<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1997
REGISTRATION NO. 333-38627
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HELLER FINANCIAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 610 36-1208070
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
500 WEST MONROE STREET, CHICAGO, ILLINOIS 60661, (312) 441-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DEBRA H. SNIDER, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
HELLER FINANCIAL, INC.
500 WEST MONROE STREET, CHICAGO, ILLINOIS 60661, (312) 441-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
LAWRENCE D. LEVIN, ESQ.
MARK D. WOOD, ESQ.
KATTEN MUCHIN & ZAVIS
525 WEST MONROE STREET, SUITE 1600
CHICAGO, ILLINOIS 60661
(312) 902-5200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, please check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective date
registration statement for the same offering: [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PROSPECTUS
LOGO HELLER FINANCIAL, INC.
OFFER TO EXCHANGE
FIXED RATE NONCUMULATIVE PERPETUAL SENIOR PREFERRED STOCK, SERIES C
FOR ALL OUTSTANDING FIXED RATE NONCUMULATIVE PERPETUAL SENIOR PREFERRED STOCK,
SERIES B
----------------
Heller Financial, Inc., a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to conditions set forth in this Prospectus
(the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" and together with the Prospectus, the "Exchange Offer"), to
exchange up to 1,500,000 shares of its Fixed Rate Noncumulative Perpetual
Senior Preferred Stock, Series C, liquidation preference $100.00 per share
(the "Exchange Preferred Stock"), for up to 1,500,000 shares of its
outstanding Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series
B, liquidation preference $100.00 per share (the "Original Preferred Stock").
The terms of the Exchange Preferred Stock are substantially the same in all
material respects as those of the Original Preferred Stock, except that the
Exchange Preferred Stock will be registered under the Securities Act of 1933,
as amended (the "Securities Act"), and, therefore, will not bear legends
restricting their transfer under the Securities Act and will not contain
provisions regarding minimum unit size, the payment of Additional Dividends
(as defined herein) or registration rights. The Exchange Preferred Stock will
be issued pursuant to, and entitled to the benefits of, a Certificate of
Designation, Preferences and Rights (the "New Certificate of Designation")
which shall be substantially similar in all material respects to the
Certificate of Designation, Preferences and Rights governing the Original
Preferred Stock (the "Original Certificate of Designation"). See "The Exchange
Offer" and "Description of the Exchange Preferred Stock."
Dividends on the Exchange Preferred Stock will be noncumulative and, if
declared, will be payable quarterly on February 15, May 15, August 15 and
November 15 of each year, commencing February 15, 1998. If dividends are
declared for the period from and including November 15, 1997 through and
including February 14, 1998, holders of the Exchange Preferred Stock will
receive dividends on February 15, 1998 from the date of initial issuance of
the Exchange Preferred Stock, plus an amount equal to the declared and
accrued, but unpaid, dividends on the Original Preferred Stock to the date of
exchange thereof. Dividends on the Exchange Preferred Stock will be payable at
a rate of 6.687% of the liquidation preference thereof, or $6.687 per share,
per annum. The amount of dividends payable in respect of the Exchange
Preferred Stock will be adjusted in the event of certain amendments to the
Internal Revenue Code of 1986, as amended (the "Code"), in respect of the
dividends received deduction. See "Description of the Exchange Preferred
Stock--Dividends." Dividends declared on the Original Preferred Stock accepted
for exchange will cease to accrue upon issuance of the Exchange Preferred
Stock in exchange therefor.
The Exchange Preferred Stock is not redeemable prior to August 15, 2007,
except as stated herein. After such date, the Exchange Preferred Stock is
redeemable, in whole or in part, at the option of the Company, at $100.00 per
share, plus an amount equal to the sum of all accrued and unpaid dividends
thereon for the then-current dividend period to the redemption date (without
accumulation of accrued and unpaid dividends for prior dividend periods unless
previously declared). The Exchange Preferred Stock will not be entitled to the
benefit of any sinking fund. See "Description of the Exchange Preferred
Stock--Redemption."
The Exchange Preferred Stock will initially only be represented by global
securities in fully registered form, deposited with a custodian for, and
registered in the name of a nominee of, The Depository Trust Company ("DTC").
Beneficial interests in the Exchange Preferred Stock will be shown on and
transfers thereof will be effected through records maintained by DTC and its
participants. Beneficial interests in the Exchange Preferred Stock will trade
in DTC's Same-Day Funds Settlement System, and secondary market trading
activity in such interests will therefore settle in immediately available
funds. See "Book-Entry Issuance."
The Company will accept for exchange any and all shares of Original
Preferred Stock which are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on January 9, 1998, unless extended by the
Company in its sole discretion (the "Expiration Date"). The Expiration Date
will not in any event be extended to a date later than June 8, 1998 (150 days
after the initial Expiration Date). Tenders of Original Preferred Stock may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. In the event the Company terminates the Exchange Offer and
does not accept for exchange any Original Preferred Stock with respect to the
Exchange Offer, the Company will promptly return the Original Preferred Stock
to the holders thereof. The Exchange Offer is not conditioned upon any minimum
aggregate number of shares of Original Preferred Stock being tendered for
exchange, but is otherwise subject to certain customary conditions.
(Continued on following page)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is December 10, 1997
<PAGE>
(Continued from previous page)
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The Exchange Preferred Stock is being offered hereunder in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement dated as of June 11, 1997 (the "Registration Rights Agreement") by
and among the Company and Lehman Brothers, Inc., Chase Securities Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as the initial purchasers
(the "Initial Purchasers") with respect to the initial sale of the Original
Preferred Stock. Based on existing interpretations of the Securities Act by
the staff of the Securities and Exchange Commission (the "Commission"), the
Company believes that the Exchange Preferred Stock issued pursuant to the
Exchange Offer in exchange for the Original Preferred Stock may be offered for
resale, resold and otherwise transferred by respective holders thereof (other
than any such holder which is an "affiliate" of the Company within the meaning
of Rule 405 of the Securities Act) without compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that the
Exchange Preferred Stock is acquired in the ordinary course of such holder's
business and such holder is not engaged, does not intend to engage in, and has
no arrangement or understanding with any person to participate in, the
distribution of such Exchange Preferred Stock. Notwithstanding the foregoing,
each broker-dealer that receives Exchange Preferred Stock in exchange for
Original Preferred Stock acquired for its own account as a result of market-
making activities or other trading activities must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Preferred Stock. The Letter of
Transmittal states that a broker-dealer will not, by so acknowledging and by
delivering a prospectus, be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer to satisfy such
prospectus delivery requirements in connection with resales of Exchange
Preferred Stock. The Company has agreed that, for a period of 180 days after
the Registration Statement of which this Prospectus is a part is declared
effective by the Commission, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Original
Preferred Stock Registration Rights" and "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Exchange Preferred Stock. The Company does not currently intend to list the
Exchange Preferred Stock on any securities exchange or to seek approval for
quotation through any automated quotation system. Although the Initial
Purchasers have advised the Company that they intend to make a market in the
Exchange Preferred Stock, they are not obligated to do so, such market making
may be interrupted or discontinued without notice, and there can be no
assurance as to the development or liquidity of any public market for the
Exchange Preferred Stock, the ability of holders to sell the Exchange
Preferred Stock, or the price at which holders will be able to sell the
Exchange Preferred Stock. Future trading prices of the Exchange Preferred
Stock will depend on many factors, including among other things, prevailing
dividend rates, the Company's operating results and the market for similar
securities.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay the expenses incurred by it incident to the Exchange
Offer. No underwriter is being used in connection with the Exchange Offer.
Holders of Original Preferred Stock not tendered and accepted in the
Exchange Offer will continue to hold such Original Preferred Stock and will be
entitled to all the rights and benefits and will be subject to the limitations
applicable thereto under the Original Certificate of Designation. Original
Preferred Stock not tendered and accepted in the Exchange Offer will continue
to bear legends restricting their transfer under the Securities Act and their
holders will not retain any rights under the Registration Rights Agreement.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF ORIGINAL PREFERRED STOCK IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT
BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
HELLER FINANCIAL, INC., 500 WEST MONROE STREET, CHICAGO, ILLINOIS 60661,
ATTENTION: TREASURER (312/441-7000). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY 5 BUSINESS DAYS PRIOR TO THE
EXPIRATION DATE.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-4 (herein, together with all
amendments and exhibits thereto, referred to herein as the "Registration
Statement") pursuant to the Securities Act, and the rules and regulations
promulgated thereunder, covering the Exchange Preferred Stock being offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby
made to the Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to in the
Registration Statement are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission, reference is made to each
copy so filed, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Such
reports and other information can be inspected and copied at the public
reference facilities of the Commission at the Commission's Public Reference
Room, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such reports and other information concerning the
Company can also be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, on which existing securities
of the Company are listed. Copies of reports, proxy and information statements
and other information regarding registrants that file electronically
(including the Company) are available on the Commission's Web Site at
http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference and made a
part of this Prospectus.
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(2) The Company's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(3) The Company's Current Reports on Form 8-K dated January 27, 1997,
April 3, 1997, April 22, 1997, July 24, 1997, October 22, 1997, November 6,
1997, November 19, 1997 and November 20, 1997.
All documents filed by the Company pursuant to sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
date on which the Exchange Offer is consummated shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
date of filing of each such document. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is, or is deemed to be, incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents incorporated herein by reference
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to: Treasurer,
Heller Financial, Inc., 500 West Monroe Street, Chicago, Illinois 60661
(telephone (312) 441-7000).
1
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information included elsewhere in this
Prospectus or incorporated herein by reference. Unless the context indicates
otherwise, references to the Company in this Prospectus include Heller
Financial, Inc. and its consolidated subsidiaries.
THE COMPANY
GENERAL
The Company is a diversified financial services company which provides a
broad array of commercial financial products and services primarily to middle-
market companies in the United States and internationally. The Company provides
its products and services through five product categories: (i) asset based
finance, (ii) cash flow lending, (iii) real estate finance, (iv) international
asset based finance and factoring and (v) specialized finance. The middle-
market segment served includes entities primarily in the manufacturing and
service sectors with annual sales in the range of $15 million to $200 million
and in the real estate sector with property values generally in the range of $5
million to $40 million.
The Company's emphasis has been to grow the lower risk asset based finance
businesses, maintain significant franchises in corporate finance and real
estate finance and continue to grow its international asset based lending
businesses. The asset based businesses have developed to become the largest
product category in assets and revenues. Earnings quality has been strengthened
through the growth in the asset based businesses which provide more consistent
revenue streams and produce lower and less volatile credit quality costs. The
Company manages asset quality through the use of disciplined underwriting
standards and aggressive account management techniques. The underwriting
standards and credit disciplines employed on the post-1990 corporate finance
and real estate finance portfolios have resulted in strong credit quality for
these portfolios. In addition, the Company continues to significantly reduce
its pre-1990 corporate finance and real estate finance portfolios. The Company
has maintained a conservative capital structure with substantial equity, low
leverage and moderate reliance for funding on the commercial paper market.
OWNERSHIP
All of the outstanding Common Stock of the Company is owned by Heller
International Corporation (the "Parent"), a wholly-owned subsidiary of The Fuji
Bank, Limited ("Fuji Bank"), headquartered in Tokyo, Japan. Fuji Bank also
directly owns 21% of the outstanding shares of Heller International Group, Inc.
("Heller International"), a consolidated subsidiary of the Company engaged in
international factoring and asset based financing activities. Fuji Bank is one
of the largest banks in the world, with total deposits of approximately $311.4
billion at March 31, 1997.
KEEP WELL AGREEMENT
The Company entered into a Keep Well Agreement (as amended from time to time,
the "Keep Well Agreement") with Fuji Bank on April 23, 1983 in order to assist
the Company in maintaining its credit rating. The Keep Well Agreement was
amended and supplemented on January 26, 1984, in connection with the
consummation of the purchase of the Company by Fuji Bank, and has been amended
since that date from time to time. Most recently, on June 17, 1997, the Keep
Well Agreement was amended in connection with the Company's offering of
Original Preferred Stock. The Keep Well Agreement shall not be terminated prior
to the date (the "Termination Date") which is the earlier of (i) December 31,
2007 and (ii) the date on which the Company has received written certifications
from Moody's Investor Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P") that, upon termination of the Keep Well Agreement, the
ratings on the Company's
2
<PAGE>
senior unsecured indebtedness without the support provided by the Keep Well
Agreement will be no lower than such ratings with the support of the Keep Well
Agreement, but in no event shall the Termination Date be earlier than December
31, 2002. After the Termination Date, either Fuji Bank or the Company may
terminate the Keep Well Agreement upon 30 business days' prior written notice,
except as set forth below. So long as the 8 1/8% Cumulative Perpetual Senior
Preferred Stock, Series A, $.01 par value ("Series A Preferred Stock"), is
outstanding and held by third parties other than Fuji Bank, the Keep Well
Agreement may not be terminated by either party unless the Company has received
written certifications from Moody's and S&P that upon termination the Series A
Preferred Stock will be rated by them no lower than "a3" and "A-,"
respectively. In addition, so long as the Original Preferred Stock or Exchange
Preferred Stock is outstanding and held by third parties other than Fuji Bank,
the Keep Well Agreement may not be terminated by either party unless the
Company has received written certifications from Moody's and S&P that upon
termination the Original Preferred Stock or Exchange Preferred Stock, as the
case may be (or both the Original Preferred Stock and Exchange Preferred Stock
if shares of both are then outstanding), will be rated no lower than "baa1" and
"BBB" by Moody's and S&P, respectively. The Keep Well Agreement provides that
Fuji Bank will maintain the Company's net worth at $500 million through the
purchase of sufficient shares of a new series of Junior Preferred Stock (as
defined herein) of the Company and, if necessary, will provide loans of up to
$500 million to maintain the Company's liquidity. No purchases of Junior
Preferred Stock or loans have been made by Fuji Bank under the Keep Well
Agreement. For further discussion of the Keep Well Agreement, see "The
Company--Keep Well Agreement with Fuji Bank."
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
------------------- ------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- ---- ---- ---- ---- ----
(UNAUDITED) (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net interest income.............. $ 303 $ 264 $355 $387 $366 $356 $339
Operating revenues............... 533 384 533 620 557 517 466
Operating expenses............... 243 177 247 216 195 174 169
Provision for losses............. 104 61 103 223 188 210 252
Income before income taxes,
minority interest and change in
accounting principle............ 186 146 183 181 174 133 45
Net income....................... 123 104 133 125 118 117 88
Common dividends paid............ 42 36 56 52 20 -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ----------------------------------
1997 1996 1995 1994 1993 1992
------------- ------ ------ ------ ------ ------
(UNAUDITED) (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Receivables.................. $10,357 $8,529 $8,085 $7,616 $7,062 $7,465
Allowance for losses of
receivables................. 255 225 229 231 221 224
Total assets................. 11,945 9,926 9,638 8,476 7,913 7,952
Total debt................... 8,717 7,506 7,368 6,381 5,949 6,168
Total liabilities............ 10,222 8,402 8,208 7,107 6,625 6,777
Total stockholders' equity... 1,664 1,467 1,384 1,330 1,253 1,144
Ratio of earnings to combined
fixed
charges and preferred stock
dividends(1)................ 1.43x 1.35x 1.34x 1.44x 1.43x 1.14x
</TABLE>
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(1) The ratio of earnings to combined fixed charges and preferred stock
dividends is calculated by dividing (i) income before income taxes, the
minority interest in Heller International income and fixed charges by (ii)
fixed charges plus preferred stock dividends.
3
<PAGE>
THE EXCHANGE OFFER
The Original Preferred The Original Preferred Stock was sold by the
Stock.................... Company on June 17, 1997 to Lehman Brothers Inc.,
Chase Securities Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Initial
Purchasers") pursuant to a Purchase Agreement,
dated as of June 11, 1997 (the "Purchase
Agreement"). The Initial Purchasers subsequently
resold the Original Preferred Stock to qualified
institutional buyers pursuant to Rule 144A under
the Securities Act.
Registration Rights Pursuant to the Purchase Agreement, the Company and
Agreement................ the Initial Purchasers entered into a Registration
Rights Agreement, dated as of June 11, 1997 (the
"Registration Rights Agreement"), which grants the
holders of the Original Preferred Stock certain
exchange and registration rights. The Exchange
Offer is being made pursuant to the Registration
Rights Agreement, and such exchange rights
terminate upon the consummation of the Exchange
Offer. The Company has agreed to use its reasonable
best efforts to cause the Registration Statement of
which this Prospectus is a part to become effective
under the Securities Act by December 14, 1997. See
"Original Preferred Stock Registration Rights."
The Exchange Offer........ The Company is offering to exchange one share of
Exchange Preferred Stock for each share of its
Original Preferred Stock that is validly tendered
and accepted. The Company will issue the Exchange
Preferred Stock on or promptly following the
Expiration Date (as defined below). There are
currently outstanding 1,500,000 shares of Original
Preferred Stock. See "The Exchange Offer."
Expiration Date...........
The Exchange Offer will expire at 5:00 p.m., New
York City time, on January 9, 1997 (the "Expiration
Date"), unless the Exchange Offer is extended by
the Company in its sole discretion, in which case
the term "Expiration Date" means the latest date
and time to which the Exchange Offer is extended by
the Company. See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer--Conditions to the Exchange
Offer." The Exchange Offer is not conditioned upon
any minimum aggregate number of shares of Original
Preferred Stock being tendered or accepted for
exchange. No vote of the Company's security holders
is required to effect the Exchange Offer and no
such vote (or proxy therefor) is being sought
hereby. See "The Exchange Offer--Conditions to the
Exchange Offer."
Procedures for Tendering
Original Preferred
Stock....................
Each holder of Original Preferred Stock wishing to
accept the Exchange Offer must complete, sign and
date the accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and mail
or otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Original
Preferred Stock and any other required
documentation to the
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<PAGE>
Exchange Agent (as defined) at the address set
forth herein. By executing the Letter of
Transmittal, each holder will represent to the
Company that, among other things, (i) any Exchange
Preferred Stock acquired by it pursuant to the
Exchange Offer will be obtained in the ordinary
course of its business, (ii) it is not engaged in,
does not intend to engage in, and has no
arrangement or understanding with any person to
participate in, the distribution of such Exchange
Preferred Stock and (iii) it is not an "affiliate"
of the Company within the meaning of Rule 405 of
the Securities Act. Each broker-dealer that
receives Exchange Preferred Stock for its own
account in exchange for Original Preferred Stock,
where such Original Preferred Stock was acquired by
such broker-dealer as a result of market-making
activities or other trading activities (other than
Original Preferred Stock acquired directly from the
Company), may participate in the Exchange Offer,
but may be deemed an "underwriter" under the
Securities Act and, therefore, must acknowledge in
the Letter of Transmittal that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
such Exchange Preferred Stock. Any holder who is an
affiliate of the Company or who tenders in the
Exchange Offer with the intention or for the
purpose of participating in a distribution of the
Exchange Preferred Stock or who is a broker-dealer
who purchased Original Preferred Stock from the
Company to resell pursuant to Rule 144A under the
Securities Act (i) cannot rely on the
interpretation of the staff of the Commission set
forth in the above-mentioned no-action letters,
(ii) will not be entitled to tender Original
Preferred Stock and (iii) must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or transfer of the Original Preferred Stock, unless
such sale or transfer is made pursuant to an
exemption from such requirements. The Letter of
Transmittal states that a broker-dealer will not,
by so acknowledging and by delivering a prospectus,
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. See "The
Exchange Offer--Procedures for Tendering" and "Plan
of Distribution."
Special Procedures for
Beneficial Owners .......
Any beneficial owner whose Original Preferred Stock
is registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender such Original Preferred Stock
in the Exchange Offer should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to
tender on its own behalf, such beneficial owner
must, prior to completing and executing the Letter
of Transmittal and delivering its Original
Preferred Stock, either make appropriate
arrangements to register ownership of the Original
Preferred Stock in such beneficial owner's name or
obtain a properly completed stock power from the
registered holder. Any such transfer of registered
ownership may take considerable time and may not be
completed prior to the Expiration Date. See "The
Exchange Offer--Procedures for Tendering."
5
<PAGE>
Guaranteed Delivery Holders of Preferred Stock who wish to tender their
Procedures .............. Original Preferred Stock and whose Original
Preferred Stock is not immediately available or who
cannot deliver their Original Preferred Stock, the
Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date must
tender their Original Preferred Stock according to
the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery
Procedures."
Withdrawal Rights......... The tender of Original Preferred Stock pursuant to
the Exchange Offer may be withdrawn at any time
prior to the Expiration Date.
Acceptance of Original
Preferred Stock and
Delivery of Exchange
Preferred Stock..........
The Company will accept for exchange any and all
Original Preferred Stock which is properly tendered
in the Exchange Offer and not validly withdrawn
prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Preferred Stock
issued pursuant to the Exchange Offer will be
delivered promptly on or following the Expiration
Date. See "Exchange Offer--Terms of the Exchange
Offer." Any Original Preferred Stock not accepted
for exchange for any reason will be returned
without expense to the tendering holder thereof as
promptly as practicable after the expiration or
termination of the Exchange Offer.
Consequences of Failure
to Exchange..............
The Original Preferred Stock that is not exchanged
pursuant to the Exchange Offer will remain
outstanding and continue to accrue dividends (if
declared) and will also continue to bear legends
restricting their transfer under the Securities
Act. Accordingly, such Original Preferred Stock may
be resold only (i) to the Company, (ii) to
"qualified institutional buyers" within the meaning
of Rule 144A of the Securities Act pursuant to Rule
144A, (iii) to institutional "accredited investors"
as defined in Rule 501(a)(1), (2), (3) or (7) of
the Securities Act, (iv) outside the United States
to a non-U.S. person pursuant to the requirements
of Regulation S under the Securities Act, (v)
pursuant to an effective registration statement
under the Securities Act, or (vi) pursuant to any
other available exemption from the registration
requirements under the Securities Act. Upon the
Company's acceptance of all validly tendered
Original Preferred Stock pursuant to the Exchange
Offer, any remaining holders of the Original
Preferred Stock will be entitled to all the rights,
and subject to all the limitations, applicable
thereto under the Original Certificate of
Designation, but will have no right to receive
Additional Dividends thereunder nor any further
registration rights under the Registration Rights
Agreement. The liquidity of the market for such
Original Preferred Stock could be adversely
affected. See "Exchange Offer--Consequences of
Failure to Exchange."
Certain Federal Income
Tax Considerations.......
For a discussion of certain federal income tax
considerations relating to the exchange of the
Exchange Preferred Stock for the Original Preferred
Stock, see "Certain Federal Income Tax
Considerations Relating to the Exchange Offer."
6
<PAGE>
Use of Proceeds........... There will be no cash proceeds to the Company from
the exchange of Original Preferred Stock pursuant
to the Exchange Offer.
Exchange Agent............ BankBoston, N.A. is serving as the Exchange Agent
in connection with the Exchange Offer. The address
and telephone number of the Exchange Agent are set
forth in "The Exchange Offer--Exchange Agent."
THE EXCHANGE PREFERRED STOCK
Exchange Preferred Stock.. Up to 1,500,000 shares of Fixed Rate Noncumulative
Perpetual Senior Preferred Stock, Series C, are
being offered pursuant to the Exchange Offer. The
form and terms of the Exchange Preferred Stock are
substantially the same in all material respects as
the form and terms of the Original Preferred Stock
for which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Preferred
Stock will be registered under the Securities Act
and, therefore, will not bear legends restricting
their transfer under the Securities Act and will
not contain provisions regarding minimum unit size,
the payment of Additional Dividends or registration
rights.
Dividends on the Exchange
Preferred Stock..........
Cash dividends on the Exchange Preferred Stock will
be noncumulative and, if declared, will be payable
quarterly on February 15, May 15, August 15 and
November 15 of each year at a rate of 6.687% of the
liquidation preference thereof, or $6.687 per
share, per annum. If dividends are declared for the
period from and including November 15, 1997 through
and including February 14, 1998, holders of the
Exchange Preferred Stock will receive dividends on
February 15, 1998 from the date of initial issuance
of the Exchange Preferred Stock, plus an amount
equal to the declared and accrued, but unpaid,
dividends on the Original Preferred Stock to the
date of exchange thereof. Dividends declared on the
Original Preferred Stock accepted for exchange will
cease to accrue upon issuance of the Exchange
Preferred Stock in exchange therefor. The amount of
dividends payable in respect of the Exchange
Preferred Stock will be adjusted in the event of
certain amendments to the Code in respect of the
dividends received deduction. See "Description of
the Exchange Preferred Stock--Dividends."
Ranking................... The Exchange Preferred Stock will constitute a
separate series, consisting of 1,500,000 shares, of
the Company's senior preferred stock $.01 par value
per share ("Senior Preferred Stock"). The Exchange
Preferred Stock will, on the date of original
issue, rank on a parity in all respects with each
other outstanding series of Senior Preferred Stock
and will rank senior in all respects to the
Company's common stock, $0.25 par value per share
("Common Stock"). No shares of the Company's
preferred stock, no par value per share ("Junior
Preferred Stock"), are currently outstanding nor
are expected to be outstanding upon consummation of
this offering. See "Description of the Exchange
Preferred Stock--General."
7
<PAGE>
Liquidation Preference.... The Exchange Preferred Stock will be entitled to a
liquidation preference of $100.00 per share, plus
an amount equal to the sum of all accrued and
unpaid dividends (whether or not earned or
declared) for the then-current dividend period to
the date of final distribution (without
accumulation of accrued and unpaid dividends for
prior dividend periods unless previously declared),
that is senior to payments to holders of the Common
Stock, the Junior Preferred Stock or any other
class or series of stock of the Company ranking
junior to the Exchange Preferred Stock and pari
passu with payments to holders of each other series
of Senior Preferred Stock outstanding on the date
of original issue of the Exchange Preferred Stock.
See "Description of the Exchange Preferred Stock--
Liquidation Rights."
Voting Rights............. Except as indicated in "Description of the Exchange
Preferred Stock--Voting Rights" or expressly
required by applicable law, the holders of the
Exchange Preferred Stock will not be entitled to
vote.
Redemption................ The Exchange Preferred Stock is not redeemable
prior to August 15, 2007, except as stated herein.
On and after such date, the Exchange Preferred
Stock is redeemable, in whole or in part, at the
option of the Company, at $100.00 per share, plus
an amount equal to the sum of all accrued and
unpaid dividends (whether or not declared) for the
then-current dividend period to the redemption date
(without accumulation of accrued and unpaid
dividends for prior dividend periods unless
previously declared). The Exchange Preferred Stock
will not be entitled to the benefit of any sinking
fund. See "Description of the New Securities--
Redemption."
Absence of Market for the
Exchange Preferred
Stock....................
The Exchange Preferred Stock will be a new issue of
securities for which, prior to the Exchange Offer,
there has been no public market. The Company does
not currently intend to list the Exchange Preferred
Stock on any securities exchange or to seek
approval for quotation through any automated
quotation system. Although the Initial Purchasers
have informed the Company that they each currently
intend to make a market in the Exchange Preferred
Stock, the Initial Purchasers are not obligated to
do so, and any such market making may be
discontinued at any time without notice.
Accordingly, there can be no assurance as to the
development or liquidity of any public market for
the Exchange Preferred Stock. If an active market
does not develop, the market price and liquidity of
the Exchange Preferred Stock may be adversely
affected.
8
<PAGE>
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Prospectus contains and the documents incorporated by reference herein
contain or will contain certain "forward-looking statements" (as defined in
Section 27A of the Securities Act) that are based on the beliefs of the
Company's management, as well as assumptions made by, and information
currently available to, the Company's management. Wherever possible, the
Company has identified these forward-looking statements by using words such as
"anticipates," "believes," "estimates," "expects" and similar expressions.
These forward-looking statements are subject to risks and uncertainties which
could cause the Company's actual results, performance or achievements to
differ materially from those expressed in, or implied by, these statements.
These risks and uncertainties include, but are not limited to, the following:
(1) the results of the Company's efforts to implement its business strategy;
(2) the effect of economic conditions and the performance of borrowers; (3)
actions of the Company's competitors and the Company's ability to respond to
such actions; (4) the cost of the Company's capital, which depends in part on
the Company's portfolio quality, ratings, prospects and outlook; and (5)
changes in governmental regulations, tax rates and similar matters. The
Company assumes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.
THE COMPANY
GENERAL
Heller Financial, Inc. (the "Company") was incorporated in 1919 under the
laws of the State of Delaware and is engaged in various aspects of the
commercial finance business. The Company and its consolidated subsidiaries
employ approximately 2,300 people. The Company's executive offices are located
at 500 West Monroe Street, Chicago, Illinois 60661 (telephone: (312) 441-
7000). Unless the context indicates otherwise, references to the Company
include Heller Financial, Inc. and its consolidated subsidiaries.
The Company is a diversified financial services company which provides a
broad array of commercial financial products and services primarily to middle-
market companies in the United States and internationally. The Company
provides its products and services through five product categories: (i) asset
based finance, (ii) cash flow lending, (iii) real estate finance, (iv)
international asset based finance and factoring and (v) specialized finance.
The middle-market segment served includes entities primarily in the
manufacturing and service sectors with annual sales in the range of $15
million to $200 million and in the real estate sector with property values
generally in the range of $5 million to $40 million.
The Company's emphasis has been to grow the lower risk asset based finance
businesses, maintain significant franchises in corporate finance and real
estate finance and continue to grow its international asset based lending
businesses. The asset based businesses have developed to become the largest
product category in assets and revenues. Earnings quality has been
strengthened through the growth in the asset based businesses, which provide
more consistent revenue streams and produce lower and less volatile credit
quality costs. The Company manages asset quality through the use of
disciplined underwriting standards and aggressive account management
techniques. The underwriting standards and credit disciplines employed on the
post-1990 corporate finance and real estate finance portfolios have resulted
in strong credit quality for these portfolios. In addition, the Company
continues to significantly reduce its pre-1990 corporate finance and real
estate finance portfolios. The Company has maintained a conservative capital
structure with substantial equity, low leverage and moderate reliance for
funding on the commercial paper market.
PRODUCT CATEGORIES
The Company offers a wide range of financial products and services to its
customers through five product categories.
9
<PAGE>
Asset Based Finance
Asset based financing is offered by six distinct product groups: Heller
Current Asset Management ("Current Asset Management"), Heller Business Credit
("Business Credit"), Heller Equipment Finance and Leasing ("Equipment Finance
and Leasing"), Heller Vendor Finance ("Vendor Finance"), Heller First Capital
("First Capital") and Heller Sales Finance ("Sales Finance").
Current Asset Management provides working capital financing, receivables
management and credit protection to companies in a broad range of industries.
Current Asset Management is the fourth largest domestic factor in the United
States and is the Company's oldest business with over 50 years of operations.
The group offers factoring services to over 600 clients and 80,000 customers
primarily in the apparel, textile, houseware, transportation, and home
furnishings industries. In return for a commission, the group purchases the
client's accounts receivables and provides collection, credit protection and
management information services. Working capital is provided by advancing on a
formula basis a percentage of the purchase price of the client's factored
accounts receivables. Current Asset Management also provides advances against
inventory on a formula basis.
Business Credit provides asset based working capital and term financing to
middle market companies for refinancings, recapitalizations, acquisitions,
seasonal borrowing, debtor-in-possession (DIP) and post-DIP transactions
through senior loans secured primarily by accounts receivables and inventory.
The group provides financing to manufacturers, retailers, wholesalers,
distributors, exporters and service firms. The group also serves as co-lender
or participant in transactions agented by other asset based lenders. Revolving
credit facilities and term loans are generally cross-collateralized. The
Company protects its position against deterioration of a borrower's
performance by using established advance rates against eligible collateral.
Transaction sizes range from $5 million to $75 million, and the group utilizes
syndication capabilities to lower the average retained transaction size to
approximately $20 million in commitments and $10 million in fundings.
Equipment Finance and Leasing is comprised of four direct origination
finance divisions: Heller Commercial Equipment Finance ("Commercial Equipment
Finance"), Heller Aircraft Finance ("Aircraft Finance"), Heller Public Finance
("Public Finance") and Heller Industrial Equipment Finance ("Industrial
Equipment Finance"). Commercial Equipment Finance provides leasing and
financing programs to a diverse group of middle market companies
collateralized by equipment for expansion, replacement or modernization or to
refinance existing equipment obligations. Typically, the equipment is
essential to the operations of the borrower, and the amount financed is
generally not a substantial part of the borrower's capital structure.
Commercial Equipment Finance serves various markets including transportation,
supermarket, manufacturing, energy, restaurant and food processing.
Transaction sizes generally range from $500,000 to $15 million with terms
ranging from three to ten years and an average transaction size in 1996 of
approximately $4 million. Aircraft Finance offers financing for commercial
aircraft and aircraft engines through operating leases and senior and junior
secured loans. Transaction sizes range from $5 million to $40 million, with
terms ranging from five to 15 years and an average transaction size in 1996 of
approximately $13 million. During 1996, the Company formed Public Finance to
provide equipment and project/facility financing to state and local
governments and Industrial Equipment Finance to provide collateral based
equipment financing to smaller middle market companies in the machine tool,
construction, printing and trucking industries. The targeted average
transaction size is approximately $2 million for Public Finance and less than
$1 million for Industrial Equipment Finance.
Vendor Finance provides customized equipment leasing and financing programs
to manufacturers and distributors of a wide variety of commercial, industrial
and technology based products. These services, offered through approximately
75 programs with manufacturers and vendors, are established to finance sales
to end users. Transactions under these programs generally have partial or in
some cases full recourse to the vendor. The group serves the financing needs
of the machining, graphic arts, information technology, energy management,
healthcare, communication, and food processing markets. Transaction sizes
range from $50,000 to approximately $3 million with an average transaction
size in 1996 of approximately $150,000. The group also provides capital to
independent finance and leasing companies.
10
<PAGE>
First Capital provides long-term financing to independent small businesses
and franchises under the United States Small Business Administration ("SBA")
loan programs. First Capital is one of the largest participants in the SBA's
7(A) loan program under which up to 80% of each loan is guaranteed by the SBA.
The Company also makes loans under the SBA's 504 program. These loans are
senior to an accompanying SBA loan and have an average loan to collateral
value of 50%. First Capital's SBA 7(A) and 504 loans include financing for
real estate acquisition, refinancing or construction financing, equipment or
business acquisition, permanent working capital for expansion efforts and debt
consolidation. The guaranteed portions of the SBA 7(A) loans are sometimes
sold in the secondary market, with servicing rights retained by First Capital.
Transaction sizes generally range from $50,000 to $2 million, with an average
transaction size in 1996 of approximately $400,000.
Sales Finance provides financing primarily through senior lines and, to a
lesser extent, subordinated debt to originators of consumer receivables.
Financing is primarily provided for vacation ownership, home equity and
improvement, non-prime auto, security alarm monitoring contracts and municipal
tax liens. Sales Finance is a major capital source in the United States in the
vacation ownership industry. Transaction sizes generally range from $3 million
to $25 million, with an average transaction size in 1996 of approximately $7
million.
Cash Flow Lending
Heller Corporate Finance ("Corporate Finance") is a leading provider of
middle market financing based on the cash flows underlying a client's
business. This lending is generally provided through coordination with private
equity sponsors and includes the financing of corporate recapitalizations,
refinancings, expansions, acquisitions and buy-outs of publicly and privately
held entities in a wide variety of industries. Loans are provided on both a
term and revolving basis for periods of up to ten years and are typically
collateralized by senior liens on the borrower's stock or assets or both.
Transactions may also include some unsecured or subordinated financings or
modest non-voting equity investments. The group also serves as co-lender or
participant in transactions agented by other asset based lenders. Transaction
sizes range from $5 million to $50 million, and the group utilizes syndication
capabilities to lower the average retained transaction size to approximately
$16 million in commitments and $9 million in fundings for 1996. Corporate
Finance also invests in equity funds generally originated by equity sponsors.
Real Estate Finance
Heller Real Estate Financial Services ("Real Estate Finance") specializes in
providing financing products to real estate owners, investors and developers
primarily for the acquisition, refinancing and renovation of commercial
income-producing properties in a wide range of property types and geographic
areas. The group is one of the nation's largest providers of loans secured by
manufactured housing communities and self storage facility property types to
be sold in the capital markets through a commercial mortgage securitization.
The group also offers financing for discounted loan portfolio acquisitions,
single family housing developments, credit sale-leasebacks and to be built
properties with credit tenants. The group also holds investments in
acquisition, development and construction transactions, as well as certain
available for sale debt securities. Loans generally have terms ranging from
one to five years and are principally collateralized by first mortgages.
Transaction sizes generally range from $1 million to $15 million, with an
average transaction size in 1996 of approximately $3 million.
International Asset Based Finance and Factoring
Heller International Group, Inc. ("Heller International") offers financial
products through commercial finance subsidiaries and joint ventures in 18
countries in Europe, Asia/Pacific and Latin America. The joint ventures and
subsidiaries primarily provide factoring, asset based financing and
receivables management services, and also make loans for acquisition
financing, leasing, vendor finance and/or trade finance programs, primarily to
small and mid-sized businesses outside the United States. Heller International
also makes modest investments in international equity funds.
11
<PAGE>
On April 2, 1997, Heller International purchased the interest of its joint
venture partner in Factofrance Heller S.A. ("Factofrance") for $174 million.
As a result, Heller International increased its ownership interest in
Factofrance from 48.8% to 97.6%. Heller International has held an interest in
Factofrance for over 30 years, using the equity method of accounting for its
previous ownership position. Factofrance, founded in 1965, is the leading
factoring company in the French marketplace. Factofrance is headquartered in
Paris and has seven regional sales offices covering local markets.
Specialized Finance
Heller Project Finance, formerly known as Project Investment and Advisory
Division, consists of transactions in project finance offering financing to
independent power producers and industrial projects in the oil and gas, coal,
mining, paper and environmental industries. Financing is provided in the form
of senior and junior secured loans and equity investments. Transaction sizes
generally range from $5 million to $25 million, and terms range from seven to
15 years.
SYNDICATION, SECURITIZATION AND LOAN SALE ACTIVITIES
A key element of the Company maintaining strong asset quality is its focus
on managing exposure to individual credits and industry concentrations. A
major part of the effort is syndicating loans or selling participations to
control the concentration of credit risk. The Company has established
syndication programs in most of its businesses, with receivable syndications
and participations totaling $453 million during 1996. In addition, Real Estate
Finance originates loans to manufactured housing communities, self storage
facilities and multi-tenant industrial property types, which may be sold as
whole loans or in the capital markets through a commercial mortgage
securitization. Other business groups also originate receivables which may be
sold as whole loans or through a securitization to take advantage of market
pricing and to reduce concentrations of credit risk. During 1996, the Company
had loan sales totaling $304 million. Through September 30, 1997, the Company
sold through securitization $268 million of loans and leases originated in its
Equipment Finance and Leasing and Vendor Finance businesses and $505 million
of mortgage loans originated in its Real Estate Finance Business.
OWNERSHIP
All of the outstanding Common Stock of the Company is owned by Heller
International Corporation (the "Parent"), a wholly-owned subsidiary of The
Fuji Bank, Limited ("Fuji Bank"), headquartered in Tokyo, Japan. Fuji Bank
also directly owns 21% of the outstanding shares of Heller International, a
consolidated subsidiary of the Company engaged in international factoring and
asset based financing activities. Fuji Bank is one of the largest banks in the
world, with total deposits of approximately $311.4 billion at March 31, 1997.
For a discussion of the Keep Well Agreement between Fuji Bank and the Company,
see "Keep Well Agreement with Fuji Bank" below.
12
<PAGE>
The following table summarizes selected financial data obtained from Fuji
Bank's most recent available financial statements, as prepared in accordance
with accounting principles generally accepted in Japan, which differ from
generally accepted accounting principles in the United States.
THE FUJI BANK, LIMITED
(CONSOLIDATED FINANCIAL STATEMENTS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------
1997 1996
------------------------ -------------------------
YEN DOLLARS* YEN DOLLARS*
(BILLIONS) (MILLIONS) (BILLIONS) (MILLIONS)
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Total Assets............ (Yen)56,211.2 $452,950.5 (Yen)54,401.4 $511,531.8
Total Deposits.......... 38,649.5 311,438.2 37,280.4 350,544.2
Total Liabilities....... 54,276.8 437,363.5 52,764.8 496,142.9
Total Stockholders' Eq-
uity................... 1,934.3 15,587.0 1,636.1 15,388.9
Net Income.............. 109.0 878.7 (325.4) (3,059.9)
</TABLE>
- --------
*Rates of Exchange: 3/31/97 (Yen) 124.10 = U.S. $1.00
3/31/96 (Yen) 106.35 = U.S. $1.00
If the financial statements from which the numbers in the foregoing table
were taken had been prepared in accordance with accounting principles
generally accepted in the United States, some of the amounts shown might have
been materially different. The Company currently understands that accounting
principles generally accepted in Japan differ from generally accepted
accounting principles in the United States in various areas, including the
following: valuation of securities; accounting treatment of guarantees,
commitments, unearned income, deferred taxes, leases, depreciation, foreign
currency transactions and investments in subsidiaries, and creation and
maintenance of optional and required reserves.
KEEP WELL AGREEMENT WITH FUJI BANK
The Company entered into a Keep Well Agreement (as amended from time to
time, the "Keep Well Agreement") with Fuji Bank on April 23, 1983 in order to
assist the Company in maintaining its credit rating. The Keep Well Agreement
was amended and supplemented on January 26, 1984, in connection with the
consummation of the purchase of the Company by Fuji Bank and has been amended
since that date from time to time. Most recently, on June 17, 1997, the Keep
Well Agreement was amended in connection with the Company's offering of its
Original Preferred Stock. The Keep Well Agreement shall not be terminated
prior to the date (the "Termination Date") which is the earlier of (i)
December 31, 2007 and (ii) the date on which the Company has received written
certifications from Moody's and S&P that, upon termination of the Keep Well
Agreement, the ratings on the Company's senior unsecured indebtedness without
the support provided by the Keep Well Agreement will be no lower than such
ratings with the support of the Keep Well Agreement, but in no event shall the
Termination Date be earlier than December 31, 2002. In addition, the Keep Well
Agreement includes certain restrictions on termination relating to the
Company's 8 1/8% Cumulative Perpetual Senior Preferred Stock, Series A, $.01
par value ("Series A Preferred Stock"), the Exchange Preferred Stock and the
Original Preferred Stock, which restrictions are discussed below.
The Keep Well Agreement provides that Fuji Bank will maintain the Company's
net worth in an amount equal to $500 million. Accordingly, if the Company
should determine, at the close of any month, that its net worth is less than
$500 million, then Fuji Bank will purchase, or cause one of its subsidiaries
to purchase, shares of the Company's NW Preferred Stock, Class B, no par value
("NW Preferred Stock"), in an amount necessary to increase the Company's net
worth to $500 million. The NW Preferred Stock is a series of Junior Preferred
Stock and, accordingly, if and when issued will rank junior to the Exchange
Preferred Stock as to payment of dividends, and in all other respects. If and
when the NW Preferred Stock is issued, dividends thereon will be noncumulative
and will be payable (if declared) quarterly at a rate per annum equal to 1%
over the three-month
13
<PAGE>
London Inter-bank Offered Rate. Such dividends will not be paid during a
default in the payment of principal or interest on any of the outstanding
indebtedness for money borrowed by the Company. Subject to certain conditions,
the NW Preferred Stock will be redeemable, at the option of the holder, within
a specified period of time after the end of a calendar quarter in an aggregate
amount not greater than the excess of the net worth of the Company as of the
end of such calendar quarter over $500 million. See "Description of Existing
Preferred Stock--NW Preferred Stock."
The Keep Well Agreement further provides that if the Company should lack
sufficient cash, other liquid assets or credit facilities to meet its payment
obligations on its commercial paper, then Fuji Bank will lend the Company up
to $500 million (the "Liquidity Commitment"), payable on demand, which the
Company may use only for the purpose of meeting such payment obligations. Any
such loan by Fuji Bank to the Company (a "Liquidity Advance") will bear
interest at a fluctuating interest rate per annum equal to the announced prime
commercial lending rate of Morgan Guaranty Trust Company of New York plus
0.25% per annum. Each Liquidity Advance will be repayable on demand at any
time after the business day following the 29th day after such Liquidity
Advance was made. No repayment of the Liquidity Advance will be made during a
period of default in the payment of the Company's senior indebtedness for
borrowed money.
No Liquidity Advances or purchases of NW Preferred Stock have been made by
Fuji Bank under the Keep Well Agreement; other infusions of capital in the
Company have been made by the Parent, the last one of which occurred in 1992.
Under the Keep Well Agreement, the Company has covenanted to maintain, and
Fuji Bank has undertaken to assure that the Company will maintain, unused
short-term lines of credit, asset sales facilities and committed credit
facilities in an amount approximately equal to 75% of the amount of its
commercial paper obligations from time to time outstanding. In addition, under
the Keep Well Agreement, neither Fuji Bank nor any of its subsidiaries can
sell, pledge or otherwise dispose of shares of Common Stock of the Company, or
permit the Company to issue shares of its Common Stock, except to Fuji Bank or
a Fuji Bank affiliate.
Neither Fuji Bank nor the Company is permitted to terminate the Keep Well
Agreement for any reason prior to the Termination Date. After the Termination
Date, either Fuji Bank or the Company may terminate the Keep Well Agreement
upon 30 business days' prior written notice, except as set forth below. So
long as the Series A Preferred Stock is outstanding and held by third parties
other than Fuji Bank, the Keep Well Agreement may not be terminated by either
party unless the Company has received written certifications from Moody's and
S&P that upon such termination the Series A Preferred Stock will be rated by
them no lower than "a3" and "A-1," respectively. Additionally, so long as the
Exchange Preferred Stock or Original Preferred Stock is outstanding and held
by third parties other than Fuji Bank, the Keep Well Agreement may not be
terminated by either party unless the Company has received written
certifications from Moody's and S&P that upon such termination the Exchange
Preferred Stock or Original Preferred Stock, as the case may be (or both the
Exchange Preferred Stock and Original Preferred Stock if shares of both are
then outstanding), will be rated no lower than "baa1" and "BBB" by Moody's and
S&P, respectively. For these purposes, the Series A Preferred Stock, Exchange
Preferred Stock or Original Preferred Stock will no longer be deemed
outstanding at such time as an effective notice of redemption of all of the
Series A Preferred Stock, Exchange Preferred Stock or Original Preferred
Stock, as the case may be, shall have been given by the Company and funds
sufficient to effectuate such redemption shall have been deposited with the
party designated for such purpose in the notice. So long as the Series A
Preferred Stock is outstanding, if both Moody's and S&P shall discontinue
rating the Series A Preferred Stock, then Goldman, Sachs & Co., or its
successor, shall, within 30 days, select a nationally recognized substitute
rating agency and identify the comparable ratings from such agency. So long as
the Series A Preferred Stock is no longer outstanding but the Exchange
Preferred Stock or Original Preferred Stock is outstanding, if both Moody's
and S&P shall discontinue rating the Exchange Preferred Stock or Original
Preferred Stock, as the case may be, then Lehman Brothers Inc., or its
successor, shall, within 30 days, select a nationally recognized substitute
rating agency and identify the comparable ratings from such agency. Any
termination of the Keep Well Agreement by the Company must be consented to by
Fuji Bank. Any such termination will not relieve the Company of its
obligations in respect of any NW Preferred Stock outstanding on the date of
termination or the
14
<PAGE>
dividends thereon, any amounts owed in respect of Liquidity Advances on the
date of termination or the unpaid principal or interest on those Liquidity
Advances or Fuji Bank's fee relating to the Liquidity Commitment. Any such
termination will not adversely affect the Company's commercial paper
obligations outstanding on the date of termination. The Keep Well Agreement
can be modified or amended by a written agreement of Fuji Bank and the
Company. However, no such modification or amendment may change the prohibition
against termination before the Termination Date or the other restrictions on
termination or adversely affect the Company's then-outstanding commercial
paper obligations.
Under the Keep Well Agreement, the Company's commercial paper obligations
and any other debt instruments are solely the obligations of the Company. The
Keep Well Agreement is not a guarantee by Fuji Bank of the payment of the
Company's commercial paper obligations, indebtedness, liabilities or
obligations of any kind.
15
<PAGE>
CAPITALIZATION
The following table sets forth, as of September 30, 1997, (i) the
capitalization of the Company and (ii) such capitalization as adjusted to give
effect to the issuance of 1,500,000 shares of Exchange Preferred Stock pursuant
to the Exchange Offer (assuming all 1,500,000 shares of Original Preferred
Stock are validly tendered and accepted by the Company pursuant to the Exchange
Offer and subsequently retired by the Company). This table is qualified by, and
should be read in conjunction with, the consolidated financial statements of
the Company and its subsidiaries, including the related notes thereto, which
are included in the documents incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------
ACTUAL AS ADJUSTED
------- -----------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Senior Debt:
Commercial paper and short-term borrowings............... $ 4,039 $ 4,039
Notes and debentures..................................... 4,678 4,678
------- -------
Total debt............................................. 8,717 8,717
Minority interest in equity of Heller International Group,
Inc....................................................... 59 59
Stockholders' equity:
Cumulative Perpetual Senior Preferred Stock, Series A,
$.01 par value, 5,000,000 shares authorized, issued and
outstanding, actual and as adjusted..................... 125 125
Fixed Rate Noncumulative Perpetual Senior Preferred
Stock, Series B, $.01 par value, 1,500,000 shares
authorized, issued and outstanding, actual; no shares
authorized, issued and outstanding, as adjusted......... 150 --
Fixed Rate Noncumulative Perpetual Senior Preferred
Stock, Series C, $.01 par value, no shares authorized,
issued and outstanding, actual; 1,500,000 shares
authorized, issued and outstanding, as adjusted......... -- 150
Common Stock, $0.25 par value, 1,000 shares authorized,
105 shares issued and outstanding, actual and as
adjusted, and additional paid-in capital................ 685 685
Retained earnings........................................ 704 704
------- -------
Total stockholders' equity............................. $ 1,664 $ 1,664
------- -------
Total capitalization................................. $10,440 $10,440
======= =======
</TABLE>
16
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data of the Company and its consolidated
subsidiaries have been derived from information contained in, and should be
read in conjunction with, the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and the Company's Quarterly Report on Form
10-Q for the nine months ended September 30, 1997. The data presented below
for, and as of the end of, each of the years in the five-year period ended
December 31, 1996 are derived from the audited consolidated financial
statements of the Company and its subsidiaries. The data presented below for,
and as of the end of, the nine months ended September 30, 1997 and 1996 are
derived from unaudited financial statements and include, in the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the data for such periods.
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
--------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------ ------ ------ ------ ------ ------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income........ $ 679 $ 598 $ 807 $ 851 $ 702 $ 620 $ 634
Interest expense....... 376 334 452 464 336 264 295
------- ------ ------ ------ ------ ------ ------
Net interest income.. 303 264 355 387 366 356 339
Fees and other income.. 132 49 79 148 117 88 52
Factoring commissions.. 71 40 55 50 53 50 49
Income of
international joint
ventures.............. 27 31 44 35 21 23 26
------- ------ ------ ------ ------ ------ ------
Operating revenues... 533 384 533 620 557 517 466
Operating expenses..... 243 177 247 216 195 174 169
Provision for losses... 104 61 103 223 188 210 252
------- ------ ------ ------ ------ ------ ------
Income before income
taxes, minority
interest
and change in
accounting
principle........... 186 146 183 181 174 133 45
Income tax
provision/(benefit)... 57 38 43 49 51 11 (5)
Minority interest in
income of Heller
International Group,
Inc................... 6 4 7 7 5 5 3
------- ------ ------ ------ ------ ------ ------
Income before change
in accounting
principle........... 123 104 133 125 118 117 47
Cumulative effect of a
change in accounting
principle for income
taxes................. -- -- -- -- -- -- 41
------- ------ ------ ------ ------ ------ ------
Net income........... $ 123 $ 104 $ 133 $ 125 $ 118 $ 117 $ 88
======= ====== ====== ====== ====== ====== ======
Common dividends
paid................ $ 42 $ 36 $ 56 $ 52 $ 20 $ -- $ --
======= ====== ====== ====== ====== ====== ======
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
--------------- --------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------ ------ ------ ------ ------ ------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Receivables............ $10,357 $8,314 $8,529 $8,085 $7,616 $7,062 $7,465
Allowance for losses
of receivables........ 255 224 225 229 231 221 224
Investments............ 915 737 805 693 634 370 280
Investment in
international joint
ventures.............. 200 244 272 233 174 144 140
------- ------ ------ ------ ------ ------ ------
Total assets......... $11,945 $9,727 $9,926 $9,638 $8,476 $7,913 $7,952
======= ====== ====== ====== ====== ====== ======
Senior debt:
Commercial paper and
short-term
borrowings.......... $ 4,039 $2,549 $2,745 $2,223 $2,451 $1,981 $2,422
Notes and debentures. 4,678 4,837 4,761 5,145 3,930 3,893 3,521
Junior subordinated
debt.................. -- -- -- -- -- 75 225
------- ------ ------ ------ ------ ------ ------
Total debt........... $ 8,717 $7,386 $7,506 $7,368 $6,381 $5,949 $6,168
======= ====== ====== ====== ====== ====== ======
Total liabilities...... $10,222 $8,223 $8,402 $8,208 $7,107 $6,625 $6,777
Preferred stock........ 275 150 150 150 150 150 150
Common equity.......... 1,389 1,300 1,317 1,234 1,180 1,103 994
------- ------ ------ ------ ------ ------ ------
Total stockholders'
equity.............. $ 1,664 $1,450 $1,467 $1,384 $1,330 $1,253 $1,144
======= ====== ====== ====== ====== ====== ======
Ratio of commercial
paper and short-term
borrowings to total
debt.................. 46% 35% 37% 30% 38% 33% 39%
======= ====== ====== ====== ====== ====== ======
Ratio of debt (net of
short-term
investments)
to total
stockholders' equity.. 5.1x 4.8x 5.0x 5.0x 4.7x 4.7x 5.4x
======= ====== ====== ====== ====== ====== ======
</TABLE>
17
<PAGE>
During 1996, the Company continued to make significant progress in
strengthening earnings, diversifying assets, strengthening asset quality and
maintaining a conservative capital structure. Due to significantly lower
credit costs in 1996, the Company achieved a fifth consecutive year of
increased net income. The lower risk asset based businesses grew to become the
largest product category and source of revenue. The asset based businesses
provide the Company with a more balanced portfolio, more consistent revenue
streams and reduced volatility of credit quality costs. Asset quality is
demonstrated by the strong credit performance of the post-1990 portfolio and
the significant reduction in the pre-1990 portfolio. The Company's capital
structure remained conservative as evidenced by a debt to equity ratio (net of
short-term investments) of five to one. Commercial paper and short-term
borrowing as a percentage of total debt remained conservative at 37%.
During the nine-month period ended September 30, 1997, the Company continued
to reduce the pre-1990 portfolio, which decreased by $316 million, or 32%, due
to the resolution or run-off of credits. Net income for the nine-month period
ended September 30, 1997 increased $19 million, or 18%, from the prior year's
comparable period, due to significant growth in operating revenues. As of
September 30, 1997, the Company's debt to equity ratio (net of short-term
investments) increased slightly to 5.1 to one, from 5.0 to one at December 31,
1996, as the effect of the consolidation of Factofrance was offset by the
issuance of the Original Preferred Stock during the second quarter. Commercial
paper and short-term borrowings represented 46% of total debt as of September
30, 1997, remaining within the range targeted by the Company to maintain its
strong financial position. Of the increase in this percentage from December
31, 1996, 4% was due to the consolidation of Factofrance in the second quarter
of 1997.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends for the
Company and its consolidated subsidiaries for the periods indicated.
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE YEAR ENDED DECEMBER
SEPTEMBER 30, 31,
------------- -----------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1)....................... 1.49x 1.43x 1.40x 1.38x 1.51x 1.49x 1.15x
Ratio of earnings to combined
fixed charges and preferred stock
dividends(2)..................... 1.43x 1.38x 1.35x 1.34x 1.44x 1.43x 1.14x
</TABLE>
- --------
(1) The ratio of earnings to fixed charges is calculated by dividing (i)
income before income taxes, the minority interest in Heller International
income and fixed charges by (ii) fixed charges. Fixed charges consist of
interest on all indebtedness and one-third of annual rentals (approximate
portion representing interest).
(2) The ratio of earnings to combined fixed charges and preferred stock
dividends is calculated by dividing (i) income before income taxes, the
minority interest in Heller International income and fixed charges by (ii)
fixed charges plus preferred stock dividends.
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any cash proceeds from the issuance of the Exchange Preferred Stock pursuant
to the Exchange Offer. In consideration for issuing the Exchange Preferred
Stock as contemplated in this Prospectus, the Company will receive, in
exchange, Original Preferred Stock in like amount. The form and terms of the
Exchange Preferred Stock are substantially the same in all material respects
as the form and terms of the Original Preferred Stock, except as otherwise
described herein under "The Exchange Offer--Terms of the Exchange Offer." The
Original Preferred Stock surrendered in exchange for the Exchange Preferred
Stock will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the Exchange Preferred Stock will not result in any increase in
the outstanding capital stock of the Company.
18
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Original Preferred Stock was sold by the Company on June 17, 1997 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Original Preferred Stock to "qualified institutional
buyers" within the meaning of Rule 144A under the Securities Act in reliance
on Rule 144A. Pursuant to the Purchase Agreement, the Company and the Initial
Purchasers entered into the Registration Rights Agreement, pursuant to which
the Company agreed, for the benefit of the holders of the Original Preferred
Stock, (i) to use its reasonable best efforts to file a registration statement
(the "Exchange Offer Registration Statement," of which this Prospectus is a
part) with respect to an offer to exchange the Original Preferred Stock for
fixed rate noncumulative senior perpetual preferred stock of the Company, with
terms substantially the same as those of the Original Preferred Stock, within
150 days after the date of original issuance of the Original Preferred Stock
and (ii) to use its reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act within 180
days after such issue date. Promptly after the Exchange Offer Registration
Statement has been declared effective under the Securities Act, the Company
agreed to offer the Exchange Preferred Stock for the Original Preferred Stock.
The Company will keep the Exchange Offer open until the Expiration Date. For
each share of Original Preferred Stock validly tendered to the Company
pursuant to the Exchange Offer and not withdrawn by the holder thereof, such
holder will receive a share of Exchange Preferred Stock having a liquidation
preference equal to the liquidation preference of the tendered Exchange
Preferred Stock.
RESALE OF EXCHANGE PREFERRED STOCK
Based on existing interpretations of the Securities Act by the staff of the
Commission set forth in several no-action letters issued to third-parties, the
Company believes that, except as described below, any Exchange Preferred Stock
issued pursuant to the Exchange Offer in exchange for Original Preferred Stock
may be offered for resale, resold and otherwise transferred by any holder
thereof (other than a holder which is an "affiliate" of the Company within the
meaning of Rule 405 of the Securities Act) without further compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Preferred Stock has been acquired in the ordinary
course of such holder's business and such holder is not engaged in, does not
intend to engage in, and has no arrangement or understanding with any person
to participate in, the distribution of such Exchange Preferred Stock. Any
holder who is an affiliate of the Company or who tenders in the Exchange Offer
with the intention or for the purpose of participating in a distribution of
the Exchange Preferred Stock or who is a broker-dealer who purchased Original
Preferred Stock from the Company to resell pursuant to Rule 144A under the
Securities Act (i) cannot rely on the interpretation of the staff of the
Commission set forth in the above-mentioned no-action letters, (ii) will not
be entitled to tender Original Preferred Stock and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Original Preferred Stock, unless
such sale or transfer is made pursuant to an exemption from such requirements.
Each broker-dealer that receives Exchange Preferred Stock in exchange for
Original Preferred Stock acquired for its own account as a result of market-
making activities or other trading activities (other than Original Preferred
Stock acquired directly from the Company) (a "Participating Broker-Dealer")
must acknowledge that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such Exchange Preferred
Stock. The Letter of Transmittal states that a broker-dealer will not, by so
acknowledging and by delivering a prospectus, be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of Exchange Preferred
Stock. The Company has agreed that, for a period of 180 days after the
Exchange Offer Registration Statement is declared effective by the Commission,
it will make this Prospectus available to any Participating Broker-Dealer for
use in connection with any such resale. See "Plan of Distribution."
19
<PAGE>
Each holder of the Original Preferred Stock who wishes to exchange such
Original Preferred Stock for Exchange Preferred Stock in the Exchange Offer
will be required to make certain representations, including representations
that (i) any Exchange Preferred Stock acquired by it will be obtained in the
ordinary course of its business, (ii) it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any person
to participate in, the distribution of the Exchange Preferred Stock, and (iii)
it is not an "affiliate" of the Company within the meaning of Rule 405 of the
Securities Act. In addition, in connection with any resales of Exchange
Preferred Stock, any Participating Broker-Dealer who acquired the Original
Preferred Stock for its own account as a result of market-making activities or
other trading activities must deliver a prospectus meeting the requirements of
the Securities Act. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Preferred Stock (other than a resale of an unsold allotment
from the original sale of the Original Preferred Stock) with this Prospectus.
Under the Registration Rights Agreement, the Company is required to allow
Participating Broker-Dealers and other persons, if any, subject to similar
prospectus delivery requirements to use this Prospectus in connection with the
resale of Exchange Preferred Stock for a period not exceeding 180 days after
the Exchange Offer Registration Statement is declared effective by the
Commission.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept for exchange any and
all Original Preferred Stock validly tendered and not withdrawn prior to 5:00
p.m., New York City time, on the Expiration Date. The Company will issue a
share of Exchange Preferred Stock in exchange for each share of outstanding
Original Preferred Stock surrendered pursuant to the Exchange Offer. Holders
may tender all or some of their Original Preferred Stock pursuant to the
Exchange Offer. The Exchange Offer is not conditioned upon any minimum
aggregate number of shares of Original Preferred Stock being tendered for
exchange.
The form and terms of the Exchange Preferred Stock will be substantially the
same as the form and terms of the Original Preferred Stock, except the
Exchange Preferred Stock will be registered under the Securities Act and,
therefore, will not bear legends restricting their transfer and will not
contain provisions regarding minimum unit size, the payment of Additional
Dividends or registration rights. The registration rights under the
Registration Rights Agreement will terminate when the Exchange Offer is
consummated. The Exchange Preferred Stock will be issued under, and entitled
to the benefits of, the New Certificate of Designation.
This Prospectus, together with the Letter of Transmittal, will only be sent
to registered holders of the Original Preferred Stock. As of the date of this
Prospectus, 1,500,000 shares of the Original Preferred Stock are outstanding
and registered in the name of Cede & Co., as nominee for DTC. There will be no
fixed record date for determining registered holders of Original Preferred
Stock entitled to participate in the Exchange Offer.
Holders of the Original Preferred Stock do not have appraisal or dissenters'
rights under the General Corporation Law of Delaware or the Original
Certificate of Designation in connection with the Exchange Offer. The Company
intends to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the Exchange
Act, and the rules and regulations of the Commission thereunder. Original
Preferred Stock which is not tendered for exchange in the Exchange Offer will
remain outstanding and continue to accrue dividends, if declared, and will be
entitled to the rights and benefits such holders have under the Original
Certificate of Designation and the Registration Rights Agreement.
The Company shall be deemed to have accepted for exchange validly tendered
Preferred Stock when, as and if the Company shall have given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act as agent for
the tendering holders for the purpose of receiving the Exchange Preferred
Stock from the Company. The Company expressly reserves the right to amend or
terminate the Exchange Offer, and not to accept for exchange any Original
Preferred Stock not theretofore accepted for exchange, upon the occurrence of
any of the conditions specified below under "--Certain Conditions to the
Exchange Offer."
20
<PAGE>
In all cases, issuance of Exchange Preferred Stock for Original Preferred
Stock that is accepted for exchange pursuant to the Exchange Offer will be
made only after timely receipt by the Exchange Agent of (i) certificates
representing Original Preferred Stock or a timely Book-Entry Confirmation (as
defined herein) of such Original Preferred Stock into the Exchange Agent's
account at DTC, as the case may be, (ii) a properly completed and duly
executed Letter of Transmittal, and (iii) all other required documents. If any
tendered Original Preferred Stock is not accepted for exchange for any reason
set forth in the terms and conditions of the Exchange Offer or if Original
Preferred Stock is submitted for a greater number of shares than the holder
desires to exchange, such unaccepted or non-exchanged Original Preferred Stock
will be returned without expense to the tendering holder thereof (or, in the
case of Original Preferred Stock tendered by book-entry transfer into the
Exchange Agent's account at DTC, pursuant to the book-entry transfer
procedures described below under "--Book-Entry Transfer", such non-exchanged
Original Preferred Stock will be credited to an account maintained with DTC)
as promptly as practicable after the expiration or termination of the Exchange
Offer.
Holders who tender Original Preferred Stock in the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of Original Preferred Stock pursuant to the Exchange Offer. The
Company will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the Exchange Offer. See
"--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date," shall mean 5:00 p.m., New York City time on
January 9, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. The Expiration Date
shall not in any event be extended to a date later than June 8, 1998 (150 days
after the initial Expiration Date).
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders of Original Preferred Stock an announcement thereof, each
prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting for exchange any Original Preferred Stock, to extend the Exchange
Offer or to terminate the Exchange Offer if any of the conditions set forth
below under "--Certain Conditions to the Exchange Offer" shall not have been
satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written
notice thereof to the registered holders of Original Preferred Stock. If the
Exchange Offer is amended in a manner determined by the Company to constitute
a material change, the Company will promptly disclose such amendment by means
of a prospectus supplement that will be distributed to the registered holders,
and the Company will extend the Exchange Offer for a period of five to 10
business days, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to 10 business day period.
DIVIDENDS ON THE EXCHANGE PREFERRED STOCK
Cash dividends on the Exchange Preferred Stock will be noncumulative and, if
declared, will be payable quarterly on February 15, May 15, August 15 and
November 15 of each year at a rate of 6.687% of the liquidation preference
thereof, or $6.687 per share, per annum. If dividends are declared for the
period from and including November 15, 1997 through and including February 14,
1998, holders of the Exchange Preferred Stock will receive dividends on
February 15, 1998 from the date of initial issuance of the Exchange Preferred
Stock, plus an amount equal to the declared and accrued, but unpaid, dividends
on the Original Preferred Stock to the date of exchange thereof. Dividends
declared on the Original Preferred Stock accepted for exchange will cease
21
<PAGE>
to accrue upon issuance of the Exchange Preferred Stock in exchange therefor.
The amount of dividends payable in respect of the Exchange Preferred Stock
will be adjusted in the event of certain amendments to the Code in respect of
the dividends received deduction. See "Description of the Exchange Preferred
Stock--Dividends."
PROCEDURES FOR TENDERING
Only a registered holder of Original Preferred Stock may tender such
Original Preferred Stock in the Exchange Offer. To tender in the Exchange
Offer, a holder must complete, sign and date the Letter of Transmittal, or
facsimile thereof, have the signature thereon guaranteed if required by the
Letter of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile, and any other required documents, to the
Exchange Agent. In addition, either (i) certificates for Original Preferred
Stock must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-
Entry Confirmation") of such Original Preferred Stock, if such procedure is
available, into the Exchange Agent's account at DTC pursuant to the procedure
for book-entry transfer described below under "--Book-Entry Transfer" must be
received by the Exchange Agent, or (iii) the holder must comply with the
guaranteed delivery procedures described below. See "--Guaranteed Delivery
Procedures." To be tendered effectively, the Letter of Transmittal and all
other required documents must be received by the Exchange Agent at the address
set forth below under "--Exchange Agent" prior to 5:00 p.m., New York City
time, on the Expiration Date.
A tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
THE METHOD OF DELIVERY OF ORIGINAL PREFERRED STOCK, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT SHALL BE AT
THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL
PREFERRED STOCK SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR OTHER
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Original Preferred Stock is registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact the registered holder promptly and
instruct such registered holder of Original Preferred Stock to tender on such
beneficial owner's behalf. If such beneficial owner wishes to tender on such
its own behalf, such beneficial owner must, prior to completing and executing
the Letter of Transmittal and delivering such beneficial owner's Original
Preferred Stock, either make appropriate arrangements to register ownership of
the Original Preferred Stock in such beneficial owner's name or obtain a
properly completed stock power from the registered holder of Original
Preferred Stock. Any such transfer of registered ownership may take
considerable time and may not be completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as
defined below) unless the Original Preferred Stock tendered pursuant thereto
is tendered (i) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. In
the event that signatures on a Letter Transmittal or a notice of withdrawal,
as the case may be, are required to be guaranteed, such guarantor must be (a)
a member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., (b) a commercial bank or trust
company having an office or correspondent in the United States or (c) an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act which is a member of one of the recognized signature guarantee
programs identified in the Letter of Transmittal (each, an "Eligible
Institution").
22
<PAGE>
If the Letter of Transmittal is signed by a person other than the registered
holder of any Original Preferred Stock listed therein, such Original Preferred
Stock must be endorsed or accompanied by a properly completed stock power,
signed by such registered holder as such registered holder's name appears on
such Original Preferred Stock with the signature thereon guaranteed by an
Eligible Institution.
If the Letter of Transmittal or any Original Preferred Stock or stock powers
are signed by trustees, executors, administrators, guardians, attorneys-in-
fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Preferred Stock and withdrawal of
tendered Original Preferred Stock will be determined by the Company in its
sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject any and all Original Preferred Stock not
validly tendered or any Original Preferred Stock the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Original Preferred Stock. The Company's
interpretation of the terms and conditions of the Exchange Offer (including
the instructions in the Letter of Transmittal) will be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of Original Preferred Stock must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Original Preferred Stock,
neither the Company, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Original Preferred
Stock will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Original Preferred Stock
received by the Exchange Agent that is not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
by the Exchange Act to the tendering holders, unless otherwise provided in the
Letter of Transmittal, as soon as practicable following the Expiration Date.
By tendering, each holder will represent to the Company, among other things,
that (i) the Exchange Preferred Stock to be acquired by the holder pursuant to
the Exchange Offer is being obtained in the ordinary course of its business,
(ii) the holder is not engaged in, does not intend to engage in, and has no
arrangement or understanding with any person to participate in, any
distribution of such Exchange Preferred Stock and (iii) the holder is not an
"affiliate" of the Company within the meaning of Rule 405 of the Securities
Act. Each Participating Broker-Dealer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Preferred Stock. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Original Preferred Stock at The Depository Trust Company ("DTC") for
purposes of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in DTC's
system may make book-entry delivery of Original Preferred Stock by causing DTC
to transfer such Original Preferred Stock into the Exchange Agent's account at
DTC in accordance with DTC's procedures for transfer. However, although
delivery of Original Preferred Stock may be effected through book-entry
transfer at DTC, the Letter of Transmittal or facsimile thereof, with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at the address set
forth below under
- --Exchange Agent" on or prior to the Expiration Date or, if the guaranteed
delivery procedures described below are to be complied with, within the time
period provided under such procedures. Delivery of documents to DTC does not
constitute delivery to the Exchange Agent.
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GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Preferred Stock and (i) whose
certificates representing Original Preferred Stock are not immediately
available, (ii) who are unable to complete the procedure for book-entry
transfer on a timely basis, or (iii) who are unable to deliver their
certificates representing Original Preferred Stock, the Letter of Transmittal
or any other required documents to the Exchange Agent prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Original Preferred Stock or the name and number of the holder's
account at DTC, as the case may be, and the number of shares of Original
Preferred Stock tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with certificate(s) representing the Original Preferred Stock in
proper form for transfer or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Original Preferred Stock in proper form for transfer or a Book-Entry
Confirmation, as the case may be, and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within three New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Original Preferred Stock according to
the guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Preferred Stock may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be received by the Exchange Agent at its address set forth
below under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having tendered the Original Preferred Stock to be withdrawn, (ii)
identify the Original Preferred Stock to be withdrawn (including the number of
shares of such Original Preferred Stock and certificate number(s) or, in the
case of Original Preferred Stock transferred by book-entry transfer, the name
and number of the account at DTC to be credited, (iii) specify the name in
which such Original Preferred Stock is to be registered, if different from
that of the withdrawing holder, and (iv) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Old Preferred was tendered (including any signature guarantees) or be
accompanied by documents of transfer sufficient to have the transfer of such
Original Preferred Stock into the name of the person withdrawing the tender.
If certificates for Original Preferred Stock have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution, unless such holder is an
Eligible Institution. If Original Preferred Stock has been tendered pursuant
to the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawn Original Preferred Stock and otherwise comply with
the procedures of DTC. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Original
Preferred Stock so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Original
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Preferred Stock which has been tendered for exchange but which is not
exchanged for any reason will be returned to the holder thereof without cost
to such holder (or, in the case of Original Preferred Stock tendered by book-
entry transfer into the Exchange Agent's account at DTC pursuant to the book-
entry transfer procedures described above under "--Book-Entry Transfer", such
Original Preferred Stock will be credited to an account maintained with DTC
for the Original Preferred Stock) as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Original Preferred Stock may be retendered by following one of the procedures
described under "--Procedures for Tendering Original Preferred Stock" above at
any time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange any Exchange Preferred Stock
for, any Original Preferred Stock, and may terminate the Exchange Offer as
provided herein before the acceptance of any Original Preferred Stock for
exchange, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the Company's sole judgment, might materially impair the ability
of the Company to proceed with the Exchange Offer, or any material adverse
development has occurred in any existing action or proceeding with respect
to the Company, which development might, in the Company's sole judgment,
materially impair the ability of the Company to proceed with the Exchange
Offer;
(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the
Staff of the Commission, which, in the Company's sole judgment, might
materially impair the ability of the Company to proceed with the Exchange
Offer;
(c) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby; or
(d) any change, or development involving a prospective change, in the
business or financial affairs of the Company has occurred which, in the
Company's sole judgment, might materially impair the ability of the Company
to proceed with the Exchange Offer.
If the Company determines, in its sole discretion, that any of these
conditions are not satisfied, the Company may (i) refuse to accept any
Original Preferred Stock and return all tendered Original Preferred Stock to
the tendering holders, (ii) extend the Exchange Offer and retain all Original
Preferred Stock tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Original Preferred
Stock (see "--Withdrawal of Tenders"), or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Original Preferred Stock which has not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclosure such waiver by means of a prospectus supplemental that will be
distributed to the registered holders, and the Company will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the registered
holders, if the Exchange Offer would expire during such five to 10 business
day period.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company, in whole or in part, at any
time and from time to time in its sole discretion. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Original Preferred
Stock tendered, and no Exchange Preferred Stock will be issued in exchange for
any such Original Preferred Stock, if at such time any stop order shall be
threatened or in effect with respect to the Registration Statement.
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EXCHANGE AGENT
BankBoston, N.A. has been appointed as Exchange Agent of the Exchange Offer.
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for the Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Overnight Courier, Hand Delivery or Registered or Certified Mail:
BankBoston, N.A.
c/o Boston EquiServe L.P.
Attn: Corporate Reorganization
150 Royall Street
Canton, Massachusetts 02021
By Facsimile:
(617) 575-2233
Confirm by Telephone:
(617) 575-3400
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telephone or in person by officers and employees of the Company
and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-dealers or others
soliciting acceptances of the Exchange Offer. The Company will, however, pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$100,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Original Preferred Stock pursuant to the Exchange Offer. If, however,
certificates representing Original Preferred Stock for shares not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of Original Preferred Stock
tendered, or if tendered Original Preferred Stock is registered in the name of
any person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Original
Preferred Stock pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment
of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
ACCOUNTING TREATMENT
The Exchange Preferred Stock will be recorded at the same carrying value as
the Original Preferred Stock, which is face value, as reflected in the
Company's accounting records on the date that the Exchange Offer is
consummated. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company.
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CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary, and holders of Original
Preferred Stock should carefully consider whether to accept the terms and
conditions thereof. Holders of the Original Preferred Stock are urged to
consult their own financial and tax advisors in making their decisions as to
what actions to take with respect to the Exchange Offer.
Original Preferred Stock which is not exchanged for Exchange Preferred Stock
pursuant to the Exchange Offer will remain outstanding, continue to accrue
dividends (if declared) and continue to be subject to the restrictions on
transfer under the Securities Act, as set forth in the legends thereon, as a
consequence of the issuance of the Original Preferred Stock pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws.
Accordingly, such Original Preferred Stock may only be resold (i) to the
Company, (ii) to a "qualified institutional buyer" within the meaning of Rule
144A of the Securities Act pursuant to Rule 144A, (iii) to an institutional
"accredited investor" within the meaning of Rule 501(a) (1), (2), (3) or (7)
of the Securities Act, (iv) outside the United States to non-U.S. persons in
compliance with Regulation S of the Securities Act, (v) pursuant to an
effective registration statement, or (vi) pursuant to any other available
exemption from the registration requirements of the Securities Act, in each
case in accordance with any applicable state securities laws. The Company does
not currently anticipate that it will register the Original Preferred Stock
under the Securities Act. Holders of Original Preferred Stock not tendered in
the Exchange Offer will not retain any registration rights under the
Registration Rights Agreement.
DESCRIPTION OF THE EXCHANGE PREFERRED STOCK
The following is a description of the terms of the Exchange Preferred Stock.
This description does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Delaware General Corporation
Law (the "DGCL"), the Company's Amended and Restated Certificate of
Incorporation, as amended (the "Restated Certificate"), and the New
Certificate of Designation, which will be filed with the Secretary of State of
the State of Delaware as part of the Restated Certificate upon consummation of
the Exchange Offer and a copy of which has been filed as an exhibit to the
Registration Statement. The Restated Certificate has been filed with, and is
available from, the Commission.
GENERAL
The Restated Certificate authorizes the Company to issue 22,000,000 shares
of capital stock, of which 1,999,000 shares shall be designated preferred
stock, no par value per share ("Junior Preferred Stock"), 20,000,000 shares
shall be designated senior preferred stock, $.01 par value per share ("Senior
Preferred Stock" and, together with the Junior Preferred Stock, "Preferred
Stock") and 1,000 shares shall be designated common stock, $.025 par value per
share ("Common Stock"). As of September 15, 1997, there were 6,600,000 shares
of Preferred Stock authorized and issued or reserved for issuance as follows:
5,000,000 shares of Series A Preferred Stock, a series of Senior Preferred
Stock, 1,500,000 shares of Original Preferred Stock, a series of Senior
Preferred Stock, and 100,000 shares of NW Preferred Stock, a series of Junior
Preferred Stock. As of September 15, 1997, 5,000,000 shares of Series A
Preferred Stock, 1,500,000 shares of Original Preferred Stock, no shares of NW
Preferred Stock and 105 shares of Common Stock were issued and outstanding.
All outstanding shares of Common Stock and Preferred Stock are fully paid and
nonassessable, and shares of Exchange Preferred Stock will, upon the Company's
acceptance of shares of Original Preferred Stock in exchange therefor,
likewise be fully paid and nonassessable.
Under the Restated Certificate, the Board of Directors of the Company may
provide for the issuance of Senior or Junior Preferred Stock in one or more
series from time to time, and the rights, preferences, privileges and
restrictions, including dividend rights, voting rights, conversion rights,
terms of redemption and liquidation preferences, of the Senior or Junior
Preferred Stock of each series will be fixed or designated by the Board of
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Directors pursuant to a certificate of designation without any further vote or
action by the Company's stockholders, except that without the vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, the Company shall not (i) issue, from any class or series of stock now
existing or to be created in the future, any shares of stock ranking senior to
the outstanding shares of Series A Preferred Stock as to the payment of
dividends and upon liquidation or (ii) amend the Restated Certificate or the
Company's By-laws, as amended, if such amendment would increase or decrease
the aggregate number of authorized shares of Series A Preferred Stock,
increase or decrease the par value of the shares of Series A Preferred Stock
or alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect the holders of the Series A Preferred Stock
adversely.
The Original Preferred Stock constitutes, and the Exchange Preferred Stock
will constitute, a separate series, consisting of 1,500,000 shares, of the
Senior Preferred Stock. The Original Preferred Stock ranks, and the Exchange
Preferred Stock will, on the date of original issue, rank, on a parity in all
respects with each other outstanding series of the Senior Preferred Stock and
will rank senior in all respects to the Common Stock. No shares of Junior
Preferred Stock are currently outstanding nor will be outstanding upon
consummation of this offering. See "Description of Other Preferred Stock" and
"Description of Common Stock" below.
DIVIDENDS
Holders of shares of the Exchange Preferred Stock will be entitled to
receive cash dividends, as, if and when declared by the Board of Directors of
the Company or a duly authorized committee thereof out of assets of the
Company legally available for payment, at the rate of 6.687% of the
liquidation preference of the Exchange Preferred Stock, or $6.687 per share,
per annum. Dividends on the Exchange Preferred Stock will not be cumulative.
The amount of dividends payable for any period shorter than a full quarterly
dividend period will be calculated on the basis of a 360-day year consisting
of twelve 30-day months. Dividends will be payable to the holders of record at
the close of business on such record date, which shall not be less than five
nor more than 50 days (whether or not a business day) preceding the Dividend
Payment Date (as defined below), as shall be fixed by the Board of Directors
of the Company or a duly authorized committee thereof. Dividends on the
Exchange Preferred Stock will be payable quarterly, as, if and when declared
by the Board of Directors of the Company or a duly authorized committee
thereof on February 15, May 15, August 15 and November 15 of each year (each a
"Dividend Payment Date"). Holders whose Original Preferred Stock is accepted
for exchange will receive declared and accrued, but unpaid, dividends thereon,
if any, to, but not including, the date of issuance of the Exchange Preferred
Stock, such dividends to be payable with the first dividend payment on the
Exchange Preferred Stock, but will not receive any payment in respect of
dividends on the Original Preferred Stock declared and accrued after the
issuance of the Exchange Preferred Stock.
The right of holders of Exchange Preferred Stock to receive dividends is
noncumulative. Accordingly, if the Board of Directors of the Company fails to
declare a dividend on the Exchange Preferred Stock payable on a Dividend
Payment Date, then holders of the Exchange Preferred Stock will have no right
to receive a dividend in respect of the dividend period ending on such
Dividend Payment Date, and the Company will have no obligation to pay any
dividend accrued for such period, whether or not dividends on the Exchange
Preferred Stock are declared payable on any future Dividend Payment Date.
When dividends are not paid in full upon the Exchange Preferred Stock and
any other series of Senior Preferred Stock ranking on a parity as to dividends
with the Exchange Preferred Stock, all dividends declared upon shares of the
Exchange Preferred Stock and any other series of Senior Preferred Stock
ranking on a parity as to dividends shall be declared pro rata so that the
amount of dividends declared per share on the Exchange Preferred Stock and
such other Senior Preferred Stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the Exchange Preferred Stock
for the then-current dividend period (without accumulation of accrued and
unpaid dividends for prior dividend periods unless previously declared) and
such other Senior Preferred Stock bear to each other. Except as provided in
the preceding sentence, unless full dividends for the then-current dividend
period (without accumulation of accrued and unpaid dividends for prior
dividend periods unless previously declared) on the Exchange Preferred Stock
have been, or contemporaneously
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are, paid, or declared and a sum sufficient for the payment thereof has been
or is set apart for such payment, no dividends (other than in Common Stock,
Junior Preferred Stock or any other stock of the Company ranking junior to the
Exchange Preferred Stock as to dividends and upon liquidation) shall be
declared or paid or set aside for payment, nor shall any other distribution be
made on the Common Stock, Junior Preferred Stock or any other stock of the
Company ranking junior to or on a parity with the Exchange Preferred Stock as
to dividends or upon liquidation, nor shall any Common Stock, Junior Preferred
Stock or any other stock of the Company ranking junior to or on a parity with
the Exchange Preferred Stock as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (nor shall any moneys be
paid to, or made available for, a sinking fund for the redemption of any
shares of any such stock) by the Company (except by conversion into or
exchange for stock of the Company ranking junior to the Exchange Preferred
Stock as to dividends and upon liquidation).
Changes in the Dividends Received Percentage
If one or more amendments to the Internal Revenue Code of 1986, as amended
(the "Code"), are enacted that reduce the percentage of the dividends received
deduction (currently 70%) as specified in Section 243(a)(1) of the Code or any
successor provision (the "Dividends Received Percentage"), the amount of each
dividend payable (if declared) per share of the Exchange Preferred Stock for
dividend payments made on or after the effective date of such change shall be
increased by multiplying the amount of the dividend payable described above
(before adjustment) by a factor which shall be the number determined in
accordance with the following formula (the "DRD Formula"), and rounding the
result to the nearest cent (with one-half cent rounded up):
1 - [.35 (1 - .70)]
---------------
1 - [.35 (1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question; provided, however, that if
the Dividends Received Percentage applicable to the dividend in question is
less than 50%, then the DRP will equal .50. No amendment to the Code, other
than a change in the percentage of the dividends received deduction set forth
in Section 243(a)(1) of the Code or any successor provision will give rise to
an adjustment. Notwithstanding the foregoing provisions, in the event that,
with respect to any such amendment, the Company shall receive either (i) an
unqualified opinion of independent recognized tax counsel based upon the
legislation amending or establishing the DRP or upon a published pronouncement
of the Internal Revenue Service (the "IRS") addressing such legislation or
(ii) a private letter ruling or similar form of assurance from the IRS, in
either case to the effect that such an amendment would not apply to dividends
payable on the Exchange Preferred Stock, then any such amendment shall not
result in the adjustment provided for pursuant to the DRD Formula. Unless the
context otherwise requires, references to dividends in this Prospectus shall
mean dividends as adjusted by the DRD Formula. The Company's calculation of
the dividends payable, as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified public
accountants then regularly engaged by the Company, shall be final and not
subject to review.
If any amendment to the Code which reduces the Dividends Received Percentage
is enacted after a dividend payable on a Dividend Payment Date has been
declared but before such dividend has been paid, the amount of dividends
payable on such Dividend Payment Date will not be increased, but instead, an
amount, equal to the excess, if any, of (x) the product of the dividends paid
by the Company on such Dividend Payment Date and the DRD Formula (where the
DRP used in the DRD Formula would be equal to the greater of the reduced
Dividends Received Percentage and .50) over (y) the dividends paid by the
Company on such Dividend Payment Date, will be payable (if declared) on the
next succeeding Dividend Payment Date to holders of the Exchange Preferred
Stock on the record date applicable to such succeeding Dividend Payment Date,
in addition to any other amounts payable on such Dividend Payment Date.
In addition, if an amendment to the Code is enacted that reduces the
Dividends Received Percentage and such reduction retroactively applies to a
Dividend Payment Date as to which the Company previously paid dividends on
shares of the Exchange Preferred Stock (each an "Affected Dividend Payment
Date"), the
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Company will pay (if declared) additional dividends (the "Retroactive
Dividends") on the next succeeding Dividend Payment Date (or if such amendment
is enacted after the dividend payable on such Dividend Payment Date has been
declared, on the second succeeding Dividend Payment Date following the date of
enactment) to holders of the Exchange Preferred Stock on the record date
applicable to such succeeding Dividend Payment Date, in an amount equal to the
excess, if any, of (x) the product of the dividends paid by the Company on
each Affected Dividend Payment Date and the DRD Formula (where the DRP used in
the DRD Formula would be equal to the greater of the reduced Dividends
Received Percentage and .50, applied to each Affected Dividend Payment Date)
over (y) the dividends paid by the Company on each Affected Dividend Payment
Date.
Retroactive Dividends will not be paid in respect of the enactment of any
amendment to the Code if such amendment would not result in an adjustment due
to the Company having received either an opinion of counsel or tax ruling
referred to in the third preceding paragraph. The Company will only make one
payment of Retroactive Dividends.
In the event that the amount of dividend payable per share of the Exchange
Preferred Stock shall be adjusted pursuant to the DRD Formula and/or
Retroactive Dividends are to be paid, the Company will cause notice of each
such adjustment and, if applicable, any Retroactive Dividends to be sent to
the holders of the Exchange Preferred Stock.
See "Certain Federal Income Tax Consequences" for a discussion of certain
Proposals (as defined herein) to reduce the Dividends Received Percentage.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of shares of Exchange Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made on the
Common Stock, the Junior Preferred Stock or any other class or series of stock
of the Company ranking junior to the Exchange Preferred Stock upon
liquidation, liquidating distributions in the amount of $100.00 per share,
plus an amount equal to the sum of all accrued and unpaid dividends (whether
or not earned or declared) on such shares for the then-current dividend period
to the date of final distribution (without accumulation of accrued and unpaid
dividends for prior dividend periods unless previously declared). If, upon any
voluntary or involuntary dissolution, liquidation or winding up of the
Company, the amounts payable with respect to the Exchange Preferred Stock and
any other shares of stock of the Company ranking as to any such distribution
on a parity with the Exchange Preferred Stock are not paid in full, the
holders of the Exchange Preferred Stock and of such other shares will share
ratably in any such distribution of assets of the Company in proportion to the
full respective distributable amounts to which they are entitled. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the Exchange Preferred Stock will not be entitled to
any further participation in any distribution of assets by the Company.
Neither the sale of all or substantially all of the property or business of
the Company nor the merger or consolidation of the Company into or with any
other corporation shall be deemed to be a dissolution, liquidation or winding
up, voluntary or involuntary, of the Company.
REDEMPTION
The Exchange Preferred Stock is not redeemable prior to August 15, 2007. On
and after such date, the Exchange Preferred Stock is redeemable in cash at the
option of the Company, in whole or in part, from time to time upon not less
than 30 nor more than 60 days' notice, at a redemption price of $100.00 per
share, plus accrued and unpaid dividends (whether or not earned or declared)
for the then-current dividend period to the redemption date (without
accumulation of accrued and unpaid dividends for prior dividend periods unless
previously declared), including any dividends payable due to changes in the
Dividends Received Percentage and Retroactive Dividends. The Exchange
Preferred Stock will not be entitled to the benefits of any sinking fund.
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If fewer than all of the outstanding shares of the Exchange Preferred Stock
are to be redeemed, the number of shares to be redeemed will be determined by
the Board of Directors of the Company and the shares to be redeemed will be
determined by lot or pro rata as determined by the Board of Directors of the
Company or by any other method determined by the Board to be equitable.
Notwithstanding the foregoing, if dividends for the then-current dividend
period to the redemption date (without accumulation of accrued and unpaid
dividends for prior dividend periods unless previously declared) have not been
declared and paid or set apart for payment on all outstanding shares of the
Exchange Preferred Stock, no shares of the Exchange Preferred Stock shall be
redeemed unless all outstanding shares of Exchange Preferred Stock are
simultaneously redeemed, and the Company shall not purchase or otherwise
acquire any shares of Exchange Preferred Stock; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of the
Exchange Preferred Stock pursuant to a tender or exchange offer made on the
same terms to all holders of the Exchange Preferred Stock and mailed to the
holders of record of the Exchange Preferred Stock at such holders' addresses
as the same appear on the stock register of the Company; and provided,
further, that if some, but less than all, of the shares of the Exchange
Preferred Stock are to be purchased or otherwise acquired pursuant to such
tender or exchange offer and the number of shares so tendered exceeds the
number of shares so to be purchased or otherwise acquired by the Company, the
shares of the Exchange Preferred Stock tendered will be purchased or otherwise
acquired by the Company on a pro rata basis (with adjustments to eliminate
fractions) according to the number of such shares tendered by each holder
tendering shares of the Exchange Preferred Stock.
Notice of redemption shall be given by mailing the same to each record
holder of the shares of the New Preferred to be redeemed, not less than 30 nor
more than 60 days prior to the date fixed for redemption thereof, to the
respective addresses of such holders as the same shall appear on the stock
register of the Company. Each such notice shall state: (i) the redemption
date; (ii) the number of shares to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for such shares of Exchange
Preferred Stock are to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue or
accumulate on such redemption date. If fewer than all shares of the Exchange
Preferred Stock held by any holder are to be redeemed, the notice mailed to
such holder shall also specify the number of shares to be redeemed from such
holder.
If notice of redemption has been given, dividends on the shares of Exchange
Preferred Stock so called for redemption shall cease to accrue or accumulate
from and after the redemption date for the shares of the Exchange Preferred
Stock called for redemption (unless default shall be made by the Company in
providing funds for the payment of the redemption price of the shares so
called for redemption), and such shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Company (except the right to receive the redemption price) shall cease. Upon
surrender in accordance with such notice of the certificates representing any
shares of the Exchange Preferred Stock so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Company shall so
require and the notice shall so state), the redemption price set forth above
shall be paid out of funds provided by the Company. The Company's obligation
to provide funds in accordance with the preceding sentence will be deemed
fulfilled if, on or before 12:00 noon, Chicago time on the date fixed for
redemption, the Company irrevocably deposits with a paying agent (which may be
an affiliate of the Company) (a "Paying Agent"), which shall be a bank or
trust company organized and in good standing under the laws of the United
States, the State of Illinois or the State of New York, and having capital,
surplus and undivided profits aggregating at least $10,000,000, funds
necessary for such redemption, including any accrued and unpaid dividends to
the redemption date, with irrevocable instructions and authorization that such
funds be applied to the redemption of the shares of Exchange Preferred Stock
called for redemption upon surrender of certificates for such shares (properly
endorsed or assigned for transfer). BankBoston, N.A. will initially serve as
the Paying Agent. If fewer than all of the shares of the Exchange Preferred
Stock represented by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
See "--Transfer Agent, Registrar and Paying Agent."
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VOTING RIGHTS
Except as indicated below or except as expressly required by applicable law,
the holders of the Exchange Preferred Stock will not be entitled to vote.
If dividends payable on any share or shares of the Exchange Preferred Stock
or on any other class or series of Senior Preferred Stock for which dividends
are noncumulative ("Noncumulative Preferred Stock") ranking on a parity with
the Exchange Preferred Stock and upon which like voting rights have been
conferred and are exercisable (excluding any class or series of Noncumulative
Preferred Stock entitled to elect additional directors by a separate vote,
"Voting Preferred Stock") have not been paid or declared and set aside for
payment for the equivalent of six full quarterly dividend periods (whether or
not consecutive), the number of directors of the Company will be increased by
two (without duplication of any increase made pursuant to the terms of any
other class or series of Voting Preferred Stock), and the holders of the
Exchange Preferred Stock, voting as a single class with the holders of the
Voting Preferred Stock, will be entitled to elect such two directors to fill
such newly-created directorships. Such right of the holders of the Exchange
Preferred Stock and the Voting Preferred Stock shall continue until dividends
on the Exchange Preferred Stock and the Voting Preferred Stock have been paid
or declared and set apart for payment regularly for at least one year (i.e.,
four consecutive full quarterly dividend periods). Any such elected directors
shall serve until the Company's next annual meeting of stockholders and until
their respective successors are elected and qualified (notwithstanding that
prior to the end of such term the dividend default shall cease to exist).
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Exchange Preferred Stock will be required for any
amendment, alteration or repeal of any provisions of the Restated Certificate,
of the Certificate of Designation or of any other certificate amendatory of or
supplemental to the Restated Certificate which would adversely affect the
powers, preferences, privileges or rights of the Exchange Preferred Stock. The
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Exchange Preferred Stock and any other series of
Noncumulative Preferred Stock ranking on a parity with the Exchange Preferred
Stock either as to dividends or upon liquidation, voting as a single class
without regard to series, will be required to issue, authorize or increase the
authorized amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of stock ranking prior to the Exchange Preferred Stock as to dividends
or upon liquidation, or to reclassify any authorized stock of the Company into
such prior shares, but such vote will not be required for the Company to take
any such actions with respect to any stock ranking on a parity with or junior
to the Exchange Preferred Stock. See "--General" above and "Description of
Other Preferred Stock--Series A Preferred Stock" below for a discussion of
certain voting rights of the Series A Preferred Stock.
Subject to such affirmative vote or consent of the holders of the
outstanding shares of the Exchange Preferred Stock, the Company may, by
resolution of its Board of Directors or as otherwise permitted by law, from
time to time alter or change the preferences, rights or powers of the Exchange
Preferred Stock. Nothing in this section shall be taken to require a class
vote or consent in connection with the authorization, designation, increase or
issuance of any shares of any class or series (including additional Exchange
Preferred Stock) ranking junior to or on a parity with the Exchange Preferred
Stock as to dividends and liquidation rights or in connection with the
authorization, designation, increase or issuance of any bonds, mortgages,
debentures or other obligations of the Company.
PREEMPTIVE AND CONVERSION RIGHTS
No holder of the Exchange Preferred Stock will have any preemptive right to
purchase or subscribe for any other shares, rights, options or other
securities of the Company which at any time may be sold or offered for sale by
the Company. The Exchange Preferred Stock is not convertible into shares of
any other class or series of the capital stock of the Company.
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TRANSFER AGENT, REGISTRAR AND PAYING AGENT
The transfer agent, registrar, dividend disbursing agent, paying agent and
redemption agent for the Exchange Preferred Stock is BankBoston, N.A. (the
"Transfer Agent" or "Paying Agent").
DESCRIPTION OF THE ORIGINAL PREFERRED STOCK
The terms of the Original Preferred Stock are substantially similar in all
material respects to those of the Exchange Preferred Stock, except that the
Original Preferred Stock is not registered under the Securities Act and,
therefore, bears legends restructuring their transfer under the Securities Act
and contains provisions regarding minimum unit size, the payment of Additional
Dividends and registration rights. See "Original Preferred Stock Registration
Rights." A copy of the Original Certificate of Designation has been filed
with, and is available from, the Commission.
DESCRIPTION OF OTHER PREFERRED STOCK
The following summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the DGCL, the Restated Certificate
and the Certificate of Designation, Preferences and Rights relating to the
Series A Preferred Stock. Such Certificate of Designation, Preferences and
Rights has been filed with, and is available from, the Commission.
SERIES A PREFERRED STOCK
The Series A Preferred Stock has an annual dividend rate of 8.125%.
Dividends are cumulative and payable quarterly. The Company is prohibited from
declaring or paying cash dividends on Common Stock, Junior Preferred Stock or
other series of Senior Preferred Stock on parity with the Series A Preferred
Stock, including the Exchange Preferred Stock and the Original Preferred
Stock, unless full cumulative dividends on all outstanding shares of Series A
Preferred Stock for all past dividend periods have been paid. The Series A
Preferred Stock is not redeemable prior to September 22, 2000. On or after
that date, the Series A Preferred Stock will be redeemable at the option of
the Company, in whole or in part, at a redemption price of $25 per share, plus
accrued and unpaid dividends. Except as required by law and as set forth
herein, the holders of Series A Preferred Stock have no voting rights. In case
the Company shall be in arrears in the payment of six consecutive quarterly
dividends on the outstanding Series A Preferred Stock, the holders of Series A
Preferred Stock, voting separately as a class and in addition to any voting
rights that holders of the Series A Preferred Stock shall have as required by
law, shall have the exclusive right to elect two additional directors beyond
the number to be elected by the stockholders at the next annual meeting of the
stockholders called for the election of directors, and at every subsequent
such meeting at which the terms of office of the directors so elected by the
Series A Preferred Stock expire, provided such arrearage exists on the date of
such meeting or subsequent meetings, as the case may be. Any such elected
directors shall serve until the dividend default shall cease to exist. In
addition, without the vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, the Company shall not (i)
issue, from any class or series of stock now existing or to be created in the
future, any shares of stock ranking senior to the outstanding shares of Series
A Preferred Stock as to the payment of dividends and upon liquidation or (ii)
amend the Restated Certificate or the Company's By-laws, as amended, if such
amendment would increase or decrease the aggregate number of authorized shares
of Series A Preferred Stock, increase or decrease the par value of the shares
of Series A Preferred Stock or alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect the holders of
the Series A Preferred Stock adversely. The Series A Preferred Stock carries a
liquidation preference of $25 per share, plus accrued and unpaid dividends.
The Series A Preferred Stock ranks senior with respect to payment of dividends
and liquidation preferences to the Common Stock and Junior Preferred Stock.
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NW PREFERRED STOCK
The Company has authorized the issuance of 100,000 shares of NW Preferred
Stock pursuant to the Keep Well Agreement wherein, among other things, Fuji
Bank has agreed to purchase NW Preferred Stock in an amount required to
maintain the Company's net worth at $500 million. The Company's net worth was
approximately $1.5 billion at December 31, 1996. If and when issued, the NW
Preferred Stock will have an annual dividend rate equal to 1% per annum above
the three-month rate at which deposits in United States dollars are offered by
The Fuji Bank, Limited in London, England to prime banks in the London
interbank market. Dividends on the NW Preferred Stock will be noncumulative
and payable (if declared) quarterly, and the Company will be prohibited from
paying cash dividends on the Common Stock unless full dividends for the then-
current dividend period (without accumulation of accrued and unpaid dividends
for prior dividend periods unless previously declared) on all outstanding
shares of NW Preferred Stock have been declared and paid or declared and a sum
sufficient set aside for such payment. Subject to certain conditions, NW
Preferred Stock will be redeemable at the option of the holder, in whole or in
part, within a specified period of time after the end of a calendar quarter in
an aggregate amount not greater than the excess of the net worth of the
Company as of the end of such calendar quarter over $500 million and at a
redemption price equal to the price paid to the Company upon the issuance
thereof, plus accrued and unpaid dividends for the then-current dividend
period (without accumulation of accrued and unpaid dividends for prior
dividend periods unless previously declared). Except as required by law, the
holders of NW Preferred Stock will have no voting rights. The NW Preferred
Stock will carry a liquidation preference equal to the price paid for each
share upon issuance thereof, plus accrued and unpaid dividends for the then-
current dividend period (without accumulation of accrued and unpaid dividends
for prior dividend periods unless previously declared). The NW Preferred Stock
will rank senior with respect to payment of dividends and liquidation
preference to the Common Stock and junior to the Senior Preferred Stock,
including the Exchange Preferred Stock and the Original Preferred Stock. No
purchases of NW Preferred Stock have been made by Fuji Bank under the Keep
Well Agreement.
DESCRIPTION OF COMMON STOCK
The following summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the DGCL and the Restated
Certificate.
All outstanding shares of the Common Stock are held by the Parent. Subject
to the rights of holders of the Senior and Junior Preferred Stock, including
any Preferred Stock offered hereby, the holders of outstanding shares of
Common Stock are entitled to share ratably in dividends declared out of assets
legally available therefor at such time and in such amounts as the Board of
Directors of the Company may from time to time lawfully determine. Each holder
of Common Stock is entitled to one vote for each share held. All shares of
Common Stock currently outstanding are fully paid and nonassessable, not
subject to redemption and assessment and without conversion, preemptive or
other rights to subscribe for or purchase any proportionate part of any new or
additional issues of any class or of securities convertible into stock of any
class.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Exchange Preferred Stock and payments thereon are generally subject to
taxation by the United States and other taxing jurisdictions to the same
extent and in the same manner as stock of and payments thereon by any other
corporation. The following summary addresses some of the U.S. federal income
tax consequences that may result from the exchange of Original Preferred Stock
for Exchange Preferred Stock and the ownership of the Exchange Preferred Stock
by a U.S. person who holds the Exchange Preferred Stock as a capital asset.
For this purpose, a U.S. person is an individual who is a citizen or resident
of the United States for federal income tax purposes, a corporation,
partnership or other type of entity organized under the laws of the United
States or any political subdivision thereof, an estate whose income is subject
to U.S. federal income tax regardless of its
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source, or a trust if a court within the United States is able to exercise
primary supervision of the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust. THIS DISCUSSION DOES NOT PURPORT TO ADDRESS ALL RULES WHICH MAY
APPLY TO THOSE WHO TENDER ORIGINAL PREFERRED STOCK IN THE EXCHANGE OFFER.
PROSPECTIVE TENDERORS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSIDERATIONS APPLICABLE TO AN
INVESTMENT IN THE EXCHANGE PREFERRED STOCK.
This discussion reflects current federal income tax laws and regulations and
administrative and judicial interpretations thereof. Changes to any of these
subsequent to the date of this Prospectus may affect the tax consequences
described herein.
EXCHANGE OF ORIGINAL PREFERRED STOCK FOR EXCHANGE PREFERRED STOCK
Under current U.S. federal income tax law, the exchange of Original
Preferred Stock for Exchange Preferred Stock pursuant to the Exchange Offer
should not be a taxable event to a stockholder because the Exchange Preferred
Stock will be by operation of the original terms of the Original Preferred
Stock, pursuant to a unilateral act by the Company and will not result in any
material alteration in the terms of the Original Preferred Stock. If a holder
of Original Preferred Stock exchanges Original Preferred Stock for Exchange
Preferred Stock pursuant to the Exchange Offer, such Exchange Preferred Stock
will have the same adjusted tax basis and holding period as such Original
Preferred Stock immediately prior to the exchange.
DIVIDENDS
Current Law
Distributions on the Exchange Preferred Stock which are paid out of current
earnings and profits, or earnings and profits accumulated after 1984,
generally constitute dividends taxable as ordinary income. To the extent that
the amount of any distribution paid on a share of Exchange Preferred Stock
exceeds the current or accumulated earnings and profits for federal income tax
purposes attributable to that share, such excess will be treated first as a
return of capital (rather than as ordinary income) and will be applied against
and reduce the holder's adjusted tax basis in that share of Exchange Preferred
Stock. Any such amount in excess of the holder's adjusted tax basis will then
be taxed as capital gain. For purposes of the remainder of this discussion, it
is assumed that dividends paid on the Exchange Preferred Stock will constitute
dividends for U.S. federal income tax purposes.
Dividends received by corporations generally will be eligible for the
dividends received deduction as specified in Section 243(a)(1) of the Code.
The dividends received deduction generally is available only with respect to a
dividend received on stock held for more than 45 days during the 90-day period
beginning 45 days before and ending 44 days after the date on which the stock
becomes ex-dividend with respect to such dividend. In the case of a preferred
dividend attributable to a period aggregating in excess of 366 days, the
dividends received deduction is available only with respect to a dividend
received on stock held for more than 90 days during the 180-day period
beginning 90 days before and ending 89 days after the date on which the stock
becomes ex-dividend with respect to such dividend. For these purposes, a
stockholder is deemed to own stock on the day it is sold, but not on the day
it is acquired.
The length of time that a corporate stockholder is deemed to have held stock
for these purposes does not include any period during which the stockholder's
risk of loss with respect to the stock is diminished by reason of the
existence of certain options, contracts to sell, short sales or other similar
transactions. The Taxpayer Reform Act of 1997, which was signed into law on
August 5, 1997, contains a complex set of rules that may limit the
availability of the dividends received deduction for corporate stockholders
who have diminished or who plan to diminish their risk of loss with respect to
either the Original Preferred Stock or the Exchange Preferred Stock. Such
stockholders should consult their own tax advisors regarding the availability
of the dividends received deduction with respect to any dividends paid on the
Exchange Preferred Stock.
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The amount of the dividends received deduction generally will equal 70
percent of the amount of the dividends received, subject to reduction in
certain events, including where a holder has indebtedness outstanding that is
directly attributable to an investment in the Exchange Preferred Stock. For
this purpose, indebtedness of a depository institution attributable to
deposits received in the ordinary course of its business is not treated as
indebtedness directly attributable to an exchange of the Original Preferred
Stock for the Exchange Preferred Stock.
For purposes of the corporate alternative minimum tax, alternative minimum
taxable income is increased by 75% of the amount by which a corporation's
adjusted current earnings exceeds it alternative minimum taxable income prior
to the addition of the applicable tax preference item. The amount of any
dividend that is included in a corporate stockholder's adjusted current
earnings will not be reduced by any dividends received deduction otherwise
allowable with respect to that dividend.
Recent Proposals
On February 6, 1997, the Clinton Administration submitted to Congress a
proposed fiscal 1998 budget. This proposed budget contained certain tax
proposals (the "Proposals") which, if enacted, could have adversely affect
holders of the Exchange Preferred Stock. Under the Proposals, the 70%
dividends received deduction generally available to corporate shareholders, as
discussed above under "Current Law," would have been reduced from 70 percent
to 50 percent for dividends paid or accrued after the 30th day after the date
of enactment of the provision.
The Proposals were not enacted and were not included in the fiscal 1998
budget signed into law, or in any tax legislation signed into law as of the
date of this Registration Statement. However, it is impossible to predict
whether the Proposals will be enacted in the future, either in their original
form or in some other form.
DISPOSITIONS, INCLUDING REDEMPTIONS
Any sale, exchange, redemption or other disposition of the Exchange
Preferred Stock, except in the case of an exchange pursuant to the Exchange
Offer (see "--Exchange of Original Preferred Stock for Exchange Preferred
Stock"), generally will result in taxable gain or loss equal to the difference
between the amount received and the stockholder's adjusted tax basis in the
Exchange Preferred Stock. Such gain or loss generally will be capital gain or
loss and will be long-term capital gain or loss if the holding period for the
Exchange Preferred Stock which includes the holding period for the Original
Preferred Stock exceeds one year.
A redemption of Exchange Preferred Stock may be treated as a dividend,
rather than as payment in exchange for the Exchange Preferred Stock, unless
the redemption is "not essentially equivalent to a dividend" with respect to
the holder within the meaning of Section 302(b)(1) of the Code. In applying
this standard, the holder must take into account not only the Exchange
Preferred Stock and other stock of the Company that it owns directly, but also
the Exchange Preferred Stock and other stock of the Company that it
constructively owns within the meaning of Section 318 of the Code. A
redemption payment made to a holder will be "not essentially equivalent to a
dividend" if it results in a "meaningful reduction" in the holder's aggregate
stock interest in the Company. Because of the ambiguities in applying this
rule, each holder should consult its tax advisor to determine whether a
redemption of Exchange Preferred Stock will be treated as a dividend or as
payment in exchange for the Exchange Preferred Stock. If the redemption
payment were treated as a dividend, the rules discussed above under
"Dividends" apply.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments of dividends on shares of Exchange Preferred Stock held of record
by U.S. persons other than corporations and other exempt holders are required
to be reported to the IRS.
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BACKUP WITHHOLDING
Unless a holder provides its correct taxpayer identification number
(employer identification number or social security number) to the Company and
certifies that such number is correct and that such holder is not subject to
backup withholding, a holder may be subject to backup withholding of U.S.
federal income tax at a 31% rate on payments received with respect to the
Exchange Preferred Stock, including payments of proceeds from the sale of
Exchange Preferred Stock. Therefore, each holder should complete and sign the
Substitute Form W-9 included with the Letter of Transmittal so as to provide
the information and certification necessary to avoid backup withholding.
Certain holders (including, among others, corporations and foreign individuals
who comply with certain certification requirements) are not subject to such
backup withholding. Holders should consult their tax advisors for further
information concerning backup withholding and instructions for completing the
Substitute Form W-9 (including how to obtain a taxpayer identification number
if you do not have one and how to complete the Substitute Form W-9) and to
find out whether they are qualified for exemption from backup withholding.
Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
ORIGINAL PREFERRED STOCK REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company has agreed for
the benefit of holders of the Original Preferred Stock (i) to use its
reasonable best efforts to file with the Commission, within 150 days after the
initial issuance of the Original Preferred Stock, an Exchange Offer
Registration Statement under the Securities Act relating to the Exchange Offer
for the Exchange Preferred Stock, which will have terms substantially the same
as the Original Preferred Stock (except that the Exchange Preferred Stock will
be registered under the Securities Act and, therefore, not bear legends
restricting their transfer under the Securities Act and will not contain
provisions regarding minimum unit size, the payment of Additional Dividends or
registration rights) and (ii) to use its reasonable best efforts to cause such
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 180 days after the initial issuance of the Original
Preferred Stock. The Registration Statement is intended to serve as the
Exchange Offer Registration Statement. Promptly after the Exchange Offer
Registration Statement has been declared effective, the Company will offer the
Exchange Preferred Stock in exchange for surrender of the Original Preferred
Stock. The Company will keep the Exchange Offer open until the Expiration
Date. For each share of Original Preferred Stock validly tendered to the
Company pursuant to the Exchange Offer and not validly withdrawn by the holder
thereof, the holder of such share of Original Preferred Stock will receive a
share of Exchange Preferred Stock having a liquidation preference equal to the
liquidation preference of the tendered Exchange Preferred Stock.
If in the reasonable opinion of counsel to the Company there is a question
as to whether the Exchange Offer is permitted by applicable law, the Company
will seek its own no-action letter from the Commission's Staff allowing the
Company to consummate the Exchange Offer. There can be no assurance that the
Commission's Staff would make a similar determination with respect to the
Exchange Offer as it has in other no-action letters to third parties. See "The
Exchange Offer--Resale of Exchange Preferred Stock" and "Plan of
Distribution."
If, (a) because of any change in law or in the applicable interpretations of
the Commission's Staff, the Company is not permitted to effect the Exchange
Offer, or (b) any holder of Original Preferred Stock that is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
or an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act shall notify the Company
within 20 business days after the consummation of the Exchange Offer (i) that
such holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, (ii) that such holder may not resell the
Exchange Preferred Stock to the public without a prospectus and that this
Prospectus is not appropriate or available for such resales, or (iii) that
such holder is a broker-dealer and holds Original Preferred
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Stock acquired directly from the Company or one of its affiliates, or (c) for
any reason the Exchange Offer Registration Statement is not declared effective
within 180 days of the initial issuance of the Original Preferred Stock, then
in addition to or in lieu of effecting the registration of the Exchange
Preferred Stock pursuant to the Exchange Offer Registration Statement, the
Company will (i) promptly deliver to the holders written notice thereof and
(ii) at the Company's sole expense, (x) as promptly as practicable, use its
reasonable best efforts to file a shelf registration covering resales of the
Original Preferred Stock (the "Shelf Registration Statement"), (y) use its
reasonable best efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act and (z) use its reasonable best
efforts to keep effective the Shelf Registration Statement until the earlier
of two years (or such shorter period as may hereafter be provided in Rule
144(k) under the Securities Act, or similar successor role) after the initial
issuance of the Original Preferred Stock, or such time as all of the
applicable Original Preferred Stock has been sold thereunder or otherwise
ceased to be registrable securities within the meaning of the Registration
Rights Agreement. The Company will, in the event that a Shelf Registration
Statement is filed, notify each such holder when the Shelf Registration
Statement for the Original Preferred Stock has become effective and take
certain other actions as are required to permit unrestricted resales of the
Original Preferred Stock. A holder that sells Original Preferred Stock
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are
applicable to such a holder (including certain indemnification rights and
obligations). In addition, each holder of Original Preferred Stock will be
required to deliver information to be used in connection with the Shelf
Registration Statement in order to have its Original Preferred Stock included
in the Shelf Registration Statement.
Each share of Original Preferred Stock contains a legend to the effect that
the holder thereof, by its acceptance thereof, is deemed to have agreed to be
bound by the provisions of the Registration Rights Agreement. In that regard,
each holder is deemed to have agreed that, upon receipt of notice from the
Company of the occurrence of any event which makes any statement of a material
fact in the prospectus which is part of the Shelf Registration Statement (or,
in the case of Participating Broker-Dealers, this Prospectus) untrue or which
requires the making of any changes in the prospects which is a part of the
Shelf Registration Statement or this Prospectus in order to make the
statements therein or herein not misleading, such holder (or Participating
Broker-Dealer, as the case may be) will suspend the sale of Original Preferred
Stock pursuant to such prospectus until the Company has amended or
supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented prospectus to such holder (or
Participating Broker-Dealer, as the case may be) or the Company has given
notice that the sale of the Exchange Preferred Stock may be resumed, as the
case may be.
If (a) the Exchange Offer Registration Statement or the Shelf Registration
Statement required by the Registration Rights Agreement has not been filed
with the Commission on or prior to the date specified for such filing in the
Registration Rights Agreement, (b) the Exchange Offer Registration Statement
or the Shelf Registration Statement has not been declared effective by the
Commission on or prior to the date specified for such effectiveness in the
Registration Rights Agreement, (c) the Exchange Offer has not been consummated
within 30 business days after the date specified for effectiveness of the
Exchange Offer Registration Statement or (d) if applicable, the Shelf
Registration Statement has been filed and declared effective and at any time
prior to the second anniversary (or such shorter period as may hereafter be
provided in Rule 144(k) under the Securities Act, or similar successor rule)
of the initial issuance of the Original Preferred Stock (other than after such
time as all shares of Original Preferred Stock have been disposed of
thereunder or ceased to be registrable securities under the Registration
Rights Agreement) ceases to be effective, or fails to be usable for its
intended purpose without being succeeded within two business days by a post-
effective amendment to such registration statement that cures such failure and
that is itself immediately declared effective (each such event referred to in
clauses (a) through (d), a "Registration Default"), then, as liquidated
damages, additional dividends (the "Additional Dividends") shall be payable
(if declared) by the Company on the Original Preferred Stock at a rate of
0.25% of the liquidation preference thereof, or $0.25 per share, per annum;
provided, however, that the Additional Dividends rate on the Original
Preferred Stock will not exceed, in the aggregate, 0.25% of the
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liquidation preference thereof, or $0.25 per share, per annum; and provided,
further, that upon the cure of all Registration Defaults or upon the
expiration of two years (or such shorter period as may hereafter be provided
in Rule 144(k) under the Securities Act (or similar successor rule))
commencing on the date of the initial issuance of the Original Preferred
Stock, Additional Dividends on the liquidation amount of the Original
Preferred Stock shall cease to accrue.
Any Additional Dividends payable as described above will be payable (if
declared) in cash on February 15, May 15, August 15 and November 15 of each
year, together with the dividends otherwise payable in respect of the Original
Preferred Stock.
The Registration Rights Agreement is governed by, and construed in
accordance with, the laws of the State of New York. The summary herein of
certain provisions of the Registration Rights Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Registration Rights Agreement, a copy of which has
been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. In addition, the information set forth above concerning
certain interpretations of, and positions taken by, the Commission's staff is
not intended to constitute legal advice, and prospective investors should
consult their own legal advisors with respect to such matters.
BOOK-ENTRY ISSUANCE
The Exchange Preferred Stock initially will be represented by one or more
certificates in registered, global form (collectively, the "Global
Securities"). The Global Securities will be deposited upon issuance with, or
on behalf of, DTC, in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the Global Securities may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Securities may not be
exchanged for Exchange Preferred Stock in certificated form except in the
limited circumstances described below. See "--Exchange of Book-Entry
Securities for Certificated Securities."
In addition, transfer of beneficial interests in the Global Securities will
be subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, those of Euroclear System
("Euroclear") and Cedel Bank, societe anonyme ("CEDEL"), which may change from
time to time.
DEPOSITARY PROCEDURES
General
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic book-
entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Company that, pursuant to procedures established by
it, (i) upon deposit of the Global Securities, DTC will credit the accounts of
Participants who have beneficial interests represented by such
39
<PAGE>
Global Securities with portions of the shares represented by of the Global
Securities and (ii) ownership of such interests in the Global Securities will
be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to the other
owners of beneficial interests in the Global Securities).
Investors in the Global Securities may hold their interests therein through
DTC if they are Participants in such system, or indirectly through
organizations (including Euroclear and CEDEL) which are Participants in such
system. All interests in a Global Security, including those held through
Euroclear or CEDEL, may be subject to the procedures and requirements of DTC.
Those interests held through Euroclear or CEDEL may also be subject to the
procedures and requirements of such system. The laws of some states require
that certain persons take physical delivery in certificated form of securities
that they own. Consequently, the ability to transfer beneficial interests in a
Global Security to such persons will be limited to that extent. Because DTC
can act only on behalf of Participants, which in turn act on behalf of
Indirect Participants and certain banks, the ability of a person having
beneficial interests in a Global Security to pledge such interests to persons
or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests. For certain other restrictions
on the transferability of the Global Securities, see "--Exchange of Book-Entry
Securities for Certificated Securities."
Except as described below, owners of interests in the Global Securities will
not have Exchange Preferred Stock registered in their name, will not receive
physical delivery of Exchange Preferred Stock in certificated form and will
not be considered the registered owners or holders thereof for any purpose.
Payments in respect of the Global Securities registered in the name DTC or
its nominee will be payable by the Company through the Paying Agent to DTC in
its capacity as the registered holder. The Company will treat the persons in
whose names the Exchange Preferred Stock, including the Global Securities, are
registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Company nor any agent thereof has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to, or payments made on account of beneficial
ownership interests in, the Global Securities, or for maintaining, supervising
or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Company that its current practice, upon receipt of any payment in
respect of securities such as the Exchange Preferred Stock, is to credit the
accounts of the relevant Participants with the payment on the payment due
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of the Exchange Preferred Stock will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility
of DTC or the Company. The Company will not be liable for any delay by DTC or
any of its Participants in identifying the beneficial owners of the Exchange
Preferred Stock, and the Company may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear or CEDEL participants, interests
in the Global Securities will trade in DTC's Same-Day Funds Settlement System,
and secondary market trading activity in such interests will therefore settle
in immediately available funds, subject in all cases to the rules and
procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable in the
Exchange Preferred Stock described herein, cross-market transfers between the
Participants in DTC, on the one hand, and Euroclear or CEDEL participants, on
the other hand, will be effected through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL, as the case may be, by its respective
depositary; however, such cross-market transactions
40
<PAGE>
will require delivery of instructions to Euroclear or CEDEL, as the case may
be, by the counterpart in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such
system. Euroclear or CEDEL, as the case may be, will, if the transaction meets
its settlement requirements, deliver instructions to its respective depositary
to take action to effect final settlement on its behalf by delivering or
receiving interests in the relevant Global Securities in DTC, and making or
receiving payment in accordance with normal procedures of same-day funds
settlement applicable to DTC. Euroclear participants and CEDEL participants
may not deliver instructions directly to the depositaries for Euroclear or
CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a Global Security from a
Participant in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or CEDEL participant, during the securities
settlement processing day (which must be a business day for Euroclear and
CEDEL) immediately following the settlement date of DTC. Cash received in
Euroclear or CEDEL as a result of sales of interests in a Global Security by
or through a Euroclear or CEDEL participant to a Participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or CEDEL cash account only as of the business day for
Euroclear or CEDEL following DTC's settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of the Exchange Preferred Stock only at the direction of one
or more Participants to whose account with DTC interests in the Global
Securities are credited. However, DTC reserves the right to exchange the
Global Securities for the Exchange Preferred Stock in certificated form and to
distribute such Exchange Preferred Stock to its Participants.
Exchange of Book-Entry Securities for Certificated Securities
A Global Security is exchangeable for Exchange Preferred Stock in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depositary for the Global Security and the Company
thereupon fails to appoint a successor depositary or (y) has ceased to be a
clearing agency registered under the Exchange Act, or (ii) the Company in its
sole discretion elects to cause the issuance of the Exchange Preferred Stock
in certificated form. In addition, beneficial interests in a Global Security
may be exchanged for certificated Exchange Preferred Stock upon request, but
only upon at least 20 days' prior written notice given to the Company by or on
behalf of DTC in accordance with customary procedures. In all cases,
certificated Exchange Preferred Stock delivered in exchange for any Global
Security or beneficial interests therein will be registered in the names, and
issued in any approved denominations, requested by or on behalf of the
depositary (in accordance with its customary procedures).
The information in this section concerning DTC, Euroclear and CEDEL, and
their book-entry systems, has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures to
facilitate transfers of interest in the Global Securities among Participants
in DTC, Euroclear and CEDEL, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued
at any time. The Company will have no responsibility for the performance by
DTC, Euroclear or CEDEL or their respective Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
41
<PAGE>
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the Commission set forth in several
no-action letters issued to third parties, the Company believes that Exchange
Preferred Stock issued pursuant to the Exchange Offer in exchange for the
Original Preferred Stock may be offered for resale, resold and otherwise
transferred by holders thereof (other than any holder which is an "affiliate"
of the Company within the meaning of Rule 405 of the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Preferred Stock is acquired in the
ordinary course of such holders' business, and such holders are not engaged
in, and do not intend to engage in, and have no arrangement or understanding
with any person to participate in, a distribution of such Exchange Preferred
Stock. Participating Broker-Dealers will be subject to a prospectus delivery
requirement with respect to any resales of Exchange Preferred Stock received
pursuant to the Exchange Offer. To date, the Commission's staff has taken the
position that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to transactions involving an exchange of
securities such as the exchange pursuant to the Exchange Offer (other than a
resale of an unsold allotment from the sale of the Original Preferred Stock to
the Initial Purchasers) with this Prospectus contained in the Exchange Offer
Registration Statement. Pursuant to the Registration Rights Agreement, the
Company has agreed to permit Participating Broker-Dealers and other persons,
if any, subject to similar prospectus delivery requirements to use this
Prospectus in connection with the resale of such Exchange Preferred Stock. The
Company has agreed that, for a period of 180 days after the effective date of
the Exchange Offer Registration Statement, it will make this Prospectus, and
any amendment or supplement to this Prospectus, available to any Participating
Broker-Dealer that requests such documents in the Letter of Transmittal.
Each holder of the Original Preferred Stock who wishes to exchange its
Original Preferred Stock for Exchange Preferred Stock in the Exchange Offer
will be required to make certain representations to the Company as set forth
in "The Exchange Offer--Terms and Conditions of the Letter of Transmittal." In
addition, each holder who is a Participating Broker-Dealer will be required to
acknowledge that it will deliver a prospectus in connection with any resale by
it of such Exchange Preferred Stock.
The Company will not receive any proceeds from any sale of Exchange
Preferred Stock by Participating Broker-Dealers. Exchange Preferred Stock
received by Participating Broker-Dealers for their own account pursuant to the
Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing
of options on the Exchange Preferred Stock or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related
to such prevailing market prices or at negotiated prices. Any such resale may
be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
Participating Broker-Dealer and/or the purchasers of any such Exchange
Preferred Stock. Any Participating Broker-Dealer that resells Exchange
Preferred Stock that was received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Preferred Stock may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of Exchange
Preferred Stock and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that a Participating Broker-Dealer will
not, by acknowledging that it will deliver and by delivering a prospectus, be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The Company has agreed to pay all expenses incidental to the Exchange Offer,
other than commissions and concessions of any brokers or dealers or other
expenses of holders in connection with the resales of Exchange Preferred
Stock, and will indemnify the Initial Purchasers and Participating Broker-
Dealers selling Exchange Preferred Stock against certain liabilities,
including liabilities under the Securities Act, as set forth in the
Registration Rights Agreement.
42
<PAGE>
LEGAL MATTERS
Certain legal matters regarding the validity of the Exchange Preferred Stock
offered hereby will be passed upon for the Company by Mark J. Ohringer, Esq.,
Associate General Counsel of the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements and schedules of the Company incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 and the financial statements of the Company for
the five years ended December 31, 1996 from which the five-year selected
financial data included in this Prospectus have been derived, have been
audited by Arthur Andersen LLP, independent public accountants, as stated in
their reports with respect thereto, and have been so included in reliance upon
the reports of such firm given upon their authority as experts in accounting
and auditing. The interim financial statements for the periods ended September
30, 1996 and September 30, 1997 have not been audited.
43
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEI-
THER THE DELIVERY OF THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMIT-
TAL NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IM-
PLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL DO
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OF-
FER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UN-
LAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 1
Documents Incorporated By Reference....................................... 1
Prospectus Summary........................................................ 2
Safe Harbor For Forward-Looking Statements................................ 9
The Company............................................................... 9
Capitalization............................................................ 16
Selected Financial Data................................................... 17
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges
and Preferred Stock Dividends............................................ 18
Use of Proceeds........................................................... 18
The Exchange Offer........................................................ 19
Description of the Exchange Preferred Stock............................... 27
Description of the Original Preferred Stock............................... 33
Description of Other Preferred Stock...................................... 33
Description of Common Stock............................................... 34
Certain Federal Income Tax Consequences................................... 34
Original Preferred Stock Registration Rights.............................. 37
Book-Entry Issuance....................................................... 39
Plan of Distribution...................................................... 42
Legal Matters............................................................. 43
Independent Public Accountants............................................ 43
</TABLE>
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
HELLER FINANCIAL, INC.
----------------
PROSPECTUS
----------------
OFFER TO EXCHANGE
FIXED RATE NONCUMULATIVE PERPETUAL SENIOR PREFERRED STOCK, SERIES C
FOR ALL OUTSTANDING FIXED RATE NONCUMULATIVE PERPETUAL SENIOR PREFERRED STOCK,
SERIES B
DECEMBER 10, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant, a Delaware corporation, is empowered by Section 145 of the
Delaware General Corporation Law, subject to the procedures and limitations
stated therein, to indemnify any person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in the defense of any threatened, pending or completed action,
suit or proceeding in which such person is made a party by reason of his being
or having been a director or officer of the Registrant. The statute provides
that indemnification pursuant to its provisions is not exclusive of other
rights of indemnification to which a person may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise. In
effect, the By-Laws of the Registrant provide for indemnification by the
Registrant of its directors and officers to the full extent permitted by the
Delaware General Corporation Law. Also, as permitted by the Delaware General
Corporation Law, the Registrant's Restated Certificate of Incorporation
eliminates the personal liability of each director of the Registrant to the
Registrant or its stockholders for monetary damages arising out of or
resulting from any breach of his fiduciary duty as a director, except where
such director breached his duty of loyalty to the Registrant or its
stockholders, failed to act in good faith, engaged in intentional misconduct
or a knowing violation of the law, paid an unlawful dividend, approved an
unlawful stock purchase or redemption, or obtained an improper personal
benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<C> <S>
4.1 Amended and Restated Certificate of Incorporation of the
Registrant, as amended, filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-3 (File No. 333-38545)
(the "Form S-3") and incorporated herein by reference.
4.2 By-laws of the Registrant, as amended, filed as Exhibit 3(ii) to
the Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1996 and incorporated herein by reference.
4.3 Certificate of Designation, Rights and Preferences for the
Original Preferred Stock, filed as Exhibit 3(i)(b) to the
Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1997 and incorporated herein by reference.
4.4* Certificate of Designation, Rights and Preferences for the
Exchange Preferred Stock.
4.5* Purchase Agreement dated as of June 11, 1997, among the
Registrant and the Initial Purchasers.
4.6* Registration Rights Agreement dated June 11, 1997, among the
Registrant and the Initial Purchasers.
4.7* Specimen Certificate for Exchange Preferred Stock.
4.8 Amended and Restated Keep Well Agreement between the Fuji Bank,
Limited and the Registrant, as amended, filed as Exhibit 28(a)
to the Registrant's Registration Statement on Form S-3 (File No.
33-51692), Exhibit 10 to the Registrant's Quarterly Report on
Form 10-Q for the period ended March 31, 1995 and Exhibit 10 to
the Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1997 and incorporated herein by reference.
5* Opinion of Mark J. Ohringer, Esq., Associate General Counsel of
the Registrant, as to the legality of the securities being
registered.
12 Computation of ratio of earnings to fixed charges, filed as
Exhibit 12 to the Form S-3 and incorporated herein by reference.
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
23.1 Consent of Arthur Andersen LLP, independent auditors.
23.2* Consent of Mark J. Ohringer, Esq. (contained in his opinion filed as Exhibit 5 hereto).
24* Power of Attorney (included on the signature page hereof).
99.1* Form of Letter of Transmittal for Exchange Preferred Stock.
99.2* Form of Notice of Guaranteed Delivery for Exchange Preferred Stock.
99.3* Form of Letter to Clients.
99.4* Form of Letter to The Depository Trust Company and other Registered Holders.
99.5* Guidelines for Certificate of Taxpayer Identification Number on Substitute Form W-9.
</TABLE>
- --------
*Previously filed as part of this Registration Statement.
(b) FINANCIAL STATEMENT SCHEDULES.
None.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
(5) Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(6) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it
became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF CHICAGO, STATE OF ILLINOIS ON THE 10TH OF DECEMBER, 1997.
Heller Financial, Inc.
*
By: _________________________________
Richard J. Almeida
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON DECEMBER 10, 1997.
SIGNATURE AND TITLE SIGNATURE AND TITLE
* *
_____________________________________ _____________________________________
Richard J. Almeida Tsutomu Hayano
Chairman, Chief Executive Officer Director
(Principal Executive Officer) and
Director
*
_____________________________________
Mark Kessel
*
_____________________________________ Director
Atsushi Takano
Director
*
_____________________________________
Masahiro Sawada
*
_____________________________________ Director
Yukihiko Chayama
Director
*
_____________________________________
Michael J. Litwin
*
_____________________________________ Director
Kenichi Tomita
Director
II-4
<PAGE>
SIGNATURE AND TITLE SIGNATURE AND TITLE
* *
_____________________________________ _____________________________________
Dennis P. Lockhart Hideo Nakajima
Director Director
* *
_____________________________________ _____________________________________
Lauralee E. Martin Kenichiro Tanaka
Executive Vice President,Chief Director
Financial Officer and Director
(Principal Financial Officer)
*
_____________________________________
Lawrence G. Hund
*
_____________________________________ Senior Vice President and Controller
Takeshi Takahashi (Principal Accounting Officer)
Director
*
_____________________________________
Osamu Ogura
Director
/s/ Mark J. Ohringer
*By: ___________________________
Mark J. Ohringer
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S> <C>
23.1 Consent of Arthur Andersen LLP, independent auditors.
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 24, 1997
(except with the matter discussed in Note 18, as to which the date is
February 5, 1997) included in Heller Financial, Inc.'s Form 10-K for the year
ended December 31, 1996 and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
December 8, 1997
