Rule 424(b)(3)
Registration Statement No. 333-21901
Pricing Supplement No. 31
Dated May 23, 1997
(To Prospectus dated February 24, 1997 and
Prospectus Supplement dated May 21, 1997)
INTERNATIONAL LEASE FINANCE CORPORATION
$750,000,000
MEDIUM-TERM NOTES, SERIES I
PRINCIPAL AMOUNT: U.S. $50,000,000
ISSUE PRICE: 100%
CUSIP: 45 974 VTE 8
ORIGINAL ISSUE DATE: May 30, 1997
INTEREST RATE: 6.57%
OVERDUE RATE (IF ANY): N/A
REDEEMABLE BY THE COMPANY ON OR AFTER: See "Additional Terms -
Reset of Interest Rate for
Second Fixed Rate Period"
REPAYABLE AT THE OPTION OF THE HOLDER ON: See "Additional Terms
- Put Option"
OPTIONAL RESET DATES: See "Additional Terms - Reset of Interest
Rate for Second Fixed Rate Period"
EXTENSION PERIODS: N/A
FINAL MATURITY: March 1, 2006
REPURCHASE PRICE (FOR ORIGINAL DISCOUNT NOTES): N/A
TYPE OF NOTE (CHECK ONE):
BOOK-ENTRY NOTE _X_
CERTIFICATED NOTE ___
OTHER PROVISIONS:
UNDERWRITER: AIG Financial Securities Corp.
DISCOUNT: 0.35%
CALCULATION AGENT: AIG Financial Securities Corp.
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ADDITIONAL TERMS
The Notes are described in the Prospectus and the Prospectus
Supplement for Medium Term Notes, Series I referenced above, and
reference is made thereto for a detailed summary of additional
provisions of the Notes. The description of the particular terms
of the Notes set forth in this Pricing Supplement supplements,
and to the extent inconsistent therewith replaces, the
description of the terms and provisions of the "Offered Debt
Securities" in the Prospectus and the "Notes" in the Prospectus
Supplement. Capitalized terms used but undefined herein shall
have the meanings given such terms in such Prospectus and
Prospectus Supplement.
INTEREST RATES
During the period commencing with the Original Issue Date to
but excluding March 1, 2001, the Notes will bear interest at a
rate of 6.57% per annum and interest will be computed and paid on
the basis of a 360-day year of twelve 30-day months.
If the Calculation Agent has not given the Put Notice (as
defined below) or the Company has not repurchased the Notes (see
"Reset of Interest Rate for Second Fixed Rate Period" below),
then during the period from and including March 1, 2001 to the
Maturity Date (the "Second Fixed Rate Period"), the Notes will
bear interest at a fixed rate calculated as described below (see
"Reset of Interest Rate for Second Fixed Rate Period" below).
PUT OPTION
The Calculation Agent has the right to require the Company
to repurchase all (but not less than all) of the Notes on March
1, 2001 at a purchase price equal to 100% of the principal amount
thereof, plus accrued but unpaid interest to but excluding March
1, 2001 (the "Redemption Price"), by delivering written notice
thereof to the Company on behalf of all (but not fewer than all)
holders of the Notes (the "Put Notice"). Such Put Notice shall
be given no later than 9:00 a.m. (New York time) on February 23,
2001. The Calculation Agent shall give the Put Notice if the
holders of a majority in principal amount of the Notes request
the Calculation Agent to give the Put Notice, in which event the
Put Notice shall be binding on all Noteholders; the Calculation
Agent shall not give the Put Notice absent such request of the
holders of a majority in principal amount of the Notes. In the
event the Put Notice is timely given, the Company shall
repurchase the Notes at the Redemption Price on March 1, 2001.
IF REQUIRED BY THE CALCULATION AGENT, EACH HOLDER SHALL
INDICATE ITS ELECTION TO HAVE THE CALCULATION AGENT DELIVER THE
PUT NOTICE TO THE COMPANY BY DELIVERING WRITTEN NOTICE OF SUCH
ELECTION TO THE CALCULATION AGENT BY NO LATER THAN 12:00 NOON
(NEW YORK TIME) ON FEBRUARY 21, 2001.
RESET OF INTEREST RATE FOR SECOND FIXED RATE PERIOD
If the Calculation Agent has not delivered the Put Notice to
the Company in accordance with the terms set forth under "Put
Option" above, the Company and the Calculation Agent, on February
23, 2001, shall undertake the following actions to calculate the
fixed rate of interest to be paid on the Notes during the Second
Fixed Rate Period. All references to specific hours are
references to prevailing New York time. Each notice, bid or
offer (including those given by the Reference Dealers [as defined
below]) shall be given telephonically and shall be confirmed as
soon as possible by facsimile to each of the Calculation Agent
and the Company. The times set forth below are guidelines for
action by the Company and the Calculation Agent, and each shall
use its best efforts to adhere to such times. The Company shall
use its best efforts to cause the Reference Dealers to take all
actions contemplated below in as timely a manner as possible.
A HOLDER SHALL INDICATE ITS ELECTION TO SELL ITS NOTE TO,
AND PURCHASE DESIGNATED TREASURY BONDS FROM, THE FINAL DEALER OR
FINAL DEALERS (AS DEFINED BELOW) IN ACCORDANCE WITH THE TERMS SET
FORTH IN PARAGRAPH (F) BELOW BY NOTIFYING THE CALCULATION AGENT
OF SUCH ELECTION BY NO LATER THAN 9:35 A.M. (NEW YORK TIME) ON
FEBRUARY 23, 2001. IF THE CALCULATION AGENT HAS NOT RECEIVED
WRITTEN ELECTION FOR THE SALE OF AT LEAST $25,000,000 AGGREGATE
PRINCIPAL AMOUNT OF THE NOTES TO THE FINAL DEALER OR FINAL
DEALERS, THE CALCULATION AGENT SHALL SELECT PRO RATA FROM ALL
HOLDERS NOTES IN A PRINCIPAL AMOUNT THAT, WHEN AGGREGATED WITH
THE PRINCIPAL AMOUNT OF NOTES FOR WHICH THE CALCULATION AGENT HAS
RECEIVED A WRITTEN ELECTION TO SELL, WILL TOTAL $25,000,000, AND
SHALL IMMEDIATELY NOTIFY SUCH HOLDERS OF SUCH SELECTION. THE
HOLDERS OF SUCH RANDOMLY SELECTED NOTES SHALL SELL THEIR NOTES
TO, AND PURCHASE DESIGNATED TREASURY BONDS FROM, THE FINAL DEALER
OR FINAL DEALERS IN ACCORDANCE WITH THE TERMS SET FORTH IN
PARAGRAPH (F) BELOW.
(a) At 9:00 a.m., the Company shall provide to the
Calculation Agent the names of four financial
institutions that deal in the Company's debt securities
and have agreed to participate as reference dealers in
accordance with the terms set forth below (the
"Reference Dealers") and, for each Reference Dealer,
the name of and telephone and facsimile numbers for one
individual who will represent such Reference Dealer.
(b) At 9:15 a.m., the Calculation Agent shall:
(i) determine and provide to the Company the 5-year
Treasury bond yield determined at or about such
time (the "Designated Treasury Yield") based on an
issue of 5-year Treasury bonds chosen by the
Calculation Agent (the "Designated Treasury
Bonds");
(ii) calculate and provide to the Company the
"Premium", which shall equal the present value
(expressed as a percentage rounded to four decimal
places) of the Treasury Rate Difference applied
over the 10 semi-annual periods from March 1, 2001
to the Maturity Date, discounted at the Discount
Rate divided by two, where:
"Treasury Rate Difference" means the difference
between 6.585% (the "Initial Treasury Yield")
minus the Designated Treasury Yield; and
"Discount Rate" means the sum of the Designated
Treasury Yield plus 0.50%; and
(iii) provide to the Company the aggregate
principal amount of the Designated Treasury
Bonds that the Holders will purchase (the
"Hedge Amount") in the event that all of the
Notes are sold to one or more of the
Reference Dealers in accordance with
paragraph (f) below.
(c) The Calculation Agent immediately thereafter shall
contact each of the Reference Dealers and request that
each Reference Dealer provide to the Calculation Agent
the following firm bid and firm offer for the benefit
of the Holders (which bid and offer shall remain firm
for 15 minutes):
(i) a firm bid (on an all-in basis), expressed as a
spread to the Designated Treasury Bonds (using,
for such purposes, the Designated Treasury Yield),
at which such Reference Dealer would purchase any
Notes offered (up to Notes in a principal amount
equal to $50,000,000, provided that such
Reference Dealer shall not be obligated to
purchase Notes in a principal amount less that
$25,000,000) at a price equal to 100% plus the
Premium for settlement on the Redemption Date (the
lowest of such spreads, the "Spread"); and
(ii) a firm offer (on an all-in basis) to sell
Designated Treasury Bonds in a principal amount
equal to the Hedge Amount at a yield equal to the
Designated Treasury Yield for settlement on the
Redemption Date.
(d) At 9:30 a.m., the following shall occur following
receipt of the bids and offers requested in paragraph
(c) above:
(i) the Calculation Agent shall calculate and provide
to the Company the "Adjusted Coupon", which shall
be the fixed rate of interest on the Notes
required to produce a yield on the Notes equal to
the sum of the Designated Treasury Yield and the
Spread given a purchase price of 100% plus the
Premium;
(ii) the Interest Rate on the Notes shall be adjusted
and shall equal, effective from and including
March 1, 2001 to the Maturity Date, the Adjusted
Coupon; and
(iii) the Reference Dealer providing the Spread
shall be deemed the "Final Dealer"; provided
that if two or more Reference Dealers shall
have quoted such Spread, the Company shall
determine which of such Reference Dealers
shall be the Final Dealer or the Final
Dealers (and, in the latter case, the
allocation to be made between them).
(e) At 9:35 a.m., the Company shall notify the Calculation
Agent whether or not it elects to redeem all of the
Notes for settlement on March 1, 2001 at a price based
on (i) the Spread and the then-current yield for the
Designated Treasury Bonds (as agreed by Company and the
Calculation Agent), or (ii) if such current yield is
greater than the Initial Treasury Yield, the Spread and
the Initial Treasury Yield; if the Company so elects,
the Company shall so redeem all of the Notes; provided
that if the Company shall not have so notified the
Calculation Agent within five minutes of receipt of
telephonic notice in accordance with paragraph (d), the
Company shall be deemed to have elected not to redeem
the Notes.
(f) If the Company elects (or is deemed to elect) not to
redeem the Notes as provided in paragraph (e), the
Holders:
(i) shall sell Notes to the Final Dealer or Final
Dealers in a principal amount which shall be not
less than $25,000,000 nor more than $50,000,000 at
a price equal to 100% plus the Premium; and
(ii) shall purchase Designated Treasury Bonds from the
Final Dealer or Final Dealers in a principal
amount equal to the Hedge Amount (adjusted pro
rata based on the amount of Notes sold in the
event that less than $50,000,000 principal amount
is sold), at a price based on the Designated
Treasury Yield, in each case for settlement on the
Redemption Date and, in the case of more than one
Final Dealer, according to the allocation
designated by the Company under paragraph (d)(iii)
above.
If the Calculation Agent determines that (i) a Market
Disruption Event (as defined below) has occurred or (ii) two or
more of the Reference Dealers have failed to provide indicative
or firm bids or offers in a timely manner substantially as
provided above, the steps contemplated above shall be delayed
until the next trading day on which there is no Market Disruption
Event and no such failure by two or more Reference Dealers.
"Market Disruption Event" shall mean any of the following: (i) a
suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the establishment of
minimum prices on such exchange: (ii) a general moratorium on
commercial banking activities declared by either federal or New
York State authorities; (iii) any material adverse change in the
existing financial, political or economic conditions in the
United States or America or elsewhere; (iv) an outbreak or
escalation of major hostilities involving the United States of
America or the declaration of a national emergency or war by the
United States of America; or (v) any material disruption of the
U.S. government securities market, U.S. corporate bond market
and/or U.S. federal wire system.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX AND ANY
OTHER TAX TREATMENT OF THE NOTES.
The following summary of the principal United States federal
income tax consequences of ownership of the Notes deals only with
a Note held as a capital asset by an initial purchaser who or
that is a U.S. Holder (as defined in the Prospectus Supplement).
It does not discuss the rules that may apply to special classes
of holders such as life insurance companies, tax-exempt
organizations, banks, dealers in securities, currencies or
commodities, persons that hold Notes as a hedge or hedged against
interest rate risks or that are part of a straddle or conversion
transaction, or persons whose functional currency is not the U.S.
dollar. The summary is based on current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), its
legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as in
effect on the date hereof and all subject to change at any time,
perhaps with retroactive effect.
The Notes will be subject to the special rules, set out in
Treasury Regulations (the "Regulations"), governing contingent
payment debt obligations. Under the Regulations, a U.S. Holder
will be required annually to include interest in income in
respect of the Notes determined by reference to (i) the annual
yield the Company would pay, as of the Original Issue Date, on a
fixed rate note with no contingent payments, but with terms and
conditions otherwise comparable to those of the Notes (the
"comparable yield") and (ii) a "projected payment schedule"
constructed for the Note (as described below). Using this
comparable yield and the projected payment schedule, rules are
applied that are similar to the rules that apply for accruing
original issue discount on a noncontingent debt instrument with
that yield.
These rules will likely have the effect of requiring U.S.
Holders to include interest in income in respect of the Notes
prior to the receipt of cash attributable to such income.
More specifically, the amount of interest includible in
income for a taxable year by a U.S. Holder will be the sum of the
"daily portions" of interest with respect to the Note for each
day during the taxable year or portion of the taxable year on
which the U.S. Holder owns the Note. The "daily portion" is
determined by allocating to each day in any "accrual period" a
pro rata portion of the interest allocable to the accrual period.
The "accrual period" may be any length selected by a U.S. Holder
and may vary over the term of the Note so long as no accrual
period is longer than one year.
The amount of interest allocable to an accrual period is the
product of the Note's "adjusted issue price" at the beginning of
such accrual period and the comparable yield (adjusted for the
length of the accrual period) described above. The "adjusted
issue price" of the Note at the start of any accrual period is
the sum of the issue price of such Note plus the accrued interest
for each prior accrual period less any projected payments of
interest deemed received for the period, determined in the manner
described below.
The amount of interest deemed received in any accrual period
is based on a "projected payment schedule" for the Notes, which
the Company will construct. The "projected payment schedule" is
a hypothetical schedule for payments on the Notes as of the issue
date that would, if paid in the assumed amounts at the assumed
times, produce the comparable yield (as described above). To
construct the projected payment schedule, the Company will use
the actual amounts and timing of payments that are known as of
the issue date. Projections of payments that are to be
determined based upon the reset mechanism will be based upon
forward interest rates and similar market-based information.
U.S. Holders are required to compute the difference between
the payments made on the Notes during a taxable year and the
projected payments for the year. If the actual payments made
during the year exceed the projected payments, the excess is
treated as an additional payment of interest. If the actual
payments are less than the projected payments, the difference
first reduces the amount of interest otherwise taken into account
for the year, and any excess (the "excess negative adjustment")
is treated as an ordinary loss for the U.S. Holder to the extent
of the interest that was included in respect of the instrument in
prior taxable years (as reduced by previous negative
adjustments). Any remaining excess negative adjustment is
carried forward and treated as a negative adjustment for the
succeeding taxable year. Any excess negative adjustment
carryforward not ultimately used to offset future interest
accruals effectively reduces the amount of gain, or increases the
amount of loss, realized at maturity or earlier redemption of the
Notes.
The Company's projected payment schedule will be available
from Pamela S. Hendry, International Lease Finance Corporation,
1999 Avenue of the Stars, 39th Floor, Los Angeles, California
90067 (telephone no.: (310) 788-1990). A U.S. Holder is required
to use the comparable yield and projected payment schedule
determined by the Company in determining its interest accruals in
respect of the Notes, unless such U.S. Holder timely discloses
and justifies on its federal income tax return the use of a
different comparable yield and projected payment schedule to the
Internal Revenue Service.
THE COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE IS NOT
PROVIDED FOR ANY PURPOSE OTHER THAN THE DETERMINATION OF A U.S.
HOLDER'S INTEREST ACCRUALS IN RESPECT OF THE NOTES, AND THE
COMPANY MAKES NO REPRESENTATION REGARDING THE ACTUAL AMOUNT OF
PAYMENTS WITH RESPECT TO THE NOTES, WHICH MAY BE LESS THAN THE
PROJECTED PAYMENTS.
Gain or loss at maturity or earlier redemption of the Notes
(at the option of (i) the Holders of a majority of the principal
amount of the Notes or (ii) the Company) will be determined by
the difference, if any, between the amount received by the U.S.
Holder at such time and the projected amount of such payment
under the projected payment schedule. Any gain recognized by a
U.S. Holder at maturity will be treated as interest income, and
any loss recognized by a U.S. Holder will be treated as ordinary
loss to the extent of the U.S. Holder's prior interest inclusions
(reduced by prior ordinary losses attributable to net negative
differences between actual contingent payments and projections of
such payments), and therefore generally as capital loss.
Any gain upon sale or exchange of the Notes will be interest
income; any loss will be ordinary loss to the extent of interest
included as income in the current or previous taxable years by
the U.S. Holder in respect of the Notes, and thereafter, capital
loss.
In general, information reporting requirements will apply to
all payments in respect of a Note made within the United States
to a non-corporate U.S. Holder and "backup withholding" at a rate
of 31% will apply to such payments if the U.S. Holder fails to
provide an accurate taxpayer identification number or is notified
by the Internal Revenue Service that it has failed to report all
interest and dividends required to be shown on its federal income
tax returns.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Company has agreed to sell to AIG Financial Securities
Corp., and AIG Financial Securities Corp. has agreed to purchase
from the Company, the Notes. See "Plan of Distribution" in the
attached Prospectus Supplement.
This Pricing Supplement and the attached Prospectus
Supplement and Prospectus may be used by AIG Financial Securities
Corp. in connection with offers and sales related to secondary
market transaction in the Notes. AIG Financial Securities Corp.
may act as principal or agent in such transactions. Such sales
will be made at prices related to prevailing prices at the time
of sale.
The offering is being made pursuant to the provisions of
Rule 2720 of the National Association of Securities Dealers, Inc.
by AIG Financial Securities Corp., an affiliate of the Company.
