrants that will be filed with the SEC as
under a separate warrant agreement (a part of the offering of any warrants.
"Warrant Agreement") between us and a To obtain a copy of this document, see
bank or trust company, as warrant "Where You Can Find More Information"
agent. The warrant agent will act on page 2.
20
<PAGE>
PLAN OF DISTRIBUTION
FINOVA Group and FINOVA Capital FINOVA Group and FINOVA Capital
may offer securities directly or or the underwriters or agents may
through underwriters, dealers or solicit offers by institutions
agents. The supplement will identify approved by us to purchase securities
those underwriters, dealers or agents under contracts providing for future
and will describe the plan of payment. Permitted institutions
distribution. If we do not name a firm include commercial and savings banks,
in the supplement, that firm may not insurance companies, pension funds,
directly or indirectly participate in investment companies, educational and
any underwriting of those securities, charitable institutions and others.
although it may participate in the Certain conditions apply to those
distribution of securities under purchases.
circumstances entitling it to a
dealer's allowance or agent's Any underwriter may engage in
commission. over-allotment, stabilizing
transactions, short covering
Any underwriting agreement transactions and penalty bids in
probably will entitle the underwriters accordance with Regulation M under the
to indemnity against certain civil Securities Exchange Act of 1934.
liabilities under the Federal Over-allotment involves sales in
securities laws and other laws. The excess of the offering size, which
underwriters' obligations to purchase creates a short position. Stabilizing
securities will be subject to certain transactions permit bids to purchase
conditions and generally will require the underlying security so long as the
them to purchase all of the securities stabilizing bids do not exceed a
if any are purchased. specified maximum. Short covering
transactions involve purchases of the
Unless otherwise noted in the securities in the open market after
supplement, the securities will be the distribution is completed to cover
offered by the underwriters, if any, short positions. Penalty bids permit
when, as and if issued by us, the underwriters to reclaim a selling
delivered to and accepted by the concession from a dealer when the
underwriters and subject to their securities originally sold by the
right to reject orders in whole or in dealer are purchased in a covering
part. transaction to cover short positions.
Those activities may cause the price
FINOVA Group and FINOVA Capital of the securities to be higher than it
may sell securities to dealers, as would otherwise be. If commenced, the
principals. Those dealers then may underwriters may discontinue those
resell the securities to the public at activities at any time.
varying prices set by those dealers
from time to time. The supplement will set forth the
anticipated delivery date of the
FINOVA Group and FINOVA Capital securities being sold at that time.
also may offer securities through
agents. Agents generally act on a
"best efforts" basis during their
appointment, meaning they are not
obligated to purchase securities.
Dealers and agents may be
entitled to indemnification as
underwriters by us against certain
liabilities under the Federal
securities laws and other laws.
LEGAL MATTERS
Unless otherwise noted in a Capital, will pass on the legality of
supplement, William J. Hallinan, Esq., the securities offered through this
Senior Vice President-General Counsel prospectus and any supplement. Brown &
of FINOVA Group and FINOVA Capital, or Wood LLP will act as counsel for any
Richard Lieberman, Esq., Vice underwriters or agents, unless
President-Assistant General Counsel of otherwise noted in a supplement.
FINOVA Group and Assistant General
Counsel of FINOVA
21
<PAGE>
EXPERTS
Deloitte & Touche LLP, The financial statements are
independent auditors, have audited the incorporated into this prospectus by
financial statements for FINOVA Group reference in reliance upon their
and FINOVA Capital incorporated in report given upon their authority as
this prospectus by reference from our experts in accounting and auditing.
Annual Reports on Form 10-K.
22
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<S> <C>
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You should rely only on the information contained $100,000,000
in or incorporated by reference in this
prospectus. We have authorized no one to provide
you with different information. FINOVA(R)
We are not making an offer of these securities in
any location where the offer is not permitted.
FINOVA CAPITAL CORPORATION
You should not assume that the information in this
prospectus, including information incorporated by
reference, is accurate as of any date other than
the date on the front of the prospectus. 6.15% Notes Due March 31, 2003
----------------------
Table of Contents
Page
----
Prospectus Supplement
FINOVA Capital Corporation ................ S-2
Note Terms ................................ S-2
Underwriting .............................. S-3
Prospectus ----------
PROSPECTUS
Where You Can Find More Information........ 2 SUPPLEMENT
The Companies ............................. 2 ----------
Selected Financial Information ............ 5
Ratio Of Income To Total Fixed Charges..... 5
Ratio Of Income To Combined Fixed
Charges And Preferred Stock Dividends..... 5
Special Note Regarding Forward-Looking
Statements ............................... 6
Use Of Proceeds ........................... 6
Description Of Debt Securities ............ 7 Citicorp Securities, Inc.
Description Of Capital Stock .............. 13
Description Of Depositary Shares .......... 18
Description Of Warrants ................... 20
Plan Of Distribution ...................... 21
Legal Matters ............................. 21 March 17, 1998
Experts ................................... 22
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