[Filed pursuant to Rule 424(b)(5)
Form S-3 Registration No. 333-38171
and 333-38171-01]
Prospectus Supplement FINOVA
(To Prospectus dated August 7, 1998)
$500,000,000 FINOVA Capital Corporation
1850 N. Central Avenue
Medium-Term Notes, Series D P.O. Box 2209
Phoenix, Arizona 85002-2209
- --------------------------------------------------------------------------------
TERMS OF NOTES
* The notes will mature in no less * For more details, see "Note Terms,"
than 9 months. "Description of the Debt
Securities" and the pricing or
* Fixed or floating rate interest. other supplements. Pricing or other
Floating rate interest will be supplements may alter the terms of
based on: the notes.
* CMT rate * Fixed rate interest paid on March
* Commercial Paper rate 15 and September 15, accruing from
* 11th District Cost of Funds rate the date we issue the notes.
("11th District rate")
* Federal Funds rate * Floating rate interest paid as
* LIBOR stated in the pricing supplement.
* Prime rate
* Treasury rate * Global securities held by The
* Any other rate specified by us Depository Trust Company,
in the pricing supplement generally.
* Any combination of rates
specified in a pricing * No sinking fund.
supplement
TERMS OF SALE
* We will receive between * Same day settlement and payment.
$499,375,000 and $496,250,000 of Immediately available funds.
the proceeds from the sale of the
notes before expenses, after paying * We may sell these notes at one or
the agents commissions of between more times.
$625,000 and $3,750,000. If the
maturity of the notes will exceed * We may sell the notes directly or
30 years, the commission rate may through one or more agents or
be higher. dealers, including the following
agents, listed in alphabetical
* No established trading market for order:
the notes.
Credit Suisse First Boston
The notes have not been approved or Goldman, Sachs & Co.
disapproved by the SEC or any state Lehman Brothers
securities commission. None of those Merrill Lynch & Co.
authorities has determined that the Morgan Stanley Dean Witter
prospectus, this supplement or any Salomon Smith Barney
pricing or other supplement is
accurate or complete. Any * Best Efforts Offering. The agents
representation to the contrary is a are not required to sell any
criminal offense. specific number or dollar amount of
the notes. They will use their
reasonable best efforts to sell the
notes offered.
August 7, 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
products to mid-size business, Commercial Finance
principally in the U.S. We concentrate * Business Credit
on lending to midsize businesses and * Commercial Services
have been in operation for over 43 * Corporate Finance
years. * Inventory Finance
* Rediscount Finance
FINOVA extends revolving credit
facilities, term loans, and equipment Specialty Finance
and real estate financing primarily to * Commercial Equipment Finance
"middle market" businesses with * Communications Finance
financing needs falling generally * Franchise Finance
between $500,000 and $35 million. * Healthcare Finance
* Public Finance
We operate in 16 specific industry * Portfolio Services
or market niches under three market * Resort Finance
groups. We selected those groups * Specialty Real Estate Finance
because our expertise in evaluating * Transportation Finance
the credit-worthiness of prospective
customers and our ability to provide Capital Markets
value-added services enable us to * FINOVA Realty Capital
differentiate ourselves from our * FINOVA Investment Alliance
competitors. That expertise and
ability enable us to command product
pricing that provides a satisfactory
spread over our borrowing costs.
NOTE TERMS
We may sell up to $500,000,000 of The pricing or other supplements or
notes under this prospectus addendums we may issue may add, update
supplement. That amount, however, may or change information contained in
be reduced, in our discretion, due to this supplement or the prospectus. For
our sale of other securities covered example, we might issue an addendum or
by the prospectus. supplement that explains the terms of
indexed or multi-currency notes. The
The forms of fixed rate note and terms of any supplement or addendum,
floating rate note have been filed including the pricing supplement, will
with the SEC as exhibits to our supersede the information in the
registration statement of which the prospectus or this supplement.
prospectus is a part. We refer you to
the note forms for a more complete It is important that you consider
description of their terms. the information contained in the
prospectus, this prospectus
In the discussion that follows, supplement, the pricing supplement and
whenever we talk about paying any other supplements or addendums
principal on the notes, we mean at applicable to the notes in making your
maturity, redemption or repurchase. investment decision.
Also, in discussing the time for
notices and how the different interest References in this supplement to
rates are calculated, all times are the pricing supplement refer to the
New York City time, unless otherwise applicable pricing supplement for
noted. those notes and not other pricing
supplements, if any. The pricing
Pricing and Other Supplements/ supplement will also indicate whether
Addendums any other supplements or addendums are
part of that offering.
The pricing supplement for each
offering of notes will contain the
specific information and terms for Redemptions or Repurchases
that offering. The pricing supplement
will specify the interest rate or If we will have the right to redeem
interest rate basis or bases, in the notes or if you will have the
addition to other pertinent terms. right to cause us to repurchase
S-2
<PAGE>
the notes, those provisions will be Interest payable at maturity,
set forth in the pricing or another redemption or repurchase will be
supplement. If the supplement does not payable to the person to whom the
provide for those terms, then the principal is payable.
notes will not be redeemable or
subject to repurchase, as applicable. If a note is first issued between a
record date and an interest payment
Discounted Notes/Original Issue date or on an interest payment date,
Discount/ Tax Consequences the first interest payment will be
made on the first interest payment
We may issue discounted notes or date after the next record date.
notes that are deemed to be issued
with original issue discount, for U.S. Record Date
income tax purposes. Notes may or may
not bear or currently pay interest. In The record dates for fixed rate
any of these events, we will furnish notes will be March 1 (for interest
through a supplement a summary of the paid on March 15) and September 1 (for
U.S. income tax regulations concerning interest paid on September 15).
original issue discount.
The record date for floating rate
Notes Denominated in a Foreign notes will be 15 calendar days prior
Currency to each day interest is paid, whether
or not that day is a Business Day.
We may issue notes denominated in
one or more foreign currencies. In Transaction Amounts and Terms
that event, we will furnish a summary
of additional terms regarding those We may concurrently offer different
notes in a supplement. If the pricing interest rates and other terms to
supplement does not expressly different investors, depending on the
designate that notes will be paid in a amounts purchased. For example, we
foreign currency, the notes and all might do so for purchases of less than
payments related to those notes, $250,000.
including interest, will be paid in
U.S. dollars. FIXED RATE NOTES
INTEREST RATES The pricing supplement will
designate the interest rate on a note.
General We will pay interest on March 15 and
September 15 and upon maturity,
The interest rate on the notes will redemption or repurchase.
in no event be higher than the maximum
rate permitted by New York law, as it If any payment date falls on a day
may be modified by U.S. law. The that is not a Business Day, we will
interest rates will automatically be make payment on the next Business Day
reduced to that maximum rate if and no additional interest will be
necessary. paid for that delay.
The Glossary at the end of this Payments will include interest
supplement defines the capitalized accrued to but excluding each March 15
words used in discussing the interest and September 15, as appropriate.
rates payable on the notes that are Interest is computed using a 360-day
not defined in other sections of this year of twelve 30-day months.
supplement.
FLOATING RATE NOTES
Interest is either fixed or
floating, or a combination of the two. Each floating rate note will have
Floating rate notes may be "regular an interest rate formula, which may be
floating rate notes," "inverse based on the:
floating rate notes," or "floating * CMT rate
rate/fixed rate notes." Regular * Commercial Paper rate
floating rate notes are discussed * 11th District rate
below. If the notes will be either of * Federal Funds rate
the other two types, we will describe * LIBOR
those attributes in a supplement. * Prime rate
* Treasury rate
Payments on notes will include * Another rate noted in the
interest accrued from the date of pricing supplement
issue to but excluding the maturity, * Any combination of rates if
repurchase or redemption date. noted in a pricing supplement
Interest is generally payable to the
person in whose name the note is
registered at the close of business on
the record date before the interest
payment date.
S-3
<PAGE>
The pricing supplement will also When Interest is Determined
indicate any Spread or Spread (the Interest Determination Date)
Multiplier. In addition, any floating
rate note may have a maximum or The Interest Determination Date for
minimum interest rate limit, but not CMT, Commercial Paper, Federal Funds
less than zero. and Prime Rate notes is the second
Business Day before the Interest Reset
Calculation Date Date.
Floating interest rates will be The Interest Determination Date for
calculated not later than the LIBOR notes is the second London
Calculation Date by the Calculation Business Day before the Interest Reset
Agent. The Calculation Date for any Date.
Interest Determination Date, described
below, will be the earlier of (a) 10 The Interest Determination Date for
days after that Interest Determination Treasury rate notes will be the day of
Date (or the next Business Day if that the week in which the Interest Reset
10th day is not a Business Day) or (b) Date falls on which Treasury bills
the Business Day before the Interest would normally be auctioned. Treasury
Payment Date or maturity, as bills are usually sold at auction on
applicable. Monday of each week, unless that day
is a legal holiday, in which case the
Calculation Agent auction is usually held on Tuesday.
The auction, however, may be held on
The Calculation Agent will provide the preceding Friday. If so, that
the current, and when known the next, Friday will be the Interest
interest rate effective for that Determination Date for the Interest
period. The First National Bank of Reset Date occurring in the next week.
Chicago will be the Calculation Agent If an auction date falls on any
unless otherwise indicated. You can Interest Reset Date then the Interest
reach it at: Reset Date will instead be the first
Business Day following the auction
The First National Bank of Chicago date.
One First National Plaza
Suite 0126 The Interest Determination Date for
Chicago, IL 60670 11th District rate notes is the last
(800) 524-9472 working day of the month just before
Attention: Investor Relations the Interest Reset Date in which the
Federal Home Loan Bank of San
Initial Interest Rate Francisco publishes the relevant index
noted below under "INTEREST RATE
The initial interest rate or FORMULAS -- 11th District Rate Notes."
interest rate formula on each note
until the first Interest Reset Date, When Interest Is Paid
described below, will be indicated in (the Interest Payment Date)
the pricing supplement. Thereafter,
the interest rate will be the rate We will pay interest on the dates
determined as of the next Interest stated in the pricing supplement. If
Determination Date, discussed below. interest is payable on a day which is
Each time a new interest rate is not a Business Day, payment will be
determined, it will become effective postponed to the next Business Day and
on the next Interest Reset Date. will include interest through that
date. For LIBOR notes, however, if the
Date of Interest Rate Changes next Business Day is in the next
(the Interest Reset Date) calendar month, interest will be paid
on the preceding Business Day. If the
The interest rate on each floating maturity, repayment or redemption date
rate note may be reset daily, weekly, is not a Business Day, interest will
monthly, quarterly, semi-annually, or be paid on the next Business Day for
annually. The Interest Reset Date will all types of notes, and no interest
be stated in the pricing supplement. will accrue after the maturity,
repayment or redemption date.
If any Interest Reset Date is not a
Business Day, then the Interest Reset Determining the Interest
Date will be postponed to the next
Business Day. For LIBOR notes, The interest payable will be the
however, if the next Business Day is amount of interest accrued from and
in the next calendar month, the including the date of issue or the
Interest Reset Date will be the most recent date to which interest has
immediately preceding Business Day. been paid, to, but excluding, the
interest payment date or maturity, as
applicable.
S-4
<PAGE>
If the interest payment date is also a week or month ended just
day that principal is due, the before the week or month
interest payable will include interest containing the Interest
accrued to, but will exclude, the date Determination Date.
of maturity, redemption or repurchase.
If the Index Maturity is not set
The accrued interest for any period forth in the pricing supplement, the
is calculated by multiplying the maturity shall be 2 years.
principal amount of a note by an
accrued interest factor. The accrued If the rate cannot be set as
interest factor is computed by adding described above, the Calculation Agent
the interest factors calculated for will use the following methods:
each day in the period to the date for
which accrued interest is being (a) If that rate is no longer
calculated. The interest factor displayed on the relevant page, or if
(expressed as a decimal rounded it is not displayed by 3:00 P.M. on
upwards if necessary, as described the related Calculation Date, then the
below) is computed by dividing the rate for that Interest Determination
interest rate (expressed as a decimal Date will be the Treasury Constant
rounded upwards if necessary) Maturity rate for the Index Maturity
applicable to that date by 360, unless as published in the relevant
the notes are Treasury rate notes or H.15(519).
CMT rate notes, in which case it will
be divided by the actual number of (b) If that rate is no longer
days in the year. published in H.15(519), or is not
published by 3:00 P.M. on the
Rounding Calculation Date, then the rate for
that Interest Determination Date will
All percentages resulting from any be the Treasury Constant Maturity rate
calculation on floating rate notes (or other United States Treasury rate)
will be rounded, if necessary, to the for the Index Maturity for that
nearest one hundred thousandth of a Interest Determination Date then
percentage point, with five published by either the Federal
one-millionths of a percentage point Reserve Board or the United States
rounded upwards (e.g., 9.876545% (or Department of the Treasury that the
.09876545) being rounded to 9.87655% Calculation Agent determines is
(or .0987655) and 9.876544% (or comparable to the rate formerly
.09876544) being rounded to 9.87654% displayed on the Designated CMT
(or .0987654)). All dollar amounts Telerate Page and published in the
used in or resulting from that relevant H.15(519).
calculation will be rounded to the
nearest cent (with one-half cent being (c) If that information is not
rounded upwards). provided by 3:00 P.M. on the related
Calculation Date, then the CMT rate
INTEREST RATE FORMULAS for that Interest Determination Date
will be calculated as a yield to
CMT Rate Notes maturity, based on the average of the
secondary market closing offer side
Each CMT rate note will bear prices as of approximately 3:30 P.M.
interest at the rate (calculated with on that Interest Determination Date
reference to the CMT rate and the reported, according to their written
Spread and/or Spread Multiplier, if records, by three leading primary
any) specified in the note and pricing United States government securities
supplement. dealers (each, a "Reference Dealer")
in New York selected by the
"CMT rate" means, for an Interest Calculation Agent. They will be
Determination Date, the rate displayed selected from five Reference Dealers.
on the Designated CMT Telerate Page
under the caption . . . "Treasury The Calculation Agent will
Constant Maturities . . . Federal eliminate the highest and lowest
Reserve Board Release H.15 . . . quotations (or, in the event of
Mondays Approximately 3:45 P.M.," equality, one of the highest and/or
under the column for the Index lowest, as applicable) for the most
Maturity for: recently issued direct noncallable
fixed rate obligations of the United
(1) if the Designated CMT States ("Treasury Note") with an
Telerate Page is 7055, the original maturity approximating the
rate on that Interest Index Maturity and a remaining term to
Determination Date; or maturity of not less than the Index
Maturity minus one year.
(2) if the Designated CMT
Telerate Page is 7052, the If three or four (and not five) of
weekly or monthly average, as the Reference Dealers are quoting as
specified in the pricing described above, the CMT rate will be
supplement, for the based on the average of the offer
prices obtained and neither the
highest nor the lowest of those quotes
will be eliminated.
S-5
<PAGE>
If two Treasury Notes with an average of the offered rates, as of
original maturity as described in the 11:00 A.M., of three leading dealers
last sentence have remaining terms to of commercial paper in New York
maturity equally close to the Index selected by the Calculation Agent. The
Maturity, the quotes for the Treasury offered rates will be for commercial
Note with the shorter remaining term paper having the Index Maturity placed
to maturity will be used. for an industrial issuer whose bond
rating is "AA," or the equivalent,
(d) If the Calculation Agent cannot from a nationally recognized rating
obtain three qualified Treasury Note agency.
quotations, the CMT rate for that
Interest Determination Date will be (c) Finally, if fewer than three
calculated as a yield to maturity dealers are quoting as mentioned, the
based on the average of the secondary rate of interest in effect for the
market offer side prices as of applicable period will be the same as
approximately 3:30 P.M. on that that for the prior interest reset
Interest Determination Date of three period.
Reference Dealers in New York selected
by the Calculation Agent using the 11th District Rate Notes
same method described above for
Treasury Notes with an original 11th District rate notes will bear
maturity of the number of years that interest at the rates (calculated with
is the next highest to the Index reference to the 11th District rate
Maturity with a remaining term to and the Spread and/or Spread
maturity closest to that Index Multiplier, if any) specified in the
Maturity and in an amount of at least note and pricing supplement.
$100 million.
The 11th District rate means for an
(e) Finally, if fewer than three Interest Determination Date the rate
Reference Dealers are quoting as equal to the monthly weighted average
mentioned above, the rate of interest cost of funds for the calendar month
in effect for the period will be the before that date set forth under the
same as that in effect for the prior caption "11th District" on Telerate
interest reset period. Page 7058 as of 11:00 A.M. San
Francisco time on the Interest
Commercial Paper Rate Notes Determination Date.
Each Commercial Paper rate note If the rate cannot be set as
will bear interest at the rate described above, the Calculation Agent
(calculated with reference to the will use the following methods:
Commercial Paper rate and the Spread
and/or Spread Multiplier, if any) (a) If the rate does not appear on
specified in the note and pricing Telerate Page 7058 on that Interest
supplement. Determination Date, the rate will be
the monthly weighted average cost of
"Commercial Paper rate" means, for funds paid by member institutions of
an Interest Determination Date, the the 11th Federal Home Loan Bank
Money Market Yield (calculated as District that was most recently
described below) of the rate on that announced by the FHLB of San Francisco
date for commercial paper having the as the cost of funds for the calendar
Index Maturity as published in month before the date of that
H.15(519) under the heading announcement (the "Index").
"Commercial Paper -- Non-financial."
(b) If the FHLB San Francisco fails
If the rate cannot be set as to announce that rate as noted above,
described above, the Calculation Agent the 11th District rate will be that
will use the following methods: rate in effect for the prior period.
(a) If that rate is not published Federal Funds Rate Notes
in H.15(519) by 3:00 P.M. on the
Calculation Date, then the rate will Each Federal Funds rate note will
be the Money Market Yield of the rate bear interest at the rate (calculated
on that Interest Determination Date with reference to the Federal Funds
for commercial paper having the Index rate and the Spread and/or Spread
Maturity as published in Composite Multiplier, if any) specified in the
Quotations under the heading note and pricing supplement.
"Commercial Paper." Index Maturities
of one month will equal a maturity of "Federal Funds rate" means for an
30 days and of three months will equal Interest Determination Date the rate
a maturity of 90 days. on that date for Federal Funds as
published in H.15(519) prior to 3:00
(b) If the rate is not published in P.M. under the heading "Federal Funds
Composite Quotations by 3:00 P.M. on (Effective)."
the Calculation Date, the Commercial
Paper rate for that Interest
Determination Date will be the Money
Market Yield of the
S-6
<PAGE>
If the rate cannot be set as Screen LIBO Page, or, in the case
described above, the Calculation Agent where (2) above applies, if no rate
will use the following methods: appears on the Telerate Page 3750,
LIBOR for that date will be determined
(a) If that rate is not published as follows:
in H.15(519) prior to 3:00 P.M. on the
Calculation Date, then the Federal (b) LIBOR will be determined based
Funds rate will be the rate on the on the rates at approximately 11:00
Interest Determination Date as A.M., London time, on that Interest
published in Composite Quotations Determination Date at which deposits
under the heading "Federal Funds/ in U.S. dollars having the Index
Effective Rate." Maturity and in a principal amount
that is representative for a single
(b) If that rate is not published transaction in that market at the time
in Composite Quotations by 3:00 P.M. (a "Representative Amount") are
on the Calculation Date, the Federal offered to prime banks in the London
Funds rate for the Interest interbank market by four major banks
Determination Date will be the average in the London interbank market
of the rates, as of 9:00 A.M. on that selected by the Calculation Agent. The
date, for the last transaction in offered rates must begin on the second
overnight Federal Funds arranged by London Business Day immediately after
three leading brokers of Federal Funds that Interest Determination Date.
transactions in New York selected by
the Calculation Agent. The Calculation Agent will request
the principal London office of each of
(c) Finally, if fewer than three those banks to provide a quotation of
brokers are quoting as mentioned its rate. If at least two quotations
above, the rate of interest will be are provided, LIBOR for that date will
the same as that in effect for the be the average of those quotations.
prior interest reset period.
(c) If fewer than two quotations
LIBOR Notes are provided, LIBOR for that date will
be the average of the rates quoted at
Each LIBOR note will bear interest approximately 11:00 A.M., New York
at the rate (calculated with reference City time, on that date by three major
to LIBOR and the Spread and/or Spread banks in New York selected by the
Multiplier, if any) specified in the Calculation Agent. The rates will be
LIBOR note and pricing supplement. for loans in a Representative Amount
in U.S. dollars to leading European
LIBOR will be determined by the banks having the Index Maturity
Calculation Agent as follows: beginning on the second London
Business Day after that date.
(a) For an Interest Determination
Date, LIBOR will be determined as (d) Finally, if the three banks
specified in the pricing supplement by noted in (c) are not quoting as
either: mentioned, the rate of interest will
be the same as that in effect for the
(1) the average of the offered prior interest reset period.
rates for deposits in U.S. dollars
having the Index Maturity beginning on Prime Rate Notes
the second London Business Day
immediately after that date, that Each prime rate note will bear
appear on the Reuters Screen LIBO Page interest at the rate (calculated with
as of 11:00 A.M., London time, on that reference to the Prime rate and the
date, if at least two offered rates Spread and/or Spread Multiplier, if
appear on the Reuters Screen LIBO any) specified on the prime rate note
Page; or and in the applicable pricing
supplement.
(2) the rate for deposits in U.S.
dollars having the Index Maturity "Prime rate" means, with respect to
beginning on the second London an Interest Determination Date, the
Business Day immediately after that rate set forth on that date in
date, that appears on the Telerate H.15(519) under the heading "Bank
Page 3750 as of 11:00 A.M., London Prime Loan."
time, on that date.
The following procedures will occur
If the pricing supplement does not if the rate cannot be set as described
specify either the Reuters Screen LIBO above:
Page or Telerate Page 3750, LIBOR will
be determined as if Telerate Page 3750 (a) If that rate is not published
had been specified. in H.15(519) prior to 3:00 P.M. on the
Calculation Date, then the Prime rate
In the case where (1) above will be the average of the rates of
applies, if fewer than two offered interest publicly announced by each
rates appear on the Reuters bank that appear
S-7
<PAGE>
on the Reuters Screen UPSPRIME1 Page date of direct obligations of the
as its prime rate or base lending rate United States ("Treasury bills")
in effect for that Interest having the Index Maturity as published
Determination Date. in H.15(519) under the heading
"Treasury bills -- auction average
(b) If fewer than four, but more (investment)."
than one, rates appear on the Reuters
Screen USPRIME1 Page, the Prime rate If the rate cannot be set as
will be the average of the prime rates described above, the Calculation Agent
quoted on the basis of the actual will use the following methods:
number of days in the year divided by
a 360-day year as of the close of (a) If that rate is not published
business on the Interest Determination in H.15(519) by 3:00 P.M. on the
Date by four major money center banks Calculation Date, the rate will be the
in New York selected by the auction average rate (expressed as a
Calculation Agent. bond equivalent, on the basis of a
year of 365 or 366 days, as
(c) If fewer than two rates appear applicable, and applied on a daily
on that Reuters screen, the Prime rate basis) as otherwise announced by the
will be determined on the basis of the United States Department of the
rates furnished in New York by three Treasury.
substitute banks or trust companies
selected by the Calculation Agent that (b) If the results of the auction
are organized and doing business under of Treasury bills having the Index
the laws of the United States, or any Maturity are not published in
state thereof, having total equity H.15(519) by 3:00 P.M. on the
capital of at least $500 million and Calculation Date, or if no auction is
being subject to supervision or held on an Interest Determination
examination by a Federal or state Date, then the Treasury rate will be
authority. calculated as a yield to maturity
(expressed as a bond equivalent, on
(d) Finally, if the banks and the basis of a year of 365 or 366
substitutes are not quoting as days, as applicable and applied on a
mentioned above, the rate of interest daily basis) of the average of the
will be the same as that in effect for secondary market bid rates as of
the prior interest reset period. approximately 3:30 P.M. on the
Interest Determination Date, of three
Treasury Rate Notes leading primary United States
government securities dealers (which
Each Treasury rate note will bear may include one or more of the agents)
interest at the rate (calculated with in New York selected by the
reference to the Treasury rate and the Calculation Agent for the issue of
Spread and/or Spread Multiplier, if Treasury bills with a remaining
any) specified on the Treasury rate maturity closest to the Index
note and in the pricing supplement. Maturity.
"Treasury rate" means for an (c) Finally, if fewer than three of
Interest Determination Date the rate the dealers are quoting as mentioned,
for the auction held on that the rate of interest will be the same
as that in effect for the prior
interest reset period.
PLAN OF DISTRIBUTION
Payment of the purchase price for the agents may make a market in the
the notes must be made in immediately notes, in its discretion.
available funds in New York on the
settlement date. Right to Change Offer and Reject
Orders
No Trading Market or Exchange Listing
We reserve the right to withdraw,
No note will have an established cancel or modify the offer made by
trading market when issued. We do not this prospectus (including
expect to list the notes on any supplements) without notice. We may
securities exchange. Each of the reject orders in whole or in part,
agents may from time to time purchase whether placed directly with us or
and sell notes in the secondary through one of the agents,
market, but no agent is obligated to underwriters or dealers. The agents in
do so. There can be no assurance that their reasonable discretion may reject
there will be a secondary market for in whole or in part any offer to
the notes or liquidity in that market purchase notes received by them.
if one develops. From time to time,
each of
S-8
<PAGE>
SALE OF NOTES By Underwriters
We may sell the notes (a) through If we use underwriters in the sale,
agents; (b) through underwriters or they will acquire the notes for their
dealers; or (c) directly to one or own account. We may also sell notes to
more purchasers. We are offering the an agent, as principal, or to a group
notes on a continuing basis from time of underwriters for whom an agent acts
to time. as representative, for resale to
investors. We will sell the notes to
By Agents the underwriters or agents at the
principal amount of the notes less a
We may sell the notes through commission equal to one for an agency
agents designated by us. The agents sale of those notes.
listed on the front of this prospectus
supplement have agreed to act as The underwriters or agents may
agents for these notes. The agents resell the notes in one or more
have agreed to use their reasonable transactions, including negotiated
best efforts to solicit offers to transactions, at a fixed public
purchase the notes. Each of those offering price or at varying prices
agents and/or their affiliates has determined by them at the time of
engaged in transactions with and sale. The underwriters or agents may
performed investment banking and/or share any part of the discount or
commercial banking services for us and commission received in that sale with
our affiliates. Those transactions other agents or dealers, as
have occurred from time to time and appropriate. After the initial public
are in the regular course of their offering of the notes, the initial
business. public offering price and any
discounts or concessions allowed,
Unless otherwise indicated, the re-allowed or paid to dealers may be
notes will be sold to the public at changed from time to time.
100% of their principal amount. Agents
will receive commissions on or The obligations of the agents or
discounts from the principal amount of underwriters to purchase the notes
the notes they sell. The commission will be subject to certain conditions.
schedule ranges from 0.125% to 0.750% Underwriters will be obligated to
of the principal amount per note, purchase all underwritten notes
depending on maturity. If we sell offered if any of the notes are
notes with maturities in excess of 30 purchased at that time.
years, we will negotiate a commission
with the agents at that time, which Direct Sales
commission might be greater than the
rates noted above. We may also sell notes directly by
us. In that case, no underwriters or
We will receive from 99.875% to agents would be used.
99.25% of the principal amount of each
note, before deducting expenses. We
have agreed to reimburse the agents
for most of their expenses in selling
the notes. We anticipate that the
expenses of this offering will
approximate $565,000 if all of the
notes are sold.
S-9
<PAGE>
GLOSSARY
Set forth below are definitions of "London Business Day." See
some of the terms used in this "Business Day."
supplement.
"Money Market Yield" is the yield
"Business Day" means any day other calculated as follows:
than a Saturday or Sunday or other day
on which banking institutions in New Money Market Yield = D X 360 X 100
York, New York are generally -------------
authorized or obligated by law, 360 - (D X M)
regulation or executive order to be
closed and for LIBOR notes, is also a where "D" refers to the per annum rate
London Business Day. "London Business for commercial paper quoted on a bank
Day" means any day on which dealings discount basis and expressed as a
in deposits in U.S. dollars are decimal; and "M" refers to the actual
transacted in the London interbank number of days in the interest period
market. for which interest is being
calculated.
"Composite Quotations" means the
daily statistical release titled "Reuters Screen LIBO Page" means
"Composite 3:30 P.M. Quotations for the display designated as page "LIBO"
U.S. Government Securities" (or any on the Reuters Monitor Money Rates
successor publication) published by Service (or any successor page on that
the Federal Reserve Bank of New York. service for the purpose of displaying
London interbank offered rates of
"Designated CMT Telerate Page" major banks).
means the display on the Dow Jones
Markets Limited (or any successor "Reuters Screen USPRIME1 Page"
service) on the page designated in the means the display designated as page
pricing supplement and on the face of "USPRIME1" on the Reuters Monitor
the note (or any successor page on Money Rates Service (or a successor
that service) for the purpose of page on that service for the purpose
displaying Treasury Constant of displaying prime rates or base
Maturities as reported in H.15(519) or lending rates of major United States
if no page is specified in the pricing banks).
supplement, page 7052.
"Spread" means the number of basis
"H.15(519)" means the publication points specified in the pricing
titled "Statistical Release H.15(519), supplement as being applicable to the
Selected Interest Rates" (or any floating rate note.
successor publication) published by
the Board of Governors of the Federal "Spread Multiplier" means the
Reserve System. percentage specified in the pricing
supplement as being applicable to the
"Index Maturity" means, for a floating rate note.
floating rate note, the period on
which the interest rate formula is "Telerate Page 3750" means the
based, as indicated in the pricing display designated as page "3750" on
supplement. the Dow Jones Markets Limited (or a
successor page on that service or
"Interest Determination Date" means another service or services nominated
the date as of which the interest rate by the British Bankers Association for
for a floating rate note is to be the purpose of displaying London
calculated, to be effective as of the interbank offered rates for U.S.
following Interest Reset Date. The dollar deposits).
Interest Determination Dates will be
indicated in the pricing supplement "Telerate Page 7058" means the
and in the note. They are also listed display on the Dow Jones Markets
above on page S-4. Limited on that page (or successor
page on that service) for the purpose
"Interest Reset Date" means the of displaying the monthly average cost
date on which a floating rate note of funds paid by member institutions
will begin to bear interest at the of the Eleventh Federal Home Loan Bank
variable interest rate determined on District.
any Interest Determination Date. The
Interest Reset Dates will be indicated
in the pricing supplement and in the
note.
S-10
<PAGE>
Prospectus FINOVA
- ---------- 1850 North Central Avenue
P.O. Box 2209
Phoenix, Arizona 85002-2209
THE FINOVA GROUP INC.
FINOVA 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 August 7, 1998
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The FINOVA Group Inc. ("FINOVA * Portions of the Proxy Statement
Group") and FINOVA Capital Corporation on Schedule 14A for FINOVA
("FINOVA Capital") file annual, Group's Annual Meeting of
quarterly and current reports, proxy Shareholders held on May 14,
and information statements and other 1998 that have been incorporated
information with the SEC. You may read by reference into our 10-K.
and copy any document we file at the
SEC's public reference rooms at 450 * Quarterly Reports on Form 10-Q
Fifth Street, N.W., Washington, D.C. of FINOVA Group and FINOVA
20549. Please call the SEC at Capital for the quarters ended
1-800-SEC-0330 for more information on March 31 and June 30 1998.
the public reference room and their
copy charges. Our SEC filings are also * Current Reports on Form 8-K of
available to the public from the SEC's FINOVA Group dated January 23,
web site at http://www.sec.gov, which April 27, and July 28, 1998.
may also be available on our web site
at http://www.finova.com. You may also * Current Reports on Form 8-K of
inspect our SEC reports and other FINOVA Capital dated January 23,
information at the New York Stock April 27, and July 30, 1998.
Exchange, 20 Broad Street, New York,
New York 10005. You may request a copy of those
filings or any other information
The SEC allows us to "incorporate incorporated by reference in this
by reference" the information we file prospectus, including exhibits. You
with them, which means we can disclose may do so orally or in writing by
information to you by referring you to contacting us at:
those documents. Information
incorporated by reference is part of Treasurer
this prospectus. Later information The FINOVA Group Inc.
filed with the SEC updates and 1850 North Central Avenue
supersedes this prospectus. P.O. Box 2209
Phoenix, Arizona 85002-2209
We incorporate by reference the (602) 207-6900
documents listed below and any future
filings made with the SEC under We will provide that information at no
Sections 13(a), 13(c), 14 or 15(d) of charge to you.
the Securities Exchange Act of 1934
until this offering is completed:
* Annual Reports on Form 10-K of
FINOVA Group and FINOVA Capital
for the year ended December 31,
1997.
THE COMPANIES
FINOVA Group is a financial and our ability to provide value-added
services holding company. Through our services enable us to differentiate
principal subsidiary, FINOVA Capital, ourselves from our competitors. That
we provide a broad range of financing expertise and ability also enable us
and capital market products to to command pricing that provides a
mid-size business. We concentrate on satisfactory spread over our borrowing
lending to mid-size businesses. FINOVA costs.
Capital has been in operation for over
43 years. We seek to maintain a high quality
portfolio and to minimize non-earning
We extend revolving credit assets and write-offs. We use clearly
facilities, term loans, and equipment defined underwriting criteria and
and real estate financing primarily to stringent portfolio management
"middle-market" businesses with techniques. We diversify our lending
financing needs falling generally activities geographically and among a
between $500,000 and $35 million. range of industries, customers and
loan products.
We operate in 16 specific industry
or market niches under three market Due to the diversity of our
groups. We selected those groups portfolio, we believe we are better
because our expertise in evaluating able to manage competitive changes in
the credit-worthiness of prospective our markets and to withstand the
customers impact of deteriorating economic
conditions on a regional or
2
<PAGE>
national basis. There can be no mortgage and premium finance
assurance, however, that competitive companies. Typical transaction
changes, borrowers' performance, sizes range from $1 million to
economic conditions or other factors $35 million.
will not result in an adverse impact
on our results of operations or Specialty Finance
financial condition.
* Commercial Equipment Finance
We generate interest, leasing, fee offers equipment leases, loans
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 credit biotechnology and electronics.
losses, marketing expenses, salaries Typical transaction sizes range
and employee benefits, servicing and from $500,000 to $15 million.
other operating expenses and income
taxes. * Communications Finance
specializes in term financing to
Business Groups advertising and
subscriber-supported businesses
We operate the following principal including radio and television
lines of business under three market stations, cable operators,
groups: outdoor advertising firms and
publishers. Typical transaction
Commercial Finance sizes range from $1 million to
$40 million.
* Business Credit offers
collateral-oriented revolving * Franchise Finance offers
credit facilities and term loans equipment, real estate and
for manufacturers, distributors, acquisition financing for
wholesalers and service operators of established
companies. Typical transaction franchise concepts. Transaction
sizes range from $500,000 to $3 sizes generally range from
million. $500,000 to $15 million.
* Commercial Services offers full * Healthcare Finance offers a full
service factoring and accounts range of working capital,
receivable management services equipment and real estate
for entrepreneurial and larger financing products for the U.S.
firms, primarily in the textile health care industry.
and apparel industries. The Transaction sizes typically
annual factored volume of these range from $500,000 to $25
companies is generally between million.
$5 million and $25 million. This
line provides accounts * Public Finance provides
receivable and inventory tax-exempt term financing to
financing and loans secured by state and local governments,
equipment and real estate. non-profit corporations and
entities using industrial
* Corporate Finance provides a revenue or development bonds.
full range of cash flow-oriented Typical transaction sizes range
and asset-based term and from $100,000 to $5 million.
revolving loan products for
manufacturers, wholesalers, * Portfolio Services provides
distributors, specialty customized receivable servicing
retailers and commercial and and collections for time-share
consumer service businesses. developers and other generators
Typical transaction sizes range of consumer receivables.
from $2 million to $35 million.
* Resort Finance focuses on
* Inventory Finance provides construction, acquisition and
inbound and outbound inventory receivables financing of
financing, combined timeshare resorts worldwide as
inventory/accounts receivable well as term financing for
lines of credit and purchase established golf resort hotels
order financing for equipment and receivables funding for
distributors, value-added developers of second home
resellers and dealers communities. Typical transaction
nationwide. Transaction sizes sizes range from $5 million to
generally range from $500,000 to $35 million.
$30 million.
* Rediscount Finance offers
revolving credit facilities to
the independent consumer finance
industry including sales,
automobile,
3
<PAGE>
* 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 in
used commercial aircraft. 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 are
estate financing products and located at 1850 North Central Avenue,
commercial mortgage banking P.O. Box 2209, Phoenix, Arizona
services. Typical transaction 85002-2209. Our telephone number is
sizes range from $1 million to (602) 207-6900.
$5 million.
* FINOVA Investment Alliance
provides equity and debt
financing for midsize businesses
in partnership with
institutional investors and
selected fund sponsors. Typical
transaction sizes range from $2
million to $15 million.
4
<PAGE>
SELECTED FINANCIAL INFORMATION
The following information was Management's Discussion and
derived from FINOVA Group's financial Analysis. Those items are part of our
statements. The information is only a Annual Reports on Form 10-K. You
summary and 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
<TABLE>
<CAPTION>
Six months ended
June 30, As of and for the Year Ended December 31,
--------------------------- ---------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Interest earned from
financing transactions $ 486,023 $ 429,197 $ 897,991 $ 769,346 $ 680,912 $ 463,404 $ 255,216
Interest margins earned 222,799 196,083 408,909 340,517 287,880 216,667 124,847
Volume-based fee income 41,259 16,367 46,733 28,588 21,204 10,796 0
Provision for credit losses 25,500 26,300 69,200 41,751 37,568 10,439 5,706
Gains on sale of assets 10,805 13,701 30,261 12,949 10,889 3,877 5,439
Income from continuing
operations 80,112 65,409 139,098 116,493 93,798 73,770 37,846
Net income 80,112 65,409 139,098 117,000 97,629 74,313 37,347
Basic earnings per
share for continuing
operations $ 1.43 $ 1.21 $ 2.56 $ 2.14 $ 1.72 $ 1.48 $ 0.96
Basic earnings per share $ 1.43 $ 1.21 $ 2.56 $ 2.15 $ 1.79 $ 1.49 $ 0.95
Basic adjusted weighted
average outstanding
shares 56,189,000 53,965,000 54,405,000 54,508,000 54,633,000 49,765,000 39,277,000
Diluted earnings per
share for continuing
operations $ 1.34 $ 1.15 $ 2.42 $ 2.08 $ 1.69 $ 1.46 $ 0.90
Diluted earnings per share $ 1.34 $ 1.15 $ 2.42 $ 2.09 $ 1.76 $ 1.47 $ 0.89
Diluted adjusted weighted
average shares 61,092,000 58,598,000 59,161,000 56,051,000 55,469,000 50,436,000 40,552,000
Dividend declared per
common share $ 0.28 $ 0.24 $ 0.52 $ 0.46 $ 0.42 $ 0.37 $ 0.34
FINANCIAL POSITION:
Investment in financing
transactions 8,928,644 7,826,196 8,399,456 7,298,759 6,348,079 5,342,979 2,846,571
Nonaccruing assets 196,824 165,885 187,356 155,505 143,127 149,046 102,607
Reserve for credit losses 178,070 159,747 177,088 148,693 129,077 110,903 64,280
Total assets 9,288,864 8,060,403 8,719,840 7,526,734 7,036,514 5,821,343 2,834,322
Total debt 7,345,194 6,338,122 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 con-
vertible debentures of
FINOVA Group
("TOPrS") 111,550 111,550 111,550 111,550 -- -- --
Shareowners' equity 1,152,097 948,595 1,090,454 929,591 825,184 770,252 503,300
</TABLE>
RATIO OF INCOME TO TOTAL FIXED CHARGES
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
FINOVA Group 1.59x 1.54x 1.54x 1.50x 1.44x 1.58x 1.53x
FINOVA Capital 1.59x 1.54x 1.54x 1.50x 1.44x 1.58x 1.50x
</TABLE>
RATIO OF INCOME TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
FINOVA Group 1.57x 1.51x 1.52x 1.50x 1.44x 1.58x 1.50x
FINOVA Capital 1.59x 1.54x 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. We seek 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 our 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 HERE IT
ISstatements. Many of those factors * Changes in government
are noted in conjunction with the regulations, tax rates and
forward-looking statements in the similar matters. For example,
text. Other important factors that government regulations could
could cause actual results to differ significantly increase the cost
include: of doing business or could
eliminate certain tax advantages
* The results of our efforts to of some of our financing
implement our business strategy. products.
Failure to fully implement our
business strategy might result * Other risks detailed in our
in decreased market penetration, other SEC reports or filings.
adverse effects on results of
operations and other adverse We do not promise to update
results. forward-looking information to reflect
actual results or changes in
* The effect of economic assumptions or other factors that
conditions and the performance could affect those statements.
of our borrowers. Economic
conditions in general or in
particular market segments could
impact the ability of our
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
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
Debt Securities * FINOVA Capital may discharge the
debt issued in any series at any
The following summary applies only time by depositing sufficient
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 its obligations on the debt, it
Capital will be issued under an will be in default. Defaults for
indenture (the "Indenture") between senior debt securities are
FINOVA Capital and one or more U.S. described on pages 11-12 of this
banking institutions (a "Trustee"). pospectus.
The Indenture may but need not have
separate Trustees for senior and General
subordinated debt.
The debt securities of FINOVA Group
The following summary of certain and FINOVA Capital offered by this
provisions of the Indenture is not prospectus will be limited to $2.0
complete. You should look at the billion principal amount. The
Indenture that is filed as an exhibit Indenture does not limit the amount of
to the Registration Statement. To debt securities FINOVA Capital could
obtain a copy of the Indenture, see offer under it. FINOVA Capital can
"Where You Can Find More Information" issue debt securities in one or more
on page 2. series, in each case as authorized by
us from time to time. Each series may
All capitalized terms have the differ as to its terms. The debt
meanings specified in the Indenture. securities will be FINOVA Capital's
unsecured general obligations and may
General Indenture Provisions that or may not be subordinated to FINOVA
Apply to Senior and Subordinated Debt Capital's other general indebtedness.
Those that are not subordinated are
* The Indenture does not limit the called "senior debt securities." The
amount of debt that FINOVA others are "subordinated debt
Capital may issue nor provide securities."
holders any protection should
there be a highly leveraged The supplement will address the
transaction involving our following terms of the debt
company. We may issue additional securities:
debt securities without your
consent. * Their title.
* If FINOVA Capital redeems debt * Any limits on the principal
which is convertible into its amounts to be issued.
capital stock or other
securities, your right to * The dates on which the principal
convert that debt into capital is payable.
stock or other securities will
expire on the redemption date. * The rates (which may be fixed or
variable) at which they shall
bear interest, or the method for
* The Indenture allows FINOVA determining rates.
Capital to merge or to
consolidate with another * The dates from which the
company, or sell all or interest will accrue and will be
substantially all of its assets payable, or the method of
to another company. If these determining those dates, and any
events occur, the other company record dates for the payments
will be required to assume due.
FINOVA Capital's
responsibilities on the debt, * Any provisions for redemption,
and FINOVA Capital will be conversion or exchange, at our
released from all liabilities option or otherwise, including
and obligations. the periods, prices and terms of
redemption or conversion.
* The Indenture provides that * Any sinking fund or similar
holders of a majority of the provisions, whether mandatory or
total principal amount of the at the holder's option,
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.
7
<PAGE>
along with the periods, prices Ownership of the Global Securities;
and terms of redemption, Beneficial Ownership. So long as the
purchase or repayment. depositary or its nominee is the
registered owner of a global security,
* The amount or percentage payable that entity will be the sole holder of
if we accelerate their maturity, the debt securities represented by
if other than the principal that instrument. The Trustee and we
amount. are only required to treat the
depositary or its nominee as the legal
* Any changes to the events of owner of those securities for all
default or covenants set forth purposes under the Indenture.
in the Indenture.
Each actual purchaser of debt
* The terms of subordination, if securities represented by a global
any. security (a "beneficial owner") will
not be entitled to receive physical
* Whether the series can be delivery of certificated securities,
reopened. will not be considered the holder of
those securities for any purpose under
* Any other terms consistent with the Indenture, and will not be able to
the Indenture. transfer or exchange the global
securities, unless this prospectus or
We may authorize and determine the the supplement provide to the
terms of a series of debt securities contrary. As a result, each beneficial
by resolution of our board of owner must rely on the procedures of
directors or one of its committees or the depositary to exercise any rights
through a supplemental Indenture. of a holder under the Indenture. In
addition, if the beneficial owner is
Form of Debt Securities not a direct or indirect participant
in the depositary (each a
The debt securities will be issued "participant") the beneficial owner
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 issue debt securities only in Those laws and the above conditions
denominations of $1,000 or integral may impair the ability to transfer
multiples of that amount, unless the beneficial interests in the global
supplement states otherwise. securities.
Global Securities The Depository Trust Company
In General. Debt securities in The following is based on
global form will be deposited with or information furnished by DTC and
on behalf of a depositary. Global applies to the extent it is the
securities are represented by one or depositary, unless otherwise stated in
more global certificates for the a supplement:
series registered in the name of the
depositary or its nominee. Debt Registered Owner. The debt
securities in global form may not be securities will be issued as fully
transferred except as a whole among registered securities in the name of
the depositary, a nominee of or a Cede & Co. (DTC's partnership
successor to the depositary and any nominee). One fully registered global
nominee of that successor. Unless security generally will be issued for
otherwise identified in the each $200 million principal amount of
supplement, the depositary will be The debt securities. The Trustee will
Depository Trust Company ("DTC"). deposit the global securities with the
depositary. The deposit of the global
No Depositary or Global Securities. securities with DTC and its
If a depositary for a series is registration in the name of Cede & Co.
unwilling or unable to continue as will not change the beneficial
depositary, and a successor is not ownership of the securities.
appointed by us within 90 days, we
will issue debt securities of that DTC Organization. DTC is a
series in definitive form in exchange limited-purpose trust company
for the global security or securities organized under the New York Banking
of that series. We also may determine Law, a "banking organization" within
at any time in our discretion not to the meaning of that law, a member of
use global securities for any series. the Federal Reserve System, a
In that event, we will issue debt "clearing corporation" within
securities in definitive form.
8
<PAGE>
the meaning of the New York Uniform Notices Among the Depositary,
Commercial Code and a "clearing Participants and Beneficial Owners.
agency" registered under the Notices and other communications by
provisions of Section 17A of the the depositary, its participants and
Securities Exchange Act of 1934, as the beneficial owners will be governed
amended. by arrangements among them, subject to
any legal requirements in effect.
DTC is owned by a number of its
direct participants and by the New Voting Procedures. Neither DTC nor
York Stock Exchange, Inc., the Cede & Co. will give consents for or
American Stock Exchange, Inc. and the vote the global securities. The
National Association of Securities depositary generally mails an omnibus
Dealers, Inc. Direct participants proxy to us just after the applicable
include securities brokers and record date. That proxy assigns Cede &
dealers, banks, trust companies, Co.'s consenting or voting rights to
clearing corporations and certain the direct participants to whose
other organizations who directly accounts the securities are credited
participate in DTC (each a "direct at that time.
participant"). Other entities
("indirect participants") may access Payments. Principal and interest
DTC's system by clearing transactions payments made by us will be delivered
through or maintaining a custodial to the depositary. DTC's practice is
relationship with direct participants, to credit direct participants'
either directly or indirectly. The accounts on the applicable payment
rules applicable to DTC and its date unless it has reason to believe
participants are on file with the SEC. it will not receive payment on that
date. Payments by participants to
DTC Activities. DTC holds beneficial owners will be governed by
securities that its participants standing instructions and customary
deposit with it. DTC also facilitates practices, as is the case with
the settlement among participants of securities held for customers in
securities transactions, such as bearer form or registered in "street
transfers and pledges, in deposited name." Those payments will be the
securities through electronic responsibility of that participant,
computerized book-entry changes in not the depositary, the Trustee or us,
participant's accounts. Doing so subject to any legal requirements in
eliminates the need for physical effect at that time.
movement of securities certificates.
We are responsible for payment of
Participants' Records. Except as principal, interest and premium, if
otherwise provided in this prospectus any, to the Trustee, who is
or a supplement, purchases of the debt responsible to pay it to the
securities must be made by or through depositary. The depositary is
direct participants, which will responsible for disbursing those
receive a credit for the securities on payments to direct participants. The
the depositary's records. The participants are responsible for
beneficial owner's ownership interest disbursing payments to the beneficial
is in turn to be recorded on the owners.
direct and indirect participants'
records. Beneficial owners will not Transfer or Exchange of Securities
receive written confirmations from the
depositary of their purchase, but they You may transfer or exchange the
are expected to receive them, along debt securities (other than a global
with periodic statements of their security) without service charge at
holdings, from the direct or indirect our office designated for that purpose
participants through whom they entered or at the office of any transfer agent
into the transaction. or security registrar identified under
the Indenture. You must execute a
Transfers of interests in the proper form of transfer and pay any
global securities will be made on the taxes and other governmental charges
books of the participants on behalf of resulting from that action. You may
the beneficial owners. Certificates transfer or exchange the debt
representing the interest of the securities (other than a global
beneficial owners in the securities security) initially at our offices at
will not be issued unless the use of 1850 North Central Avenue, P.O. Box
global securities is suspended, as 2209, Phoenix, Arizona 85002-2209 or
provided above. at our office or agency established
for that purpose in New York, New
The depositary has no knowledge of York.
the actual beneficial owners of the
global securities. Its records only Debt securities in the several
reflect the identity of the direct denominations will be interchangeable
participants as owners of the without service charge, but we may
securities. Those participants may or require payment to cover taxes and
may not be the beneficial owners. other
Participants are responsible for
keeping account of their holdings on
behalf of their customers.
9
<PAGE>
governmental charges. The Trustee exclude any portion of long-term debt
initially will act as authenticating maturing within one year of that date
agent under the Indenture. of determination, all as reflected on
the consolidated balance sheet of
Same-Day Settlement and Payment FINOVA Capital and its consolidated
subsidiaries.
Unless the supplement otherwise
provides, the debt securities will be "Lien" means any lien, charge,
settled in immediately available claim, security interest, pledge,
funds. We will make payments of hypothecation, right of another under
principal and interest in immediately any conditional sale or other title
available funds. retention agreement or any other
encumbrance affecting title to
Payment and Paying Agent property. Lien includes any lease
under a sale and leaseback
If the debt securities are not held arrangement.
in global form, we will make payment
of principal and premium, if any, "Subsidiary" means any corporation
against surrender of the debt a majority of the Voting Stock of
securities at the principal office of which is owned, directly or
the Trustee in New York, New York. We indirectly, by FINOVA Capital or by
will pay any installment of interest one or more Subsidiaries or by FINOVA
on debt securities to the record Capital and one or more Subsidiaries.
holder on the record date for that
interest. We can make those payments "Restricted Subsidiary" is any
through the Trustee, as noted above, Subsidiary a majority of the Voting
by check mailed by first class mail to Stock of which is owned directly by
the registered holders at their FINOVA Capital or by one or more
registered address or by wire transfer Restricted Subsidiaries, or by FINOVA
to an eligible account of the Capital and one or more Restricted
registered holder. Subsidiaries and which is designated
as a Restricted Subsidiary by
If any payments of principal, resolution of FINOVA Capital's board
premium or interest are not claimed of directors.
within three years of the date the
payment became due, those funds are to "Unrestricted Subsidiary" means any
be repaid to us. The beneficial owners Subsidiary other than a Restricted
of those interests thereafter will Subsidiary.
look only to us for payment for those
amounts. "Voting Stock" means stock of any
class or classes (however designated)
Certain Indenture Provisions having ordinary voting power for the
election of a majority of the members
Certain Definitions. The following of the board of directors (or any
is a summary of certain terms defined governing body) of that corporation,
in the Indenture and applicable only other than stock having that power
to senior debt securities. Those terms only by reason of the happening of a
are determined in accordance with contingency.
generally accepted accounting
principles, unless specifically stated Limitation on Liens. The Indenture
otherwise. provides that FINOVA Capital will not
create, assume, incur or allow to be
"Consolidated Net Tangible Assets" created, assumed or incurred or to
means the total of all assets exist any Lien on any of its
reflected on the most recent quarterly properties unless FINOVA Capital
or annual consolidated balance sheet secures the senior debt securities
of FINOVA Capital and its consolidated equally and ratably with any other
subsidiaries, at their net book values obligation secured in that manner. The
(after deducting related depreciation, Indenture contains the following
depletion, amortization and all other exceptions to that prohibition:
valuation reserves), less the
aggregate of its current liabilities * Leases of property in the
and those of its consolidated ordinary course of business or
Subsidiaries reflected on that balance if the property is not needed in
sheet. We exclude from assets the operation of our business.
goodwill, unamortized debt discount
and all other like intangible assets. * Purchase money security
For purposes of this definition, interests that are non-recourse
"current liabilities" include all to FINOVA Capital or its
indebtedness for money borrowed, Restricted Subsidiaries except
incurred, issued, assumed or to the extent of the property so
guaranteed by FINOVA Capital and its acquired or any proceeds from
consolidated subsidiaries, and other that property, or both.
payables and accruals, in each case
payable on demand or due within one * Governmental deposits or
year of the date of determination, but security as a condition to the
transaction of business or the
10
<PAGE>
exercise of a privilege, or to Merger, Consolidation and Sale of
maintain self-insurance, or to Assets. FINOVA Capital cannot merge
participate in any fund in with or into, consolidate with, sell
connection with worker's or lease all or substantially all of
compensation, unemployment its assets to or purchase all or
insurance, pensions, social substantially all the assets of
security or for appeal bonds. another corporation unless it will be
the surviving corporation or the
* Liens for taxes or assessments successor is incorporated in the U.S.
not yet due or which are payable and assumes all of FINOVA Capital's
without a penalty or are being obligations under the debt securities
contested in good faith and with and the Indenture, provided, and if
adequate reserves, so long as immediately after that transaction, no
foreclosure or similar default will exist. A purchase by a
proceedings are not commenced. Subsidiary of all or substantially all
of the assets of another corporation
* Judgment Liens that have not will not be a purchase of those assets
remained undischarged or by FINOVA Capital. If, however, any of
unstayed for more than six the transactions noted in this
months. paragraph occurs and results in a Lien
on any of FINOVA Capital's properties
* Incidental or undetermined (except as permitted above), FINOVA
construction, mechanics or Capital must simultaneously secure the
similar Liens arising in the senior debt securities equally and
ordinary course of business ratably with the debt secured by that
relating to obligations not Lien.
overdue or which are being
contested by FINOVA Capital or a Modification of the Indenture. The
Restricted Subsidiary in good Trustee and FINOVA Capital may amend
faith and deposits for releases the Indenture without consent of the
of such Liens. holders of debt securities to do
certain things, such as establishing
* Zoning restrictions, licenses, the form and terms of any series of
easements and similar debt securities. FINOVA Capital must
encumbrances or defects if obtain consent of holders of at least
immaterial. two-thirds of the outstanding debt
securities affected by a change to
* Other Liens immaterial in the amend the terms of the Indenture or
aggregate incidental to FINOVA any supplemental indenture or the
Capital's or the Restricted rights of the holders of those debt
Subsidiary's business or securities.
property, other than for
indebtedness. Unanimous consent is required for
changes to extend the fixed maturity
* Banker's liens and set off of any debt securities, reduce the
rights in the ordinary course of principal, redemption premium or rate
business. of interest, extend the time of
payment of interest, change the form
* Leasehold or purchase rights, of currency, limit the right to sue
exercisable for fair for payment on or after maturity of
consideration, arising in the the debt securities, adversely affect
ordinary course of business. the right, if any, to convert or
exchange the debt securities or
* Liens on property or securities adversely affect the subordination
existing when an entity becomes provisions, if any. Unanimous consent
a Restricted Subsidiary or is also required to reduce the level
merges with FINOVA Capital or a of consents needed to approve any such
Restricted Subsidiary, provided change. The Trustee must consent to
they are not incurred in changes modifying its rights, duties
anticipation of those events. or immunities.
* Liens on property or securities Defaults. Events of default under
existing at the time of the Indenture for any series are:
acquisition.
* Failure for 30 days to pay
* Liens in a total amount less interest on any debt securities
than $25 million, excluding of that series.
Liens covered by the exceptions
noted above. * Failure to pay principal (other
than sinking fund redemptions)
* Liens securing indebtedness of or premium, if any, on debt
FINOVA Capital or a Restricted securities of that series.
Subsidiary provided those and
similar Liens on indebtedness do * Failure for 30 days to pay any
not exceed 10% of Consolidated sinking fund installment on that
Net Tangible Assets, excluding series.
certain preexisting indebtedness
and those Liens permitted above.
11
<PAGE>
* Violation of a covenant under under that series before maturity. It
the Indenture pertaining to that may do so by depositing with the
series that persists for at Trustee, in trust for the benefit of
least 90 days after FINOVA the holders, either enough funds to
Capital is notified by the pay, or direct U.S. government
Trustee or the holders of 25% of obligations that, together with the
the series. income of those obligations (without
considering any reinvestment), will be
* Default in other instruments or sufficient to pay, the obligation of
under any other series of debt that series, including principal,
securities resulting in premium, if any, and interest. Certain
acceleration of indebtedness other conditions must be met before it
over $15 million, unless that may do so. FINOVA Capital must deliver
default is rescinded or an opinion of counsel that the holders
discharged within 10 days after of that series will have no Federal
written notice by the Trustee or income tax consequences as a result of
the holders of 10% of that that deposit.
series.
Subordination
* Bankruptcy, insolvency or
similar event. The terms and conditions of any
subordination of subordinated debt
* Any other event of default with securities to other indebtedness of
respect to the debt securities FINOVA Capital will be described in
of that series. the supplement relating to the
subordinated debt securities. The
If an event of default occurs and terms will include a description of
continues, the Trustee or the holders the indebtedness ranking senior to the
of at least 25% of the series may subordinated debt securities, the
declare those debt securities due and restrictions on payments to the
payable. FINOVA Capital is required to holders of the subordinated debt
certify to the Trustee annually as to securities while a default exists with
its compliance with the Indenture. A respect to senior indebtedness, any
default under one series does not restrictions on payments to the
necessarily mean that a default or an holders of the subordinated debt
event of default will have occurred securities following an event of
under another series under the default and provisions requiring
Indenture. holders of the subordinated debt
securities to remit certain payments
Holders of a majority of the to holders of senior indebtedness.
principal of a series may control
certain actions of the Trustee and may Because of the subordination, if
waive past defaults for that series. FINOVA Capital becomes insolvent,
Except as provided in the Indenture, holders of the subordinated debt
the Trustee will not be under any securities may recover less, ratably,
obligation to exercise any of the than other creditors of FINOVA
rights or powers vested in it by the Capital, including holders of senior
Indenture at the request, order or indebtedness.
direction of any holder unless one or
more of them shall have offered Conversion
reasonable indemnity to the Trustee.
Debt securities may be convertible
If an event of default occurs and into or exchangeable for common stock,
is continuing, the Trustee may preferred stock, other debt
reimburse itself for its reasonable securities, warrants or other of
compensation and expenses incurred out securities of FINOVA Capital, or
of any sums held or received by it securities of any other issuer or
before making any payments to the obligor. The supplement will describe
holders of the debt securities of the the terms of any conversion rights.
defaulted series.
Concerning the Trustee
The right of any holders of debt
securities of a series to commence an The Trustee may, but need not be,
action for any remedy is subject to one of the banks in one of FINOVA
certain conditions, including the Capital's credit agreements and from
requirement that the holders of at time to time may perform other
least 25% of that series request that banking, trust or related services on
the Trustee take such action, and behalf of FINOVA Capital or our
offer reasonable indemnity to the customers.
Trustee against its liabilities
incurred in doing so.
Defeasance
FINOVA Capital may defease the debt
securities of a series, meaning it
would satisfy its duties
12
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary of certain action, to issue preferred stock in
provisions of the common stock, the one or more series, with the
preferred stock, the junior designations, powers, preferences,
participating preferred stock (the rights, qualifications, limitations
"Junior Preferred Stock") and the and restrictions as the board
rights to purchase the Junior determines. Thus, the board, without
Preferred Stock (the "Rights") of stockholder approval, could authorize
FINOVA Group is not complete. You the issuance of preferred stock with
should refer to the certificate of voting, conversion and other rights
incorporation and bylaws of FINOVA that could adversely affect the voting
Group, as amended, FINOVA Group's power and other rights of the holders
certificate of designations for the of the common stock or that could make
Junior Preferred Stock and the Rights it more difficult for another company
Agreement dated as of February 15, to enter into certain business
1992, as amended and restated as of combinations with FINOVA Group. See
September 14, 1995 (the "Rights "-- Certain Other Provisions of the
Agreement"), between FINOVA Group and Certificate of Incorporation, the
Harris Trust & Savings Bank, as Bylaws and Delaware Law -- Preferred
successor Rights Agent. To obtain Stock" below.
copies of those documents, see "Where
You Can Find More Information" on page Shareholder Rights Plan
2. If we issue capital stock of FINOVA
Capital, we will describe those In 1992, FINOVA Group issued one
securities in the applicable Right for each outstanding share of
supplement. common stock. FINOVA Group has and
will continue to issue one Right with
FINOVA Group is authorized by its each newly issued share of its common
certificate of incorporation to issue stock (including stock issued on
105,000,000 shares of capital stock, conversion of preferred securities).
consisting of 5,000,000 shares of The obligation to continue to issue
preferred stock, par value $.01 per the Rights, however, will terminate on
share, and 100,000,000 shares of the expiration, exchange or redemption
common stock, par value $.01 per of the Rights.
share. As of July 31, 1998, there were
56,491,446 shares of common stock Each Right entitles the registered
outstanding (excluding 2,063,229 holder to purchase from FINOVA Group
treasury shares held by FINOVA Group) 1/200th of a share of the Junior
and no shares of preferred stock Preferred Stock. The purchase price is
outstanding. However, FINOVA Group has $67.50 per 1/200th of a share, subject
authorized 600,000 shares of Junior to adjustment under certain
Preferred Stock which have been circumstances.
reserved for issuance on the exercise
of the Rights. The Rights will trade only with the
common stock and FINOVA Group will not
Common Stock issue separate certificates for the
Rights until the "Rights Distribution
The holders of the common stock are Date." That date occurs on the first
entitled to one vote per share. FINOVA to occur of the following events:
Group's certificate of incorporation
does not provide for cumulative voting * 10 days after a public
in the election of directors. The announcement (the "Share
board may declare dividends on the Acquisition Date") that a person
common stock in its discretion, if or group of persons acting
funds are legally available for those together has become the
purposes. On liquidation, common beneficial owner of at least 20%
stockholders are entitled to receive or more of FINOVA Group's common
pro rata any remaining assets of stock, directly or indirectly
FINOVA Group, after we satisfy or (becoming an "Acquiring
provide for the satisfaction of all Person"), or
liabilities as well as obligations on
our preferred stock, if any. The * 10 business days after the start
holders of common stock do not have or announcement of an intention
preemptive rights to subscribe for or to make a tender offer or
purchase any shares of capital stock exchange offer that would result
or other securities of FINOVA Group. in a person or group acting
together beneficially owning 20%
Preferred Stock or more of FINOVA Group's common
stock, directly or indirectly.
Under FINOVA Group's certificate of The board, however, may extend
incorporation, the board is that 10 business day deadline
authorized, without stockholder prior to the time the person or
group becomes an Acquiring
Person.
13
<PAGE>
The Rights may not be exercised We may pay the redemption price in
until the Rights Distribution Date. cash, common stock or any other method
The Rights will expire on February 28, selected by the board. Upon
2002 unless we extend that date or, redemption, the right to exercise the
unless we redeem or exchange the Rights will terminate and the holders
Rights before then. will only have the right to receive
the redemption price.
The value of each 1/200th interest
in a share of Junior Preferred Stock No Rights as a Stockholder. Rights
is intended to approximate the value holders, as Rights holders, have no
of one share of FINOVA Group common independent rights as stockholders of
stock, due to the dividend, FINOVA Group, including the right to
liquidation and voting rights of the vote or to receive dividends, until
Junior Preferred Stock, although there the Rights are exercised.
can be no assurance the value will be
the same. Antitakeover Effects. The Rights
have certain antitakeover effects. The
How the Rights Work. If a person or Rights will substantially dilute the
group becomes an Acquiring Person, ownership interest in our shares of
their Rights become void. The other any Acquiring Person. That dilution
Rights holders will have the right to would impair the ability of the
exercise their Rights, at the then Acquiring Person to change the
current exercise price, for FINOVA composition of our board. It also
Group common stock having a market would impact its ability to acquire
value of two times the exercise price FINOVA Group on terms not approved by
of the Right. That right to purchase, our board, including through a tender
however, will not exist if the Rights offer at a premium to the market
Distribution Date is due to a tender price, other than through an offer
or exchange offer for all of FINOVA conditioned on a substantial number of
Group's common stock and the Rights being acquired. The Rights
independent members of our board should not interfere with any merger
determine that the offer is at a fair or business combination approved by
price, on fair terms and is otherwise the board, since we may redeem the
in the best interests of FINOVA Group Rights before they become exercisable.
and its stockholders.
Junior Preferred Stock Not
The other Rights holders also will Registered. The Junior Preferred Stock
have the same exercise rights is not registered with the SEC or any
described above if, after a person or other securities administrator. If the
group becomes an Acquiring Person, Rights become exercisable, we intend
FINOVA Group is acquired in a merger to register with the SEC the Junior
or business combination or at least Preferred Stock exchangeable for the
half of our total assets and earning Rights.
power are sold. The exception is the
same as the one noted in the above Certain Other Provisions of the
paragraph, provided that the price Certificate of Incorporation, the
offered to the shareholders for each Bylaws and Delaware Law
share of common stock is not less than
that paid in the tender or exchange FINOVA Group's certificate of
offer, and the consideration is in the incorporation and bylaws contain
same form as that paid in the tender certain provisions that could make
or exchange offer. If the requirements more difficult our acquisition by
of this exception are met, then the means of a tender offer, a proxy
Rights will expire. contest or otherwise. This description
is only a summary and does not provide
Exchange of Rights. After a person all the information contained in
or group becomes an Acquiring Person FINOVA Group's certificate of
but before the Acquiring Person incorporation and bylaws. To obtain
acquires at least half of the copies of these documents, see "Where
outstanding common stock, our board You Can Find More Information" on page
may exchange all or some of the Rights 2.
at an exchange ratio of one share of
common stock for 1/200th of a share of Delaware law permits a corporation
Junior Preferred Stock per Right, to eliminate or limit the personal
subject to adjustment. liability of its directors to the
corporation or to any of its
Redemption of Rights. We may redeem stockholders for monetary damages for
all the Rights, but not some of them, a breach of fiduciary duty as a
for $.005 per Right at any time before director, except (i) for breach of the
the earlier of 15 days after the Share director's duty of loyalty, (ii) for
Acquisition Date or the expiration acts or omissions not in good faith or
date noted above. The board may which involve intentional misconduct
determine the conditions, terms and or a knowing violation of law, (iii)
effective date for the redemption. for certain unlawful
14
<PAGE>
dividends and stock purchases and Number of Directors; Removal;
redemptions or (iv) for any Filling Vacancies. FINOVA Group's
transaction from which the director certificate of incorporation provides
derived an improper personal benefit. that, subject to any rights of
FINOVA Group's certificate of preferred stockholders to elect
incorporation provides that no additional directors under specified
director will be personally liable to circumstances, the number of directors
FINOVA Group or its stockholders for will be fixed in the manner provided
monetary damages for any breach of his in the bylaws. FINOVA Group's bylaws
or her fiduciary duty as a director, provide that, subject to any rights of
except as provided by Delaware law. holders of preferred stock to elect
directors under specified
Board of Directors. FINOVA Group's circumstances, the number of directors
certificate of incorporation and will be fixed from time to time
bylaws divide the board into three exclusively by directors constituting
classes of directors, with the classes a majority of the total number of
to be as nearly equal in number as directors that FINOVA Group would have
possible. The stockholders elect one if there were no vacancies on the
class of directors each year for a board, but must consist of between 3
three-year term. and 17 directors.
The classification of directors In addition, FINOVA Group's bylaws
makes it more difficult for provide that, subject to any rights of
stockholders to change the composition preferred stockholders, and unless the
of the board. At least two annual board otherwise determines, any
meetings of stockholders, instead of vacancies will be filled only by the
one, generally will be required to affirmative vote of a majority of the
change a majority of the board. That remaining directors, though less than
delay may help ensure that FINOVA a quorum. Accordingly, absent an
Group's directors, if confronted by a amendment to the bylaws, the board
proxy contest, tender or exchange could prevent any stockholder from
offer or extraordinary corporate enlarging the board and filling the
transaction, would have sufficient new directorships with that
time to review the proposal as well as stockholder's own nominees.
any available alternatives to the
proposal and to act in what they Under Delaware law, unless
believe to be the best interest of the otherwise provided in the certificate
stockholders. The classification of incorporation, directors serving on
provisions apply to every election of a classified board may only be removed
directors, regardless of whether a by the stockholders for cause. In
change in the composition of the board addition, FINOVA Group's certificate
would be beneficial to FINOVA Group of incorporation and bylaws provide
and its stockholders and whether or that directors may be removed only for
not a majority of the stockholders cause and only upon the affirmative
believe that such a change is vote of holders of at least 80% of the
desirable. voting power of all the then
outstanding shares of stock entitled
The classification provisions also to vote generally in the election of
could discourage a third party from directors, voting together as a single
initiating a proxy contest, tender class.
offer or other attempt to obtain
control of FINOVA Group, even though Stockholder Action by Written
an attempt might be beneficial to Consent; Special Meetings.
FINOVA Group and its stockholders. The Stockholders of FINOVA Group must act
classification of the board thus only through an annual or special
increases the likelihood that meeting. Stockholders cannot act by
incumbent directors will retain their written consent in lieu of a meeting.
positions. In addition, because the Only the Chairman or a majority of the
classification provisions may whole board of FINOVA Group may call a
discourage accumulations of large special meeting. Stockholders of
blocks of FINOVA Group's stock by FINOVA Group are not able to call a
purchasers whose objective is to take special meeting to require that the
control of FINOVA Group and remove a board do so. At a special meeting,
majority of the board, the stockholders may consider only the
classification of the board could business specified in the notice of
reduce the likelihood of fluctuations meeting given by FINOVA Group.
in the market price of the common Preferred stockholders may be given
stock that might result from different rights from those noted
accumulations of large blocks. above.
Accordingly, stockholders could be
deprived of certain opportunities to The provisions of FINOVA Group's
sell their shares of common stock at a certificate of incorporation and
higher market price than otherwise bylaws prohibiting stockholder action
might be the case. by written consent may have the effect
of
15
<PAGE>
delaying consideration of a receipt by our Secretary between the
stockholder proposal until the next 90th day before the meeting and the
annual meeting, unless a special later of the 70th day before the
meeting is called by the Chairman or meeting or the 10th day after the
at the request of a majority of the first public announcement of the
whole board. These provisions also meeting date.
would prevent the holders of a
majority of stock from unilaterally A stockholder's notice proposing to
using the written consent procedure to nominate a person for election as a
take stockholder action. Moreover, a director must contain certain
stockholder could not force information, including, without
stockholder consideration of a limitation, the identity and address
proposal over the opposition of the of the nominating stockholder, the
Chairman and the board by calling a class and number of shares of stock of
special meeting of stockholders prior FINOVA Group beneficially owned by the
to the time the Chairman or a majority stockholder and all information
of the whole board believes such regarding the proposed nominee that
consideration to be appropriate. would be required to be included in a
proxy statement soliciting proxies for
Advance Notice Provisions for the proposed nominee. A stockholder's
Stockholder Nominations and notice relating to the conduct of
Stockholder Proposals. The bylaws business other than the nomination of
establish an advance notice procedure directors must contain certain
for stockholders to nominate information about that business and
directors, or bring other business about the proposing stockholder,
before an annual meeting of including, without limitation, a brief
stockholders of FINOVA Group. description of the business the
stockholder proposes to bring before
A person may not be nominated for a the meeting, the reasons for
director position unless that person conducting that business at such
is nominated by or at the direction of meeting, the name and address of such
the board or by a stockholder who has stockholder, the class and number of
given appropriate notice to FINOVA shares of stock of FINOVA Group
Group's Secretary during the periods beneficially owned by that stockholder
noted below prior to the meeting. and any material interest of the
Similarly, stockholders may not bring stockholder in the business so
business before an annual meeting proposed. If the Chairman or other
unless the stockholder has given officer presiding at a meeting
FINOVA Group's Secretary appropriate determines that a person was not
notice of their or its intention to nominated, or other business was not
bring that business before the brought before the meeting, in
meeting. FINOVA Group's Secretary must accordance with these procedures, the
receive the nomination or proposal person will not be eligible for
between 70 and 90 days before the election as a director, or the
first anniversary of the prior year's business will not be conducted at the
annual meeting. If FINOVA Group's meeting, as appropriate.
annual meeting date is advanced by
more than 20 days or delayed by more Advance notice of nominations or
than 70 days from that anniversary proposed business by stockholders
date, then we must receive the notice gives the board time to consider the
between 90 days before the meeting and qualifications of the proposed
the later of the 70th day before the nominees, the merits of the proposals
meeting or 10 days after the meeting and, to the extent deemed necessary or
date is first publicly announced. desirable by the board, to inform
stockholders about those matters. The
If the board increases the number board also may recommend positions
of directors and if we have not regarding those nominees or proposals,
publicly announced nominees for each so that stockholders can better decide
open position within 80 days before whether to attend the meeting or to
the first anniversary of the prior grant a proxy regarding the nominee or
year's annual meeting, stockholders that business.
may nominate directors for the new
position, but only those newly created Although the bylaws do not give the
positions, if FINOVA Group's Secretary board any power to approve or
receives the notice no later than 10 disapprove stockholder nominations for
days following public announcement of the election of directors or proposals
that change. for action, these procedures may
preclude a contest for the election of
Stockholders may nominate directors directors or the consideration of
only at a special meeting by sending stockholder proposals if the proper
appropriate notice for procedures are not followed, and of
discouraging or deterring a third
party from conducting a solicitation
of proxies to elect its own slate of
directors or to approve its
16
<PAGE>
own proposal, without regard to stock, or in the amount of voting
whether consideration of such nominees securities, outstanding of at least
or proposals might be harmful or 20%, subject to certain exceptions. If
beneficial to FINOVA Group and its the approval of FINOVA Group's
stockholders. stockholders is not required for the
issuance of shares of preferred stock
Preferred Stock. FINOVA Group's or common stock, the board may
certificate of incorporation determine not to seek stockholder
authorizes the board to establish one approval.
or more series of preferred stock and
to determine, with respect to any Although the board has no intention
series of preferred stock, the terms at the present time of doing so, it
and rights of such series, including could issue a series of preferred
(i) the designation of the series, stock that could, depending on its
(ii) the number of shares of the terms, impede a merger, tender offer
series, which the board may (except or other takeover attempt. The board
where otherwise provided by the terms will make any determination to issue
of such series) increase or decrease shares with those terms based on its
(but not below the number of shares judgment as to the best interests of
thereof then outstanding), (iii) FINOVA Group and its stockholders. The
whether dividends, if any, will be 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 the "Continuing Directors" or meet
or rates, the date or dates as of certain requirements regarding price
which the shares shall be convertible and procedure. The terms quoted in
and all other terms and conditions this paragraph are defined in the
upon which the conversion may be made, certificate of incorporation.
(ix) restrictions on the issuance of
shares of the same series or of any Amendment of Certain Provisions of
other class or series and (x) the the Certificate of Incorporation and
voting rights, if any, of the holders Bylaws. Under Delaware law,
of shares of the series. stockholders may adopt, amend or
repeal the bylaws and, with approval
FINOVA Group believes that the of the board, the certificate of
ability of the board to issue one or incorporation of a corporation. In
more series of preferred stock will addition, a corporation's board may
provide FINOVA Group with flexibility adopt, amend or repeal the bylaws if
in structuring possible future allowed by the certificate of
financings and acquisitions, and in incorporation. FINOVA Group's
meeting other corporate needs which certificate of incorporation requires
might arise. The authorized shares of a vote of (i) at least 80% of the
preferred stock, as well as shares of outstanding shares of voting stock,
common stock, will be available for voting together as a single class, to
issuance without further action by amend provisions of the certificate of
FINOVA Group's stockholders, unless incorporation relating to the
approval is required by applicable law prohibition of stockholder action
or the rules of any stock exchange or without a meeting; the number,
automated quotation system on which election and term of FINOVA Group's
FINOVA Group's securities are listed directors; and the removal of
or traded. The NYSE currently requires directors; (ii) at least 66 2/3% of
stockholder approval in several the outstanding shares of voting
instances, including where the present stock, voting together as a single
or potential issuance of shares could
result in an increase in the number of
shares of common
17
<PAGE>
class, to amend the provisions of the subsequent to that date, the board and
certificate of incorporation relating 66 2/3% of the outstanding voting
to approval of certain business stock not owned by the interested
combinations; and (iii) at least a stockholder approved the business
majority of the outstanding shares of combination. Except as specified by
voting stock, voting together as a Delaware law, an interested
single class, to amend all other stockholder includes (x) any person
provisions of the certificate of that is the owner of 15% or more of
incorporation. FINOVA Group's the outstanding voting stock of the
certificate of incorporation further corporation, or is an affiliate or
provides that the bylaws may be associate of the corporation and was
amended by the board or by the the owner of 15% or more of the
affirmative vote of the holders of at outstanding voting stock of the
least 80% of the voting power of the corporation, at any time within three
outstanding shares of voting stock, years immediately prior to the
voting together as a single class. relevant date, and (y) the affiliates
These supermajority voting and associates of that person.
requirements make the amendment by
stockholders of the bylaws or of any Under certain circumstances,
of the provisions of the certificate Delaware law makes it more difficult
of incorporation described above more for an "interested stockholder" to
difficult, even if a majority of enter into various business
FINOVA Group's stockholders believe combinations with a corporation for a
that amendment would be in their best three-year period, although
interests. stockholders may adopt an amendment to
a corporation's certificate of
Antitakeover Legislation. Subject incorporation or bylaws excluding the
to certain exceptions, Delaware law corporation from those restrictions.
does not allow a corporation to engage However, FINOVA Group's certificate of
in a business combination with any incorporation and bylaws do not
"interested stockholder" for a exclude FINOVA Group from the
three-year period following the date restrictions imposed under Delaware
that the stockholder becomes an law. These provisions of Delaware law
interested stockholder, unless (i) may encourage companies interested in
prior to that date, the board approved acquiring FINOVA Group to negotiate in
either the business combination or the advance with the board, since the
transaction which resulted in the stockholder approval requirement would
stockholder becoming an interested be avoided if a majority of the board
stockholder, (ii) on that date, the approves either the business
interested stockholder owned at least combination or the transaction which
85% of the voting stock of the results in the stockholder becoming an
corporation outstanding at the time interested stockholder.
the transaction commenced (excluding
certain shares) or (iii) on or
DESCRIPTION OF DEPOSITARY SHARES
The following summary of certain Agreement") between us and a bank or
provisions of the Deposit Agreement, trust company selected by us having
the depositary shares and depositary its principal office in the U.S. and
receipts is not complete. You should having a combined capital and surplus
refer to the forms of Deposit of at least $50 million. Subject to
Agreement and depositary receipts the terms of the Deposit Agreement,
relating to each series of preferred each owner of depositary shares will
stock that will be filed with the SEC. be entitled, in proportion to the
To obtain copies of these documents, applicable fractional interests in
see "Where You Can Find More shares of preferred stock underlying
Information" on page 2. the depositary shares to all the
rights and preferences of the
General preferred stock underlying the
depositary shares. Those rights
We may offer fractional interests include dividend, voting, redemption,
in shares of preferred stock, instead conversion and liquidation rights.
of shares of preferred stock. If we
do, we will have a depositary issue to The depositary shares will be
the public receipts for depositary evidenced by depositary receipts
shares, each of which will represent issued under the Deposit Agreement.
fractional interests of a particular Individuals purchasing the fractional
series of preferred stock. interests in shares of the related
series of preferred stock will receive
We will deposit shares of any depositary receipts according to the
series of preferred stock underlying terms of the offering described in the
the depositary shares under a separate supplement.
Deposit Agreement (the "Deposit
18
<PAGE>
Dividends and Other Distributions redemption date, the number of
depositary shares representing the
The depositary will distribute all preferred stock. The depositary shares
cash dividends or other cash to be redeemed will be selected by lot
distributions received for the or pro rata as determined by the
preferred stock to the record holders depositary when less than all
of depositary shares representing the outstanding depositary shares will be
preferred stock in proportion to the redeemed.
number of depositary shares owned by
those holders on the relevant record After the redemption date, the
date. The depositary will distribute depositary shares redeemed will no
only the amount that can be longer be outstanding. When this
distributed without attributing to any occurs, all rights of the holders will
holder of depositary shares a fraction cease, except the right to receive
of one cent. The undistributed balance money, securities or other property
will be added to and treated as part payable upon such redemption and any
of the next amount received by the money, securities or other property
depositary for distribution to record that the holders of depositary shares
holders of depositary shares. were entitled to on the redemption
upon surrender to the depositary of
If there is a distribution other the depositary receipts evidencing the
than in cash, the depositary will depositary shares redeemed.
distribute property received by it to
the record holders of depositary Voting the Preferred Stock
shares, in proportion, if possible, to
the number of depositary shares owned Upon receipt of notice of any
by those holders, unless the meeting at which the holders of the
depositary determines (after preferred stock are entitled to vote,
consulting with us) that it cannot the depositary will mail all relevant
make the distribution. If this occurs, information to the record holders of
the depositary may, with our approval, the depositary shares representing the
sell the property and distribute the preferred stock. The record holders
net proceeds from the sale to the may instruct the depositary how to
holders of depositary shares. vote the shares of preferred stock
underlying their depositary shares.
The Deposit Agreement also will The depositary will try, if practical,
state how any subscription or similar to vote the number of shares of
rights offered by us to holders of the preferred stock underlying the
preferred stock will be made available depositary shares according to the
to holders of depositary shares. instructions, and we will agree to
take all reasonable action requested
Conversion and Exchange by the depositary so the depositary
may follow the instructions.
If any series of preferred stock
underlying the depositary shares is Amendment and Termination of
subject to conversion or exchange, Depositary Agreement
each record holder of depositary
receipts may convert or exchange the The form of depositary receipt and
depositary shares represented by those any provision of the Deposit Agreement
depositary receipts. may be amended by agreement between us
and the depositary. However, any
Redemption of Depositary Shares amendment that materially and
adversely alters the rights of the
If a series of the preferred stock existing holders of depositary shares
underlying the depositary shares is will not be effective unless approved
subject to redemption, the depositary by the record holders of at least a
will redeem the depositary shares from majority of the depositary shares then
the proceeds received by the outstanding. We or the depositary may
depositary in the redemption, in whole only terminate the Deposit Agreement
or in part, of the series of the if (a) all related outstanding
preferred stock held by the depositary shares have been redeemed
depositary. The depositary will mail or (b) there has been a final
notice of redemption within 30 to 60 distribution of the preferred stock of
days prior to the date fixed for the relevant series in connection with
redemption to the record holders of our liquidation, dissolution or
the depositary shares to be redeemed winding up and that distribution has
at their addresses appearing in the been distributed to the holders of the
depositary's books. The redemption related depositary shares.
price per depositary share will equal
the applicable fraction of the
redemption price per share payable on
such series of the preferred stock.
Whenever we redeem shares of preferred
stock held by the depositary, the
depositary will redeem as of the same
19
<PAGE>
Charges of Depositary Miscellaneous
We will pay all transfer and other The depositary will send to the
taxes and governmental charges arising holders of depositary shares all
solely from the existence of the reports and communications from us
depositary arrangements. We will pay that we must furnish to the holders of
associated charges of the depositary preferred stock.
for the initial deposit of the
preferred stock and any redemption of We and the depositary will not be
the preferred stock. Holders of liable if we are prevented or delayed
depositary shares will pay transfer by law or any circumstance beyond our
and other taxes and governmental control in performing our obligations
charges and any other charges stated under the Deposit Agreement. Those
in the Deposit Agreement to be for obligations will be limited to
their accounts. performance in good faith of duties
set forth in the Deposit Agreement. We
Resignation and Removal and the depositary will not be
of Depositary obligated to prosecute or defend any
legal proceeding connected with any
The depositary may resign by depositary shares or preferred stock
delivering notice to us, and we may unless satisfactory indemnity is
remove the depositary. Resignations or furnished. We and the depositary may
removals will take effect upon the rely upon written advice of counsel or
appointment and acceptance of a accountants, or information provided
successor depositary. We must appoint by persons presenting preferred stock
a successor depositary within 60 days for deposit, holders of depositary
after delivery of the notice of shares, or other persons believed to
resignation or removal. The successor be competent and on documents believed
depositary must be a bank or trust to be genuine.
company having its principal office in
the U.S. and having a combined capital
and surplus of at least $50 million.
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.
PLAN OF DISTRIBUTION
FINOVA Group and FINOVA Capital may civil liabilities under the Federal
offer securities directly or through securities laws and other laws. The
underwriters, dealers or agents. The underwriters' obligations to purchase
supplement will identify those securities will be subject to certain
underwriters, dealers or agents and conditions and generally will require
will describe the plan of them to purchase all of the securities
distribution, including commissions to if any are purchased.
be paid. If we do not name a firm in
the supplement, that firm may not Unless otherwise noted in the
directly or indirectly participate in supplement, the securities will be
any underwriting of those securities, offered by the underwriters, if any,
although it may participate in the when, as and if issued by us,
distribution of securities under delivered to and accepted by the
circumstances entitling it to a underwriters and subject to their
dealer's allowance or agent's right to reject orders in whole or in
commission. part.
Any underwriting agreement probably FINOVA Group and FINOVA Capital may
will entitle the underwriters to sell securities to dealers, as
indemnity against certain principals. Those dealers
20
<PAGE>
then may resell the securities to the transactions and penalty bids in
public at varying prices set by those accordance with Regulation M under the
dealers from time to time. Securities Exchange Act of 1934.
Over-allotment involves sales in
FINOVA Group and FINOVA Capital excess of the offering size, which
also may offer securities through creates a short position. Stabilizing
agents. Agents generally act on a transactions permit bids to purchase
"best efforts" basis during their the underlying security so long as the
appointment, meaning they are not stabilizing bids do not exceed a
obligated to purchase securities. specified maximum. Short covering
transactions involve purchases of the
Dealers and agents may be entitled securities in the open market after
to indemnification as underwriters by the distribution is completed to cover
us against certain liabilities under short positions. Penalty bids permit
the Federal securities laws and other the underwriters to reclaim a selling
laws. concession from a dealer when the
securities originally sold by the
FINOVA Group and FINOVA Capital or dealer are purchased in a covering
the underwriters or agents may solicit transaction to cover short positions.
offers by institutions approved by us Those activities may cause the price
to purchase securities under contracts of the securities to be higher than it
providing for future payment. would otherwise be. The underwriters
Permitted institutions include may engage in any such activities on
commercial and savings banks, any exchange or other market in which
insurance companies, pension funds, the securities may be traded. If
investment companies, educational and commenced, the underwriters may
charitable institutions and others. discontinue those activities at any
Certain conditions apply to those time.
purchases.
The supplement or pricing
Any underwriter may engage in supplement, as applicable, will set
over-allotment, stabilizing trans- forth the anticipated delivery date of
actions, short covering the securities being sold at that
time.
LEGAL MATTERS
Unless otherwise noted in a Group and FINOVA Capital, will pass on
supplement, William J. Hallinan, Esq., the legality of the securities offered
Senior Vice President-General Counsel through this prospectus and any
of FINOVA Group and FINOVA Capital, or supplement. Brown & Wood LLP will act
Richard Lieberman, Esq., Vice as counsel for any underwriters or
President-Assistant General Counsel of agents, unless otherwise noted in a
FINOVA supplement.
EXPERTS
Deloitte & Touche LLP, independent on Form 10-K. The financial statements
auditors, have audited the financial are incorporated into this prospectus
statements for FINOVA Group and FINOVA by reference in reliance upon their
Capital incorporated in this report given upon their authority as
prospectus by reference from our experts in accounting and auditing.
Annual Reports
21
<PAGE>
You should rely only on the $500,000,000
information contained in or
incorporated by reference in this
prospectus. We have authorized no one
to provide you with different FINOVA
information.
We are not making an offer of these
securities in any location where the FINOVA CAPITAL CORPORATION
offer is not permitted.
You should not assume that the Medium Term Notes
information in this prospectus, Series D
including information incorporated by
reference, is accurate as of any date
other than the date on the front of
the prospectus.
--------------
--------------
Table of Contents PROSPECTUS
SUPPLEMENT
Page --------------
----
Prospectus Supplement
FINOVA Capital Corporation .....S-2
Note Terms ....................S-2 Credit Suisse First Boston
Plan of Distribution ...........S-8 Goldman, Sachs & Co.
Glossary ......................S-10 Lehman Brothers
Merrill Lynch & Co.
Prospectus Morgan Stanley Dean Witter
Salomon Smith Barney
Where You Can Find More
Information ......................2
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 August 7, 1998
Special Note Regarding
Forward-Looking Statements .......6
Use Of Proceeds ....................6
Description Of Debt Securities .....7
Description Of Capital Stock ......13
Description Of Depositary Shares ..18
Description Of Warrants ...........20
Plan Of Distribution ..............20
Legal Matters .....................21
Experts ...........................21
