As filed with the Securities and Exchange Commission on February 21, 1995
Registration No. 33-56961 and 33-56961-01
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________
SUNAMERICA CAPITAL TRUST I SUNAMERICA INC.
(Exact name of Registrant as specified (Exact name of Registrant
in its charter) as specified in its charter)
Delaware Maryland
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
To Be Applied For 86-0176061
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1 SunAmerica Center 1 SunAmerica Center
Los Angeles, California 90067-6022 Los Angeles, California 90067-6022
(310) 772-6000 (310) 772-6000
(Address and telephone number (Address and telephone number
of principal executive offices) of principal executive offices)
Susan L. Harris, Esq.
Vice President and General Counsel - Corporate Affairs
SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Name, address and telephone number
of agent for service)
__________
Copies to:
David W. Ferguson, Esq. Gregg A. Noel, Esq.
Davis Polk & Wardwell Skadden, Arps, Slate, Meagher & Flom
450 Lexington Avenue 300 South Grand Avenue, Suite 3400
New York, New York 10017 Los Angeles, California 90071
(212) 450-4000 (213) 687-5000
__________
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of 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, check the following box: ( )
__________
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CALCULATION OF REGISTRATION FEE
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Proposed maximum
offering price per Proposed maximum Amount of
Title of each class of securities to be Amount to be Preferred aggregate offering registration
registered registered Security(1) price (1) fee
_________________________________________________________________________________________________________________________________
Preferred Securities of SunAmerica Capital
Trust and Junior Subordinated Debentures 5,500,000 Preferred
due 2044 of SunAmerica Inc.(2)............... Securities(3) $24.625 $135,437,500 $46,703.00(4)
_________________________________________________________________________________________________________________________________
Guarantee of SunAmerica Inc. with respect
to Preferred Securities of SunAmerica
Capital Trust I (5).......................... __ __ __ __
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(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(1) based on the average of the
high and low prices for SunAmerica Inc.'s 9-1/4% Preferred Stock, Series B on December 13, 1994.
(2) The Junior Subordinated Debentures will be deposited as trust assets of SunAmerica Capital Trust I. No separate
consideration will be received in respect of such deposit.
(3) To the extent participants in the Offer (as defined herein) elect not to participate in the Offer, the number of Preferred
securities issued will be reduced and the number of Junior Subordinated Debentures deposited with SunAmerica Capital Trust
col I as trust assets will be reduced commensurately.
(4) Previously paid.
(5) No separate consideration will be received for the SunAmerica Inc. Guarantee. Pursuant to Rule 457(a) no separate fee is
payable in respect of the SunAmerica Inc. Guarantee.
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The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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 this registration
statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may determine.
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CROSS REFERENCE SHEET
SUNAMERICA INC.
SUNAMERICA CAPITAL TRUST I
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
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CAPTION IN OFFERING
FORM S-4 ITEM NO. CIRCULAR/PROSPECTUS
_________________ ___________________
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus. . . . . . . . . . . Outside Front Cover Page; Inside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page; Available Information;
Incorporation of Certain Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information . . . . . . . . . . . . . . . . . Offering Circular/Prospectus Summary; Special
Considerations Relating to the Offer; SunAmerica;
SunAmerica Capital Trust I; Ratio of Earnings to Fixed
Charges; Selected Consolidated Financial Data
4. Terms of the Transaction. . . . . . . . . . . . . . . . The Offer; Description of the Preferred Securities;
Description of the Junior Subordinated Debentures;
Description of the Preferred Securities Guarantee; Taxation
5. Pro Forma Financial Information. . . . . . . . . . . Not Applicable
6. Material Contacts with the Company Being
Acquired. . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters. . . . . . . . . . . . . . . . . . . . . . . Not Applicable
.
8. Interests of Named Experts and Counsel. . . . . . Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. . . Not Applicable
10. Information with Respect to S-3 Registrants. . . . Not Applicable
11. Incorporation of Certain Information by
Reference. . . . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
14. Information with Respect to Registrants Other
than S-3 or S-2 Registrants. . . . . . . . . . . . . . Not Applicable
15. Information With Respect to S-3 Companies. . . . Not Applicable
16. Information with Respect to S-2 or S-3
Companies. . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies. . . . . . . . . . . . . . Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited. . . . . . . . . . Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer. . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
</TABLE>
SUBJECT TO COMPLETION, DATED FEBRUARY 21, 1995
OFFERING CIRCULAR/PROSPECTUS
SUNAMERICA CAPITAL TRUST I
OFFER TO EXCHANGE ITS
% TRUST ORIGINATED PREFERRED SECURITIES ("TOPrS")
(liquidation amount $25 per
Preferred Security and
guaranteed to the extent set forth herein
by SunAmerica Inc.)
FOR UP TO 5,500,000 OUTSTANDING SHARES OF
9 1/4% PREFERRED STOCK, SERIES B
OF
SUNAMERICA INC.
THE OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M. NEW YORK CITY TIME, ON MARCH , 1995,
UNLESS THE OFFER IS EXTENDED.
SunAmerica Capital Trust I, a Delaware business trust (the "Trust"),
hereby offers, upon the terms and subject to the conditions set forth in this
Offering Circular/Prospectus and the accompanying Letter of Transmittal (the
"Letter of Transmittal" which, together with this Offering
Circular/Prospectus, constitute the "Offer"), to exchange its % Trust
Originated Preferred Securities ("TOPrS") (the "Preferred Securities") for up
to 5,500,000 shares of outstanding 9 1/4% Preferred Stock, Series B (the
"Series B Preferred") of SunAmerica Inc., a Maryland corporation
("SunAmerica"). Exchanges will be made on the basis of one Preferred Security
for each share of Series B Preferred validly tendered and accepted for
exchange in the Offer. Shares of Series B Preferred not accepted for exchange
because of proration will be returned. Concurrently with the acceptance by
the Trust of Series B Preferred validly tendered in the Offer, SunAmerica will
deposit in the Trust as trust assets its % Junior Subordinated Debentures,
Series A, due 2044 (the "Junior Subordinated Debentures") having an aggregate
principal amount equal to the aggregate stated liquidation amount of the
Preferred Securities to be issued by the Trust.
Holders of Series B Preferred may participate in the Offer by
properly completing and signing the Letter of Transmittal and tendering their
shares of Series B Preferred as described in "The Offer -- Procedures for
Tendering" in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the Expiration Date (as defined herein). In
order to participate in the Offer, holders of Series B Preferred must submit a
Letter of Transmittal and comply with the other procedures for tendering in
accordance with the instructions contained herein and in the Letter of
Transmittal prior to the Expiration Date.
For a description of the other terms of the Offer, see "The
Offer -- Terms of the Offer"; "-- Expiration Date; Extensions; Amendments;
Termination"; "-- Withdrawal of Tenders" and "-- Acceptance of Shares and
Proration". The Trust expressly reserves the right to extend, amend or modify
the terms of the Offer, and not accept for exchange any Series B Preferred, at
any time prior to the Expiration Date (as defined herein) for any reason,
including (without limitation) if fewer than 2,810,000 shares of Series B
Preferred are tendered (which condition may be waived by SunAmerica and the
Trust). See "The Offer -- Expiration Date; Extensions; Amendments;
Termination".
The Preferred Securities evidence preferred undivided beneficial
interests in the assets of the Trust, a business trust formed under the laws
of the State of Delaware. SunAmerica will own directly all of the securities
(the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities") representing common undivided beneficial interests in the
assets of the Trust. The Trust exists for the sole purpose of issuing (i)
Preferred Securities in exchange for Series B Preferred validly tendered in
the Offer and in consideration for the deposit by SunAmerica of Junior
Subordinated Debentures in the Trust as trust assets and (ii) Common
Securities to SunAmerica and investing the proceeds thereof in an equivalent
amount of Junior Subordinated Debentures. The Preferred Securities and the
Common Securities will rank pari passu with each other and will have equivalent
terms; provided that if an Event of Default (as defined herein) with respect
to the Junior Subordinated Debentures occurs and is continuing, the holders of
Preferred Securities will have a preference over holders of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption and maturity.
Cash distributions on the Preferred Securities will be cumulative
from the first day following the Expiration Date (the "Accrual Date") at an
annual rate of % of the liquidation amount of $25 per Preferred Security,
and will be payable monthly in arrears on the last day of each month of each
year, commencing on the last day of the month in which the Expiration Date
occurs ("distributions"). Cash distributions in arrears for more than one
month will bear interest thereon at the rate per annum of % of the stated
liquidation amount of $25 per Preferred Security, compounded monthly. The
term "distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. In addition, holders of the
Preferred Securities will be entitled to an additional cash distribution at
the rate of 9 1/4% per annum of the liquidation amount thereof from March 15,
1995 through the Expiration Date in lieu of dividends accumulating after March
15, 1995 on their Series B Preferred accepted for exchange, such additional
distribution to be made at the time the first distribution on the Preferred
Securities is made. The payment of distributions out of moneys held by the
Property Trustee (as defined herein) and payments on liquidation of the Trust
and the redemption of Preferred Securities, as set forth below, are guaranteed
by SunAmerica on a subordinated basis as and to the extent described herein
(the "Preferred Securities Guarantee"). See "Description of the Preferred
Securities Guarantee". SunAmerica has the right from time to time to defer
the payment of interest on the Junior Subordinated Debentures for one or more
Extension Periods (as defined herein) at the end of each of which all accrued
and unpaid interest is required to be paid in full. If SunAmerica were not
to make interest payments on the Junior Subordinated Debentures, the Trust
will not make distributions on the Preferred Securities or the Common
Securities. The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the Preferred Securities, but does not
cover payment of distributions when the Trust does not have sufficient funds
to make such distributions. For a description of redemption rights with
respect to the Preferred Securities, the possible dissolution of the Trust and
distribution of Junior Subordinated Debentures held by the Trust to holders of
the Trust Securities and the liquidation amount on the Preferred Securities,
see "Risk Factors"; "Description of the Preferred Securities -- Optional
Redemption"; "-- Special Event Redemption or Distribution"; "-- Liquidation
Distribution Upon Dissolution" and "Description of the Junior Subordinated
Debentures".
The Junior Subordinated Debentures to be deposited in the Trust as
trust assets and held by the Property Trustee (as defined herein) for the
benefit of the holders of the Trust Securities will mature on
, 2044 and will bear interest at an annual rate of % of the
principal amount thereof from the Accrual Date. In addition, the Property
Trustee, as the owner and holder of the Junior Subordinated Debentures will be
entitled to interest at the rate of 9 1/4% per annum of the principal amount
thereof from March 15, 1995 through the Expiration Date, payable at the time
of the first interest payment on the Junior Subordinated Debentures. Interest
will be payable monthly in arrears on the last day of each month of each year,
commencing on the last day of the month in which the Expiration Date occurs;
provided that, so long as SunAmerica shall not be in default in the payment of
interest on the Junior Subordinated Debentures, SunAmerica shall have the
right to extend the interest payment period from time to time for a period not
exceeding 60 consecutive months (each, an "Extension Period"). Prior to the
termination of any such Extension Period, SunAmerica may further extend the
interest payment period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 60 consecutive
months. No interest shall be due and payable during an Extension Period, but
at the end of such Extension Period SunAmerica shall pay all interest then
accrued and unpaid on the Junior Subordinated Debentures, together with
interest thereon at the rate specified for the Junior Subordinated Debentures
to the extent permitted by applicable law, compounded monthly ("Compounded
Interest"). All references herein to interest shall include Compounded
Interest unless otherwise stated. During any such Extension Period,
SunAmerica may not declare or pay dividends on, or purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock
or preferred stock; provided that SunAmerica will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion of any
of its Series D Mandatory Conversion Premium Dividend Preferred Stock (the
"Series D Preferred Stock") in accordance with the terms of such stock. Upon
the termination of any Extension Period and the payment of all interest then
due, SunAmerica may commence a new Extension Period. SunAmerica may also
prepay at any time all or any portion of the interest accrued during an
Extension Period. Consequently, there could be multiple Extension Periods of
varying lengths (up to six Extension Periods of 60 consecutive months each or
more numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures. See "Risk Factors"; "Description of the Junior
Subordinated Debentures -- Interest" and "-- Option to Extend Interest Payment
Period".
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO
THE PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES THAT SHOULD BE
CONSIDERED BY INVESTORS, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND
UNDER WHICH PAYMENTS ON THE PREFERRED SECURITIES AND JUNIOR SUBORDINATED
DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
The Series B Preferred is listed and principally traded on the New
York Stock Exchange, Inc. (the "NYSE"). On December 19, 1994, the last full
day of trading prior to the first public announcement of the Offer, the
closing sales price of the Series B Preferred on the NYSE as reported on the
Composite Tape was $25 3/8 per share. The closing sales price of the Series B
Preferred on the NYSE on February 16, 1995 was
$26 1/8. Stockholders are urged to obtain current market quotations for the
Series B Preferred. To the extent that Series B Preferred is tendered and
accepted in the Offer, the terms on which untendered Series B Preferred could
subsequently be sold could be adversely affected. See "Listing and Trading of
Preferred Securities and Series B Preferred".
Application has been made to list the Preferred Securities on the
NYSE. In order to satisfy the NYSE listing requirements, acceptance of Series
B Preferred validly tendered in the Offer is subject to the condition that as
of the Expiration Date there be at least 400 record or beneficial holders of
Preferred Securities to be issued in exchange for such Series B Preferred,
which condition may not be waived by SunAmerica or the Trust.
Neither the board of directors of SunAmerica nor SunAmerica nor the
Trustees nor the Trust makes any recommendation to holders of Series B
Preferred as to whether to tender or refrain from tendering in the Offer.
Holders of Series B Preferred are urged to consult their financial and tax
advisors in making their decisions on what action to take in light of their
own particular circumstances.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR/PROSPECTUS,
AND ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THE OFFER NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR/PROSPECTUS.
Merrill Lynch & Co. has been retained as Dealer Manager to solicit
exchanges of Series B Preferred for Preferred Securities. See "The Offer --
Dealer Manager". Georgeson & Company Inc. has been retained by SunAmerica and
the Trust to act as Information Agent to assist in connection with the Offer.
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
The date of this Offering Circular/Prospectus is February , 1995.
DIAGRAM OF OFFERS
[GRAPHIC A]
(SEE APPENDIX A FOR DESCRIPTION OF GRAPHIC MATERIAL)
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN
THIS OFFERING CIRCULAR/PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
SUNAMERICA, THE TRUST, THE TRUSTEES OR THE DEALER MANAGER. NEITHER THE
DELIVERY OF THIS OFFERING CIRCULAR/PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF SUNAMERICA OR THE TRUST SINCE THE RESPECTIVE DATES AS
OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING MADE TO (NOR
WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SERIES B PREFERRED
IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER,
SUNAMERICA AND THE TRUST MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY
DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER
TO HOLDERS OF SERIES B PREFERRED IN SUCH JURISDICTION. IN ANY JURISDICTION
THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY
A LICENSED BROKER OR DEALER, THE OFFER IS BEING MADE ON BEHALF OF THE TRUST BY
THE DEALER MANAGER OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
SunAmerica is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information concerning SunAmerica can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Such material can also be inspected and copied at the
offices of the NYSE, 20 Broad Street, New York, N.Y. 10005.
This Offering Circular/Prospectus constitutes a part of a
registration statement on Form S-4 (together with all amendments and exhibits,
the "Registration Statement") filed by SunAmerica and the Trust with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). This Offering Circular/Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
subject to and qualified in its entirety by such reference. Reference is made
to such Registration Statement and to the exhibits relating thereto for
further information with respect to SunAmerica, the Trust and the securities
offered hereby.
No separate financial statements of the Trust have been included or
incorporated by reference herein. SunAmerica and the Trust do not consider
that such financial statements would be material to holders of Preferred
Securities because the Trust is a newly-formed special purpose entity, has no
operating history, has no independent operations and is not engaged in, and
does not propose to engage in, any activity other than its holding as trust
assets the Junior Subordinated Debentures of SunAmerica and its issuance of
Trust Securities. See "SunAmerica Capital Trust I", "Description of the
Preferred Securities", "Description of the Preferred Securities Guarantee" and
"Description of the Junior Subordinated Debentures". The Trust is a statutory
business trust formed under the laws of the State of Delaware. SunAmerica, as
of the date hereof, beneficially owns all of the beneficial interests in the
Trust. Each holder of Preferred Securities will be furnished annually with
unaudited financial statements of the Trust as soon as available after the end
of the Trust's fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SunAmerica's Annual Report on Form 10-K for the year ended September
30, 1994 and its Quarterly Report on Form 10-Q for the quarter ended December
31, 1994 have been filed with the Commission and are incorporated herein by
reference.
All documents filed by SunAmerica pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Offering
Circular/Prospectus and prior to the Expiration Date shall be deemed to be
incorporated by reference in this Offering Circular/Prospectus and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of this
Offering Circular/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 and superseded, to constitute a part of this Offering
Circular/Prospectus.
This Offering Circular/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. SunAmerica will provide
without charge to each person, including any beneficial owner of the Series B
Preferred, to whom this Offering Circular/Prospectus is delivered, upon 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 such
documents). Requests for such documents should be directed to Shareholder
Communications of SunAmerica at 1 SunAmerica Center, Los Angeles, California
90067-6022 (Telephone (310) 772-6000). In order to ensure timely delivery of
the documents, any request should be made not later than five business days
prior to the Expiration Date.
TABLE OF CONTENTS
Page
Offering Circular/Prospectus Summary..................................... 4
Risk Factors. . . ....................................................... 13
Comparison of Preferred Securities and Series B Preferred.............. 17
SunAmerica............................................................... 20
SunAmerica Capital Trust I............................................... 21
Ratio of Earnings to Fixed Charges....................................... 24
Selected Consolidated Financial Data..................................... 25
Capitalization........................................................... 27
The Offer................................................................ 28
Listing and Trading of Preferred Securities and Series B Preferred....... 35
Transactions and Arrangements Concerning the Offer....................... 35
Fees and Expenses; Transfer Taxes........................................ 35
Price Range of Series B Preferred........................................ 36
Description of the Preferred Securities.................................. 37
Description of the Preferred Securities Guarantee........................ 47
Description of the Junior Subordinated Debentures........................ 49
Relationship Between the Preferred Securities, the Junior Subordinated
Debentures and the Preferred Securities Guarantee...................... 57
Taxation................................................................. 58
Legal Matters............................................................ 61
Experts.................................................................. 62
ERISA Matters............................................................ 62
OFFERING CIRCULAR/PROSPECTUS SUMMARY
The following summary does not purport to be complete and is
qualified in its entirety by the detailed information contained elsewhere in,
or incorporated by reference in, this Offering Circular/Prospectus.
SunAmerica
SunAmerica is a diversified financial services company with more than
$24 billion of assets owned or under management. At December 31, 1994, these
assets consisted of $14.78 billion of assets owned by SunAmerica, $2.04
billion of assets managed in mutual funds and private accounts and $7.63
billion under custody in retirement trust accounts. Together, the SunAmerica
life insurance companies rank among the largest U.S. issuers of annuities.
Complementing these annuity operations are SunAmerica's asset management
operations; its two broker-dealers, which SunAmerica believes, based on
industry data, represent the largest network of independent registered
representatives in the nation; and its trust company which provides
administrative and custodial services to qualified retirement plans. Through
these subsidiaries, SunAmerica specializes in the sale of tax-deferred
long-term savings products and investments to the expanding preretirement
savings market. SunAmerica markets fixed annuities and fee-generating
variable annuities, mutual funds and trust services, as well as guaranteed
investment contracts. SunAmerica's products are distributed through a broad
spectrum of financial services distribution channels, including independent
registered representatives of SunAmerica's broker-dealer subsidiaries and
unaffiliated broker-dealers, independent general insurance agents and
financial institutions.
SunAmerica Capital Trust I
SunAmerica Capital Trust I is a statutory business trust that was
formed under the Delaware Business Trust Act (the "Trust Act") on February ,
1995. The Trust's original declaration of trust will be amended and restated
in its entirety as of the date the Trust accepts Series B Preferred in the
Offer (as so amended and restated, the "Declaration") substantially in the
form filed as an exhibit to the Registration Statement of which this Offering
Circular/Prospectus forms a part. See "The Offer -- Terms of the Offer" and
"-- Acceptance of Shares and Proration" for information regarding the Trust's
acceptance of Series B Preferred in the Offer. Upon issuance of the Preferred
Securities, the holders thereof will own all of the issued and outstanding
Preferred Securities. In this Offering Circular/Prospectus, the phrase,
"holders of Preferred Securities," refers to the beneficial owners of the
Preferred Securities. See "Description of the Preferred Securities --
Book-Entry-Only Issuance -- The Depository Trust Company." SunAmerica has
agreed to acquire Common Securities in an amount equal to at least 3% of the
total capital of the Trust and will own all of the Common Securities. The
Preferred Securities and the Common Securities will rank pari passu with each
other and will have equivalent terms; provided that if an Event of Default
with respect to the Junior Subordinated Debentures occurs and is continuing,
the holders of Preferred Securities will have a preference over the holders of
the Common Securities with respect to payments in respect of distributions and
payments upon liquidation, redemption and maturity.
The number of trustees (the "Trustees") of the Trust shall initially
be three. Two of the Trustees (the "Regular Trustees") are individuals who
are employees or officers of, or affiliated with, SunAmerica. The third
trustee is The Chase Manhattan Bank (USA), who will serve as property trustee
(the "Property Trustee") and who shall be unaffiliated with SunAmerica. Legal
title to the Junior Subordinated Debentures will be held by the Property
Trustee for the benefit of the holders of the Trust Securities. In addition,
the Property Trustee will maintain exclusive control of a segregated bank
account (the "Property Trustee Account") to hold all payment of all funds in
respect of the Junior Subordinated Debentures for the benefit of the holders
of Trust Securities. The Property Trustee will promptly make distributions to
the holders of the Trust Securities out of funds in the Property Trustee
Account. SunAmerica, as sponsor of the Trust (the "Sponsor"), has the right
to appoint or remove any Trustee, to increase the number of Trustees and to
appoint such additional Trustees.
The Trust exists for the sole purpose of issuing (i) its Preferred
Securities in exchange for Series B Preferred validly tendered in the Offer
and in consideration for the deposit by SunAmerica of Junior Subordinated
Debentures in the Trust as trust assets and (ii) its Common Securities to
SunAmerica and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures. The rights of the holders of the Trust
Securities, including economic rights, rights to information and voting
rights, are set forth in the Declaration and the Trust Act. See "SunAmerica
Capital Trust I" and "Description of the Preferred Securities". The
Declaration does not permit the incurrence by the Trust of any indebtedness
for borrowed money. In the Declaration, SunAmerica has agreed to pay for all
(and the Trust shall not be obligated to pay, directly or indirectly, for any)
costs and expenses of the Trust, including the fees and expenses of the
Trustees and any Special Representative (as defined herein) and any income
taxes, duties and other governmental charges, and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United
States withholding taxes. See "Risk Factors" and "Description of the
Preferred Securities".
Certain Investor Considerations
Prospective investors should carefully review the information
contained elsewhere in this Offering Circular/Prospectus prior to making a
decision regarding the Offer and should particularly consider the following
matters:
Potential Benefits to Exchanging Holders
bullet The cash distributions rate on the Preferred Securities will
be basis points greater than the dividend rate on the Series B Preferred.
See "Comparison of Preferred Securities and Series B Preferred".
bullet Cash distributions on the Preferred Securities will be made
monthly and thus more frequently than dividends on the Series B Preferred
which are payable quarterly. See "Comparison of Preferred Securities and
Series B Preferred".
bullet So long as payments of interest and other payments are made
when due on the Junior Subordinated Debentures, such payments will be
sufficient to cover cash distributions and other payments made on the
Preferred Securities (and the Common Securities) because (i) the aggregate
principal amount of Junior Subordinated Debentures deposited as trust assets
will be equal to the sum of (x) the aggregate stated liquidation amount of
the Preferred Securities issued by the Trust in exchange for the Series B
Preferred accepted in the Offer and (y) the amount of proceeds received by the
Trust from the issuance of the Common Securities to SunAmerica, which proceeds
will be used by the Trust to purchase an equal principal amount of Junior
Subordinated Debentures, (ii) the interest rate and interest and other payment
dates on the Junior Subordinated Debentures will match the distribution rate
and distribution and other payment dates for the Preferred Securities, (iii)
the Declaration provides that SunAmerica shall pay for all (and the Trust
shall not be obligated to pay, directly or indirectly, for any) costs and
expenses of the Trust, and (iv) the Declaration further provides that the
Trustees shall not permit the Trust to, among other things, engage in any
activity that is not consistent with the purposes of the Trust. See "Offering
Circular/Prospectus Summary -- The Offer -- Description of Preferred
Securities and Junior Subordinated Debentures" and "SunAmerica Capital Trust
I."
bullet The Trust will have no independent operations and will exist
for the sole purpose of issuing the Trust Securities as described herein and
owning and holding through the Property Trustees the Junior Subordinated
Debentures. See "SunAmerica Capital Trust I."
bullet If (i) the Trust fails to pay distributions in full on the
Preferred Securities for 18 consecutive monthly distribution periods; (ii) an
Event of Default with respect to the Junior Subordinated Debentures occurs and
is continuing; or (iii) SunAmerica is in default on any of its payment or
other obligations under the Preferred Securities Guarantee, then the
Declaration provides a mechanism whereby holders of the Preferred Securities
may appoint a Special Representative which shall be authorized to direct the
Property Trustee to enforce the Trust's creditor rights under the Junior
Subordinated Debentures, to enforce the rights of the holders of the Preferred
Securities under the Preferred Securities Guarantee and to enforce the rights
of the holders of the Preferred Securities to receive distributions on the
Preferred Securities. See "Description of the Preferred Securities -- Voting
Rights".
bullet The Offer will allow SunAmerica to achieve certain tax
efficiencies while preserving its flexibility with respect to future
financings because, in contrast to dividend payments on the Series B Preferred
which are not deductible by SunAmerica, SunAmerica will be able to deduct
interest payments on the Junior Subordinated Debentures for United States
federal income tax purposes. See "The Offer -- Purpose of the Offer".
Potential Risks to Exchanging Holders
bullet Participation in the Offer will be a taxable event. See "Risk
Factors -- Tax Consequences of the Offer".
bullet The obligations of SunAmerica under (i) the Junior Subordinated
Debentures are subordinate in right of payment to Senior Indebtedness (as
defined herein) of SunAmerica, (ii) SunAmerica's payment obligations under the
Preferred Securities Guarantee are subordinate in right of payment to all
liabilities of SunAmerica, including the Junior Subordinated Debentures and
(iii) the Junior Subordinated Debentures and the Preferred Securities
Guarantee are effectively subordinated to all liabilities of subsidiaries of
SunAmerica. See "Risk Factors -- Subordination of Preferred Securities
Guarantee and Junior Subordinated Debentures; Dependence on SunAmerica".
bullet The Trust's ability to make distributions on the Preferred
Securities is solely dependent upon SunAmerica making interest payments on the
Junior Subordinated Debentures when and as required, and the interest payment
period on the Junior Subordinated Debentures may be extended under certain
circumstances by SunAmerica in its sole discretion for up to 60 consecutive
months during which no interest would be payable thereon. See "Risk Factors
- -- Subordination of Preferred Securities Guarantee and Junior Subordinated
Debentures; Dependence on SunAmerica; "-- Option to Extend Interest Payment
Period; Tax Impact of Extension" and "-- Potential Market Volatility During
Extension Period".
bullet Should SunAmerica not make payments on the Junior Subordinated
Debentures for any reason, including as a result of SunAmerica's election to
extend the interest payment period on the Junior Subordinated Debentures, the
Trust will not make distributions on the Trust Securities. In such an event,
holders of the Preferred Securities would not be able to rely on the Preferred
Securities Guarantee since such Guarantee does not cover payment of
distributions on the Preferred Securities when the Trust does not have
sufficient funds to make the distributions. See "Risk Factors --
Subordination of Preferred Securities Guarantee and Junior Subordinated
Debentures; Dependence on SunAmerica".
bullet If SunAmerica elects to extend the interest period on the
Junior Subordinated Debentures, the Trust will continue to accrue interest
income in respect of such Debentures which will be taxable to beneficial
owners of Preferred Securities. As a result, beneficial owners of Preferred
Securities during an Extension Period will include their pro rata share of the
interest in gross income in advance of the receipt of cash. See "Taxation --
Income from the Preferred Securities".
bullet While dividends on the Series B Preferred are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders. See "Comparison of Preferred Securities and Series B
Preferred".
bullet The Preferred Securities are a new issue of securities with no
established trading market. See "Risk Factors -- Listing and Trading of
Preferred Securities and Series B Preferred".
Potential Risk to Non-Exchanging Holders
bullet The liquidity and trading market for untendered Series B
Preferred could be adversely affected to the extent Series B Preferred is
tendered and accepted in the Offer. See "Risk Factors -- Listing and Trading
of Preferred Securities and Series B Preferred".
The Offer
Purpose of the Offer
The purpose of the Offer is to refinance the Series B Preferred with
the Preferred Securities and to achieve certain tax efficiencies while
preserving SunAmerica's flexibility with respect to future financings. This
refinancing will permit SunAmerica to deduct interest payable on the Junior
Subordinated Debentures for United States federal income tax purposes;
dividends payable on the Series B Preferred are not deductible. See "The
Offer -- Purpose of the Offer".
Terms of the Offer
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal, the Trust hereby offers to exchange its Preferred
Securities for up to 5,500,000 outstanding shares of Series B Preferred of
SunAmerica. Exchanges will be made on the basis of one Preferred Security for
each share of Series B Preferred validly tendered and accepted for exchange in
the Offer. See "The Offer -- Terms of the Offer".
Expiration Date; Withdrawals
Upon the terms and conditions of the Offer, including the provisions
relating to proration described herein, the Trust will accept for exchange up
to 5,500,000 shares of Series B Preferred, validly tendered and not withdrawn
prior to 5:00 p.m., New York City time, on March , 1995, or if the Offer is
extended by the Trust, in its sole discretion, the latest date and time to
which the Offer has been extended (the "Expiration Date"). Tenders of Series
B Preferred pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless accepted for exchange by the Trust, may be
withdrawn at any time after 40 Business Days (as defined herein) after the
date of this Offering Circular/Prospectus. Shares of Series B Preferred not
accepted because of proration will be returned to the tendering Holders at the
Trust's expense as promptly as practicable following the Expiration Date. A
"Business Day" shall mean any day other than a day on which banking
institutions in the City of New York are authorized or required by law to
close. See "The Offer -- Withdrawal of Tenders"; "-- Expiration Date;
Extensions; Amendments; Termination" and "-- Acceptance of Shares and
Proration".
Extensions; Amendments; Termination
Except as set forth in the following sentence, the Trust expressly
reserves the right to (i) extend, amend or modify the terms of the Offer in
any manner and (ii) withdraw or terminate the Offer and not accept for
exchange any Series B Preferred, at any time prior to the Expiration Date for
any reason, including (without limitation) if fewer than 2,810,000 shares of
Series B Preferred are tendered (which conditions may be waived by the Trust).
See "The Offer -- Expiration Date; Extensions; Amendments; Termination". In
addition, the Trust will not accept shares of Series B Preferred validly
tendered in the Offer if as of the Expiration Date there would be fewer than
400 record or beneficial holders of Preferred Securities to be issued in
exchange for such Series B Preferred, which condition may not be waived.
Procedures for Tendering
Each Holder of Series B Preferred wishing to participate in the Offer
must (i) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Offering Circular/Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) in accordance with
the instructions contained herein and in the Letter of Transmittal, together
with any required signature guarantees, and deliver the same to The First
National Bank of Chicago, as Exchange Agent, at one of its addresses set forth
in "The Offer -- Exchange Agent and Information Agent" prior to the Expiration
Date and either (a) certificates for the Series B Preferred must be received
by the Exchange Agent at such address or (b) such Series B Preferred must be
transferred pursuant to the procedures for book-entry transfer described
herein and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the Expiration Date or (ii) comply with
the guaranteed delivery procedures described herein.
In order to participate in the Offer, Holders of Series B Preferred
must submit a Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the Expiration Date.
LETTERS OF TRANSMITTAL, SERIES B PREFERRED AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO SUNAMERICA, THE TRUST, THE
DEALER MANAGER OR THE INFORMATION AGENT.
Special Procedure for Beneficial Owners
Any beneficial owner whose Series B Preferred is registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender such Series B Preferred 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 owner must, prior to completing and executing a Letter of
Transmittal and delivering its Series B Preferred, either make appropriate
arrangements to register ownership of the Series B Preferred in such owner's
name or obtain a properly completed stock power from the registered Holder.
The transfer of registered ownership may take considerable time and may not be
able to be completed prior to the Expiration Date. See "The Offer --
Procedures for Tendering -- Special Procedure for Beneficial Owners".
Guaranteed Delivery Procedures
If a Holder desires to accept the Offer and time will not permit a
Letter of Transmittal or Series B Preferred to reach the Exchange Agent before
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The Offer -- Procedures for
Tendering -- Guaranteed Delivery".
Acceptance of Shares and Proration
Upon the terms and subject to the conditions of the Offer, if
5,500,000 or fewer shares of Series B Preferred have been validly tendered and
not withdrawn prior to the Expiration Date, the Trust will accept for exchange
all such shares of Series B Preferred. Upon the terms and subject to the
conditions of the Offer, if more than 5,500,000 shares of Series B Preferred
(or, if decreased as described herein, such lesser number as the Trust may
elect to purchase pursuant to the Offer) have been validly tendered and not
withdrawn prior to the Expiration Date, the Trust will accept for exchange
shares of Series B Preferred from each tendering Holder on a pro rata basis,
subject to adjustment to avoid the acceptance for exchange of fractional
shares.
If the Trust decreases the amount of Series B Preferred sought, and
the Offer is scheduled to expire less than ten Business Days from and
including the date that notice of such decrease is first published, sent or
given in the manner specified in "Terms of the Offer -- Expiration Date;
Extensions; Amendments; Termination", then the Offer will be extended for ten
Business Days from and including the date of such notice.
All shares of Series B Preferred not accepted pursuant to the Offer,
including shares not purchased because of proration, will be returned to the
tendering Holders at the Trust's expense as promptly as practicable following
the Expiration Date.
Delivery of Preferred Securities
Subject to the terms and conditions of the Offer, the delivery of the
Preferred Securities to be issued pursuant to the Offer will occur as promptly
as practicable following the Expiration Date. See "The Offer -- Terms of the
Offer" and "-- Expiration Date; Extensions; Amendments; Termination".
If proration of tendered shares of Series B Preferred is required,
because of the difficulty in determining the number of shares of Series B
Preferred validly tendered (including shares tendered by the guaranteed
delivery procedures described in "Terms of the Offer -- Procedures for
Tendering"), the Trust does not expect that it would be able to announce the
final proration factor or to commence the exchange for any shares of Series B
Preferred pursuant to the Offer until approximately seven Business Days after
the Expiration Date. Preliminary results of the proration will be announced
by press release as promptly as practicable after the Expiration Date.
Holders of shares of Series B Preferred may obtain such preliminary
information from the Dealer Manager or the Information Agent and may also be
able to obtain such information from their brokers.
Description of Preferred Securities and Junior Subordinated Debentures
The Preferred Securities evidence undivided preferred beneficial
interests in the assets of the Trust and will rank pari passu with, and have
terms equivalent to, the Common Securities; provided that if an Event of
Default with respect to the Junior Subordinated Debentures occurs and is
continuing, the holders of Preferred Securities will have a preference over
holders of the Common Securities with respect to payments in respect of
distributions and payments upon liquidation, redemption and maturity. The
Declaration does not permit the issuance by the Trust of any securities other
than the Preferred Securities and the Common Securities or the incurrence of
any indebtedness for borrowed money by the Trust.
Periodic cash distributions on each Preferred Security will be fixed
at a rate per annum of % of the stated liquidation amount of $25 per
Preferred Security. Distributions in arrears for more than one month will
bear interest thereon at the rate per annum of % of the stated liquidation
amount of $25 per Preferred Security, compounded monthly. Distributions on
the Preferred Securities will be cumulative, will accrue from the Accrual Date
and, except as otherwise described herein, will be made monthly in arrears, on
the last day of each month of each year, commencing on the last day of the
month in which the Expiration Date occurs, but only if, and to the extent
that, the Property Trustee has funds available in the Property Trustee Account
to make such distribution. In addition, holders of Preferred Securities will
be entitled to an additional cash distribution at the rate of
9 1/4% per annum of the liquidation amount thereof from March 15, 1995 through
the Expiration Date in lieu of dividends accumulating after March 15, 1995 on
their Series B Preferred accepted for exchange, such additional distribution
to be made at the time the first distribution on the Preferred Securities is
made.
So long as SunAmerica shall not be in default in the payment of
interest on the Junior Subordinated Debentures, SunAmerica has the right under
the Indenture (as defined herein) to extend the interest payment period from
time to time on the Junior Subordinated Debentures for a period not exceeding
60 consecutive months and, as a consequence, monthly distributions on the
Preferred Securities would not be made (but would continue to accrue with
interest thereon at the rate of % per annum, compounded monthly) by the
Trust during any such Extension Period. If SunAmerica exercises this right,
SunAmerica may not declare or pay dividends on, or purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock or
preferred stock or make any guarantee payments with respect thereto during
such Extension Period; provided that SunAmerica will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the conversion
of any of its Series D Preferred Stock in accordance with the terms of such
stock. Prior to the termination of any such Extension Period, SunAmerica may
further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
60 consecutive months. Upon the termination of any Extension Period and the
payment of all amounts then due, SunAmerica may commence a new Extension
Period, subject to the above requirements. SunAmerica may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths (up
to six Extension Periods of 60 consecutive months each or more numerous
shorter Extension Periods) throughout the term of the Junior Subordinated
Debentures. See "Risk Factors"; "Description of the Junior Subordinated
Debentures -- Interest" and "-- Option to Extend Interest Payment Period".
There will be deposited in the Trust as trust assets (i) Junior
Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities issued by the
Trust in exchange for the Series B Preferred accepted in the Offer and (ii)
Junior Subordinated Debentures having an aggregate principal amount equal to
the amount of proceeds received by the Trust from the sale of the Common
Securities to SunAmerica. Under the Declaration, if and to the extent
SunAmerica does make interest payments on the Junior Subordinated Debentures
deposited in the Trust as trust assets, the Property Trustee is obligated to
make distributions on the Preferred Securities. The payment of distributions
on the Preferred Securities and payments on liquidation of the Trust and the
redemption of Preferred Securities, as set forth below, in each case out of
moneys held by the Property Trustee in the Property Trustee Account, are
guaranteed by SunAmerica on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee". The
Preferred Securities Guarantee is a full and unconditional guarantee from the
time of issuance of the Preferred Securities, but does not apply to the
payment of distributions and other payments on the Preferred Securities when
the Property Trustee does not have sufficient funds in the Property Trustee
Account to make such distributions or other payments.
The Preferred Securities are redeemable from time to time, in whole
or in part, to the same extent as the Junior Subordinated Debentures are
redeemable by SunAmerica, on or after June 15, 1997, upon not less than 30 nor
more than 60 days' notice, at $25 per Preferred Security plus accrued and
unpaid distributions thereon to the date of redemption (the "Redemption
Price"), payable in cash. The Preferred Securities will be redeemed upon the
maturity or earlier redemption or repurchase of the Junior Subordinated
Debentures. See "Description of the Preferred Securities -- Mandatory
Redemption".
In addition, upon the occurrence and during the continuation of a Tax
Event or an Investment Company Event (each as hereinafter defined) arising
from a change in law or a change in legal interpretation or other specified
circumstances, the Trust may be dissolved with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities and the Common Securities on a pro rata basis, in lieu of any cash
distribution. In the case of a Tax Event, in certain circumstances SunAmerica
will also have the right in certain circumstances to redeem the Junior
Subordinated Debentures. If the Junior Subordinated Debentures are
distributed to the holders of the Preferred Securities, SunAmerica will use
its best efforts to have the Junior Subordinated Debentures listed on the New
York Stock Exchange or on such other exchange as the Preferred Securities are
then listed. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution".
The Junior Subordinated Debentures will be issued pursuant to an
indenture, dated as of March 15, 1995 (as supplemented by the First
Supplemental Indenture (the "First Supplemental Indenture") to be dated as of
March 15, 1995, the "Indenture") between SunAmerica and The First National
Bank of Chicago, as trustee (the "Indenture Trustee"). See "Description of
the Junior Subordinated Debentures". The Junior Subordinated Debentures will
mature on , 2044 and will bear interest at an annual rate of
% from the Accrual Date. Interest will be payable monthly in arrears on the
last day of each month of each year, commencing on the last day of the month
in which the Expiration Date occurs; provided that, as described above, so
long as SunAmerica shall not be in default in the payment of interest on the
Junior Subordinated Debentures, SunAmerica shall have the right to extend the
interest payment period from time to time for a period not exceeding 60
consecutive months. SunAmerica has no current intention of exercising its
right to extend an interest payment period. However, should SunAmerica
determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. See "Risk Factors" and
"Description of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period".
The Junior Subordinated Debentures will also accrue interest at the
rate of 9 1/4% per annum of the principal amount thereof from March 15, 1995
through the Expiration Date, payable at the time of the first interest payment
on the Junior Subordinated Debentures. No extension of interest will be
permitted with respect to interest accruing from March 15, 1995 through the
Expiration Date.
SunAmerica shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after June 15, 1997,
upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed, plus any accrued and
unpaid interest, to the redemption date, payable in cash.
Certain United States Federal Income Tax Considerations
The exchange of Series B Preferred for Preferred Securities pursuant
to the Offer will be a taxable event. Gain or loss generally will be
recognized in an amount equal to the difference between the fair market value
on the Expiration Date of the holder's pro rata share of the Junior
Subordinated Debentures represented by the Preferred Securities received in
the exchange and the exchanging Holder's tax basis in the shares of Series B
Preferred surrendered. For this purpose, the fair market value of the Junior
Subordinated Debentures deemed issued in exchange for Series B Preferred on
the Expiration Date will equal the fair market value of the Series B Preferred
on that date. See "Taxation -- Exchange of Series B Preferred for Preferred
Securities".
The Junior Subordinated Debentures will be treated as issued with
"original issue discount" for United States federal income tax purposes.
Holders of Preferred Securities will be required to include their pro rata
share of original issue discount in gross income as it accrues on the Junior
Subordinated Debentures in advance of the receipt of cash. See "Taxation --
Accrual of Original Issue Discount and Premium" and -- Potential Extension of
Payment Period on the Junior Subordinated Debentures".
No portion of the amounts received on the Preferred Securities will
be eligible for the dividends received deduction.
Untendered Shares
Holders of Series B Preferred who do not tender their Series B
Preferred in the Offer or whose Series B Preferred is not accepted for
exchange will continue to hold such Series B Preferred and will be entitled to
all the rights and preferences, and will be subject to all of the limitations,
applicable thereto.
To the extent that Series B Preferred is tendered and accepted in the
Offer, the terms on which untendered Series B Preferred could subsequently be
sold could be adversely affected. See "Risk Factors -- Listing and Trading of
Preferred Securities and Series B Preferred".
Exchange Agent and Information Agent
The First National Bank of Chicago has been appointed as Exchange
Agent in connection with the Offer. Questions and requests for assistance,
requests for additional copies of this Offering Circular/Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to Georgeson & Company, Inc. which has been retained by SunAmerica
and the Trust to act as Information Agent for the Offer. The addresses and
telephone numbers of the Exchange Agent and the Information Agent are set
forth in "The Offer -- Exchange Agent and Information Agent" and on the
outside back cover of this Offering Circular/Prospectus.
Dealer Manager
Merrill Lynch & Co. has been retained as Dealer Manager in connection
with the Offer. Questions with respect to the Offer may be directed to the
Capital Markets Desk at (212) 449-4906.
RISK FACTORS
Prospective exchanging Holders of Series B Preferred who plan to
participate in the Offer should carefully consider, in addition to the other
information set forth elsewhere in this Offering Circular/ Prospectus, the
following:
Tax Consequences of the Offer
The exchange of Series B Preferred for Preferred Securities pursuant
to the Offer will be a taxable event. Generally, gain or loss will be
recognized in an amount equal to the difference between the fair market value
on the Expiration Date of the holder's pro rata share of the Junior
Subordinated Debentures represented by the Preferred Securities received in
the exchange and the exchanging Holder's tax basis in the Series B Preferred
exchanged therefor. See "Taxation -- Exchange of Series B Preferred and
Issuance of Preferred Securities". All Holders of Series B Preferred are
advised to consult their tax advisors regarding the United States federal,
state, local and foreign tax consequences of the exchange of Series B
Preferred and the issuance of Preferred Securities.
Subordination of Preferred Securities Guarantee and Junior Subordinated
Debentures; Dependence on SunAmerica
The obligations of SunAmerica under the Junior Subordinated
Debentures are unsecured obligations of SunAmerica and will be subordinate and
junior in right of payment to Senior Indebtedness of SunAmerica but senior to
its capital stock. At December 31, 1994, Senior Indebtedness of SunAmerica
(on an unconsolidated basis) aggregated approximately $472.8 million. Because
SunAmerica is a holding company, the Junior Subordinated Debentures (and
SunAmerica's obligations under the Preferred Securities Guarantee) are also
effectively subordinated to all existing and future liabilities, including
trade payables, of SunAmerica's subsidiaries, except to the extent that
SunAmerica is a creditor of the subsidiaries recognized as such. Claims on
SunAmerica's subsidiaries by creditors other than SunAmerica include
substantial claims for policy benefits, as well as other liabilities incurred
in the ordinary course of business. At December 31, 1994, SunAmerica's
subsidiaries had outstanding approximately $8.47 billion of liabilities
(excluding variable annuity liabilities, with respect to which assets are
segregated in separate accounts). In addition, since many of SunAmerica's
subsidiaries are insurance companies subject to regulatory control by various
state insurance departments, the ability of such subsidiaries to pay dividends
or make loans or advances to SunAmerica without prior regulatory approval is
limited by applicable laws and regulations. There are no terms in the
Preferred Securities, the Junior Subordinated Debentures or the Preferred
Securities Guarantee that limit SunAmerica's ability to incur additional
indebtedness, including indebtedness that ranks senior to or pari passu with
the Junior Subordinated Debentures and the Preferred Securities Guarantee, or
the ability of its subsidiaries to incur additional indebtedness. See
"Description of the Preferred Securities Guarantee -- Status of the Guarantee"
and "Description of the Junior Subordinated Debentures -- Subordination".
The Trust's ability to make distributions on the Preferred Securities
is solely dependent upon SunAmerica making interest payments on the Junior
Subordinated Debentures deposited as trust assets as and when required. If
SunAmerica were not to make payments on the Junior Subordinated Debentures for
any reason, including as a result of SunAmerica's election to extend the
interest period on the Junior Subordinated Debentures, the Trust will not make
distributions on the Trust Securities. In such an event, holders of the
Preferred Securities would not be able to rely on the Preferred Securities
Guarantee since such Guarantee does not cover payment of distributions on the
Preferred Securities when the Trust does not have sufficient funds to make the
distribution. If the Trust's failure to make distributions on the Preferred
Securities is a consequence of SunAmerica's exercise of its right to extend
the interest payment period for the Junior Subordinated Debentures, the
Property Trustee will have no right to enforce the payment of distributions on
the Preferred Securities until an Event of Default shall have occurred.
SunAmerica's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all other liabilities of
SunAmerica, including the Junior Subordinated Debentures, except those made
pari passu (that is, equal in priority) or subordinate by their terms to the
Preferred Securities Guarantee and senior to its capital stock or to any
guarantee of SunAmerica in respect of its capital stock.
The Declaration provides that SunAmerica shall pay for all (and the
Trust shall not be obligated to pay, directly or indirectly, for any) costs
and expenses of the Trust, including any taxes and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United
States withholding taxes. No assurance can be given that SunAmerica will have
sufficient resources to enable it to pay such costs and expenses on behalf of
the Trust.
Option to Extend Interest Payment Period; Tax Impact of Extension
So long as SunAmerica shall not be in default in the payment of
interest on the Junior Subordinated Debentures, SunAmerica has the right under
the Indenture to extend the interest payment period from time to time on the
Junior Subordinated Debentures for an Extension Period not exceeding 60
consecutive months, during which no interest shall be due and payable. In
such an event, monthly distributions on the Preferred Securities would not be
made (but would continue to accrue with interest thereon at the rate of %
per annum, compounded monthly) by the Trust during any such Extension Period.
If SunAmerica exercises the right to extend an interest payment period,
SunAmerica may not during such Extension Period declare or pay dividends on,
or purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock; provided that
SunAmerica will be permitted to pay accrued dividends (and cash in lieu of
fractional shares) upon the conversion of any of its Series D Preferred Stock.
SunAmerica has outstanding 5,002,500 $2.78 Depositary Shares (the "Series D
Depositary Shares"), each representing one-fiftieth of a share of Series D
Preferred Stock. Dividends accrue on each Series D Depositary Share at the
rate of $2.78 per year. On March 1, 1996, unless previously redeemed, each of
the outstanding Series D Depositary Shares will convert into one share of
SunAmerica's common stock and the right to receive an amount in cash equal to
all accrued and unpaid dividends.
Prior to the termination of any Extension Period, SunAmerica may
further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
60 consecutive months. Upon the termination of any Extension Period and the
payment of all amounts then due, SunAmerica may commence a new Extension
Period, subject to the above requirements. SunAmerica may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths (up
to six Extension Periods of 60 consecutive months each or more numerous
shorter Extension Periods) throughout the term of the Junior Subordinated
Debentures. See "Description of the Preferred Securities -- Dividends" and
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period".
Because SunAmerica has the right to extend the interest payment
period up to 60 months on various occasions, the Junior Subordinated
Debentures will be treated as issued with "original issue discount" for United
States federal income tax purposes. As a result, holders of Preferred
Securities will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. See "Taxation -- Potential
Extension of Payment Period on the Junior Subordinated Debentures".
Listing and Trading of Preferred Securities and Series B Preferred
The Preferred Securities constitute a new issue of securities with
no established trading market. While application has been made to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Manager has indicated to SunAmerica and
the Trust that it intends to make a market in the Preferred Securities as
permitted by applicable laws and regulations prior to the commencement of
trading on the NYSE, it is not obligated to do so and may discontinue any such
market-making at any time without notice. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Preferred
Securities. In order to satisfy the NYSE listing requirements, acceptance of
Series B Preferred validly tendered in the Offer is subject to the condition
that as of the Expiration Date there be at least 400 record or beneficial
holders of Preferred Securities to be issued in exchange for such Series B
Preferred, which condition may not be waived by SunAmerica or the Trust.
To the extent Series B Preferred is tendered and accepted in the
Offer, the liquidity and trading market for the Series B Preferred to be
outstanding following the Offer, and the terms upon which such shares of
Series B Preferred could be sold, could be adversely affected. In addition,
if the Offer is substantially subscribed or oversubscribed, there would be a
significant risk that round lot holdings of Series B Preferred outstanding
following the Offer would be limited. See "Listing and Trading of Preferred
Securities and Series B Preferred."
The Offer is for up to 5,500,000 shares of Series B Preferred or
97.9% of the 5,620,000 shares of Series B Preferred outstanding. The Offer is
for up to this number of shares (rather than for all the outstanding shares of
Series B Preferred) to reduce the risk that the Series B Preferred would be
subject to delisting following consummation of the Offer (or in the event of
under subscription if all outstanding shares of Series B Preferred were
tendered for).
Under the rules of the NYSE, preferred securities such as the
Series B Preferred are subject to delisting if (i) the aggregate value of
publicly-held shares is less than $2 million and (ii) the number of
publicly-held shares is less than 100,000. Since at least 120,000 shares of
Series B Preferred will remain outstanding following consummation of the
Offer, the number of outstanding shares of Series B Preferred will exceed the
delisting criteria set forth in clause (ii) above. In addition, based on the
market price of the Series B Preferred on the NYSE ($25 3/8 on December 19,
1994, the closing sales price of the Series B Preferred on the NYSE on the
last full trading day immediately prior to SunAmerica's first public
announcement of the Offer, and $26 1/8 on February 16, 1995), the Company
believes that the aggregate value of the minimum number (120,000) of shares of
Series B Preferred which will be outstanding following consummation of the
Offer should exceed the delisting criteria set forth in clause (i) above. See
"Price Range of Series B Preferred". If less than 5,500,000 shares of Series
B Preferred are validly tendered, then the number of shares of Series B
Preferred outstanding, and the market value thereof, will be even greater.
Special Event Redemption or Distribution
Upon the occurrence and during the continuation of a Tax Event or
Investment Company Event (as defined herein), which may occur at any time, the
Trust may be dissolved with the result that, in the manner described in
"Description of the Preferred Securities -- Liquidation Distribution Upon
Dissolution", Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Preferred Securities and
Common Securities would be distributed on a pro rata basis to the holders of
the Preferred Securities and Common Securities in liquidation of the Trust.
In the case of a Tax Event (as defined herein), in certain circumstances,
SunAmerica shall also have the right to redeem the Junior Subordinated
Debentures, in whole or in part, in which event the Trust will redeem
Preferred Securities and Common Securities to the same extent as the Junior
Subordinated Debentures are redeemed. There can be no assurance as to the
market prices for Preferred Securities or the Junior Subordinated Debentures
which may be distributed in exchange for Preferred Securities if a dissolution
and liquidation of the Trust were to occur. Accordingly, the Preferred
Securities or the Junior Subordinated Debentures which the investor may
receive on dissolution and liquidation of the Trust, may trade at a discount
to the price of the Series B Preferred exchanged. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution" and
"Description of the Junior Subordinated Debentures -- General".
Under current United States federal income tax law, a distribution
of the Junior Subordinated Debentures upon a Tax Event or Investment Company
Event would not be a taxable event to holders of the Preferred Securities.
Under a change in law giving rise to a Tax Event or Investment Company Event,
however, the resulting dissolution could be a taxable event to holders of the
Preferred Securities. See "Taxation -- Distribution of Junior Subordinated
Debentures to Holders of Preferred Securities".
Potential Market Volatility During Extension Period
As described above, SunAmerica has the right to extend an interest
payment period on the Junior Subordinated Debentures from time to time for a
period not exceeding 60 consecutive months. If SunAmerica determines to
extend an interest payment period, or if SunAmerica thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Preferred Securities is likely to be
affected. In addition, as a result of such rights, the market price of the
Preferred Securities (which represent an undivided interest in Junior
Subordinated Debentures) may be more volatile than other securities on which
original issue discount accrues that do not have such rights. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
may not receive the same return on its investment as a holder that continues to
hold its Preferred Securities. See "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period".
COMPARISON OF PREFERRED SECURITIES AND SERIES B PREFERRED
The following is a brief summary of certain terms of the Preferred
Securities and the Series B Preferred. For a more complete description of the
Preferred Securities, see "Description of the Preferred Securities". For a
complete description of the Junior Subordinated Debentures which will be
deposited in the Trust as trust assets and will represent the sole source for
the payment of distributions and other payments on the Preferred Securities,
see "Description of the Junior Subordinated Debentures".
<TABLE>
<CAPTION>
Preferred Securities Series B Preferred
-------------------- ------------------
<S> <C> <C>
Issuer The Trust. Payment of SunAmerica
distributions and on
liquidation or redemption is
guaranteed on a subordinated
basis as and to the extent
described herein by
SunAmerica.
Distribution/Interest/ % per annum distribution 9 1/4% per annum dividend
Dividend Rate payable monthly, from and payable on the 15th day of
including the Accrual Date, March, June, September and
but only if, and to the extent December of each year, out
that, the Property Trustee has of funds legally available
funds available in the therefor, when, as and if
Property Trustee Account to declared by SunAmerica's
make such distribution. Board of Directors.
During any Extension Period on Dividends are cumulative.
the Junior Subordinated Accumulated unpaid
Debentures, distribution dividends do not bear
payments on the Preferred interest.
Securities will not be made
but would continue to accrue,
and, in the case of
distributions in arrears for
more than one month, would
bear interest at the rate of
% per annum, compounded
monthly.
Optional Redemption Redeemable on or after June Redeemable at the option
15, 1997 to the same extent as of SunAmerica on and after
the Junior Subordinated June 15, 1997, in whole or
Debentures are redeemable by in part, at a redemption
SunAmerica, at a redemption price equal to 100% of the
price equal to 100% of the liquidation preference of
liquidation amount of the the shares to be redeemed,
Preferred Securities to be plus accrued and unpaid
redeemed, plus accrued and dividends, if any, to the
unpaid distributions, if any, redemption date.
to the redemption date.
Maturity/Mandatory The Preferred Securities will None.
Redemption be redeemed upon the maturity
or earlier redemption of the
Junior Subordinated
Debentures. See "Description
of the Preferred Securities --
Mandatory Redemption".
Subordination Subordinated to claims of Subordinated to claims of
creditors of the Trust, if creditors of SunAmerica,
any. The Preferred Securities including holders of
and the Common Securities will SunAmerica's outstanding
rank pari passu with each debt securities and the
other and will have equivalent Junior Subordinated
terms; provided that if an Debentures, and effectively
Event of Default with respect subordinated to all obligations of
to the Junior Subordinated SunAmerica's subsidiaries,
Debentures occurs and is but senior to the common
continuing, the holders of stock of SunAmerica.
Preferred Securities will have
a preference over holders of
the Common Securities with
respect to payments in respect
of distributions and payments
upon liquidation, redemption
and maturity. The Trust is
not permitted to incur any
indebtedness for borrowed
money. The Declaration
provides that SunAmerica shall
pay for all (and the Trust
shall not be obligated to pay,
directly or indirectly, for
any) costs and expenses of the
Trust, including any income
taxes, duties and other
governmental charges, and all
costs and expenses with
respect thereto, to which the
Trust may become subject,
except for United States
withholding taxes.
SunAmerica's obligations under
the Preferred Securities
Guarantee will rank
subordinate and junior to all
other liabilities of
SunAmerica, including the
Junior Subordinated
Debentures, except those made
pari passu or subordinate by
their terms, and effectively
subordinated to all
obligations of SunAmerica's
subsidiaries, and senior to
all capital stock now or
hereafter issued by SunAmerica
and to any guarantee now or
hereafter entered into by
SunAmerica in respect of any
of its capital stock.
Listing Application has been made to The Series B Preferred is
list the Preferred Securities listed on the NYSE.
on the NYSE. In order to
satisfy the NYSE listing
requirements, acceptance of
Series B Preferred validly
tendered in the Offer is
subject to the condition that
as of the Expiration Date
there be at least 400 record
or beneficial holders of
Preferred Securities to be
issued in exchange for such
Series B Preferred, which
condition may not be waived by
SunAmerica or the Trust.
Dividends Received Dividends are not eligible for Dividends are eligible for
Deduction the dividends received the dividends received
deduction for corporate deduction for corporate
holders. holders.
Voting Rights/ Holders of Preferred If dividends shall be in
Enforcement Securities have no voting arrears in an aggregate
rights unless either (i) amount equivalent to six
distributions on the Preferred quarterly dividend
Securities shall be in arrears payments, the Holders have
for 18 consecutive monthly the right (together with
distribution periods; (ii) an other classes of preferred
Event of Default (as defined stock ranking on a parity
herein) occurs and is with the Series B
continuing with respect to the Preferred either as to
Junior Subordinated dividends or on the
Debentures; or (iii) distribution of assets
SunAmerica is in default on upon liquidation) to elect
any of its payment obligations two directors.
under the Preferred Securities
Guarantee, in which case
holders have the right to
appoint a Special
Representative which shall be
authorized to direct the
Property Trustee to enforce
the Trust's creditor rights
under the Junior Subordinated
Debentures, the holders'
rights under the Preferred
Securities Guarantee and the
rights of the holders to
receive distributions on the
Preferred Securities. If the
Trust's failure to make
distributions is a consequence
of SunAmerica's exercise of
its right to extend the
interest payment period for
the Junior Subordinated
Debentures as described under
"Distribution/Interest/
Dividend Rate", the Property
Trustee will have no right to
enforce the payment of
distributions until an Event
of Default shall have
occurred.
</TABLE>
<PAGE>
SUNAMERICA
SunAmerica is a diversified financial services company with more than
$24 billion of assets owned or under management. At December 31, 1994, these
assets consisted of $14.78 billion of assets owned by SunAmerica, $2.04
billion of assets managed in mutual funds and private accounts and $7.63
billion under custody in retirement trust accounts. Together, the SunAmerica
life insurance companies rank among the largest U.S. issuers of annuities.
Complementing these annuity operations are SunAmerica's asset management
operations; its two broker-dealers, which SunAmerica believes, based on
industry data, represent the largest network of independent registered
representatives in the nation; and its trust company which provides
administrative and custodial services to qualified retirement plans. Through
these subsidiaries, SunAmerica specializes in the sale of tax-deferred
long-term savings products and investments to the expanding preretirement
savings market. SunAmerica markets fixed annuities and fee-generating
variable annuities, mutual funds and trust services, as well as guaranteed
investment contracts. SunAmerica's products are distributed through a broad
spectrum of financial services distribution channels, including independent
registered representatives of SunAmerica's broker-dealer subsidiaries and
unaffiliated broker-dealers, independent general insurance agents and
financial institutions.
The principal executive offices of SunAmerica are located at 1
SunAmerica Center, Los Angeles, California 90067-6022, telephone number (310)
772-6000.
Recent Developments
For its first quarter ended December 31, 1994, SunAmerica reported
net income of $45.1 million or $.98 per share, up 15% on a per share basis
from $39.6 million or $.85 per share in the first quarter of fiscal 1994
(before cumulative effect of change in accounting for income taxes of $33.5
million or $.80 per share).
Net investment income for the three months ended December 31, 1994
increased by 10.5% and fee income increased by 5.4% as compared to the year
earlier period. These increases occurred despite a difficult environment
characterized by higher interest rates and volatile stock and bond markets.
The increases in investment spread and fee income were coupled with a 1.0%
decrease in general and administrative expenses, as SunAmerica continued to
closely control these expenses through a company-wide cost containment program.
Net investment income for the first quarter of fiscal 1995 rose to
$78.1 million from $70.7 million in the fiscal 1994 quarter. The spread on
average invested assets was 3.33%, up from 3.18% a year ago. Fee income rose
to $39.7 million, up from $37.6 million in fiscal 1994. Included in the
fiscal 1995 quarter was $1.8 million of loan servicing fees resulting from
SunAmerica's recent acquisition of the net assets of Imperial Premium Finance,
Inc.
Sales of financial services products rose to $833.1 million from
$625.2 million in the first quarter of fiscal 1994, primarily as a result of a
near five-fold increase in fixed annuity premiums and a doubling of premiums
from guaranteed investment contracts.
The United States Supreme Court recently affirmed the ability of a
national bank to sell annuities issued by a life insurance company. This
decision confirms the ability of the Company to sell its products through
national banks.
SUNAMERICA CAPITAL TRUST I
The Trust is a statutory business trust that was formed under the
Trust Act on February , 1995 pursuant to a declaration of trust dated such
date among the Trustees and SunAmerica and the filing of a certificate of
trust with the Secretary of State of Delaware. Such declaration of trust will
be amended and restated in its entirety as of the date the Trust accepts
Series B Preferred in the Offer (see "The Offer -- Terms of the Offer")
substantially in the form filed as an exhibit to the Registration Statement of
which this Offering Circular/Prospectus forms a part. Upon issuance of the
Preferred Securities, the holders thereof will own all of the issued and
outstanding Preferred Securities. SunAmerica will agree to acquire Common
Securities in an amount equal to at least 3% of the total capital of the Trust
and will own all of the issued and outstanding Common Securities. The
Preferred Securities and the Common Securities will rank pari passu with each
other and will have equivalent terms; provided that if an Event of Default
with respect to the Junior Subordinated Debentures occurs and is continuing,
the holders of Preferred Securities will have a preference over holders of the
Common Securities with respect to payments in respect of distributions and
payments upon liquidation, redemption and maturity.
The number of Trustees of the Trust shall initially be three. Two
of the Trustees will be the Regular Trustees. The third trustee is The Chase
Manhattan Bank (USA), who will serve as the Property Trustee. Legal title to
the Junior Subordinated Debentures will be held by the Property Trustee for
the benefit of the holders of the Trust Securities. In addition, the Property
Trustee will maintain exclusive control of the Property Trustee Account to
hold all payment of all funds in respect of the Junior Subordinated Debentures
for the benefit of the holders of Trust Securities. The Property Trustee will
promptly make distributions to the holders of the Trust Securities out of
funds from the Property Trustee Account. SunAmerica has the right to appoint
or remove any Trustee, to increase the number of Trustees and to appoint such
additional trustees.
The Trust exists for the sole purpose of issuing (i) its Preferred
Securities in exchange for Series B Preferred validly tendered in the Offer
and in consideration for the deposit by SunAmerica of Junior Subordinated
Debentures in the Trust as trust assets and (ii) its Common Securities to
SunAmerica and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures. The rights of the holders of the Preferred
Securities, including economic rights, rights to information and voting
rights, are set forth in the Declaration and the Trust Act.
Under the Declaration, the Trustees shall have no right or power to
do any act or thing contrary to or inconsistent with the actions of any duly
elected or appointed Special Representative taken in accordance with the terms
of the relevant Trust Securities. In addition, the Declaration provides that
the Trust shall not, and the Trustees shall cause the Trust not to, engage in
any activity other than in connection with the foregoing or other than as
required or authorized by the Declaration. In particular, the Trust shall not
and the Trustees shall not (a) invest any proceeds received by the Trust from
holding the Junior Subordinated Debentures but shall promptly distribute from
the Property Trustee Account all such proceeds to holders of Trust Securities
pursuant to the terms of the Declaration and of the Trust Securities; (b)
acquire any assets other than as expressly provided in the Declaration; (c)
possess Trust property for other than a Trust purpose; (d) make any loans or
incur any indebtedness to SunAmerica or an affiliate of SunAmerica, other than
loans represented by the Junior Subordinated Debentures; (e) possess any power
or otherwise act in such a way as to vary the Trust assets or the terms of the
Trust Securities in any way whatsoever; (f) issue any securities other than
the Trust Securities; or (g) incur any indebtedness for borrowed money.
The books and records of the Trust will be maintained at the
principal office of the Trust and will be open for inspection by a holder of
Preferred Securities or his representative for any purpose reasonably related
to its interest in the Trust during normal business hours. Each holder of
Preferred Securities will be furnished annually with unaudited financial
statements of the Trust as soon as available after the end of the Trust's
fiscal year.
Except as provided below or under the Trust Act, holders of Preferred
Securities will have no voting rights. If (i) distributions on the Preferred
Securities are in arrears for 18 consecutive monthly distribution periods,
(ii) an Event of Default (as defined in the Indenture) occurs and is
continuing with respect to the Junior Subordinated Debentures or (iii)
SunAmerica is in default on any of its payment obligations under the Preferred
Securities Guarantee, holders of Preferred Securities shall have the right to
vote, as a single class, for the appointment of a special representative (a
"Special Representative") which shall be authorized to direct the Property
Trustee to enforce the Trust's creditor rights under the Junior Subordinated
Debentures, the rights of holders of Preferred Securities under the Preferred
Securities Guarantee and the rights of holders of Preferred Securities to
receive distributions on the Preferred Securities. If the Trust's failure to
make distributions on the Preferred Securities is a consequence of
SunAmerica's exercise of its right to extend the interest payment period for
the Junior Subordinated Debentures, the Property Trustee will have no right to
enforce the payment of distributions on the Preferred Securities until an
Event of Default shall have occurred. See "Description of the Preferred
Securities -- Voting Rights".
The Declaration provides that the Trustees may treat the person in
whose name a Preferred Security is registered on the books and records of the
Trust as the sole holder thereof and of the Preferred Securities represented
thereby for purposes of receiving distributions and for all other purposes
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such certificate or in the Preferred Securities represented
thereby on the part of any person, whether or not the Trust shall have actual
or other notice thereof. Certificates representing the Preferred Securities
will be issued in the form of one or more global certificates as discussed
under "Description of Preferred Securities -- Book-Entry-Only Issuance -- The
Depository Trust Company" and registered on the books and records of the Trust
in the name of Cede & Co., the nominee of The Depository Trust Company
("DTC"). Except as described in such section, no person owning Preferred
Securities (a "Preferred Security Beneficial Owner") registered in the name of
and held by the DTC or its nominee will receive definitive Preferred
Securities. Unless definitive Preferred Securities have been issued to
Preferred Security Beneficial Owners in accordance with the Declaration:
(i) the Trust and the Trustees shall be entitled to deal with
DTC (or any successor depositary) for all purposes, including the
payment of distributions and receiving approvals, votes or consents
under the Declaration, and except as set forth in the Declaration
with respect to the Property Trustee, shall have no obligation to
Preferred Security Beneficial Owners; and
(ii) the rights of Preferred Security Beneficial Owners shall
be exercised only through DTC (or any successor depositary) and shall
be limited to those established by law and agreements between such
Owners and DTC and/or its participants. See "Description of the
Preferred Securities -- Book-Entry-Only Issuances -- The Depository
Trust Company." Until definitive Preferred Securities are issued to
Preferred Security Beneficial Owners, all notices and other
communications required under the Declaration shall be given to, and
all distributions on the Preferred Securities shall be given or made
to, DTC (or its successor).
In the Declaration, SunAmerica has agreed to pay for all (and the
Trust shall not be obligated to pay, directly or indirectly, for any) costs
and expenses of the Trust, including the fees and expenses of the Trustees and
any Special Representative (as defined herein) and any taxes and all costs and
expenses with respect thereto, to which the Trust may become subject, except
for United States withholding taxes. See "Risk Factors" and "Description of
the Preferred Securities".
The foregoing summary of certain provisions of the Declaration does
not purport to be complete and is qualified in its entirety by reference to
the Declaration which have been filed as exhibits to the Registration
Statement of which this Offering Circular/Prospectus is a part.
The business address of the Trust is c/o SunAmerica Inc.,
1 SunAmerica Center, Los Angeles, California 90067-6022, telephone number
(310) 772-6000.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months Ended
Years ended September 30, December 31,
----------------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (excluding interest on
fixed annuities, guaranteed
investment contracts and
trust deposits) (1) 2.4 2.7 4.0 6.1 5.8 6.2 5.5
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed
charges (including interest on
fixed annuities, guaranteed
investment contracts and
trust deposits) (2) 1.1 1.1 1.2 1.4 1.5 1.5 1.5
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to combined
fixed charges and preferred stock
dividends (excluding interest
on fixed annuities, guaranteed
investment contracts and
trust deposits) (3) 2.0 2.3 2.7 2.8 2.8 2.8 3.1
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to combined
fixed charges and preferred stock
dividends (including interest
on fixed annuities, guaranteed
investment contracts and
trust deposits) (4) 1.1 1.1 1.2 1.3 1.4 1.3 1.4
========= ========= ========= ========= ========= ========= =========
_______________
(1) In computing the ratio of earnings to fixed charges (excluding
interest on fixed annuities, guaranteed investment contracts and trust
deposits), fixed charges consist of interest expense on senior and
subordinated indebtedness. Earnings are computed by adding interest
incurred on senior and subordinated indebtedness to pretax income.
(2) In computing the ratio of earnings to fixed charges (including
interest on fixed annuities, guaranteed investment contracts and trust
deposits), fixed charges consist of interest expense on senior and
subordinated indebtedness, fixed annuity contracts, guaranteed
investment contracts and trust deposits. Earnings are computed by
adding interest incurred on senior and subordinated indebtedness,
fixed annuity contracts, guaranteed investment contracts and trust
deposits to pretax income.
(3) In computing the ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest on fixed annuities,
guaranteed investment contracts and trust deposits), combined fixed
charges and preferred stock dividends consist of interest expense on
senior and subordinated indebtedness and dividends on preferred stock
on a tax equivalent basis. Earnings are computed by adding interest
incurred on senior and subordinated indebtedness to pretax income.
(4) In computing the ratio of earnings to combined fixed charges and
preferred stock dividends (including interest on fixed annuities,
guaranteed investment contracts and trust deposits), combined fixed
charges and preferred stock dividends consist of interest expense on
senior and subordinated indebtedness, fixed annuity contracts,
guaranteed investment contracts and trust deposits and dividends on
preferred stock on a tax equivalent basis. Earnings are computed by
adding interest incurred on senior and subordinated indebtedness,
fixed annuity contracts, guaranteed investment contracts and trust
deposits to pretax income.
</TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
Reference is made to SunAmerica's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 (the "Form 10-K"), which is incorporated
by reference in this Offering Circular/Prospectus and which contains
SunAmerica's audited consolidated financial statements, including the
consolidated income statement for SunAmerica's three fiscal years in the
period ended September 30, 1994, consolidated balance sheets as of September
30, 1993 and 1994, and the related notes. Selected unaudited financial
information as of and for the three months ended December 31, 1993 and 1994
should be read in conjunction with the audited consolidated financial
statements and related notes contained in the Form 10-K and the unaudited
consolidated financial statements contained in SunAmerica's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1994 (the "Form 10-Q"), which
report is also incorporated by reference in this Offering Circular/Prospectus.
Such unaudited information reflects, in the opinion of management, all
adjustments, principally consisting of normal accruals, necessary for the
presentation on a basis consistent with that of the audited financial
information. Results of operations for the three months ended December 31,
1994 may not necessarily be indicative of the results to be expected for the
full fiscal year.
<TABLE>
<CAPTION>
Three months ended
Years ended September 30, December 31,
----------------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(In thousands, except per common share amounts and ratios)
Results of operations
Net investment income ......... $ 132,947 $ 162,412 $ 219,384 $ 263,791 $ 294,454 $ 70,714 $ 78,109
Net realized investment
losses ...................... (29,319) (46,060) (56,364) (21,287) (21,124) (5,367) (7,066)
Fee income .................... 72,327 92,689 112,831 134,305 150,736 37,627 39,661
General and
administrative expenses...... (112,860) (120,475) (133,058) (135,790) (132,743) (33,457) (33,108)
Provision for future
guaranty fund assessments.... -- -- -- (22,000) -- -- --
Amortization of deferred
acquisition costs ........... (27,872) (40,088) (48,375) (51,860) (66,925) (15,243) (18,674)
Other income and
expenses, net ............... 25,644 24,903 16,673 16,852 15,603 2,990 4,612
--------- --------- --------- --------- --------- --------- ---------
Pretax income ................. 60,867 73,381 111,091 184,011 240,001 57,264 63,534
Income tax expense ............ (22,100) (25,900) (34,300) (57,000) (74,700) (17,700) (18,400)
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect
of change in accounting for
for income taxes ............ 38,767 47,481 76,791 127,011 165,301 39,564 45,134
Cumulative effect of change in
accounting for income taxes.. -- -- -- -- (33,500) (33,500) --
--------- --------- --------- --------- --------- --------- ---------
Net income .................... $ 38,767 $ 47,481 $ 76,791 $ 127,011 $ 131,801 $ 6,064 $ 45,134
========= ========= ========= ========= ========= ========= =========
Earnings per share:
Income before cumulative
effect of change in
accounting for income
taxes........................ $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 3.58 $ 0.85 $ 0.98
Cumulative effect of
change in accounting
for income taxes ............ -- -- -- -- (.81) (0.80) --
--------- --------- --------- --------- --------- --------- ---------
Net income .................. $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 2.77 $ 0.05 $ 0.98
========= ========= ========= ========= ========= ========= =========
Cash dividends per
share paid to common
shareholders:
Nontransferable Class B
Stock ..................... $ 0.180 $ 0.180 $ 0.180 $ 0.252 $ 0.360 $ 0.090 $ 0.135
========= ========= ========= ========= ========= ========= =========
Common Stock .............. $ 0.200 $ 0.200 $ 0.200 $ 0.280 $ 0.400 $ 0.100 $ 0.150
========= ========= ========= ========= ========= ========= =========
Financial Position
Investments.................. $ 7,275,401 $ 7,596,275 $ 9,428,266 $10,364,952 $ 9,280,390 $10,387,761 $ 9,493,129
Variable annuity assets........ 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093 4,432,876 4,359,290
Deferred acquisition costs..... 356,088 392,278 436,209 475,917 581,874 483,092 603,954
Other assets .................. 301,906 279,007 245,833 231,582 280,868 237,346 322,176
----------- ----------- ----------- ----------- ----------- ----------- ----------
Total assets .................. $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225 $15,541,075 $14,778,549
=========== =========== =========== =========== =========== =========== ==========
Reserves for fixed
annuity contracts............ $ 5,523,320 $ 5,359,757 $ 5,143,339 $ 4,934,871 $ 4,519,623 $ 4,810,948 $ 4,545,686
Reserves for guaranteed
investment contracts......... 1,294,338 1,598,963 2,023,048 2,216,104 2,783,522 2,378,606 3,018,234
Trust deposits ................ -- -- 367,458 378,986 442,320 382,315 464,840
Variable annuity
liabilities................... 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093 4,432,876 4,359,290
Other payables and
accrued liabilities.......... 159,416 344,789 1,372,010 1,828,153 860,763 1,678,885 901,347
Long-term notes and
debentures................... -- -- 225,000 380,560 472,835 404,835 472,835
Collateralized mortgage
obligations and reverse
repurchase agreements........ 368,907 299,343 182,784 112,032 28,662 241,383 --
Other senior indebtedness...... 43,503 38,035 25,919 15,119 -- -- --
Subordinated notes............. 119,485 117,985 -- -- --
Deferred income taxes.......... 40,353 58,779 40,682 96,599 74,319 119,396 54,369
Shareholders' equity........... 384,073 449,909 730,068 1,110,027 961,088 1,091,831 961,948
----------- ----------- ----------- ----------- ----------- ----------- ----------
Total liabilities and
shareholders' equity......... $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225 $15,541,075 $14,778,549
=========== =========== =========== =========== =========== =========== ==========
Book value per common
share........................ $ 9.98 $ 12.24 $ 14.54 $ 22.64 $ 18.90 $ 22.12 $ 18.76
=========== =========== =========== =========== =========== =========== ==========
</TABLE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of
SunAmerica and its subsidiaries at December 31, 1994 and as adjusted to give
effect to the issuance of Preferred Securities in exchange for the Series B
Preferred. Interest rates are as of December 31, 1994. The "As Adjusted"
capitalization described in the table below assumes that Holders of 5,500,000
shares of Series B Preferred elect to participate in the Offer. To the extent
holders of Series B Preferred do not participate in the Offer, Minority
interests in consolidated subsidiary would be reduced and Preferred Stock
would be increased by an amount equal to the additional liquidation value of
the Series B Preferred which remained outstanding.
<TABLE>
<CAPTION>
December 31, 1994
-------------------------------
Actual As Adjusted
------------- --------------
(In thousands)
<S> <C> <C>
Indebtedness:
Long-term notes and debentures:
Medium-term notes due 1998 through 2005
(5-3/8% to 6-3/4%).................... $ 147,835 $ 147,835
8-1/8% debentures due
April 28, 2023........................ 100,000 100,000
9.95% debentures due
February 1, 2012...................... 100,000 100,000
9% notes due January 15, 1999........... 125,000 125,000
------------- --------------
Total indebtedness......................... 472,835 472,835
============= ==============
Minority interests in consolidated
subsidiary (Preferred Securities of
the Trust)............................. --- 137,500
------------- --------------
Shareholders' equity:
Preferred Stock......................... 374,273 236,773
Nontransferable Class B Stock........... 6,826 6,826
Common Stock............................ 29,327 29,327
Additional paid-in capital.............. 201,536 201,536
Retained earnings....................... 545,020 545,020
Net unrealized losses on debt and
equity securities available for sale.. (195,034) (195,034)
------------- --------------
Total shareholders' equity ............. 961,948 824,448
============= ==============
Total capitalization....................... $1,434,783 $1,434,783
============= ==============
</TABLE>
THE OFFER
Purpose of the Offer
The purpose of the Offer is to refinance the Series B Preferred with
the Preferred Securities and to achieve certain tax efficiencies while
preserving SunAmerica's flexibility with respect to future financings. This
refinancing will permit SunAmerica to deduct interest payable on the Junior
Subordinated Debentures for United States federal income tax purposes;
dividends payable on the Series B Preferred are not deductible.
Following the Offer, and depending on the number of shares of Series
B Preferred tendered, SunAmerica may take additional actions to reduce further
or eliminate the remaining Series B Preferred, including by making purchases
of Series B Preferred in the open market, by making subsequent tender or
exchange offers or by undertaking a recapitalization transaction. Such
transactions could be undertaken on terms which are more favorable or less
favorable than the exchange ratios in the Offer. SunAmerica has made no
decision to take any such actions, and there is no assurance that SunAmerica
will take any such actions.
General
Participation in the Offer is voluntary and Holders of Series B
Preferred should carefully consider whether to accept. Neither the board of
directors of SunAmerica nor SunAmerica nor the Trust makes any recommendation
to Holders as to whether to tender or refrain from tendering in the Offer.
Holders of Series B Preferred are urged to consult their financial and tax
advisors in making their decisions on what action to take in light of their
own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect
to the Offer means (i) any person in whose name any shares of Series B
Preferred are registered on the books of SunAmerica or (ii) any other person
who has obtained a properly completed stock power from the registered holder,
or (iii) any person whose shares of Series B Preferred are held of record by
The Depository Trust Company ("DTC") who desires to deliver such Series B
Preferred by book-entry transfer at DTC.
Terms of the Offer
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal, the Trust will exchange its Preferred Securities
for up to 5,500,000 outstanding shares of Series B Preferred. The Offer will
be effected on a basis of one Preferred Security for each share of Series B
Preferred validly tendered and accepted for exchange. See " -- Procedures for
Tendering". Upon the terms and subject to the conditions set forth herein and
in the Letter of Transmittal, the Trust will accept up to 5,500,000 shares of
Series B Preferred validly tendered and not withdrawn prior to the Expiration
Date and, unless the Offer has been withdrawn or terminated, will deliver
Preferred Securities in exchange therefor to tendering Holders of Series B
Preferred as promptly as practicable following the Expiration Date. The Trust
expressly reserves the right, in its sole discretion, to delay acceptance for
exchange of Series B Preferred tendered under the Offer and the delivery of
the Preferred Securities with respect to the Series B Preferred accepted for
exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which
require that the Trust consummate the Offer or return the Series B Preferred
deposited by or on behalf of the Holders thereof promptly after the
termination or withdrawal of the Offer), or to withdraw or terminate the Offer
at any time prior to the Expiration Date for any reason.
In all cases, except to the extent waived by the Trust, delivery of
Preferred Securities issued with respect to the Series B Preferred accepted
for exchange pursuant to the Offer will be made only after timely receipt by
the Exchange Agent of Series B Preferred (or confirmation of book-entry
transfer thereof), a properly completed and duly executed Letter of
Transmittal and any other documents required thereby.
As of the date of this Offering Circular/Prospectus, there were
5,620,000 shares of Series B Preferred outstanding. This Offering
Circular/Prospectus, together with the Letter of Transmittal, is being sent to
all registered Holders as of February , 1995.
The Trust shall be deemed to have accepted validly tendered Series
B Preferred (or defectively tendered Series B Preferred with respect to which
the Trust has waived such defect) when, as and if the Trust has 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 Preferred
Securities from, and remitting such Preferred Securities to, tendering Holders
who are participating in the Offer. Upon the terms and subject to the
conditions of the Offer, delivery of Preferred Securities to tendering Holders
will be made as promptly as practicable following the Expiration Date.
If proration of tendered shares of Series B Preferred is required,
because of the difficulty in determining the number of shares of Series B
Preferred validly tendered (including shares tendered by the guaranteed
delivery procedures described in "-- Procedures for Tendering"), the Trust
does not expect that it would be able to announce the final proration factor
or to commence the exchange for any shares of Series B Preferred pursuant to
the Offer until approximately seven Business Days after the Expiration Date.
Preliminary results of the proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of shares of
Series B Preferred may obtain such preliminary information from the Dealer
Manager, the Information Agent or the Exchange Agent and may also be able to
obtain such information from their brokers.
If any tendered shares of Series B Preferred are not accepted for
exchange because of an invalid tender, proration, the occurrence of certain
other events set forth herein or otherwise, unless otherwise requested by the
Holder under "Special Delivery Instructions" in the Letter of Transmittal,
such shares of Series B Preferred will be returned, without expense, to the
tendering Holder thereof (or in the case of shares of Series B Preferred
tendered by book-entry transfer into the Exchange Agent's account at DTC, such
shares of Series B Preferred will be credited to an account maintained at DTC
designated by the participant therein who so delivered such Series B
Preferred), as promptly as practicable after the Expiration Date or the
withdrawal or termination of the Offer.
Holders of Series B Preferred will not have any appraisal or
dissenters' rights under the Maryland General Corporation Law in connection
with the Offer. The Trust intends to conduct the Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission thereunder.
Holders who tender Series B Preferred in the 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
Series B Preferred pursuant to the Offer. See "Fees and Expenses; Transfer
Taxes".
Expiration Date; Extensions; Amendments; Termination
The Offer will expire on the Expiration Date. The Trust reserves the
right to extend the Offer in its sole discretion at any time and from time to
time by giving oral or written notice to the Exchange Agent and by timely
public announcement communicated, unless otherwise required by applicable law
or regulation, by making a release to the Dow Jones News Service. During any
extension of the Offer, all Series B Preferred previously tendered pursuant to
the Offer and not withdrawn will remain subject to the Offer.
Except as provided below, the Trust expressly reserves the right to
(i) extend, amend or modify the terms of the Offer in any manner and (ii)
withdraw or terminate the Offer and not accept for exchange any Series B
Preferred at any time prior to the Expiration Date for any reason, including
(without limitation) if fewer than 2,810,000 shares of Series B are tendered
in the Offer (which conditions may be waived by SunAmerica and the Trust). If
the Trust makes a material change in the terms of the Offer or if it waives a
material condition of the Offer, the Trust will extend the Offer. The minimum
period for which the Offer will be extended following a material change or
waiver, other than a change in the amount of Series B Preferred sought for
exchange, will depend upon the facts and circumstances, including the relative
materiality of the change or waiver. With respect to a change in the amount
of Series B Preferred sought, the Offer will be extended for a minimum of ten
Business Days following public announcement of such change. Any withdrawal or
termination of the Offer will be followed as promptly as practicable by public
announcement thereof. If the Trust withdraws or terminates the Offer, it will
give immediate notice to the Exchange Agent, and all Series B Preferred
theretofore tendered pursuant to the Offer will be returned promptly to the
tendering Holders thereof. See "-- Withdrawal of Tenders". In order to
satisfy the NYSE listing requirements, acceptance of Series B Preferred
validly tendered in the Offer is subject to the condition that as of the
Expiration Date there be at least 400 record or beneficial holders of
Preferred Securities to be issued in exchange for such Series B Preferred,
which condition may not be waived by SunAmerica or the Trust.
Procedures for Tendering
The tender of Series B Preferred by a Holder thereof pursuant to one
of the procedures set forth below will constitute an agreement between such
Holder and the Trust in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Each Holder of the Series B Preferred wishing to participate in the
Offer must (i) properly complete and sign the Letter of Transmittal in
accordance with the instructions contained herein and in the Letter of
Transmittal, together with any required signature guarantees, and deliver the
same to the Exchange Agent, at one of its addresses set forth in "-- Exchange
Agent and Information Agent" prior to the Expiration Date and either (a)
certificates for the Series B Preferred must be received by the Exchange Agent
at such address or (b) such Series B Preferred must be transferred pursuant to
the procedures for book-entry transfer described below and a confirmation of
such book-entry transfer must be received by the Exchange Agent, in each case
prior to the Expiration Date or (ii) comply with the guaranteed delivery
procedures described below.
In order to participate in the Offer, Holders of Series B Preferred
must submit a Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the Expiration Date.
LETTERS OF TRANSMITTAL, SERIES B PREFERRED AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE TRUST, THE DEALER
MANAGER OR THE INFORMATION AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose
Series B Preferred is registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender 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 owner must, prior to completing and executing the
Letter of Transmittal and delivering its Series B Preferred, either make
appropriate arrangements to register ownership of the Series B Preferred in
such owner's name or obtain a properly completed stock power from the
registered Holder. The transfer of registered ownership may take considerable
time and may not be able to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF SERIES B PREFERRED AND ALL OTHER DOCUMENTS
IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, INSURANCE BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Signature Guarantees. If tendered Series B Preferred is registered
in the name of the signer of the Letter of Transmittal and the Preferred
Securities to be issued in exchange therefor are to be issued (and any
untendered Series B Preferred is to be reissued) in the name of the registered
Holder (which term, for the purposes described herein, shall include any
participant in DTC whose name appears on a security listing as the owner of
Series B Preferred), the signature of such signer need not be guaranteed. If
the tendered Series B Preferred is registered in the name of someone other
than the signer of the Letter of Transmittal, such tendered Series B Preferred
must be endorsed or accompanied by written instruments of transfer in form
satisfactory to the Trust and duly executed by the registered Holder, and the
signature on the endorsement or instrument of transfer must be guaranteed by a
financial institution (including most banks, savings and loans associations
and brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program or the Stock Exchange Medallion Program (any of the foregoing
hereinafter referred to as an "Eligible Institution"). If the Preferred
Securities and/or the Series B Preferred not exchanged are to be delivered to
an address other than that of the registered Holder appearing on the register
for the Series B Preferred, the signature in the Letter of Transmittal must be
guaranteed by an Eligible Institution.
Book-Entry Transfer. The Trust understands that the Exchange Agent
will make a request promptly after the date of this Offering
Circular/Prospectus to establish accounts with respect to the Series B
Preferred at DTC for the purpose of facilitating the Offer, and subject to the
establishment thereof, any financial institution that is a participant in
DTC's system may make book-entry delivery of Series B Preferred by causing DTC
to transfer such Series B Preferred into the Exchange Agent's account with
respect to the Series B Preferred in accordance with DTC's Automated Tender
Offer Program ("ATOP") procedures for such book-entry transfers. However, the
exchange for the Series B Preferred so tendered will only be made after timely
confirmation (a "Book-Entry Confirmation") of such Book-Entry Transfer of
Series B Preferred into the Exchange Agent's account, and timely receipt by
the Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by DTC and received by the
Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that DTC has received an express acknowledgment from a participant tendering
Series B Preferred that is the subject of such Book-Entry Confirmation that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal, and that the Trust may enforce such agreement against
such participant.
Guaranteed Delivery. If a Holder desires to participate in the Offer
and time will not permit a Letter of Transmittal or Series B Preferred to
reach the Exchange Agent before the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if the Exchange Agent has received at its office prior to the
Expiration Date, a letter, telegram or facsimile transmission from an Eligible
Institution setting forth the name and address of the tendering Holder, the
name(s) in which the Series B Preferred is registered and, if the Series B
Preferred is held in certificated form, the certificate numbers of the Series
B Preferred to be tendered, and stating that the tender is being made thereby
and guaranteeing that within five NYSE trading days after the date of
execution of such letter, telegram or facsimile transmission by the Eligible
Institution, the Series B Preferred in proper form for transfer together with
a properly completed and duly executed Letter of Transmittal (and any other
required documents), or a confirmation of book-entry transfer of such Series B
Preferred into the Exchange Agent's account at DTC, will be delivered by such
Eligible Institution. Unless the Series B Preferred being tendered by the
above-described method is deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents) or a confirmation of
book-entry transfer of such Series B Preferred into the Exchange Agent's
account at DTC in accordance with DTC's ATOP procedures is received, the Trust
may, at its option, reject the tender. In addition to the copy being
transmitted herewith, copies of a Notice of Guaranteed Delivery which may be
used by Eligible Institutions for the purposes described in this paragraph are
available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Series B Preferred will be determined by the Trust, whose determination will
be final and binding. The Trust reserves the absolute right to reject any or
all tenders not in proper form or the acceptance for exchange of which may, in
the opinion of the Trust's counsel, be unlawful. The Trust also reserves the
absolute right to waive any defect or irregularity in the tender of any Series
B Preferred, and the Trust's interpretation of the terms and conditions of the
Offer (including the instructions in the Letter of Transmittal) will be final
and binding. None of the Trust, the Exchange Agent, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Tenders of Series B Preferred involving any irregularities will not
be deemed to have been made until such irregularities have been cured or
waived. Series B Preferred received by the Exchange Agent that is not validly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering Holder (or in the case of
Series B Preferred tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Series B Preferred will be credited to an account
maintained at DTC designated by the participant therein who so delivered such
Series B Preferred), unless otherwise requested by the Holder in the Letter of
Transmittal, as promptly as practicable after the Expiration Date or the
withdrawal or termination of the Offer.
Letter of Transmittal
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Offer.
The party tendering Series B Preferred for exchange (the
"Transferor") exchanges, assigns and transfers the Series B Preferred to the
Trust, and irrevocably constitutes and appoints the Exchange Agent as the
Transferor's agent and attorney-in-fact to cause the Series B Preferred to be
assigned, transferred and exchanged. The Transferor represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Series B Preferred and to acquire Preferred Securities issuable upon the
exchange of such tendered Series B Preferred and that, when such Transferor's
shares of Series B Preferred are accepted for exchange, the Trust will acquire
good and unencumbered title to such shares of tendered Series B Preferred,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim. The Transferor also warrants that it will, upon
request, execute and deliver any additional documents deemed by the Trust to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Series B Preferred or transfer ownership of such Series B Preferred
on the account books maintained by DTC. All authority conferred by the
Transferor will survive the death, bankruptcy or incapacity of the Transferor
and every obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
Withdrawal of Tenders
Tenders of Series B Preferred pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for exchange by
the Trust, may be withdrawn at any time after 40 Business Days after the date
of this Offering Circular/Prospectus.
To be effective, a written notice of withdrawal delivered by mail,
hand delivery or facsimile transmission must be timely received by the
Exchange Agent at the address set forth below under "-- Exchange Agent and
Information Agent". The method of notification is at the risk and election of
the Holder. Any such notice of withdrawal must specify (i) the Holder named
in the Letter of Transmittal as having tendered Series B Preferred to be
withdrawn, (ii) if the Series B Preferred is held in certificated form, the
certificate numbers of the Series B Preferred to be withdrawn, (iii) that such
Holder is withdrawing his election to have such Series B Preferred exchanged
and (iv) the name of the registered Holder of such Series B Preferred, and
must be signed by the Holder in the same manner as the original signature on
the Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Trust that the person withdrawing
the tender has succeeded to the beneficial ownership of the Series B Preferred
being withdrawn. The Exchange Agent will return the properly withdrawn Series
B Preferred promptly following receipt of notice of withdrawal. If Series B
Preferred has been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn Series B Preferred and otherwise comply
with DTC's procedures. All questions as to the validity of notice of
withdrawal, including time of receipt, will be determined by the Trust, and
such determination will be final and binding on all parties. Withdrawals of
tenders of Series B Preferred may not be rescinded and any Series B Preferred
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. Properly withdrawn Series B Preferred, however, may be retendered by
following the procedures therefor described elsewhere herein at any time prior
to the Expiration Date. See "-- Procedures for Tendering."
Acceptance of Shares and Proration
Upon the terms and subject to the conditions of the Offer, if
5,500,000 or fewer shares of Series B Preferred have been validly tendered and
not withdrawn prior to the Expiration Date, the Trust will accept for exchange
all such shares of Series B Preferred. Upon the terms and subject to the
conditions of the Offer, if more than 5,500,000 shares of Series B Preferred
(or, if decreased as described herein, such lesser number as the Trust may
elect to purchase pursuant to the Offer) have been validly tendered and not
withdrawn prior to the Expiration Date, the Trust will accept for exchange
shares of Series B Preferred from each tendering Holder on a pro rata basis,
subject to adjustment to avoid the acceptance for exchange of fractional
shares.
If the Trust decreases the amount of Series B Preferred sought, and
the Offer is scheduled to expire less than ten Business Days from and
including the date that notice of such decrease is first published, sent or
given in the manner specified in "-- Expiration Date; Extensions; Amendments;
Termination", then the Offer will be extended for ten Business Days from and
including the date of such notice.
All shares of Series B Preferred not accepted pursuant to the Offer,
including shares not purchased because of proration, will be returned to the
tendering Holders at the Trust's expense as promptly as practicable following
the Expiration Date.
Exchange Agent and Information Agent
The First National Bank of Chicago has been appointed as Exchange
Agent for the Offer.
The Exchange Agent:
The First National Bank of Chicago
By Hand or Overnight Courier in By Hand or Overnight Courier in
Chicago: New York:
The First National Bank of Chicago, First Chicago Trust Company of
Exchange Agent New York
One North State Street 14 Wall Street
9th Floor 8th Floor - Window 2
Attention: Securities Processing New York, New York 10005
Suite 0124
Chicago, Illinois 60602
By Mail:
The First National Bank of Chicago,
Exchange Agent
Registered Securities Processing Unit
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
By Facsimile Transmission
(For Eligible Institutions Only):
(312) 407-1067 or (212) 240-8938
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 524-9472 (Chicago) or (212) 240-8800 (New York)
Georgeson & Company Inc. has been retained by SunAmerica and the
Trust as the Information Agent to assist in connection with the Offer.
Questions and requests for assistance regarding the Offer, requests for
additional copies of this Offering Circular/Prospectus, the Letter of
Transmittal and requests for Notice of Guaranteed Delivery may be directed to
the Information Agent at Wall Street Plaza, New York, New York 10005,
telephone (800) 223-2064.
SunAmerica will pay the Exchange Agent and Information Agent
reasonable and customary fees for their services and will reimburse them for
all their reasonable out-of-pocket expenses in connection therewith.
Dealer Manager
Merrill Lynch & Co., as Dealer Manager, has agreed to solicit
exchanges of Series B Preferred for Preferred Securities. SunAmerica will pay
the Dealer Manager a fee that is dependent on the number of shares of Series B
Preferred accepted pursuant to the Offer. The maximum fee payable is
approximately $3.44 million. SunAmerica will also reimburse the Dealer
Manager for certain reasonable out-of-pocket expenses in connection with the
Offer and will indemnify the Dealer Managers against certain liabilities,
including liabilities under the Securities Act. Additional solicitation may
be made by telephone or in person by officers and regular employees of
SunAmerica and its affiliates. No additional compensation will be paid to any
such officers and employees who engage in soliciting tenders. Merrill Lynch
& Co. engages in transactions with, and from time to time has performed
services for, SunAmerica, including acting as lead underwriter for the
issuance of the Series B Preferred.
LISTING AND TRADING OF PREFERRED SECURITIES AND SERIES B PREFERRED
The Preferred Securities constitute a new issue of securities with
no established trading market. While application has been made to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Manager has indicated to the Trust that
it intends to make a market in the Preferred Securities as permitted by
applicable laws and regulations prior to the commencement of trading on the
NYSE, it is not obligated to do so and may discontinue any such market-making
at any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Preferred Securities. In order to
satisfy the NYSE listing requirements, acceptance of Series B Preferred validly
tendered in the Offer is subject to the condition that as of the Expiration
Date there be at least 400 record or beneficial holders of Preferred
Securities to be issued in exchange for such Series B Preferred, which
condition may not be waived by SunAmerica or the Trust.
To the extent that Series B Preferred is tendered and accepted in the
Offer, the terms on which untendered Series B Preferred could subsequently be
sold could be adversely affected. See "Risk Factors -- Listing and Trading of
Preferred Securities and Series B Preferred".
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Offer between
SunAmerica or any of its directors or executive officers, the Trust or the
Trustees and any person with respect to any securities of SunAmerica or the
Trust, including the Junior Subordinated Debentures, the Series B Preferred
and the Preferred Securities.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Series B Preferred will be
borne by SunAmerica. For compensation to be paid to the Dealer Manager see
"The Offer -- Dealer Manager". The total cash expenditures to be incurred by
SunAmerica in connection with the Offer, other than fees payable to the Dealer
Manager, but including the expenses of the Dealer Manager, printing,
accounting and legal fees, and the fees and expenses of the Exchange Agent,
the Information Agent, the Property Trustee and the Indenture Trustee, are
estimated to be approximately $600,000.
SunAmerica will pay all transfer taxes, if any, applicable to the
exchange of Series B Preferred pursuant to the Offer. If, however,
certificates representing Preferred Securities or shares of Series B Preferred
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 the
Series B Preferred tendered or if a transfer tax is imposed for any reason
other than the exchange of Series B Preferred pursuant to the 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.
PRICE RANGE OF SERIES B PREFERRED
The Series B Preferred is listed and principally traded on the NYSE.
The following table sets forth, for each period shown, the high and low sales
prices of the Series B Preferred as reported on the NYSE Composite Tape.
Fiscal Year Ended High Low
September 30, 1993
1st Quarter.............................. $26 3/8 $24 7/8
2nd Quarter.............................. $27 $25 1/2
3rd Quarter.............................. $27 7/8 $26 5/8
4th Quarter.............................. $28 1/4 $27 1/8
Fiscal Year Ended High Low
September 30, 1994
1st Quarter.............................. $28 5/8 $26 1/2
2nd Quarter.............................. $27 7/8 $25 1/2
3rd Quarter.............................. $26 1/2 $25
4th Quarter.............................. $26 1/2 $25 1/4
Fiscal Year Ending High Low
September 30, 1995
1st Quarter.............................. $25 1/2 $24 1/2
2nd Quarter (through February 16, 1995).. $26 3/8 $25
On December 19, 1994, the last full day of trading prior to the first
public announcement of the Offer, the closing sales price of the Series B
Preferred on the NYSE as reported on the Composite Tape was $25 3/8 per share.
Stockholders are urged to obtain a current market quotation for the Series B
Preferred.
DESCRIPTION OF THE PREFERRED SECURITIES
The summary of certain material terms and provisions of the Preferred
Securities set forth below does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Declaration, which has been
filed as an exhibit to the Registration Statement of which this Offering
Circular/Prospectus forms a part, and the Trust Act.
General
The Declaration authorizes the Trustees to create, and the Trustees
have created the Preferred Securities, which represent preferred undivided
beneficial interests in the assets of the Trust, and the Common Securities,
which represent common undivided beneficial interests in the assets of the
Trust. All of the Common Securities are owned by SunAmerica. The Common
Securities rank pari passu with the Preferred Securities except that, if an
Event of Default occurs and is continuing under the Indenture, the rights of
the holders of the Common Securities to payment in respect of periodic
distributions and payments upon liquidation, redemption and maturity are
subordinated to the rights of the holders of the Preferred Securities. The
Declaration does not permit the issuance by the Trust of any securities other
than the Preferred Securities and the Common Securities or the incurrence of
any indebtedness for borrowed money by the Trust. Pursuant to the
Declaration, the Property Trustee will own and hold the Junior Subordinated
Debentures for the benefit of the holders of the Preferred Securities and the
Common Securities. The payment of distributions out of money held by the
Property Trustee, and payments on redemption of the Preferred Securities or
liquidation of the Trust, are guaranteed by SunAmerica on a subordinated basis
as and to the extent described under "Description of the Preferred Securities
Guarantee." The Preferred Securities Guarantee does not cover payment of
distributions on the Preferred Securities when the Property Trustee does not
have sufficient funds in the Property Trustee Account to make such
distributions. See "Voting Rights."
Distributions
Distributions on the Preferred Securities will be fixed at a rate per
annum of % of the stated liquidation amount of $25 per Preferred
Security. Distributions in arrears for more than one month will bear interest
thereon at the rate per annum of % of the stated liquidation amount of
$25 per Preferred Security, compounded monthly. The term "distributions" as
used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will
accrue from the Accrual Date and, except as otherwise described below, will be
payable monthly in arrears, on the last day of each month of each year,
commencing on the last day of the month in which the Expiration Date occurs,
but only if, and to the extent that, the Property Trustee has funds available
in the Property Trustee Account to make such distribution. In addition,
holders of Preferred Securities will be entitled to an additional cash
distribution at the rate of
9 1/4% per annum of the liquidation amount thereof from March 15, 1995 through
the Expiration Date in lieu of dividends accumulating after March 15, 1995 on
their Series B Preferred accepted for exchange, such additional distribution
to be made at the time the first distribution on the Preferred Securities is
made.
So long as SunAmerica shall not be in default in the payment of
interest on the Junior Subordinated Debentures, SunAmerica has the right under
the Indenture to extend the interest payment period from time to time on the
Junior Subordinated Debentures for a period not exceeding 60 consecutive
months and, as a consequence, monthly distributions on the Preferred
Securities would not be made (but would continue to accrue with interest
thereon at the rate of % per annum, compounded monthly) by the Trust
during any such Extension Period. If SunAmerica exercises the right to extend
an interest payment period, SunAmerica may not declare or pay dividends on, or
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock during such Extension Period;
provided that SunAmerica will be permitted to pay accrued dividends (and cash
in lieu of fractional shares) upon the conversion of any of its Series D
Preferred Stock in accordance with the terms of such stock. Prior to the
termination of any such Extension Period, SunAmerica may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 60 consecutive months.
Upon the termination of any Extension Period and the payment of all amounts
then due, SunAmerica may commence a new Extension Period, subject to the above
requirements. SunAmerica may also prepay at any time all or any portion of
the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to six Extension Periods of
60 consecutive months each or more numerous shorter Extension Periods)
throughout the term of the Junior Subordinated Debentures. See "Risk
Factors"; "Description of the Junior Subordinated Debentures -- Interest" and
"-- Option to Extend Interest Payment Period".
Distributions on the Preferred Securities must be paid on the dates
payable to the extent that the Property Trustee has cash on hand in the
Property Trustee Account to permit such payment. The funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received by the Property Trustee in respect of the Junior
Subordinated Debentures that are deposited in the Trust as trust assets. See
"Description of the Junior Subordinated Debentures". If SunAmerica does not
make interest payments on the Junior Subordinated Debentures, the Property
Trustee will not make distributions on the Preferred Securities. Under the
Declaration, if and to the extent SunAmerica does make interest payments on
the Junior Subordinated Debentures deposited in the Trust as trust assets, the
Property Trustee is obligated to make distributions on the Preferred
Securities. The payment of distributions on the Preferred Securities is
guaranteed by SunAmerica on a subordinated basis as and to the extent set
forth under "Description of the Guarantee". The Guarantee is a full and
unconditional guarantee from the time of issuance of the Preferred Securities
but does not apply to the payment of distributions and other payments on the
Preferred Securities when the Property Trustee does not have sufficient funds
in the Property Trustee Account to make such distributions or other payments.
Distributions on the Preferred Securities will be made to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in
book-entry-only form, will be one Business Day prior to the relevant payment
dates. The Declaration provides that the payment dates or record dates for
the Preferred Securities shall be the same as the payment dates and record
dates for the Junior Subordinated Debentures. Distributions on the Preferred
Securities will be paid through the Property Trustee who will hold amounts
received in respect of the Junior Subordinated Debentures and the Preferred
Securities Guarantee in the Property Trustee Account for the benefit of the
holders of the Preferred and Common Securities. Subject to any applicable
laws and regulations and the provisions of the Declaration, each such payment
will be made as described under "Book-Entry-Only Issuance - The Depository
Trust Company" below. If the Preferred Securities shall not continue to
remain in book-entry-only form, the Regular Trustees shall have to select
relevant record dates, which shall be the same as the record dates for the
Junior Subordinated Debentures. If any date on which distributions are to be
made on the Preferred Securities is not a Business Day, then payment of the
distribution to be made on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
Special Event Redemption or Distribution
If a Tax Event or an Investment Company Event (each as hereinafter
defined, and each a "Special Event") shall occur and be continuing, the Trust
may be dissolved with the result that Junior Subordinated Debentures with an
aggregate principal amount equal to the aggregate stated liquidation amount of
the Preferred Securities and the Common Securities would be distributed on a
pro rata basis to the holders of the Preferred Securities and the Common
Securities in liquidation of such holders' interests in the Trust, within 90
days following the occurrence of such Special Event; provided, however, that
in the case of the occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Trustees shall have received an opinion of
nationally recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion") to the effect that the holders of the Preferred
Securities will not recognize any gain or loss for federal income tax purposes
as a result of such dissolution and distribution of Junior Subordinated
Debentures; and, provided, further, that, if at the time there is available to
the Trust the opportunity to eliminate, within such 90 day period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure, which has no
adverse effect on the Trust or SunAmerica or the holders of the Preferred
Securities, the Trust will pursue such measure in lieu of dissolution.
Furthermore, if in the case of the occurrence of a Tax Event, (i) the Trustees
have received an opinion (a "Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that SunAmerica would be
precluded from deducting the interest on the Junior Subordinated Debentures
for federal income tax purposes even if the Junior Subordinated Debentures
were distributed to the holders of Preferred Securities in liquidation of such
holders' interests in the Trust as described above or (ii) after its receipt
of a Dissolution Tax Opinion (as defined below), the Trustees shall have been
informed by such tax counsel that a No Recognition Opinion cannot be delivered
to the Trust, SunAmerica shall have the right, upon not less than 30 nor more
than 60 days notice, to redeem the Junior Subordinated Debentures in whole or
in part for cash within 90 days following the occurrence of such Tax Event,
and Preferred Securities and Common Securities with an aggregate liquidation
value equal to the aggregate principal amount of the Junior Subordinated
Debentures so redeemed will be redeemed by the Trust at the Redemption Price;
provided, however, that if at the time there is available to SunAmerica the
opportunity to eliminate, within such 90 day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure, which has no adverse effect on
the Trust, SunAmerica or the holders of the Preferred Securities, SunAmerica
will pursue such measure in lieu of redemption or dissolution. The Common
Securities will be redeemed pro rata with the Preferred Securities, except
that if an Event of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a preference over the Common
Securities.
"Tax Event" means that the Regular Trustees shall have obtained an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after the date
of this Offering Circular/Prospectus, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after the date of this Offering Circular/Prospectus,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date thereof, subject to United States federal income tax
with respect to income accrued or received on the Junior Subordinated
Debentures, (ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges or (iii) interest payable by SunAmerica to the Trust on
the Junior Subordinated Debentures is not, or within 90 days of the date
thereof will not be, deductible by SunAmerica for United States federal income
tax purposes.
"Investment Company Event" means the occurrence of a change in law
or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that the Trust is or will
be considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change
in 1940 Act Law becomes effective on or after the date of this Offering
Circular/Prospectus; provided that no Investment Company Event shall be deemed
to have occurred if the Regular Trustees obtain a written opinion of
nationally recognized independent counsel to the Trust experienced in practice
under the 1940 Act to the effect that SunAmerica or the Regular Trustees have
taken such action as may be necessary so that, in the opinion of such counsel,
notwithstanding such Change in 1940 Act Law, the Trust is not required to be
registered as an "investment company" within the meaning of the 1940 Act. In
case of any uncertainty regarding an Investment Company Event, the good faith
determination of the Regular Trustees (based on the advice of counsel) shall
be conclusive.
After the date for any distribution of Junior Subordinated
Debentures, upon dissolution of the Trust, (i) the Preferred Securities and
the Common Securities will no longer be deemed to be outstanding, (ii) DTC or
its nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution and (iii) any
certificates representing Preferred Securities not held by DTC or its nominee
will be deemed to represent Junior Subordinated Debentures having an aggregate
principal amount equal to the stated liquidation amount of, with an interest
rate identical to distribution rate of, and accrued and unpaid interest equal
to accrued and unpaid distributions on, such Preferred Securities until such
certificates are presented to SunAmerica or its agent for transfer or
reissuance.
There can be no assurance as to the market price for the Junior
Subordinated Debentures which may be distributed in exchange for Preferred
Securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the Junior Subordinated Debentures which the investor may
subsequently receive on dissolution and liquidation of the Trust, may trade at
a discount to the price of the Preferred Securities exchanged. If the Junior
Subordinated Debentures are distributed to the holders of Preferred Securities
upon the dissolution of the Trust, SunAmerica will use its best efforts to
list the Junior Subordinated Debentures on the NYSE or on such other exchange
on which the Preferred Securities are then listed.
Mandatory Redemption
Upon the repayment of the Junior Subordinated Debentures, whether at
maturity or upon redemption, the proceeds from such repayment or payment will
be simultaneously applied to redeem the Preferred Securities and the Common
Securities having an aggregate liquidation value equal to the Junior
Subordinated Debentures so repaid, in whole (and not in part), upon not less
than 30 nor more than 60 days' notice, at the Redemption Price. The Common
Securities will be entitled to be redeemed pro rata with the Preferred
Securities, except that if an Event of Default under the Indenture has
occurred and is continuing, the Preferred Securities will have a preference
over the Common Securities. In the event fewer than all outstanding Preferred
Securities are to be redeemed, the Preferred Securities will be redeemed pro
rata as described under "Book-Entry-Only Issuance -- The Depository Trust
Company" below.
Redemption Procedures
The Trust may not redeem fewer than all the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all monthly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Trust will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. See "-- Book-Entry-Only Issuance - The
Depository Trust Company". If notice of redemption shall have been given and
funds deposited as required, then immediately prior to the close of business
on the date of such deposit, all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the
holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither Trustees nor the Trust
shall be required to register or cause to be registered the transfer of any
Preferred Securities which have been so called for redemption. If any date
fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If SunAmerica fails to repay Junior
Subordinated Debentures on maturity or on the date fixed for this redemption
or if payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by the Property Trustee or
by SunAmerica pursuant to the Preferred Securities Guarantee described under
"Description of the Preferred Securities Guarantee", distributions on such
Preferred Securities will continue to accrue, from the original redemption
date of the Preferred Securities to the date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), SunAmerica or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary dissolution,
liquidation, winding-up or termination of the Trust, the holders of the
Preferred Securities and Common Securities at the time will be entitled to
receive out of the assets of the Trust, after satisfaction of liabilities of
creditors, distributions in an amount equal to, the aggregate of the stated
liquidation value of $25 per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"), unless, in connection with such dissolution,
liquidation, winding-up or termination, Junior Subordinated Debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Trust Securities, with an interest rate identical to the distribution
rate of, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid distributions on, such Preferred Securities, shall be
distributed on a pro rata basis to the holders of the Preferred Securities and
Common Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and the Common Securities
shall be paid in cash or in kind on a pro rata basis. The holders of the
Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if an Event of Default under the Indenture has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities.
Pursuant to the Declaration, the Trust shall terminate: (i) on
December 31, 2094, (ii) upon the bankruptcy of the Trust or SunAmerica, (iii)
upon the filing of a certificate of dissolution or its equivalent with respect
to the Trust or SunAmerica, or the revocation of SunAmerica's or the Trust's
charter or declaration and the expiration of 90 days after the date of notice
of revocation without a reinstatement thereof, (iv) upon the entry of a decree
of judicial dissolution, (v) upon the written consent of all holders of Trust
Securities, (vi) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the holders of Trust Securities in accordance with the terms of the
Trust Securities; or (vii) when all of the Junior Subordinated Debentures
shall have been distributed to the holders of Trust Securities in exchange for
all of the Securities in accordance with the terms of the Trust Securities.
No Merger, Consolidation or Amalgamation of the Trust
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body.
Voting Rights
Except as provided below and under "Description of the Preferred
Securities Guarantee -- Amendments and Assignment" and as otherwise required
by law and the Declaration, the holders of the Preferred Securities will have
no voting rights.
If (i) the Trust fails to make distributions on the Preferred
Securities for 18 consecutive monthly distribution periods; (ii) an Event of
Default (as defined in the Indenture) occurs and is continuing on the Junior
Subordinated Debentures; or (iii) SunAmerica is in default on any of its
payment or other obligations under the Preferred Securities Guarantee, then
the holders of the Preferred Securities, acting as a single class, will be
entitled, by the vote of holders of Preferred Securities representing a
majority in aggregate liquidation amount of the outstanding Preferred
Securities, to appoint a Special Representative which will be authorized to
direct the Property Trustee to enforce the Trust's creditor rights under the
Junior Subordinated Debentures, to enforce the rights of the holders of the
Preferred Securities under the Preferred Securities Guarantee and to enforce
the rights of the holders of the Preferred Securities to receive distributions
on the Preferred Securities. In the case of clause (i) above, if the Trust's
failure to pay distributions is a consequence of SunAmerica's exercise of its
right to extend the interest payment period for the Junior Subordinated
Debentures as described under "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period", the Special
Representative will have no right to enforce the payment of distributions
until an Event of Default shall have occurred. The Special Representative
shall not be a holder of beneficial interests in the Trust, shall have no
rights other than described herein or otherwise shall have no liability for
the debts, obligations or liabilities of the Trust. For purposes of
determining whether the Trust has failed to pay distributions in full for 18
consecutive monthly distribution periods, distributions shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative distributions have been or contemporaneously are paid with respect
to all monthly distribution periods terminating on or prior to the date of
payment of such cumulative distributions. Not later than 30 days after such
right to appoint a Special Representative arises, the Regular Trustees will
convene a meeting for the purpose of appointing a Special Representative. If
the Regular Trustees fail to convene such meeting within such 30-day period,
the holders of Preferred Securities representing 10% in liquidation amount of
the outstanding Preferred Securities will be entitled to convene such meeting.
The provisions of the Declaration relating to the convening and conduct of the
meetings of the holders will apply with respect to any such meeting. If, at
any such meeting, holders of less than a majority in aggregate liquidation
amount of Preferred Securities entitled to vote for the appointment of a
Special Representative vote for such appointment, no Special Representative
shall be appointed. Any Special Representative appointed shall cease to be a
Special Representative of the holders if the Trust (or SunAmerica pursuant to
the Preferred Securities Guarantee) shall have paid in full all accrued and
unpaid distributions on the Preferred Securities or such default or breach
under (ii) or (iii) above, as the case may be, shall have been cured, in which
case the activities of the Trust shall continue without dissolution.
Notwithstanding the appointment of any such Special Representative, SunAmerica
shall retain all rights under the Indenture, including the right to extend the
interest payment period as provided under "Description of the Junior
Subordinated Debentures -- Option to Extend Interest Payment Period." If such
an extension occurs, there will be no Event of Default under the Indenture for
failure to make any scheduled interest payment during the Extension Period on
the date originally scheduled. The Trustees shall have no right or power to
do any act or thing contrary to or inconsistent with the actions of any duly
elected or appointed Special Representative.
If any proposed amendment to the Declaration provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely
affect the powers, preferences or special rights of the Preferred Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Junior Subordinated Debentures held by the Property
Trustee upon the occurrence of a Special Event or in connection with the
redemption of Preferred Securities as a consequence of a redemption of Junior
Subordinated Debentures, then the holders of outstanding Preferred Securities
will be entitled to vote on such amendment or proposal as a class and such
amendment or proposal shall not be effective except with the approval of the
holders of 66 2/3% in liquidation amount of such outstanding Preferred
Securities; provided, however, that no such approval shall be required if the
dissolution, winding-up or termination of the Trust is proposed or initiated
upon the initiation of proceedings, or after proceedings have been initiated,
for the dissolution, winding-up, liquidation or termination of SunAmerica.
So long as any Junior Subordinated Debentures are held by the
Property Trustee, the Property Trustee shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the
Indenture Trustee, or executing any trust or power conferred on the Indenture
Trustee with respect to the Junior Subordinated Debentures, (ii) waive any
past default that is waivable under Section 6.06 of the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Junior Subordinated Debentures shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in
each case, obtaining the prior approval of the holders of at least 66 2/3% in
liquidation amount of the Preferred Securities affected thereby; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of
each holder of all Preferred Securities affected thereby. The Property
Trustee shall not revoke any action previously authorized or approved by a
vote of the holders of Preferred Securities. The Property Trustee shall
notify all holders of Preferred Securities of any notice of default received
from the Indenture Trustee with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the holders of the
Preferred Securities, prior to taking any of the foregoing actions, the
Property Trustee shall obtain an opinion of tax counsel to the effect that the
Trust will not fail to be classified as a grantor trust for federal income tax
purposes on account of such action.
Any required approval of holders of Preferred Securities may be given
at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of beneficial interests in the
Trust or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of such holders is
to be taken, to be mailed to each holder of record of Preferred Securities.
Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities in accordance
with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities as a single class at such time that are owned by
SunAmerica or by any entity directly or indirectly controlling or controlled
by or under direct or indirect common control with SunAmerica shall not be
entitled to vote or consent and shall, for purposes of such vote or consent,
be treated as if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise
their voting rights are described below.
Holders of the Preferred Securities will have no rights to remove or
replace Trustees, who will be removable or replaceable solely by SunAmerica,
as the Sponsor.
Book-Entry-Only Issuance - The Depository Trust Company
DTC will act as securities depository for the Preferred Securities.
The Preferred Securities will be issued only as fully registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully
registered global Preferred Security certificates will be issued, representing
in the aggregate the total number of Preferred Securities, and will be
deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global Preferred
Security.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by
the NYSE, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made
by or through Direct Participants, which will receive a credit for the
Preferred Securities on DTC's records. The ownership interest of each actual
purchaser of each Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Preferred
Securities, except in the event that use of the book-entry system for the
Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of
the Preferred Securities are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such series to be
redeemed.
Although voting with respect to the Preferred Securities is limited,
in those instances in which a vote is required, neither DTC nor Cede & Co.
itself will consent or vote with respect to Preferred Securities. Under its
usual procedures, DTC would mail an Omnibus Proxy to the Trust as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participants and not of DTC,
the Trust or SunAmerica, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of distributions to DTC is the
responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities at any time by giving reasonable
notice to the Trust. Under such circumstances, if a successor securities
depository is not obtained, Preferred Security certificates will be required
to be printed and delivered. Additionally, the Trust may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depository). In that event, certificates for the Preferred
Securities will be printed and delivered. In each of the above circumstances,
the Trustees will appoint the Property Trustee or other appropriate banking
institution as paying agent with respect to the Preferred Securities.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Trust and SunAmerica believe to
be reliable, but the Trust and SunAmerica take no responsibility for the
accuracy thereof.
Registrar and Transfer Agent
If the book-entry system for the Preferred Securities is
discontinued, it is anticipated that The First National Bank of Chicago or one
of its affiliates will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (with the giving
of such indemnity as the Trust or SunAmerica may require) in respect of any
tax or other governmental charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered
the transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
Miscellaneous
Application has been made to list the Preferred Securities on the
NYSE.
The Regular Trustees are authorized and directed to take such action
as they deem reasonable in order that the Trust will not be deemed to be an
"investment company" required to be registered under the 1940 Act or taxed as
a corporation for United States federal income tax purposes. In this
connection, the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust or the Declaration,
that the General Partners determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not adversely affect
the interests of the holders of the Preferred Securities or vary the terms
thereof.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by SunAmerica for the
benefit of the holders from time to time of Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Preferred
Securities Guarantee, which is filed as an exhibit to the Registration
Statement of which this Offering Circular/Prospectus forms a part.
General
Pursuant to the Preferred Securities Guarantee, SunAmerica will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities, the Guarantee Payments
(as defined below) (without duplication of amounts theretofore paid by the
Trust), to the extent not paid by the Trust, regardless of any defense, right
of set-off or counterclaim that the Trust may have or assert. The following
payments or distributions with respect to the Preferred Securities to the
extent not paid or made by the Trust (the "Guarantee Payments") will be
subject to the Guarantee (without duplication): (i) any accrued and unpaid
distributions on the Preferred Securities where SunAmerica has made a payment
of principal, premium or interest on the Junior Subordinated Debentures held
by the Property Trustee, (ii) the redemption price, including all accrued and
unpaid dividends to the date of the redemption, with respect to the Preferred
Securities called for redemption by the Trust and (iii) upon a liquidation of
the Trust, the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment and (b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Securities in liquidation of the Trust.
SunAmerica's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by SunAmerica to the holders of Preferred
Securities or by causing the Trust to pay such amounts to such holders.
If SunAmerica does not make interest payments on the Junior
Subordinated Debentures held by the Property Trustee, the Trust will not make
distributions on the Preferred Securities. The Preferred Securities Guarantee
will be a full and unconditional guarantee of the Guarantee Payments with
respect to the Preferred Securities from the time of issuance of the Preferred
Securities, but will not apply to the payment of distributions and other
payments on the Preferred Securities when the Property Trustee does not have
sufficient funds in the Property Trustee Account to make such distributions or
other payments.
Certain Covenants of SunAmerica
In the Preferred Securities Guarantee, SunAmerica will covenant that,
so long as the Preferred Securities remain outstanding, SunAmerica will not
declare or pay any dividends on, or purchase, acquire or make a distribution
or liquidation payment with respect to, any of its common stock or preferred
stock or make any guarantee payment with respect thereto if at such time (i)
SunAmerica shall be in default with respect to its Guarantee Payments or other
payment obligations under the Guarantee, (ii) there shall have occurred any
Event of Default under the Indenture or (iii) SunAmerica shall have given
notice of its selection of an Extension Period as provided in the Indenture
and such period, or any extension thereof, is continuing; provided that
SunAmerica will be permitted to pay accrued dividends (and cash in lieu of
fractional shares) upon the conversion of any of its Series D Preferred Stock
in accordance with the terms of such stock.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the
rights of holders of Preferred Securities (in which case no consent will be
required), the Preferred Securities Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation amount
of the outstanding Preferred Securities. The manner of obtaining any such
approval of holders of the Preferred Securities will be as set forth under
"Description of the Preferred Securities -- Voting Rights". All guarantees
and agreements contained in the Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of SunAmerica and
shall inure to the benefit of the holders of the Preferred Securities then
outstanding.
Termination of the Preferred Securities Guarantee
The Preferred Securities Guarantee will terminate and be of no
further force and effect as to the Preferred Securities upon full payment of
the redemption price of all Preferred Securities, or upon distribution of the
Junior Subordinated Debentures to the holders of Preferred Securities, and
will terminate completely upon full payment of the amounts payable upon
liquidation of the Trust. See "Description of the Junior Subordinated
Debentures -- Events of Default" for a description of the events of default
and enforcement rights of the holders of Junior Subordinated Debentures. The
Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities must restore payment of any sums paid under the Preferred
Securities or the Preferred Securities Guarantee.
Status of the Preferred Securities Guarantee
SunAmerica's obligations under the Preferred Securities Guarantee to
make the Guarantee Payments will constitute an unsecured obligation of
SunAmerica and will rank (i) subordinate and junior in right of payment to all
other liabilities of SunAmerica, including the Junior Subordinated Debentures,
except those made pari passu or subordinate by their terms, and (ii) senior to
all capital stock now or hereafter issued by SunAmerica and to any guarantee
now or hereafter entered into by SunAmerica in respect of any of its capital
stock. Because SunAmerica is a holding company, SunAmerica's obligations
under the Preferred Securities Guarantee are also effectively subordinated to
all existing and future liabilities, including trade payables, of SunAmerica's
subsidiaries, except to the extent that SunAmerica is a creditor of the
subsidiaries recognized as such. The Declaration provides that each holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of
payment and not of collection (that is, the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under
the guarantee without first instituting a legal proceeding against any other
person or entity). The Preferred Securities Guarantee will be deposited with
the Property Trustee to be held for the benefit of the holders of the
Preferred Securities. If no Special Representative has been appointed to
enforce the Preferred Securities Guarantee, the Property Trustee has the right
to enforce the Preferred Securities Guarantee on behalf of the holders of the
Preferred Securities. The holders of not less than a majority in aggregate
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available
in respect of the Preferred Securities Guarantee, including the giving of
directions to either the Property Trustee or the Special Representative, as
the case may be. If the Property Trustee or the Special Representative fails
to enforce the Preferred Securities Guarantee as above provided, any holder of
Preferred Securities may, after a period of 30 days has elapsed from such
holder's written request to the Property Trustee or the Special
Representative, as the case may be, to enforce the Preferred Securities
Guarantee, institute a legal proceeding directly against SunAmerica to enforce
its rights under the Preferred Securities Guarantee, without first instituting
a legal proceeding against the Trust or any other person or entity. The
Preferred Securities Guarantee will not be discharged except by payment of the
Guarantee Payments in full (without duplication of amounts theretofore paid by
the Trust).
Governing Law
The Preferred Securities Guarantee will be governed by and construed
in accordance with the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated
Debentures which will be deposited in the Trust as trust assets. The terms of
the Junior Subordinated Debentures include those stated in the Indenture and
the First Supplemental Indenture, forms of which have been filed as exhibits
to the Registration Statement of which this Offering Circular/Prospectus forms
a part, and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The following description does not purport to be complete and is
qualified in its entirety by reference to the Indenture and the Trust
Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and Article references used herein
are references to provisions of the Indenture.
The Indenture does not limit the aggregate principal amount of
indebtedness which may be issued thereunder and provides that junior
subordinated debentures may be issued thereunder from time to time in one or
more series (collectively, together with the Junior Subordinated Debentures,
the "Subordinated Debentures"). The Junior Subordinated Debentures constitute
a separate series under the Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Junior Subordinated Debentures
may be distributed to the holders of the Preferred Securities in liquidation
of the Trust. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution".
General
The Junior Subordinated Debentures are unsecured, subordinated
obligations of SunAmerica, limited in aggregate principal amount to an amount
equal to the sum of (i) the stated liquidation amount of the Preferred
Securities issued by the Trust in the Offer and (ii) the proceeds received by
the Trust upon issuance of the Common Securities to SunAmerica (which proceeds
will be used to purchase an equal principal amount of Junior Subordinated
Debentures).
The entire principal amount of the Junior Subordinated Debentures
will become due and payable, together with any accrued and unpaid interest
thereon, on , 2044.
If any Junior Subordinated Debentures are distributed to holders of
Preferred Securities in dissolution of the Trust, such Junior Subordinated
Debentures will initially be so issued as global securities. As described
herein, under certain limited circumstances Junior Subordinated Debentures may
be issued in certificated form in exchange for global securities. If Junior
Subordinated Debentures are issued in certificated form, such Junior
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Junior Subordinated Debentures issued as global
securities will be made to DTC, as the depository for the Junior Subordinated
Debentures. If Junior Subordinated Debentures are issued in certificated
form, principal and interest will be payable, the transfer of the Junior
Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office of the Indenture Trustee in The City of New York; provided that payment
of interest may be made at the option of SunAmerica by check mailed to the
address of the persons entitled thereto.
If the Junior Subordinated Debentures are distributed to the holders
of Preferred Securities upon the dissolution of the Trust, SunAmerica will use
its best efforts to list the Junior Subordinated Debentures on the NYSE or on
such other exchange on which the Preferred Securities are then listed.
Optional Redemption
SunAmerica shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after June 15, 1997,
upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed, plus any accrued and
unpaid interest, to the redemption date.
If SunAmerica gives a notice of redemption in respect of Junior
Subordinated Debentures (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, SunAmerica will deposit
irrevocably with the Indenture Trustee or, if the Junior Subordinated
Debentures are then issued in book entry form, with DTC, funds sufficient to
pay the applicable redemption price and will give DTC irrevocable instructions
and authority to pay such redemption price to the holders of the Junior
Subordinated Debentures. See "-- Book Entry and Settlement". If notice of
redemption shall have been given and funds deposited as required, then upon
the date of such deposit, all rights of holders of such Junior Subordinated
Debentures so called for redemption will cease, except the right of the
holders of such Junior Subordinated Debentures to receive the applicable
redemption price, but without interest on such redemption price. If any date
fixed for redemption of Junior Subordinated Debentures is not a Business Day,
then payment of the redemption price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the redemption price in
respect of Junior Subordinated Debentures is improperly withheld or refused
and not paid by SunAmerica, interest on such Junior Subordinated Debentures
will continue to accrue, from the original redemption date to the date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the applicable redemption
price.
Interest
The Junior Subordinated Debentures will bear interest at an annual
rate of % from the Accrual Date. In addition, holders of the Junior
Subordinated Debentures will be entitled to interest at the rate of 9 1/4% per
annum of the principal amount thereof from March 15, 1995 through the
Expiration Date, payable at the time of the first interest payment on the
Junior Subordinated Debentures. Interest will be payable monthly in arrears
on the last day of each month of each year (each, an "Interest Payment Date"),
commencing on the last day of the month in which the Expiration Date occurs,
to the person in whose name such Junior Subordinated Debenture is registered,
subject to certain exceptions, at the close of business on the Business Day
next preceding such Interest Payment Date. If the Junior Subordinated
Debentures shall not continue to remain in book-entry-only form, SunAmerica
shall have the right to select record dates that shall be more than one
Business Day prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. If any date on which
interest is payable on the Junior Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
Compounded Interest
Payments of Compounded Interest on the Junior Subordinated Debentures
held by the Trust will make funds available to pay any interest on
distributions in arrears in respect of the Preferred Securities pursuant to
the terms thereof.
Option to Extend Interest Payment Period
So long as SunAmerica shall not be in default in the payment of
interest on the Junior Subordinated Debentures, SunAmerica shall have the
right to extend the interest payment period from time to time for a period not
exceeding 60 consecutive months. SunAmerica has no current intention of
exercising its right to extend an interest payment period. No extension of
interest will be permitted with respect to interest accruing from March 15,
1995 through the Expiration Date. No interest shall be due and payable during
an Extension Period, except at the end thereof. During any Extension Period,
SunAmerica shall not declare or pay any dividends on, or purchase, acquire or
make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock or make any guarantee payments with respect thereto;
provided that SunAmerica will be permitted to pay accrued dividends (and cash
in lieu of fractional shares) upon the conversion of any of its Series D
Preferred Stock in accordance with the terms of such stock. Prior to the
termination of any such Extension Period, SunAmerica may further extend the
interest payment period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 60 consecutive
months. On the interest payment date occurring at the end of each Extension
Period, SunAmerica shall pay to the holders of Junior Subordinated Debentures
of record on the record date for such interest payment date (regardless of who
the holders of record may have been on other dates during the Extension
Period) all accrued and unpaid interest on the Junior Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all amounts
then due, SunAmerica may commence a new Extension Period, subject to the above
requirements. SunAmerica may also prepay at any time all or any portion of
the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to six Extension Periods of
60 consecutive months each or more numerous shorter Extension Periods)
throughout the term of the Junior Subordinated Debentures. The failure by
SunAmerica to make interest payments during an Extension Period would not
constitute a default or an event of default under SunAmerica's currently
outstanding indebtedness.
If the Property Trustee shall be the sole holder of the Junior
Subordinated Debentures, SunAmerica shall give the Property Trustee notice of
its selection of such Extension Period one Business Day prior to the earlier
of (i) the date the distributions on the Preferred Securities are payable or
(ii) the date the Trust is required to give notice to the NYSE or other
applicable self-regulatory organization or to holders of the Preferred
Securities of the record date or the date such dividend is payable, but in any
event not less than one Business Day prior to such record date. The Trust
shall give notice of SunAmerica's selection of such Extension Period to the
holders of the Preferred Securities.
If the Trust shall not be the sole holder of the Junior Subordinated
Debentures, SunAmerica shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
the date SunAmerica is required to give notice to the NYSE (if the Junior
Subordinated Debentures are then listed thereon) or other applicable
self-regulatory organization or to holders of the Junior Subordinated
Debentures of the record or payment date of such related interest payment, but
in any event not less than two Business Days prior to such record date.
Set-Off
Notwithstanding anything to the contrary in the Indenture, SunAmerica
shall have the right to set-off any payment it is otherwise required to make
thereunder if and to the extent SunAmerica has theretofore made, or is
concurrently on the date of such payment making, a payment under the Preferred
Securities Guarantee.
Subordination
The Indenture provides that the Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness of
SunAmerica. In the event (a) of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar proceedings in
respect of SunAmerica or its property or any proceeding for voluntary
liquidation, dissolution or other winding up of SunAmerica, or (b) that
Subordinated Debentures of any series are declared due and payable before
their expressed maturity because of the occurrence of an Event of Default
pursuant to Section 6.01 of the Indenture (under circumstances other than as
set forth in clause (a) above), then the holders of all Senior Indebtedness
shall first be entitled to receive payment of the full amount due thereon in
money, before the holders of any of the Subordinated Debentures are entitled to
receive a payment on account of the principal of, premium, if any, or interest
on the indebtedness evidenced by such Subordinated Debentures. In the event
and during the continuation of any default in payment of any Senior
Indebtedness or if any event of default shall exist under any Senior
Indebtedness, as "event of default" is defined therein or in the agreement
under which the same is outstanding, no payment of the principal of, premium,
if any, or interest on the Subordinated Debentures shall be made. (Section
14.02)
The term "Senior Indebtedness" shall mean the principal of and
premium, if any, and interest on (a) all indebtedness of SunAmerica, whether
outstanding on the date of the Indenture or thereafter created, (i) for money
borrowed by SunAmerica (including, without limitation, indebtedness issued or
to be issued pursuant to the Indenture dated as of April 15, 1993 between
SunAmerica and The First National Bank of Chicago, as Trustee), (ii) for money
borrowed by, or obligations of, others and either assumed or guaranteed,
directly or indirectly, by SunAmerica, (iii) in respect of letters of credit
and acceptances issued or made by banks, or (iv) constituting purchase money
indebtedness, or indebtedness secured by property included in the property,
plant and equipment accounts of SunAmerica at the time of the acquisition of
such property by SunAmerica, for the payment of which SunAmerica is directly
liable, and (b) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any such indebtedness. As used
in the preceding sentence the term "purchase money indebtedness" means
indebtedness evidenced by a note, debenture, bond or other instrument (whether
or not secured by any lien or other security interest) issued or assumed as
all or a part of the consideration for the acquisition of property, whether by
purchase, merger, consolidation or otherwise, unless by its terms such
indebtedness is subordinate to other indebtedness of SunAmerica.
Notwithstanding anything to the contrary in the Indenture or the Subordinated
Debentures, Senior Indebtedness shall not include (i) any indebtedness of
SunAmerica which, by its terms or the terms of the instrument creating or
evidencing it, is subordinate in right of payment to or pari passu with the
Subordinated Debentures or (ii) any indebtedness of SunAmerica to a subsidiary
of SunAmerica. (Section 1.01)
The Indenture does not limit the aggregate amount of indebtedness,
including Senior Indebtedness, that may be issued. As of December 31, 1994,
Senior Indebtedness of SunAmerica (on an unconsolidated basis) aggregated
approximately $472.8 million all of which is unsecured. Because SunAmerica is
a holding company, the Junior Subordinated Debentures are also effectively
subordinated to all existing and future liabilities, including trade payables,
of SunAmerica's subsidiaries, except to the extent that SunAmerica is a
creditor of the subsidiaries recognized as such. Claims on SunAmerica's
subsidiaries by creditors other than SunAmerica include substantial claims for
policy benefits, as well as other liabilities incurred in the ordinary course
of business. At December 31, 1994, SunAmerica's subsidiaries had outstanding
approximately $8.47 billion of liabilities (excluding variable annuity
liabilities, with respect to which assets are segregated in separate
accounts). In addition, since many of SunAmerica's subsidiaries are insurance
companies subject to regulatory control by various state insurance
departments, the ability of such subsidiaries to pay dividends or make loans
or advances to SunAmerica without prior regulatory approval is limited by
applicable laws and regulations. There are no terms in the Preferred
Securities, the Junior Subordinated Debentures or the Preferred Securities
Guarantee that limit SunAmerica's ability to incur additional indebtedness,
including indebtedness that ranks senior to or pari passu with the Junior
Subordinated Debentures and the Preferred Securities Guarantee, or the ability
of its subsidiaries to incur additional indebtedness. See "Description of the
Preferred Securities Guarantee -- Status of the Preferred Securities
Guarantee".
Events of Default
The Indenture provides that any one or more of the following
described events, which has occurred and is continuing, constitutes an "Event
of Default" with respect to a series of Subordinated Debentures:
(a) failure for 30 days to pay interest on the Subordinated
Debentures of such series when due; provided that a valid extension of the
interest payment period by SunAmerica shall not constitute a default in the
payment of interest for this purpose; or
(b) failure to pay principal of or premium, if any, on the
Subordinated Debentures of such series when due whether at maturity, upon
redemption, by declaration or otherwise; or
(c) failure to observe or perform any other covenant contained in
the Indenture with respect to such series for 90 days after written notice to
SunAmerica from the Indenture Trustee or the holders of at least 25% in
principal amount of the outstanding Subordinated Debentures of such series; or
(d) certain events in bankruptcy, insolvency or reorganization of
SunAmerica.
In each and every such case, unless the principal of all the
Subordinated Debentures of that series shall have already become due and
payable, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Subordinated Debentures of that series then
outstanding, by notice in writing to SunAmerica (and to the Indenture Trustee
if given by such holders), may declare the principal of all the Subordinated
Debentures of that series to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable.
(Section 6.01).
The holders of a majority in aggregate outstanding principal amount
of the Subordinated Debentures of that series have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee. (Section 6.06). The Indenture Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of the
Subordinated Debentures of that series may declare the principal due and
payable immediately upon an Event of Default with respect to such series, but
the holders of a majority in aggregate outstanding principal amount of
Subordinated Debentures of such series may annul such declaration and waive the
default if the default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee. (Sections 6.01 and
6.06).
The holders of a majority in aggregate outstanding principal amount
of the Subordinated Debentures of that series may, on behalf of the holders of
all the Subordinated Debentures of that series, waive any past default, except
a default in the payment of principal, premium, if any, or interest (unless
such default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee) or a call for
redemption of Junior Subordinated Debentures. (Section 6.06). SunAmerica is
required to file annually with the Indenture Trustee a certificate as to
whether or not SunAmerica is in compliance with all the conditions and
covenants under the Indenture.
Enforcement of Certain Rights by Special Representative
If (i) the Trust fails to make distributions on the Preferred
Securities for 18 consecutive monthly distribution periods; (ii) an Event of
Default occurs and is continuing on the Junior Subordinated Debentures; or
(iii) SunAmerica is in default on any of its payment or other obligations
under the Preferred Securities Guarantee, under the terms of the Preferred
Securities, the holders of outstanding Preferred Securities will have the
rights referred to under "Description of the Preferred Securities -- Voting
Rights", including the right to appoint a Special Representative, which
Special Representative shall, if an Event of Default occurs under the
Indenture, be authorized to direct the Property Trustee to enforce the Trust's
right to accelerate the principal amount of the Junior Subordinated Debentures
upon an Event of Default and to enforce the Trust's other creditor rights
under the Junior Subordinated Debentures. In the case of clause (i) above, if
the Trust's failure to make distributions is a consequence of SunAmerica's
exercise of its right to extend the interest payment period for the Junior
Subordinated Debentures as described under "-- Option to Extend Interest
Payment Period", the Special Representative will have no right to enforce the
payment of dividends until an Event of Default shall have occurred.
Notwithstanding the appointment of any such Special Representative, SunAmerica
shall retain all rights under the Indenture including the right to extend the
interest payment period. See " -- Option to Extend Interest Payment Period."
If such an extension occurs, there will be no Event of Default under the
Indenture for failure to make any scheduled interest payment during the
Extension Period on the date originally scheduled.
Modification of the Indenture
The Indenture contains provisions permitting SunAmerica and the
Indenture Trustee, with the consent of the holders of not less than a majority
in principal amount of the outstanding Subordinated Debentures of each series
affected, to modify the Indenture or any supplemental indenture affecting the
rights of the holders of such Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each outstanding
Subordinated Debenture affected thereby, (i) extend the fixed maturity of any
Subordinated Debentures of any series, or reduce the principal amount thereof,
or reduce the rate or extend the time of payment of interest thereon, or
reduce any premium payable upon the redemption thereof, without the consent of
the holder of each Subordinated Debenture so affected or (ii) reduce the
percentage of Subordinated Debentures, the holders of which are required to
consent to any such modification, without the consent of the holders of each
Subordinated Debenture then outstanding and affected thereby. (Section 9.02).
Book-Entry and Settlement
If any Junior Subordinated Debentures are distributed to holders of
Preferred Securities (see "Description of the Preferred Securities"), such
Junior Subordinated Debentures will be issued in the form of one or more
global certificates registered in the name of Cede & Co., the nominee of DTC.
For a description of DTC and DTC's book-entry system, see
"Description of the Preferred Securities -- Book-Entry-Only Issuance - The
Depository Trust Company". As of the date of this Offering
Circular/Prospectus, the description herein of DTC's book-entry system and
DTC's practices as they relate to purchases, transfers, notices and payments
with respect to the Preferred Securities apply in all material respects to any
debt obligations of SunAmerica represented by one or more global securities
held by DTC.
Consolidation, Merger and Sale
The Indenture will provide that SunAmerica may not consolidate with
or merge into any other person or transfer or lease its properties and assets
substantially as an entirety to any person and may not permit any person to
merge into or consolidate with SunAmerica unless (i) either SunAmerica will be
the resulting or surviving entity or any successor or purchaser is a
corporation organized under the laws of the United States of America, any
State or the District of Columbia, and any such successor or purchaser
expressly assumes SunAmerica's obligations under the Indenture and (ii)
immediately after giving effect to the transaction no Event of Default shall
have occurred and be continuing.
Defeasance and Discharge
Under the terms of the Indenture, SunAmerica will be discharged from
any and all obligations in respect of the Junior Subordinated Debentures
(except in each case for certain obligations to register the transfer or
exchange of Junior Subordinated Debentures, replace stolen, lost or mutilated
Junior Subordinated Debentures, maintain paying agencies and hold moneys for
payment in trust) if (i) SunAmerica irrevocably deposits with the Indenture
Trustee cash or U.S. Government Obligations, as trust funds in an amount
certified to be sufficient to pay at maturity (or upon redemption) the
principal of, premium, if any, and interest on all outstanding Junior
Subordinated Debentures; (ii) SunAmerica delivers to the Indenture Trustee an
opinion of counsel to the effect that the holders of the Junior Subordinated
Debentures will not recognize income, gain or loss for United States federal
income tax purposes as a result of such defeasance and that defeasance will not
otherwise alter such holders' United States federal income tax treatment of
principal, premium and interest payments on such Junior Subordinated
Debentures (such opinion must be based on a ruling of the Internal Revenue
Service or a change in United States federal income tax law occurring after
the date of such Indenture, since such a result would not occur under current
tax law); and (iii) no event or condition shall exist that, pursuant to
certain provisions described under "Subordination" above, would prevent
SunAmerica from making payments of principal of, premium, if any, and interest
on the Junior Subordinated Debentures at the date of the irrevocable deposit
referred to above. (Section 11.01).
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed
by, and construed in accordance with, the laws of the State of New York.
(Section 13.05).
Information Concerning the Trustee
The Indenture Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise
in the conduct of his or her own affairs. (Section 7.01). Subject to such
provision, the Indenture Trustee is under no obligation to exercise any of the
powers vested in it by the Indenture at the request of any holder of Junior
Subordinated Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities that might be incurred thereby.
(Section 7.02). The Indenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance
of its duties if the Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it. (Section 7.01). The Indenture
Trustee is one of a number of banks with which SunAmerica and its subsidiaries
maintain ordinary banking and trust relationships.
Miscellaneous
SunAmerica will have the right at all times to assign any of its
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of SunAmerica; provided, that, in the event of any such assignment,
SunAmerica will remain jointly and severally liable for all such obligations.
Subject to the foregoing, the Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns.
The Indenture provides that it may not otherwise be assigned by the parties
thereto other than by SunAmerica to a successor or purchaser pursuant to a
consolidation, merger or sale permitted by the Indenture. (Section 13.11).
RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
As long as payments of interest and other payments are made when due
on the Junior Subordinated Debentures held by the Property Trustee, such
payments will be sufficient to cover distributions and other payments due on
the Preferred Securities primarily because (i) the aggregate principal amount
of Junior Subordinated Debentures held by the Property Trustee will be equal
to the sum of the aggregate stated liquidation amount of the Preferred
Securities and the proceeds received by the Trust upon issuance of the Common
Securities to SunAmerica; (ii) the interest rate and interest and other
payment dates on the Junior Subordinated Debentures will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) the Declaration provides that SunAmerica shall pay for all
(and the Trust shall not be obligated to pay, directly or indirectly, for any)
costs and expenses of the Trust, including any taxes and all costs and
expenses with respect thereto, to which the Trust may become subject, except
for United States withholding taxes; and (iv) the Declaration further provides
that the Trustees shall not cause or permit the Trust, among other things, to
engage in any activity that is not consistent with the limited purposes of the
Trust. With respect to clause (iii) above, however, no assurance can be given
that SunAmerica will have sufficient resources to enable them to pay such
costs and expenses on behalf of the Trust.
Payments of distributions and other payments due on the Preferred
Securities are guaranteed by SunAmerica on a subordinated basis as and to the
extent set forth under "Description of the Preferred Securities Guarantee".
If SunAmerica does not make interest payments on the Junior Subordinated
Debentures held by the Property Trustee, the Trust will not make distributions
on the Preferred Securities. Under the Declaration, if and to the extent
SunAmerica does make interest payments on the Junior Subordinated Debentures,
the Property Trustee is obligated to make distributions on the Preferred
Securities. The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the Preferred Securities, but does not
apply to the payment of distributions and other payments on the Preferred
Securities when the Property Trustee does not have sufficient funds in the
Property Trustee Account to make such distributions or other payments.
If an Event of Default occurs and is continuing, the Declaration
provides a mechanism whereby the holders of the Preferred Securities may
appoint a Special Representative which will be authorized to direct the
Property Trustee to enforce the rights of the Trust under the Junior
Subordinated Debentures. The Declaration also provides, and SunAmerica, under
the Preferred Securities Guarantee, acknowledges, that a Special
Representative may be appointed which will be authorized to direct the
Property Trustee to enforce the Preferred Securities Guarantee if SunAmerica
is in default on any of its payment obligations thereunder. In addition, if
the Trustees or the Special Representative fails to enforce the Preferred
Securities Guarantee, a holder of a Preferred Security may, after a period of
30 days has elapsed from such holder's written request to the Trustees or the
Special Representative, as the case may be, to enforce the Preferred
Securities Guarantee, institute a legal proceeding directly against SunAmerica
to enforce its rights under the Preferred Securities Guarantee without first
instituting a legal proceeding against the Trust or any other person or
entity.
If a Special Event shall occur and be continuing, the Trust may be
dissolved with the effect that, in the manner described in "Description of the
Preferred Securities -- Liquidation Distribution Upon Dissolution", Junior
Subordinated Debentures held by the Trust having an aggregate principal amount
equal to the aggregate stated liquidation amount of the Preferred Securities
and Common Securities will be distributed in exchange for the outstanding
Preferred Securities and Common Securities. The Preferred Securities
represent preferred undivided beneficial interests in the assets of the Trust,
a business trust which exists for the sole purpose of issuing (i) Preferred
Securities in exchange for Series B Preferred validly tendered in the Offer
and in consideration for the deposit by SunAmerica of Junior Subordinated
Debentures in the Trust as trust assets and (ii) Common Securities to
SunAmerica and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures of SunAmerica.
Upon any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of Preferred Securities will be entitled
to receive the Liquidation Distribution in cash or Junior Subordinated
Debentures and will be entitled to the benefits of the Preferred Securities
Guarantee with respect to any such distribution. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Dissolution". Upon any
voluntary or involuntary liquidation or bankruptcy of SunAmerica, the holders
of Junior Subordinated Debentures would be subordinated creditors of
SunAmerica, subordinated in right of payment to all Senior Indebtedness, but
entitled to receive payment in full of principal, premium, if any, and
interest, before any stockholders of SunAmerica receive payments or
distributions.
A default or event of default under any Senior Indebtedness would not
constitute a default or event of default under the Junior Subordinated
Debentures. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Junior
Subordinated Debentures provide that no payments may be made in respect of the
Junior Subordinated Debentures. Failure to make required payments on the
Junior Subordinated Debentures would constitute an event of default under the
Indenture.
TAXATION
In the opinion of Davis Polk & Wardwell, counsel to SunAmerica and
the Trust, the following are the material United States federal income tax
consequences of the issuance of Preferred Securities in exchange for the
Series B Preferred pursuant to the Offer, and of the ownership and disposition
of Preferred Securities. Unless otherwise stated, this summary deals only
with Preferred Securities held as capital assets by holders who acquire the
Preferred Securities pursuant to the Offer ("Initial Holders"). It does not
deal with special classes of holders, such as dealers in securities or
currencies, life insurance companies, persons holding Preferred Securities as
a hedge against or which are hedged against currency risks or as part of a
straddle, or persons whose functional currency is not the United States
dollar. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change (possibly on a retroactive basis).
ALL SERIES B PREFERRED HOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF SERIES B
PREFERRED FOR PREFERRED SECURITIES AND OF THE OWNERSHIP AND DISPOSITION OF
PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS
THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
Exchange of Series B Preferred for Preferred Securities
The exchange of Series B Preferred for Preferred Securities pursuant
to the Offer will be a taxable transaction. In the case of a Holder who owns
solely Series B Preferred, or not more than one percent of such stock and not
more than one percent of any other class of SunAmerica stock, gain or loss
will be recognized in an amount equal to the difference between the fair
market value on the Expiration Date of the Preferred Securities (representing
an undivided interest in the Junior Subordinated Debentures) received in the
exchange and the exchanging Holder's tax basis in the Series B Preferred
exchanged therefor and will be long-term capital gain or loss if the Series B
Preferred has been held for more than one year as of such date. A holder's
aggregate tax basis in his pro rata share of the underlying Junior
Subordinated Debentures will be equal to his pro rata share of their "issue
price" on the Expiration Date as defined below.
Holders of Series B Preferred who actually or constructively own more
than one percent of any other class of SunAmerica stock are advised to consult
their tax advisors as to the income tax consequences of exchanging Series B
Preferred.
Classification of the Trust
In connection with the issuance of the Preferred Securities, Davis
Polk & Wardwell, counsel to SunAmerica and the Trust, will render its opinion
generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration, the Trust will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, each holder of Preferred
Securities (a "Securityholder") will be considered the owner of a pro rata
portion of the Junior Subordinated Debentures held by the Trust. Accordingly,
each Securityholder will be required to include in gross income his pro rata
share of the income accrued on the Junior Subordinated Debentures.
Accrual of Original Issue Discount and Premium
The Junior Subordinated Debentures will be considered to have been
issued with "original issue discount" and each Securityholder, including a
taxpayer who otherwise uses the cash method of accounting, will be required to
include his pro rata share of original issue discount on the Junior
Subordinated Debentures in income as it accrues, in accordance with a constant
yield method based on a compounding of interest, before the receipt of cash
payments on the Preferred Securities.
The total amount of "original issue discount" on the Junior
Subordinated Debentures will equal the difference between the "issue price" of
the Junior Subordinated Debentures and their "stated redemption price at
maturity." Because SunAmerica has the right to extend the interest payment
period of the Junior Subordinated Debentures, all of the stated interest
payments on the Junior Subordinated Debentures will be includible in
determining their "stated redemption price at maturity." The "issue price" of
each $25 principal amount of the Junior Subordinated Debentures will be equal
to the fair market value of a share of Series B Preferred on the Expiration
Date (reduced by Pre-Issuance Accrued Interest), which may be more or less
than $25, with the result that the total amount of original issue discount on
the Junior Subordinated Debentures may be more or less than the amount of
stated interest payable with respect thereto.
A Securityholder's initial tax basis for his pro rata share of the
Junior Subordinated Debentures will be equal to his pro rata share of their
"issue price," as defined above, and will be increased by original issue
discount accrued with respect thereto, and reduced by the amount of cash
distributions (including the amount of Pre-issuance Accrued Interest) paid to
such Securityholder. No portion of the amounts received on the Preferred
Securities will be eligible for the dividends received deduction.
Potential Extension of Payment Period on the Junior Subordinated Debentures
Securityholders will continue to accrue original issue discount with
respect to their pro rata share of the Junior Subordinated Debentures during
an extended interest payment period, and any holders who dispose of Preferred
Securities prior to the record date for the payment of interest following such
extended interest payment period will not receive from the Trust any cash
related thereto.
Distribution of Junior Subordinated Debentures to Holders of Preferred
Securities
Under current law, a distribution by the Trust of the Junior
Subordinated Debentures as described under the caption "Description of the
Preferred Securities -- Special Event Redemption or Distribution", will be
non-taxable and will result in the Securityholder receiving directly his pro
rata share of the Junior Subordinated Debentures previously held indirectly
through the Trust, with a holding period and tax basis equal to the holding
period and adjusted tax basis such Securityholder was considered to have had
in his pro rata share of the underlying Junior Subordinated Debentures prior
to such distribution.
Treatment of the Payment of Pre-issuance Accrued Interest
"Pre-issuance Accrued Interest" payable on the first Interest Payment
Date should be treated as a return of capital with respect a Securityholder's
pro rata interest in the Junior Subordinated Debentures, reducing the
Securityholder's tax basis in his pro rata share of the Junior Subordinated
Debentures.
Market Discount and Bond Premium
Securityholders other than Initial Holders may be considered to have
acquired their pro rata interest in the Junior Subordinated Debentures with
market discount, acquisition premium or amortizable bond premium. Such
holders are advised to consult their tax advisors as to the income tax
consequences of the acquisition, ownership and disposition of the Preferred
Securities.
Disposition of the Preferred Securities
Upon on a sale, exchange or other disposition of the Preferred
Securities (including a distribution of cash in redemption of a
Securityholder's Preferred Securities upon redemption or repayment of the
underlying Junior Subordinated Debentures, but excluding the distribution of
Junior Subordinated Debentures), a Securityholder will be considered to have
disposed of all or part of his pro rata share of the Junior Subordinated
Debentures, and will recognize gain or loss equal to the difference between
the amount realized and the Securityholder's adjusted tax basis in his pro
rata share of the underlying Junior Subordinated Debentures deemed disposed
of. Gain or loss will be capital gain or loss (except to the extent of any
accrued market discount with respect to such Securityholder's pro rata share of
the Junior Subordinated Debentures not previously included in income). See
"Market Discount and Bond Premium" above. Such gain or loss will be long-term
capital gain or loss if the Preferred Securities have been held for more than
one year.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is
any corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a non-resident alien individual, a
foreign partnership or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law:
(i) payments by the Trust or any of its paying agents to any
holder of a Preferred Security who or which is a United States Alien
Holder will not be subject to United States federal withholding tax,
provided that (a) the beneficial owner of the Preferred Security does
not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of SunAmerica entitled to vote,
(b) the beneficial owner of the Preferred Security is not a
controlled foreign corporation that is related to SunAmerica through
stock ownership, and (c) either (A) the beneficial owner of the
Preferred Security certifies to the Trust or its agent, under
penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business
(a "Financial Institution") and holds the Preferred Security
certifies to the Trust or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or
by a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Preferred Security will
not be subject to United States federal withholding tax on any gain
realized upon the sale or other disposition of a Preferred Security.
(iii) any gain realized by a United States Alien Holder upon
the exchange of Series B Preferred for Preferred Securities will not
be subject to United States federal withholding tax.
Information Reporting to Holders
The Trust will report the original issue discount that accrued during
the year with respect to the Junior Subordinated Debentures, and any gross
proceeds received by the Trust from the retirement or redemption of the Junior
Subordinated Debentures, annually to the holders of record of the Preferred
Securities and the Internal Revenue Service. The Trust currently intends to
deliver such reports to holders of record prior to January 31 following each
calendar year. It is anticipated that persons who hold Preferred Securities
as nominees for beneficial holders will report the required tax information to
beneficial holders on Form 1099.
Backup Withholding
Payments made on, and proceeds from the sale of Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will generally
be allowed as a credit against the holder's federal income tax, provided the
required information is timely filed with the Internal Revenue Service.
LEGAL MATTERS
The validity of the Preferred Securities will be passed upon for the
Trust by Richards, Layton & Finger, Wilmington, Delaware, special Delaware
counsel to the Trust. The validity of the Preferred Securities Guarantee and
the Junior Subordinated Debentures will be passed upon for the Trust and
SunAmerica by Davis Polk & Wardwell, New York, New York, special counsel to
SunAmerica and the Trust. Davis Polk & Wardwell will rely as to matters of
Maryland law on Piper & Marbury, Baltimore, Maryland. Certain legal matters
in connection with the Preferred Securities, the Preferred Securities
Guarantee and the Junior Subordinated Debentures will be passed upon for the
Trust and SunAmerica by Susan L. Harris, Vice President and General Counsel -
Corporate Affairs of SunAmerica. Ms. Harris holds options, granted under
SunAmerica's Employee Stock Plan, to purchase in the aggregate less than 1% of
SunAmerica's common stock. David W. Ferguson, a partner of Davis Polk &
Wardwell, is a director of First SunAmerica Life Insurance Company, a
subsidiary of SunAmerica.
EXPERTS
The consolidated financial statements incorporated in this Offering
Circular/Prospectus by reference to the Annual Report on Form 10-K for the
year ended September 30, 1994 have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
ERISA MATTERS
SunAmerica and certain affiliates of SunAmerica, including Anchor
National Life Insurance Company and Sun Life Insurance Company of America, may
each be considered a "party in interest" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a
"disqualified person" within the meaning of the Code with respect to many
employee benefit plans. Prohibited transactions within the meaning of ERISA
or the Code may arise, for example, if the securities offered hereby are
acquired by a pension or other employee benefit plan with respect to which
SunAmerica or any of its affiliates is a service provider, unless such
securities are acquired pursuant to an exemption for transactions effected on
behalf of such plan by a "qualified professional asset manager" or pursuant to
any other available exemption. Any such pension or employee benefit plan
proposing to invest in the securities offered hereby should consult with its
legal counsel.
Facsimile copies of the Letter of Transmittal will be accepted.
Letters of Transmittal, certificates representing shares of Series B Preferred
and any other required documents should be sent by each Holder of Series B
Preferred or his broker, dealer, commercial bank, trust company or other
nominee to the Exchange Agent at one of the addresses as set forth below:
The Exchange Agent is:
The First National Bank of Chicago
By Hand or Overnight Courier in By Hand or Overnight Courier in
Chicago: New York:
The First National Bank of Chicago, First Chicago Trust Company of
Exchange Agent New York
One North State Street 14 Wall Street
9th Floor 8th Floor - Window 2
Attention: Securities Processing New York, New York 10005
Suite 0124
Chicago, Illinois 60602
By Mail:
The First National Bank of Chicago,
Exchange Agent
Registered Securities Processing Unit
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
By Facsimile Transmission
(For Eligible Institutions Only):
(312) 407-1067 or (212) 240-8938
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 524-9472 (Chicago) or (212) 240-8800 (New York)
The Information Agent is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Call Toll-Free: (800) 223-2064
Any questions or requests for assistance or additional copies of this
Offering Circular/Prospectus, the Letter of Transmittal or for copies of the
Notice of Guaranteed Delivery may be directed to the Information Agent at its
telephone number and location set forth above. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
APPENDIX A
Appendix A - Graphic Information Omitted from Electronic Filing
The diagram is entitled "Diagram of Offer". The diagram includes boxes
representing the Trust, the Regular Trustees and the Property Trustee,
SunAmerica and the Holders of Series B Preferred. Arrows between such boxes
depict the exchange of Preferred Securities for Series B Preferred in the
Offer, the purchase of Common Securities of the Trust by SunAmerica for cash,
the purchase by the Trust with such cash of Junior Subordinated Debentures of
SunAmerica and the deposit of Junior Subordinated Debentures of SunAmerica in
the Trust in respect of the aggregate liquidation amount of the Preferred
Securities issued in connection with the Offer. There are two explanatory
notes at the bottom of the diagram, which state:
bullet Existing Holders of Series B Preferred who participate in the Offer
will receive one Preferred Security of the Trust for each outstanding
share of Series B Preferred that is validly tendered and accepted for
exchange.
bullet The principal amount of Junior Subordinated Debentures delivered to
SunAmerica Capital Trust I as trust assets will be equal to the sum
of (i) the aggregate liquidation amount of the Preferred Securities
issued in connection with the Offer and (ii) an amount equal to the
purchase price of the Common Securities issued to SunAmerica, all of
which will be used by the Trust to purchase an equal principal amount
of Junior Subordinated Debentures.
PART II
INFORMATION NOT REQUIRED IN OFFERING CIRCULAR/PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 2-418 of the Maryland General Corporation law permits the
indemnification of directors, officers, employees and agents of Maryland
corporations. Article Eighth of SunAmerica's Restated Articles of
Incorporation (the "Articles") authorizes the indemnification of directors and
officers to the full extent required or permitted by the General Laws of the
State of Maryland, now or hereafter in force, whether such persons are serving
SunAmerica, or, at its request, any other entity, which indemnification shall
include the advance of expenses under the procedures and to the full extent
permitted by law. Article Eighth further provides that the foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled and that no amendment or repeal of
Article Eighth shall apply to or have any effect on any right to
indemnification provided thereunder with respect to acts or omissions
occurring prior to such amendment or repeal. In addition, SunAmerica's
officers and directors are covered by certain directors' and officers'
liability insurance policies maintained by SunAmerica. Reference is made to
section 2-418 of the Maryland General Corporation Law and Article Eighth of
the Articles, which are incorporated herein by reference.
Pursuant to the Declaration, to the fullest extent permitted by
applicable law, the Trust shall indemnify and hold harmless each Trustee, any
Special Representative, any affiliate of a Trustee or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Trustees or any Special
Representative, or any employee or agent of the Trust or its affiliates (each,
an "Indemnified Person") from and against any loss, damage or claim incurred
by such Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by the Declaration, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any such indemnity shall be provided out of and to the
extent of the Trust's assets only, and no Trustee, any affiliate of a Trustee
or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Trustee or its respective affiliates, or any
employee or agent of the Trust or any Special Representative shall have any
personal liability on account thereof. To the fullest extent permitted by
applicable law, expenses (including legal fees) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Trust prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Trust of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified.
Item 21. Exhibits.
EXHIBIT NO. DOCUMENT
- ----------- --------
1.1 Form of Dealer Manager Agreement*
4.1 Form of Indenture between SunAmerica and The
First National Bank of Chicago, as Trustee*
4.2 Form of First Supplemental Indenture to
Indenture*
4.3 Certificate of Trust of SunAmerica Capital
Trust I*
4.4 Declaration of Trust of SunAmerica Capital
Trust I*
4.5 Form of Amended and Restated Declaration of
Trust of SunAmerica Capital Trust I*
4.6 Form of Preferred Security (included in Exhibit
4.5 above)*
4.7 Form of Junior Subordinated Debenture (included
in Exhibit 4.2)*
4.8 Form of Guarantee Agreement with respect to
Preferred Securities (included in Exhibit 4.5
above)*
4.9 Senior Indenture, dated as of December 15,
1991, between SunAmerica and Bank of America NT
& SA (formerly Security Pacific National Bank),
as Trustee, defining the rights of the holders
of SunAmerica's 9% Notes due January 15, 1995
and 9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit No.
4.1 to SunAmerica's Registration Statement No.
33-44084 on Form S-3, filed November 20, 1991.
4.10 Senior Debt Indenture, dated as of April 15,
1993, between SunAmerica and The First National
Bank of Chicago, as Trustee, defining the
rights of the holders of SunAmerica's 8 1/8%
Debentures due April 28, 2023 and certain other
debt securities of SunAmerica, is incorporated
herein by reference to Exhibit 4(h) to
SunAmerica's Annual Report on Form 10-K, filed
December 16, 1993.
4.11 Tri-Party Agreement, dated as of July 1, 1993,
among The First National Bank of Chicago, Bank
of America, NT & SA and SunAmerica, appointing
The First National Bank of Chicago as Successor
Trustee to Bank of America NT & SA for
SunAmerica's 9% Notes due January 15, 1995 and
9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit
4(i) to SunAmerica's Annual Report on Form
10-K, filed December 16, 1993.
5.1 Opinion of Davis Polk & Wardwell*
5.2 Opinion of Piper & Marbury*
5.3 Opinion of Richards, Layton & Finger*
8.1 Tax Opinion of Davis Polk & Wardwell*
12.1 Computations of consolidated ratio of earnings
to fixed charges and consolidated ratio of
earnings to combined fixed charges and
preferred stock dividends
23.1 Consent of Price Waterhouse LLP
23.2 Consents of Davis Polk & Wardwell (included in
Exhibits 5.1 and 8.1 above)*
23.3 Consent of Piper & Marbury (included in Exhibit
5.2 above)*
23.4 Consent of Richards, Layton & Finger (included
in Exhibit 5.3 above)*
24.1 Powers of Attorney for SunAmerica (included on
signature pages)**
24.2 Powers of Attorney for SunAmerica Capital Trust
I (included in Exhibit 4.4)*
25.1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of
The First National Bank of Chicago, as Trustee
under the Indenture**
99.1 Proposed Form of Letter of Transmittal*
99.2 Proposed Form of Notice of Guaranteed Delivery*
99.3 Proposed Form of Letter to Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees*
99.4 Proposed Form of Letter to Clients*
99.5 Form of Exchange Agent Agreement*
99.6 Form of Information Agent Agreement*
99.7 Form of Newspaper Announcement*
99.8 Proposed Form of SunAmerica Letter to Holders
of 9 1/4% Preferred Stock, Series B*
____________________________
* To be filed by amendment.
** Previously filed.
Item 22. Undertakings.
Each of the Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of SunAmerica's Annual Report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to 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.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants 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 Registrants will, unless
in the opinion of their 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 Act
and will be governed by the final adjudication of such issue.
(3) To respond to requests for information that is incorporated by
reference into the Offering Circular/Prospectus pursuant to Item 4, 10(b), 11
or 13 of Form S-4, within one business day of receipt of such request, and to
send the incorporated documents by first-class mail or equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date responding to
the request.
(4) 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
SunAmerica Inc. has duly caused this Amendment No. 1 to the Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on this 17th
day of February, 1995.
SUNAMERICA INC.
By: /s/ James R. Belardi
-------------------------------
Name: James R. Belardi
Title: Senior Vice President
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* Chairman, President and Chief February 17, 1995
- ------------------------ Executive Officer (Principal
Eli Broad Executive Officer) of
SunAmerica Inc. and President
(Principal Executive Officer)
of SunAmerica Financial, Inc.
* Senior Vice President and February 17, 1995
- ------------------------ Treasurer (Principal Financial
James R. Belardi Officer)
* Senior Vice President and February 17, 1995
- ------------------------ Controller (Principal
Scott L. Robinson Accounting Officer)
* Director February 17, 1995
- ------------------------
Ronald J. Arnault
* Director February 17, 1995
- ------------------------
Karen Hastie-Williams
* Director February 17, 1995
- ------------------------
David O. Maxwell
* Director February 17, 1995
- ------------------------
Barry Munitz
* Director February 17, 1995
- ------------------------
Lester Pollack
* Director February 17, 1995
- ------------------------
Richard D. Rohr
* Director February 17, 1995
- ------------------------
Sanford C. Sigoloff
* Director February 17, 1995
- ------------------------
Harold M. Williams
* By /s/ Susan L. Harris
---------------------
(Attorney-in-Fact)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SunAmerica
Capital Trust I has duly caused this Amendment No. 1 to the Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on this
day of , 1995.
SUNAMERICA CAPITAL TRUST I
By , as Trustee
------------------------
Name: James R. Belardi
Title: Trustee
By , as Trustee
-----------------------
Name: Scott L. Robinson
Title: Trustee
By: The Chase Manhattan Bank (USA),
as Trustee
By:
---------------------------------
Name:
Title:
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Trustee of SunAmerica Capital , 1995
- ------------------------ Trust I
James R. Belardi
Trustee of SunAmerica Capital , 1995
- ------------------------ Trust I
Scott L. Robinson
The Chase Manhattan Bank (USA),
Trustee of SunAmerica Capital Trust I
By:_____________________ , 1995
Name:
Title:
EXHIBIT INDEX
EXHIBIT NO. DOCUMENT PAGE
- ----------- -------- ----
1.1 Form of Dealer Manager Agreement*
4.1 Form of Indenture between SunAmerica and The First
National Bank of Chicago, as Trustee*
4.2 Form of First Supplemental Indenture to Indenture*
4.3 Certificate of Trust of SunAmerica Capital Trust I*
4.4 Declaration of Trust of SunAmerica Capital Trust I*
4.5 Form of Amended and Restated Declaration of Trust of
SunAmerica Capital Trust I*
4.6 Form of Preferred Security (included in Exhibit 4.5
above)*
4.7 Form of Junior Subordinated Debenture (included in
Exhibit 4.2)*
4.8 Form of Guarantee Agreement with respect to Preferred
Securities (included in Exhibit 4.5)*
4.9 Senior Indenture, dated as of December 15, 1991, between
SunAmerica and Bank of America NT & SA (formerly Security
Pacific National Bank), as Trustee, defining the rights of
the holders of SunAmerica's 9% Notes due January 15, 1995
and 9.95% Debentures due February 1, 2012, is incorporated
herein by reference to Exhibit No. 4.1 to SunAmerica's
Registration Statement No. 33-44084 on Form S-3, filed
November 20, 1991.
4.10 Senior Debt Indenture, dated as of April 15, 1993, between
SunAmerica and The First National Bank of Chicago, as
Trustee, defining the rights of the holders of SunAmerica's
8 1/8% Debentures due April 28, 2023 and certain other debt
securities of SunAmerica, is incorporated herein by
reference to Exhibit 4(h) to SunAmerica's Annual Report on
Form 10-K, filed December 16, 1993.
4.11 Tri-Party Agreement, dated as of July 1, 1993, among The
First National Bank of Chicago, Bank of America, NT & SA and
SunAmerica, appointing The First National Bank of Chicago as
Successor Trustee to Bank of America NT & SA for
SunAmerica's 9% Notes due January 15, 1995 and 9.95%
Debentures due February 1, 2012, is incorporated herein by
reference to Exhibit 4(i) to SunAmerica's Annual Report on
Form 10-K, filed December 16, 1993.
5.1 Opinion of Davis Polk & Wardwell*
5.2 Opinion of Piper & Marbury*
5.3 Opinion of Richards, Layton & Finger*
8.1 Tax Opinion of Davis Polk & Wardwell*
12.1 Computations of consolidated ratio of earnings to fixed
charges and consolidated ratio of earnings to combined fixed
charges and preferred stock dividends
23.1 Consent of Price Waterhouse LLP
23.2 Consents of Davis Polk & Wardwell (included in Exhibits
5.1 and 8.1 above)*
23.3 Consent of Piper & Marbury (included in Exhibit 5.2
above)*
23.4 Consent of Richards, Layton & Finger (included in Exhibit
5.3 above)*
24.1 Powers of Attorney for SunAmerica (included on signature
pages)**
24.2 Powers of Attorney for SunAmerica Capital Trust I
(included in Exhibit 4.4)*
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee under the Indenture**
99.1 Proposed Form of Letter of Transmittal*
99.2 Proposed Form of Notice of Guaranteed Delivery*
99.3 Proposed Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees*
99.4 Proposed Form of Letter to Clients*
99.5 Form of Exchange Agent Agreement*
99.6 Form of Information Agent Agreement*
99.7 Form of Newspaper Announcement*
99.8 Proposed Form of SunAmerica Letter to Holders of 9 1/4%
Preferred Stock, Series B*
___________
* To be filed by amendment.
** Previously filed.
EXHIBIT 12.1
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES &
PREFERRED STOCK DIVIDENDS (EXCLUDING INTEREST ON FIXED
ANNUITIES, GUARANTEED INVESTMENT CONTRACTS & TRUST DEPOSITS)
<TABLE>
<CAPTION>
(In thousands, except ratios)
Three months ended
Years ended September 30, December 31,
----------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001 $ 57,264 $ 63,534
--------- --------- --------- --------- --------- --------- ---------
Add:
Interest incurred on:
Senior indebtedness 31,436 33,072 33,224 36,246 50,292 11,112 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total interest incurred 44,439 43,545 37,165 36,246 50,292 11,112 14,255
--------- --------- --------- --------- --------- --------- ---------
Total earnings $ 105,306 $ 116,926 $ 148,256 $ 220,257 $ 290,293 $ 68,376 $ 77,789
========= ========= ========= ========= ========= ========= =========
Combined Fixed Charges and
Preferred Stock Dividends:
Interest incurred on:
Senior indebtedness $ 31,436 $ 33,072 $ 33,224 $ 36,246 $ 50,292 $ 11,112 $ 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total interest incurred 44,439 43,545 37,165 36,246 50,292 11,112 14,255
--------- --------- --------- --------- --------- --------- ---------
Tax equivalent basis of
preferred stock dividends 8,362 8,369 17,733 42,675 54,528 13,378 10,684
--------- --------- --------- --------- --------- --------- ---------
Total combined fixed charges and
preferred stock dividends $ 52,801 $ 51,914 $ 54,898 $ 78,921 $ 104,820 $ 24,490 $ 24,939
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to combined fixed
charges and preferred stock
dividends (excluding interest
incurred on fixed annuities,
guaranteed investment contracts
and trust deposits) 2.0 2.3 2.7 2.8 2.8 2.8 3.1
========= ========= ========= ========= ========= ========= =========
</TABLE>
EXHIBIT 12.1 (CONTINUED)
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES &
PREFERRED STOCK DIVIDENDS (EXCLUDING INTEREST ON FIXED
ANNUITIES, GUARANTEED INVESTMENT CONTRACTS & TRUST DEPOSITS)
<TABLE>
<CAPTION>
(In thousands, except ratios)
Three months ended
Years ended September 30, December 31,
----------------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001 $ 57,264 $ 63,534
--------- --------- --------- --------- --------- --------- ---------
Add:
Interest incurred on:
Fixed annuity contracts 403,775 411,084 362,094 308,910 254,464 69,920 59,878
Guaranteed investment contracts 87,280 124,381 140,114 136,984 150,424 36,845 47,255
Trust deposits 2,909 -- 4,256 8,438 8,516 1,940 2,670
Senior indebtedness 31,436 33,072 33,224 36,246 50,292 11,112 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total interest incurred 538,403 579,010 543,629 490,578 463,696 119,817 124,058
--------- --------- --------- --------- --------- --------- ---------
Total earnings $ 599,270 $ 652,391 $ 654,720 $ 674,589 $ 703,697 $ 177,081 $ 187,592
========= ========= ========= ========= ========= ========= =========
Combined Fixed Charges and
Preferred Stock Dividends:
Interest incurred on:
Fixed annuity contracts $ 403,775 $ 411,084 $ 362,094 $ 308,910 $ 254,464 $ 69,920 $ 59,878
Guaranteed investment contracts 87,280 124,381 140,114 136,984 150,424 36,845 47,255
Trust deposits 2,909 -- 4,256 8,438 8,516 1,940 2,670
Senior indebtedness 31,436 33,072 33,224 36,246 50,292 11,112 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total interest incurred 538,403 579,010 543,629 490,578 463,696 119,817 124,058
--------- --------- --------- --------- --------- --------- ---------
Tax equivalent basis of
preferred stock dividends 8,362 8,369 17,733 42,675 54,528 13,378 10,684
--------- --------- --------- --------- --------- --------- ---------
Total combined fixed charges and
preferred stock dividends $ 546,765 $ 587,379 $ 561,362 $ 533,253 $ 518,224 $ 133,195 $ 134,742
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to combined fixed
charges and preferred stock
dividends (including interest
incurred on fixed annuities,
guaranteed investment contracts
and trust deposits) 1.1 1.1 1.2 1.3 1.4 1.3 1.4
========= ========= ========= ========= ========= ========= =========
</TABLE>
EXHIBIT 12.1 (CONTINUED)
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(EXCLUDING INTEREST ON FIXED ANNUITIES, GUARANTEED INVESTMENT CONTRACTS
& TRUST DEPOSITS)
<TABLE>
<CAPTION>
(In thousands, except ratios)
Three months ended
Years ended September 30, December 31,
----------------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001 $ 57,264 $ 63,534
--------- --------- --------- --------- --------- --------- ---------
Add:
Interest incurred on:
Senior indebtedness 31,436 33,072 33,224 36,246 50,292 11,112 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total interest incurred 44,439 43,545 37,165 36,246 50,292 11,112 14,255
--------- --------- --------- --------- --------- --------- ---------
Total earnings $ 105,306 $ 116,926 $ 148,256 $ 220,257 $ 290,293 $ 68,376 $ 77,789
========= ========= ========= ========= ========= ========= =========
Fixed Charges:
Interest incurred on:
Senior indebtedness $ 31,436 $ 33,072 $ 33,224 $ 36,246 $ 50,292 $ 11,112 $ 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges $ 44,439 $ 43,545 $ 37,165 $ 36,246 $ 50,292 $ 11,112 $ 14,255
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges
(excluding interest incurred on
fixed annuities, guaranteed
investment contracts and trust
deposits) 2.4 2.7 4.0 6.1 5.8 6.2 5.5
========= ========= ========= ========= ========= ========= =========
</TABLE>
EXHIBIT 12.1 (CONTINUED)
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(INCLUDING INTEREST ON FIXED ANNUITIES, GUARANTEED INVESTMENT CONTRACTS &
TRUST DEPOSITS)
<TABLE>
<CAPTION>
(In thousands, except ratios)
Three months ended
Years ended September 30, December 31,
----------------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001 $ 57,264 $ 63,534
--------- --------- --------- --------- --------- --------- ---------
Add:
Interest incurred on:
Fixed annuity contracts 403,775 411,084 362,094 308,910 254,464 69,920 59,878
Guaranteed investment
contracts 87,280 124,381 140,114 136,984 150,424 36,845 47,255
Trust deposits 2,909 -- 4,256 8,438 8,516 1,940 2,670
Senior indebtedness 31,436 33,072 33,224 36,246 50,292 11,112 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total interest incurred 538,403 579,010 543,629 490,578 463,696 119,817 124,058
--------- --------- --------- --------- --------- --------- ---------
Total earnings $ 599,270 $ 652,391 $ 654,720 $ 674,589 $ 703,697 $ 177,081 $ 187,592
========= ========= ========= ========= ========= ========= =========
Fixed Charges:
Interest incurred on:
Fixed annuity contracts $ 403,775 $ 411,084 $ 362,094 $ 308,910 $ 254,464 $ 69,920 $ 59,878
Guaranteed investment
contracts 87,280 124,381 140,114 136,984 150,424 36,845 47,255
Trust deposits 2,909 -- 4,256 8,438 8,516 1,940 2,670
Senior indebtedness 31,436 33,072 33,224 36,246 50,292 11,112 14,255
Subordinated notes 13,003 10,473 3,941 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges $ 538,403 $ 579,010 $ 543,629 $ 490,578 $ 463,696 $ 119,817 $ 124,058
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges
(including interest incurred on
fixed annuities, guaranteed
investment contracts and trust
deposits) 1.1 1.1 1.2 1.4 1.5 1.5 1.5
========= ========= ========= ========= ========= ========= =========
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our report
dated November 9, 1994 appearing on page F-2 of SunAmerica Inc.'s Annual
Report on Form 10-K for the year ended September 30, 1994. We also consent
to the incorporation by reference of our report on the Financial Statement
Schedules, which appears on page S-2 of such Annual Report on Form 10-K.
We also consent to the reference to us under heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
- ----------------------------
PRICE WATERHOUSE LLP
Los Angeles, California
February 17, 1995
