METROPOLITAN MORTGAGE & SECURITIES CO., INC.
$96,500,000 Investment Debentures, Series II
$ 3,500,000 Installment Debentures, Series I
250,000 Shares Variable Rate Cumulative Preferred
Stock, Series E-7 ($100 Per Share Offering
Price and Liquidation Preference)
The Investment Debentures, Series II and Installment Debentures, Series I
(collectively, Debentures) and the shares of Variable Rate Cumulative Preferred
Stock, Series E-7 (Preferred Stock) are being offered separately and not as
units. A holder of Investment Debentures, Series II may elect to receive
interest monthly, quarterly, semi-annually or annually without compounding, or
at the election of the holder of Investment Debentures, Series II if interest is
left with Metropolitan it will compound semi-annually until maturity.
Installment Debentures, Series I will pay equal monthly installments of
principal and interest until maturity according to an amortization schedule
selected by the owner. The Debentures are unsecured debt instruments, senior in
liquidation to outstanding equity securities, subordinate to collateralized
debt, on parity with unsecured accounts payable and accrued liabilities and on
parity with all previously issued and outstanding debentures. At September 30,
1996, the Consolidated Group had approximately $1,033,190,000 of debt senior to
and approximately $10,952,000 of debt in parity with the approximately
$192,174,000 of outstanding debentures. The Debentures will be issued in fully
registered form in fractional denominations of $0.01 or multiples thereof at
100% of the principal amount paid. Metropolitan Mortgage & Securities Co., Inc.
(Metropolitan) reserves the right to change prospectively, by way of a
supplement to this Prospectus, the interest rates, maturities, and minimum
investment amounts on unsold Debentures. The current provisions are set forth
below. See "DESCRIPTION OF DEBENTURES."
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<CAPTION>
Pricing Supplement No. 1 effective October 27, 1997.
ANNUAL | ANNUAL
MINIMUM INTEREST| MINIMUM INTEREST
INVESTMENT TERM TO MATURITY RATE | INVESTMENT TERM TO MATURITY RATE
__________ ________________ ________| __________ ________________ ________
Investment Debentures, Series II Investment Debentures, Series II
<S> <C> <C> <C> <C> <C>
$1,000 116 to 120 months 8.875% | $250,000 116 to 120 months 9.000%
$1,000 92 to 115 months 8.500% | $250,000 92 to 115 months 8.875%
$1,000 68 to 91 months 8.250% | $250,000 68 to 91 months 8.750%
$1,000 56 to 67 months 8.000% | $250,000 56 to 67 months 8.625%
$1,000 48 to 55 months 7.000% |
$1,000 36 to 47 months 6.750% | Installment Debentures, Series I
$1,000 24 to 35 months 6.500% | $2,000 60 to 120 months 6.500%
$100 12 to 23 months 6.350% |
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PREFERRED STOCK, SERIES E-7
PRICE DISTRIBUTION FORMULA
PER SHARE (Applicable Rate)
$100 The greater per annum rate of
the Three-Month U.S. Treasury Bill Rate, or
the Ten Year Constant Maturity Rate, or
the Twenty Year Constant Maturity Rate,
plus .5% (Minimum 6%/Maximum 14%)
The Preferred Stock offered hereunder will be sold in whole or fractional
units. Preferred Stock distributions are cumulative and are to be declared and
paid monthly. See "DESCRIPTION OF PREFERRED STOCK-Distributions." Preferred
Stock may be redeemed, in whole or in part, at the option of Metropolitan at the
redemption prices set forth herein. Under certain limited circumstances, the
Board of Directors may, in its sole discretion and without any obligation to do
so, redeem shares tendered for redemption by stockholders. See "DESCRIPTION OF
PREFERRED STOCK-Redemption of Shares." In liquidation, Preferred Stock is
subordinate to all debts of Metropolitan including Metropolitan's Investment and
Installment Debentures, Series II and I, and on parity with other preferred
stock and senior to Metropolitan's common stock. See "DESCRIPTION OF PREFERRED
STOCK-Liquidation Rights."
There is no trading market for the Debentures or the Preferred Stock and none
is expected to be established in the future. See "RISK FACTORS." A list of
persons willing to sell or purchase Metropolitan's issued and outstanding shares
of preferred stock has been maintained by Metropolitan Investment Securities,
Inc. (MIS) as a convenience to holders of Metropolitan's preferred stock. See
"DESCRIPTION OF PREFERRED STOCK-Redemption of Shares." This offering of
Debentures and Preferred Stock is subject to withdrawal or cancellation by
Metropolitan without notice.
FOR A DISCUSSION OF MATERIAL RISKS ASSOCIATED WITH THE DEBENTURES AND
PREFERRED STOCK OFFERED HEREBY SEE RISK FACTORS ON PAGE 13 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PRICING SUPPLEMENT THERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING DISCOUNTS PROCEEDS TO
PRICE AND ISSUER OR OTHER
TO PUBLIC COMMISSIONS (1) PERSONS(2)
<S> <C> <C> <C>
Per
Debenture 100% 0% to 6% 100% to 94%
Total: $100,000,000 None - $6,000,000 $100,000,000-$94,000,000
Per
Preferred
Share $100 0% to 6% 100% to 94%
Total: $25,000,000 None - $1,500,000 $25,000,000-$23,500,000
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(1) There is no direct sales charge to the investor. Debentures earn
interest, and Preferred Stock distributions are calculated on their full
respective offering prices, without deduction. Metropolitan will reimburse its
underwriters for commissions paid to licensed securities sales representatives.
Sales commission rates on the sale of Debentures depend upon the terms of the
sale and upon whether the sales are reinvestments or new purchases. See "PLAN OF
DISTRIBUTION."
(2) Before deducting other expenses estimated at $190,000.
The Debentures and Preferred Stock are being offered for sale on a continuous,
best efforts basis. There are no minimum amounts of securities that must be
sold. See "PLAN OF DISTRIBUTION" & "CERTAIN RELATIONSHIPS & RELATED
TRANSACTIONS." No offering will be made pursuant to this prospectus subsequent
to January 31, 1998. The offering is subject to NASD Rule 2720 (formerly
Schedule E). See "PLAN OF DISTRIBUTION."
The date of this Prospectus is June 11, 1997.
