PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 23 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 December 6, 1995
Rule 424(b)(3)
$ 25,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
Senior Fixed Rate Notes
EXCHANGEABLE NOTES DUE DECEMBER 31, 2001
Exchangeable For American Depositary Receipts Representing
Class A Ordinary Shares of
SMITHKLINE BEECHAM plc
The Exchangeable Notes due December 31, 2001 (the "Notes") are Medium-Term
Notes, Series C (Senior Fixed Rate Notes) of Morgan Stanley Group Inc. (the
"Company"), as further described below and in the Prospectus Supplement under
"Description of Notes - Fixed Rate Notes." The issue price of each Note will
be $835.14 (83.514% of the principal amount at maturity) (the "Issue Price"),
and there will be no periodic payments of interest. The Issue Price
represents a yield to maturity of 3.0% per annum computed on a semiannual
bond-equivalent basis based on the Issue Price calculated from the date of
issuance (the "Original Issue Date"). The Notes are issued in minimum
denominations of $1,000 per Note and will mature on December 31, 2001.
On any Exchange Date, the holder of a Note will have the
right (the "Exchange Right"), subject to a prior call of the Notes for cash in
an amount equal to the Call Price (as defined herein) by the Company (as
described in the immediately succeeding paragraph) and upon completion by the
holder and acknowledgment by the Company and the Calculation Agent of an
Official Notice of Exchange prior to 11:00 a.m. New York City time on the
Business Day (as defined herein) immediately prior to such Exchange Date (the
"Exchange Notification Date"), to exchange each $1,000 principal amount of
such Note for 13.1182 (the "Exchange Ratio") American Depositary Receipts
("SBH ADRs") evidencing the American Depositary Shares of SmithKline Beecham
plc, a public limited company incorporated under the laws of England
("SmithKline Beecham"), subject to the Company's right to pay cash in an
amount equal to the Exchange Ratio times the ADR Market Price (as defined
herein) on the Exchange Date in lieu of such SBH ADRs. Each SBH ADR
represents five (5) Class A Ordinary Shares, par value 12.5p per share ("A
Shares"), of SmithKline Beecham. The Exchange Ratio will be adjusted for
certain corporate events but will not be adjusted for any original issue
discount ("OID") on the Notes. See "Adjustments to Exchange Ratio" in this
Pricing Supplement. Upon exchange, the holder will not receive any cash
payment representing any accrued OID. Such accrued OID will be deemed paid by
the SBH ADRs or cash received by the holder upon exercise of the Exchange
Right. An Exchange Date will be any Exchanges Trading Day (as defined herein)
that is also a Business Day, and that falls during the period beginning March
13, 1996 and ending on the day prior to the earliest of (i) the Maturity Date,
(ii) the Call Date (as defined below) and (iii) in the event of a call for
cash in an amount equal to the Call Price as described under "Company Exchange
Right" herein, the Company Notice Date (as defined herein).
On or after December 15, 1998, the Company may call the Notes, in whole but
not in part, for cash in an amount equal to the Call Price to be paid on the
date (the "Call Date") not less than 30 nor more than 60 days after the
Company Notice Date (as defined herein), as specified by the Company; provided
that, if Parity (as defined herein) as determined on the Exchange Date
immediately prior to the Company Notice Date is equal to or greater than the
Call Price, the Company shall, at its sole option, either (i) deliver SBH ADRs
at the Exchange Ratio or (ii) pay cash in an amount equal to Parity, as
determined on the second Exchange Date immediately prior to the Call Date. If
the Notes are so called, the cash or SBH ADRs to be delivered to holders of
Notes will be delivered on the Call Date.
SmithKline Beecham is not affiliated with the Company nor involved in this
offering of the Notes. The ADR Market Price on the date of this Pricing
Supplement was $55.00 (the "Initial Market Price").
The Company will cause Parity and any adjustments to the Exchange Ratio to be
determined by the Calculation Agent for Chemical Bank, as Trustee under the
Senior Debt Indenture.
An investment in the Notes entails risks not associated with similar
investments in a conventional debt security, as described under "Risk Factors"
on PS-7 and PS-8 herein.
The Notes have been approved for listing on the New York Stock Exchange
("NYSE"), subject to official notice of issuance. It is not possible to
predict whether the Notes will trade in the secondary market or if such market
will be liquid or illiquid.
PRICE 83.514%
Agent's
Price to Public Commissions(1) Proceeds to Company
----------------- ---------------- ---------------------
Per Note... 83.514% 0.25% 83.264%
Total...... $20,878,500 $62,500 $20,816,000
_______________
(1) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933.
MORGAN STANLEY & CO.
Incorporated
(This page intentionally left blank)
Capitalized terms not defined herein have the meanings given to such terms in
the accompanying Prospectus Supplement.
Principal Amount:.............. $25,000,000
Maturity Date:................. December 31, 2001
Specified Currency:............ U.S. Dollars
Issue Price:................... 83.514%
Original Issue Date (Settlement Date):December 13, 1995
Book Entry Note or Certificated Note:Book Entry
Senior Note or Subordinated Note:Senior
Minimum Denominations:......... $1,000
Trustee:....................... Chemical Bank
SBH American Depositary Receipts: SBH American Depositary Receipts ("SBH
ADRs") evidence SBH American Depositary
Shares of SmithKline Beecham plc, a public
limited company incorporated under the laws
of England ("SmithKline Beecham"). Each SBH
ADR represents five (5) Class A Ordinary
Shares, par value 12.5p per share ("A
Shares"), of SmithKline Beecham. The SBH
ADRs are registered under the Securities
Exchange Act of 1934, as amended (the
"Exchange Act") and are listed on the New
York Stock Exchange. The A Shares are listed
on The International Stock Exchange of the
United Kingdom and the Republic of Ireland
Limited (the "London Stock Exchange") and the
Tokyo Stock Exchange. See "Historical
Information" below.
Exchange Right:................ On any Exchange Date, subject to a prior call
of the Notes by the Company for cash in an
amount equal to the Call Price as described
under "Company Exchange Right" below, the
holders of Notes will be entitled upon (i)
completion by the holder and acknowledgment by
the Company and the Calculation Agent of an
Official Notice of Exchange (in the form of
Annex A attached hereto) prior to 11:00 a.m.
New York City time on the Exchange
Notification Date and (ii) delivery on such
Exchange Notification Date of such Notes to
the Trustee, to exchange each $1,000
principal amount of Notes for 13.1182 SBH
ADRs (the "Exchange Ratio"), subject to
adjustment as described under "Adjustments to
the Exchange Ratio" below. Upon any such
exchange, the Company may, at its sole
option, deliver such SBH ADRs or pay an
amount in cash equal to the Exchange Ratio
times the ADR Market Price on the Exchange
Date, as determined by the Calculation Agent,
in lieu of such SBH ADRs; provided that if a
Delisting Date (as defined below) has
occurred, the Company will pay such cash
amount and will not deliver such SBH ADRs.
Such delivery or payment will be made 3
Business Days after any Exchange Date.
The Company shall, or shall cause the
Calculation Agent to, deliver such SBH ADRs
or cash to the Trustee for delivery to the
holders.
No Fractional Shares:.......... If upon any exchange of the Notes the Company
chooses to deliver SBH ADRs, the Company will
pay cash in lieu of delivering fractional SBH
ADRs in an amount equal to the corresponding
fractional ADR Market Price as determined by
the Calculation Agent on such Exchange Date.
Exchange Ratio:................ 13.1182, subject to adjustment for certain
corporate events. See "Adjustments to
Exchange Ratio" below.
Exchange Notification Day:..... The Business Day (as defined herein)
immediately prior to any Exchange Date.
Exchange Date:................. Any Exchanges Trading Day that is also a
Business Day and that falls during the period
beginning March 13, 1996 and ending on the
day prior to the earliest of (i) the Maturity
Date, (ii) the Call Date and (iii) in the
event of a call for cash in an amount equal
to the Call Price as described under "Company
Exchange Right" below, the Company Notice
Date.
Company Exchange Right:........ On or after December 15, 1998, the Company
may call the Notes, in whole but not in part,
for cash in an amount equal to the Call Price;
provided that, if Parity as determined by the
Calculation Agent on the Exchanges Trading
Day immediately prior to the Company Notice
Date is equal to or greater than the Call
Price, the Company shall, at its sole option,
either (i) deliver SBH ADRs at the Exchange
Ratio or (ii) pay cash in an amount equal to
Parity, in each case as determined on the
second Exchange Date immediately prior to the
Call Date. If the Notes are so called for
exchange by the Company, then, unless a
holder subsequently exercises the Exchange
Right (the exercise of which will not be
available to the holder following a call for
cash in an amount equal to the Call Price),
the SBH ADRs or cash to be delivered to
holders of Notes will be delivered on the
Call Date fixed by the Company and set forth
in its notice of exchange, upon delivery of
such Notes to the Trustee. Upon an exchange
by the Company, the holder will not receive
any additional cash payment representing any
accrued OID. Such accrued OID will be deemed
paid by the delivery of SBH ADRs or cash.
The Company shall, or shall cause the
Calculation Agent to, deliver such SBH ADRs
or cash to the Trustee for delivery to the
holders.
If a Delisting Date occurs prior to the Call
Date, the Company will pay cash, rather than
SBH ADRs, upon any such exchange. See
"Delisting Date" below.
Company Notice Date:........... Any Exchanges Trading Day on or after
December 15, 1998 on which the Company issues
its notice of exchange.
Parity:........................ With respect to any Exchanges Trading Day, an
amount equal to the Exchange Ratio times the
ADR Market Price (as defined below) on such
Exchanges Trading Day.
Call Price:.................... 100% of principal amount.
ADR Market Price:.............. If the SBH ADRs are listed on a national
securities exchange, are securities on The
Nasdaq National Market ("NASDAQ NMS") or are
included in the OTC Bulletin Board Service
("OTC Bulletin Board") operated by the
National Association of Securities Dealers,
Inc. (the "NASD"), the ADR Market Price of an
SBH ADR for any Exchange Date means (i) the
last reported sale price, regular way, on
such day on the principal United States
securities exchange registered under the
Exchange Act on which SBH ADRs are listed or
admitted to trading or (ii) if not listed or
admitted to trading on any such securities
exchange or if such last reported sale price
is not obtainable, the last reported sale
price on the over-the-counter market as
reported on the NASDAQ NMS or OTC Bulletin
Board on such day. If the last reported sale
price is not available pursuant to clause (i)
or (ii) of the preceding sentence, the ADR
Market Price for any Exchange Date shall be
the mean, as determined by the Calculation
Agent, of the bid prices for an SBH ADR
obtained from as many dealers in such SBH
ADRs, but not exceeding three, as will make
such bid prices available to the Calculation
Agent. If the ADR Market Price is not
available in accordance with the two preceding
sentences because a Delisting Date has
occurred, the ADR Market Price for any
Exchange Date shall be the ADR Equivalent
Market Price (as defined below) on such
Exchange Date as determined by the
Calculation Agent. The term "NASDAQ NMS
security" shall include a security included
in any successor to such system and the term
"OTC Bulletin Board Service" shall include
any successor service thereto.
NYSE Trading Day:.............. A day on which trading is generally conducted
in the over-the-counter market for equity
securities in the United States and on the
NYSE, as determined by the Calculation Agent,
and on which a Market Disruption Event has
not occurred.
Exchanges Trading Day:......... Any NYSE Trading Day on which trading in
equity securities is also generally conducted
on the London Stock Exchange, as determined
by the Calculation Agent, and on which a
Market Disruption Event has not occurred.
Business Day:.................. Any day, other than a Saturday or Sunday that
is neither a legal holiday nor a day on which
banking institutions are authorized or
required by law or regulation to close in The
City of New York or the City of London.
Delisting Date:................ The first date on which the SBH ADRs (or the
American depositary shares or common stock of
any SmithKline Beecham Survivor (as defined
under "Adjustments to Exchange Ratio")) are
not listed on any U.S. national securities
exchanges, traded through the facilities of a
U.S. national securities system or are
permanently suspended from trading (within
the meaning of the Exchange Act and the rules
and regulations thereunder) on each such
securities exchange and securities system on
which such security is then listed.
If a Delisting Date occurs, the NYSE will
cause the Notes to be delisted as well. If
the Notes are not listed or traded on any U.S.
national securities exchange or through the
facilities of a U.S. national securities
system, pricing information for the Notes may
be more difficult to obtain, and the
liquidity and market prices of the Notes may
be adversely affected.
ADR Equivalent Market Price:... The ADR Equivalent Market Price, for any
Exchange Date, shall be the product of (x)
five (5) (as such multiple may have been
adjusted by the depository for the SBH ADRs
as described in paragraphs 1 and 2 in
"Adjustments to the Exchange Ratio" below)
and (y) the A Share Market Price, which
product shall be converted from pounds
sterling into dollars at the spot buying rate
prevailing on such date as determined by the
Calculation Agent.
A Share Market Price:.......... If A Shares are listed on the London Stock
Exchange, the A Share Market Price for any
Exchange Date (or Exchanges Trading Day, as
applicable) shall be (i) the closing price,
as derived from the London Stock Exchange
Daily Official List, of the A shares on such
day, not being subject to any special
provisions (or, if no sale occurs on such
day, the closing bid price on such day). If
A Shares are not listed on the London
Exchange (or are subject to any special
provisions), the Market Price for the A
Shares, for any Exchange Date (or Exchanges
Trading Day, as applicable), shall be (i) the
equivalent price by reference to such stock
exchange or other securities market on which
A Shares are principally traded, as the
Calculation Agent shall determine in its sole
discretion, on such day, not being subject
to any special provisions, or, if such day is
not a Business Day, the next succeeding
Business Day that is also an Exchange Date (or
Exchanges Trading Day, as applicable),
converted (if necessary) into pounds sterling
at the spot buying rate prevailing on such
date as determined by the Calculation Agent.
For purposes of the immediately preceding
sentence, a "Business Day" shall be a day on
which banks are open for business in the city
in which the relevant stock exchange is
located and on which such stock exchange is
open for business. If the A Share Market
Price cannot be determined in accordance with
the above provisions, then such A Share Market
Price shall be deemed to be the value, for
any Exchange Date (or Exchanges Trading Day,
as applicable) (converted (if necessary),
into pounds sterling, as aforesaid) as
determined by the Calculation Agent whose
determination shall be conclusive.
Calculation Agent:............. Morgan Stanley & Co. Incorporated ("MS & Co.")
Because the Calculation Agent is an affiliate
of the Company, potential conflicts of
interest may exist between the Calculation
Agent and the holders of the Notes, including
with respect to certain determinations and
judgments that the Calculation Agent must make
in making adjustments to the Exchange Ratio
or determining the ADR Market Price, the A
Share Market Price or whether a Market
Disruption Event has occurred. See
"Adjustment to the Exchange Ratio" and
"Market Disruption Event" below. MS & Co. is
obligated to carry out its duties and
functions as Calculation Agent in good faith
and using its reasonable judgment.
Total Amount of OID:........... $164.86 per $1,000 principal amount of Notes
Original Yield to Maturity:.... 3.0% per annum computed on a semiannual
bond-equivalent basis based on the Issue
Price calculated from the Original Issue Date.
Risk Factors:.................. An investment in the Notes entails
significant risks not associated with similar
investments in a conventional debt security,
including the following:
The Notes do not pay interest and the yield
to maturity is less than would be payable on
a non-exchangeable debt security issued with
OID if the Company were to issue such a
security at the same time it issues the Notes.
The Company is not affiliated with SmithKline
Beecham and, although the Company as of the
date of this Pricing Supplement does not have
any material non-public information
concerning SmithKline Beecham, corporate
events of SmithKline Beecham, including those
described below in "Adjustments to the
Exchange Ratio," are beyond the Company's
ability to control and are difficult to
predict.
SmithKline Beecham is not involved in the
offering of the Notes and has no obligations
with respect to the Notes, including any
obligation to take the interests of the
Company or of holders of Notes into
consideration for any reason. SmithKline
Beecham will not receive any of the proceeds
of the offering of the Notes made hereby and
is not responsible for, and has not
participated in, the determination of the
timing of, prices for or quantities of, the
Notes offered hereby.
There can be no assurance as to how the Notes
will trade in the secondary market or whether
such market will be liquid or illiquid. The
market value for the Notes will be affected
by a number of factors independent of the
creditworthiness of the Company and the value
of SBH ADRs or A Shares, including, but not
limited to, the volatility of SBH ADRs or A
Shares, the dividend rate on SBH ADRs or A
Shares, market interest and yield rates, the
pound sterling/U.S. dollar exchange rate and
the time remaining to the first Exchange
Date, any Call Date or the maturity of the
Notes. In addition, the value of SBH ADRs or
A Shares depends on a number of interrelated
factors, including economic, financial and
political events, over which the Company has
no control. The market value of the Notes is
expected to depend primarily on the extent of
the appreciation, if any, of the ADR Market
Price above the Initial Market Price. The
price at which a holder will be able to sell
Notes prior to maturity may be at a discount,
which could be substantial, from the accreted
principal amount thereof, if, at such time,
the ADR Market Price is below, equal to or
not sufficiently above the Initial Market
Price. The historical market prices of SBH
ADRs should not be taken as an indication of
future performance of SBH ADRs during the
term of any Note.
Fluctuations in the exchange rate between the
pound sterling and the U.S. dollar will
affect the U.S. dollar equivalent of the pound
sterling price of A Shares on the London
Stock Exchange and, as a result, will likely
affect the ADR Market Price, which may
consequently affect the market value of the
Notes. See "Currency Exchange Rates" below.
If a Delisting Date occurs, the NYSE will
cause the Notes to be delisted as well. If
the Notes are not listed or traded on any U.S.
national securities exchange or through the
facilities of a U.S. national securities
system, pricing information for the Notes may
be more difficult to obtain, and the
liquidity and market prices of the Notes may
be adversely affected. No assurance may be
given that a Delisting Date will not occur.
Because the Calculation Agent is an affiliate
of the Company, potential conflicts of
interest may exist between the Calculation
Agent and the holders of the Notes, including
with respect to certain adjustments to the
Exchange Ratio that may influence the
determination of Parity or of the amount of
stock or cash receivable upon exercise of the
Exchange Right or the Company Exchange Right.
See "Adjustments to the Exchange Ratio" and
"Market Disruption Event."
It is suggested that prospective investors
who consider purchasing the Notes should
reach an investment decision only after
carefully considering the suitability of the
Notes in light of their particular
circumstances.
Investors should also consider the tax
consequences of investing in the Notes. See
"United States Federal Taxation" below.
Adjustments to the Exchange Ratio: The Exchange Ratio will be adjusted as
follows:
1. If the A Shares are subject to a stock
split or reverse stock split, then once such
split has become effective, the Exchange
Ratio will be proportionately adjusted;
provided, however, that if SmithKline Beecham
and the depositary for the SBH ADRs shall
have adjusted the number of A Shares
represented by each SBH ADR so that the price
of such SBH ADR would not be affected by such
stock split or reverse stock split, no
adjustment of the Exchange Ratio shall be
made.
2. If the A Shares are subject to a stock
dividend (issuance of additional A Shares
that is given ratably to all holders of A
Shares), then once the dividend on the SBH
ADRs corresponding to such dividend has
become effective with respect to the SBH ADRs
and SBH ADRs are trading ex-dividend, the
Exchange Ratio will be proportionately
adjusted; provided, however, that if
SmithKline Beecham and the depositary for the
SBH ADRs shall have adjusted the number of A
Shares represented by each SBH ADR so that the
price of such SBH ADR would not be affected
by such stock dividend, no adjustment to the
Exchange Ratio shall be made.
3. There will be no adjustments to the
Exchange Ratio to reflect cash dividends or
other distributions paid with respect to the A
Shares other than distributions described in
paragraph 6 below and Extraordinary A Share
Dividends as described below. An A Share
dividend will be deemed an "Extraordinary A
Share Dividend" if such A Share Dividend
exceeds the immediately preceding
non-Extraordinary A Share Dividend by an
amount equal to at least 10% of the A Share
Market Price on the Exchanges Trading Day
preceding the ex-dividend date for the
payment of such Extraordinary A Share
Dividend (the "ex-dividend date") on the A
Shares. If an Extraordinary A Share Dividend
occurs, the Exchange Ratio with respect to
SBH ADRs will be adjusted on the ex-dividend
date with respect to such Extraordinary A
Share Dividend so that the new Exchange Ratio
will equal the product of (i) the then current
Exchange Ratio and (ii) a fraction, the
numerator of which is the A Share Market
Price on the Exchanges Trading Day preceding
the ex-dividend date, and the denominator of
which is the amount by which the A Share
Market Price on the Exchanges Trading Day
preceding the ex-dividend date exceeds the
Extraordinary A Share Dividend Amount. The
"Extraordinary Dividend Amount" with respect
to an Extraordinary A Share Dividend will
equal (i) in the case of cash dividends or
other distributions that constitute quarterly
dividends, the amount per A Share of such
Extraordinary A Share Dividend minus the
amount per A Share of the immediately
preceding non-Extraordinary A Share Dividend
or (ii) in the case of cash dividends or
other distributions that do not constitute
quarterly dividends, the amount per A Share
of such Extraordinary A Share Dividend. To
the extent an Extraordinary A Share Dividend
is not paid in cash, the value of the
non-cash component will be determined by the
Calculation Agent, whose determination shall
be conclusive. A distribution on the SBH
ADRs described in paragraph 6 below that also
constitutes an Extraordinary ADR Dividend
shall only cause an adjustment to the
Exchange Ratio pursuant to paragraph 6.
4. If SmithKline Beecham is being
liquidated or is subject to a proceeding
under any applicable bankruptcy, insolvency
or other similar law, the Notes will continue
to be exchangeable into SBH ADRs so long as
an ADR Market Price for the SBH ADRs is
available. If an ADR Market Price is no
longer available for the SBH ADRs for
whatever reason, including the liquidation of
SmithKline Beecham or the subjection of
SmithKline Beecham to a proceeding under any
applicable bankruptcy, insolvency or other
similar law, then the value of an SBH ADR
will equal zero for so long as no ADR Market
Price is available.
5. If there occurs any reclassification or
change of the A Shares, or if SmithKline
Beecham has been subject to a merger,
combination or consolidation and is not the
surviving entity, or if there occurs a sale
or conveyance to another corporation of the
property and assets of SmithKline Beecham as
an entirety or substantially as an entirety,
in each case as a result of which the holders
of A Shares shall be entitled to receive
stock, other securities or other property or
assets (including cash) with respect to or in
exchange for such A Shares, then the holders
of the Notes then outstanding will be entitled
thereafter to exchange such Notes for the
kind and amount of shares of stock, other
securities or other property or assets
(including cash) that they would have owned
or been entitled to receive upon such
reclassification, change, merger,
combination, consolidation, sale or
conveyance had such holders exchanged such
Notes for SBH ADRs and exchanged the SBH ADRs
for A Shares immediately prior to any such
corporate event. At such time, no adjustment
will be made to the Exchange Ratio.
6. If SmithKline Beecham issues to all
holders of A Shares (and consequently of SBH
ADRs) equity securities of an issuer other
than SmithKline Beecham (other than in a
transaction described in paragraph 5 above),
then the holders of the Notes then outstanding
will be entitled to receive such new equity
securities upon exchange of such Notes. The
Exchange Ratio for such new equity securities
will equal the product of the Exchange Ratio
in effect for the SBH ADRs at the time of the
issuance of such new equity securities times
the product of (x) five (5) (as such multiple
may have been adjusted by the depository as
described in paragraphs 1 and 2 above) and (y)
the number of shares of the new equity
securities issued with respect to one A Share.
7. In the event that SmithKline Beecham and
the depositary for the SBH ADRs elect, in the
absence of any of the events described in
paragraph 1, 2 or 3 above, to change the
number of A Shares that are represented by
each SBH ADR, the Exchange Ratio on any
Exchanges Trading Day after the change
becomes effective will be proportionately
adjusted.
No adjustments to the Exchange Ratio will be
required unless such adjustment would require
a change of at least 0.1% in the Exchange
Ratio then in effect. The Exchange Ratio
resulting from any of the adjustments
specified above will be rounded to the
nearest one thousandth with five
ten-thousandths being rounded upward.
No adjustments to the Exchange Ratio will be
made other than those specified above. The
adjustments specified above do not cover all
events that could affect the ADR Market
Price.
The Calculation Agent shall be solely
responsible for the determination and
calculation of any adjustments to the Exchange
Ratio and of any related determinations and
calculations with respect to any
distributions of stock, other securities or
other property or assets (including cash) in
connection with any corporate event described
in paragraph 5 or 6 above, and its
determinations and calculations with respect
thereto shall be conclusive.
The Calculation Agent will provide
information as to any adjustments to the
Exchange Ratio upon written request by any
holder of the Notes.
Market Disruption Event:....... "Market Disruption Event" means:
(i) a suspension, absence or material
limitation of trading of SBH ADRs or A Shares
on the primary market for SBH ADRs or A
Shares for more than two hours of trading or
during the one-half hour period preceding the
close of trading in such market; or the
suspension or material limitation on the
primary market for trading in options
contracts related to SBH ADRs or A Shares, if
available, during the one-half hour period
preceding the close of trading in the
applicable market, in each case as determined
by the Calculation Agent in its sole
discretion; and
(ii) a determination by the Calculation
Agent in its sole discretion that the event
described in clause (i) above materially
interfered with the ability of the Company or
any of its affiliates to unwind all or a
material portion of the hedge with respect to
the Notes.
For purposes of determining whether a Market
Disruption Event has occurred: (1) a
limitation on the hours or number of days of
trading will not constitute a Market
Disruption Event if it results from an
announced change in the regular business
hours of the relevant exchange, (2) a
decision to permanently discontinue trading
in the relevant contract will not constitute
a Market Disruption Event, (3) limitations
pursuant to New York Stock Exchange Rule 80A
(or any applicable rule or regulation enacted
or promulgated by the NYSE, any other
self-regulatory organization, the Securities
and Exchange Commission, the London Stock
Exchange or any other exchange relevant to
the determination of the ADR Market Price or
the A Share Market Price, as applicable, of
similar scope as determined by the
Calculation Agent) on trading during
significant market fluctuations shall
constitute a Market Disruption Event, (4) a
suspension of trading in an options contract
on SBH ADRs or A Shares by the primary
securities market trading in such options, if
available, by reason of (x) a price change
exceeding limits set by such securities
exchange or market, (y) an imbalance of orders
relating to such contracts or (z) a disparity
in bid and ask quotes relating to such
contracts will constitute a suspension or
material limitation of trading in options
contracts related to SBH ADRs or A Shares and
(5) an "absence of trading" on the primary
securities market on which options contracts
related to SBH ADRs or A Shares are traded
will not include any time when such
securities market is itself closed for
trading under ordinary circumstances.
SBH ADRs; Public Information... The SBH ADRs are registered under the
Exchange Act. Companies with securities
registered under the Exchange Act are
required to file periodically certain
financial and other information specified by
the Securities and Exchange Commission (the
"Commission"). Information provided to or
filed with the Commission is available at the
offices of the Commission specified under
"Available Information" in the accompanying
Prospectus. In addition, information
regarding SmithKline Beecham may be obtained
from other sources including, but not limited
to, press releases, newspaper articles and
other publicly disseminated documents. The
Company makes no representation or warranty
as to the accuracy or completeness of such
reports.
THIS PRICING SUPPLEMENT RELATES ONLY TO THE
NOTES OFFERED HEREBY AND DOES NOT RELATE TO
SBH ADRs, A SHARES OR OTHER SECURITIES OF
SMITHKLINE BEECHAM OR OF ANY AFFILIATE
THEREOF. ALL DISCLOSURES CONTAINED IN THIS
PRICING SUPPLEMENT REGARDING SMITHKLINE
BEECHAM ARE DERIVED FROM THE PUBLICLY
AVAILABLE DOCUMENTS DESCRIBED IN THE
PRECEDING PARAGRAPH. NEITHER THE COMPANY NOR
THE AGENT HAS PARTICIPATED IN THE PREPARATION
OF SUCH DOCUMENTS OR MADE ANY DUE DILIGENCE
INQUIRY WITH RESPECT TO SMITHKLINE BEECHAM.
NEITHER THE COMPANY NOR THE AGENT MAKES ANY
REPRESENTATION THAT SUCH PUBLICLY AVAILABLE
DOCUMENTS OR ANY OTHER PUBLICLY AVAILABLE
INFORMATION REGARDING SMITHKLINE BEECHAM ARE
ACCURATE OR COMPLETE. FURTHERMORE, THERE CAN
BE NO ASSURANCE THAT ALL EVENTS OCCURRING
PRIOR TO THE DATE HEREOF (INCLUDING EVENTS
THAT WOULD AFFECT THE ACCURACY OR
COMPLETENESS OF THE PUBLICLY AVAILABLE
DOCUMENTS DESCRIBED IN THE PRECEDING
PARAGRAPH) THAT WOULD AFFECT THE TRADING
PRICE OF SBH ADRs (AND THEREFORE THE INITIAL
MARKET PRICE AND THE EXCHANGE RATIO), HAVE
BEEN PUBLICLY DISCLOSED. SUBSEQUENT
DISCLOSURE OF ANY SUCH EVENTS OR THE
DISCLOSURE OF OR FAILURE TO DISCLOSE MATERIAL
FUTURE EVENTS CONCERNING SMITHKLINE BEECHAM
COULD AFFECT THE VALUE RECEIVED ON ANY
EXCHANGE DATE OR CALL DATE WITH RESPECT TO
THE NOTES AND THEREFORE THE TRADING PRICES OF
THE NOTES.
NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES
MAKE ANY REPRESENTATION TO ANY PURCHASER OF
NOTES AS TO THE PERFORMANCE OF SBH ADRs, THE A
SHARES OR ANY OTHER SECURITY OF SMITHKLINE
BEECHAM.
The Company or its affiliates may presently
or from time to time engage in business with
SmithKline Beecham including extending loans
to, or making equity investments in,
SmithKline Beecham or providing advisory
services to SmithKline Beecham, including
merger and acquisition advisory services. In
the course of such business, the Company or
its affiliates may acquire non-public
information with respect to SmithKline
Beecham and, in addition, one or more
affiliates of the Company may publish
research reports with respect to SmithKline
Beecham. The Company does not make any
representation to any purchaser of Notes with
respect to any matters whatsoever relating to
SmithKline Beecham. Any prospective
purchaser of a Note should undertake an
independent investigation of SmithKline
Beecham as in its judgment is appropriate to
make an informed decision with respect to an
investment in SBH ADRs.
Historical Information......... SmithKline Beecham's share capital consists
of two classes of Ordinary Shares: A Shares
and B Shares ("B Shares"), each having equal
voting rights. All votes are exercised by
poll. The B Shares are paired with
Cumulative Participating Preferred Stock of
SmithKline Beecham Corporation, a
Pennsylvania corporation, and trade only in
the form of resulting Equity Units (the
"Equity Units").
The American Depositary Receipts related to
the Equity Units ("SBE ADRs") as well as the
SBH ADRs are registered under the Exchange
Act. Each SBE ADR represents 5 Equity Units.
Both the A Shares and the Equity Units are
listed on the London Stock Exchange. The SBH
ADRs and SBE ADRs are each listed on the
NYSE. The A Shares are also listed on the
Tokyo Stock Exchange.
The principal trading market for both the A
Shares and the Equity Units is the London
Stock Exchange.
The following table sets forth, for the
periods indicated, the high and low sale
prices and the average daily volume for the A
Shares on the London Stock Exchange, as
reported on Bloomberg Financial Markets. Any
comparison of the closing bid price of the A
Shares and the ADR Market Price must take
into account the exchange rate then in
effect, since the A Share prices are stated
in pence and the ADR Market Price is
determined in U.S. dollars.
<TABLE>
<CAPTION>
Pence Per
A Share
Average Daily
High Low Volume (000's)
--------------------------- ----------------
<S> <C> <C> <C>
Calendar Year
1993
First Quarter 506.0 392.5 3,342
Second Quarter 485.0 407.5 2,383
Third Quarter 466.5 404.0 3,008
Fourth Quarter 448.0 375.0 3,790
1994
First Quarter 439.0 372.5 3,746
Second Quarter 419.5 359.0 2,456
Third Quarter 465.5 388.0 3,563
Fourth Quarter 472.5 401.5 4,145
1995
First Quarter 527.0 449.0 5,213
Second Quarter 569.0 483.0 4,124
Third Quarter 640.0 558.0 3,075
Fourth Quarter (through December 6, 1995) 705.0 636.0 3,533
</TABLE>
The following table sets forth, for the
periods indicated, the high and low sale
prices and the average daily volume for the
SBH ADRs as reported on Bloomberg Financial
Markets.
<TABLE>
<CAPTION>
US Dollars
per SBH ADR
Average Daily
High Low Volume (000's)
-------------------------- ----------------
<S> <C> <C> <C>
Calendar Year
1993
First Quarter 38.250 29.750 19
Second Quarter 38.625 30.625 21
Third Quarter 35.250 30.250 16
Fourth Quarter 32.875 27.500 18
1994
First Quarter 32.625 27.500 12
Second Quarter 31.625 26.375 14
Third Quarter 35.625 30.625 31
Fourth Quarter 36.625 32.750 25
1995
First Quarter 41.875 35.250 34
Second Quarter 45.625 38.125 32
Third Quarter 51.250 44.625 125
Fourth Quarter (through December 6, 1995) 55.000 49.875 108
</TABLE>
The historical information, including the
market prices and average daily trading
volumes listed above, have been derived from
publicly disseminated information, described
above under "SBH ADRs; Public Information,"
that the Company believes to be accurate.
Neither the Company nor the Agent makes any
representation as to the accuracy of such
information. The historical prices of SBH
ADRs or A Shares should not be taken as an
indication of future performance, and no
assurance can be given that the price of SBH
ADRs will increase sufficiently to cause the
beneficial owners of the Notes to receive an
amount in excess of the principal amount on
any Exchange Date or Call Date or at
maturity.
Currency Exchange Rate......... The following table sets forth, for the
periods indicated, the period-end, average,
high and low Close Buying Rate for the
purchase of U.S. dollars, expressed in U.S.
dollars/pound sterling.
<TABLE>
<CAPTION>
Rate<F1>
---------------------------------------------------------------------
Year ended Period
December 31, end Average<F2> High Low
------------ ------ ----------- ------ ------
<S> <C> <C> <C> <C>
1991 1.8707 1.7645 2.0045 1.6025
1992 1.5105 1.7560 2.0063 1.4990
1993 1.4775 1.4974 1.5875 1.4180
1994 1.5647 1.5392 1.6382 1.4620
First Quarter 1995 1.6215 1.5950 1.6400 1.5495
Second Quarter 1995 1.5955 1.5981 1.6240 1.5632
Third Quarter 1995 1.5848 1.5771 1.6083 1.5338
Fourth Quarter 1995 1.5424 1.5660 1.5895 1.5310
(through December 6, 1995)
<FN>
- --------
<F1> Source: Bloomberg Financial Markets
<F2> Average of month-end rates (for Fourth Quarter 1995, average of the second
day of October through the sixth day of December).
</TABLE>
The information presented in this Pricing
Supplement relating to the exchange rate of
the U.S. dollar as compared to the pound
sterling is furnished as a matter of
information only. The pound sterling has
been subject to fluctuations in the past and
may be subject to significant fluctuations in
the future. The fluctuations in the U.S.
dollar/pound sterling exchange rate that have
occurred in the past are not necessarily
indicative of fluctuations in that rate that
may occur over the term of the Notes.
The spot exchange rates between the pound
sterling and U.S. dollar are at any moment a
result of the supply of and demand for the
currencies being compared, and changes in the
exchange rates result over time from the
interaction of many factors directly or
indirectly affecting economic and political
developments in other countries. Of
particular importance are rates of inflation,
interest rate levels, the balance of payments
and the extent of governmental surpluses of
deficits in the United Kingdom and the United
States, all of which are in turn sensitive to
the monetary, fiscal and trade policies
pursued by the governments of the United
Kingdom, the United States and other
countries important to international trade and
finance.
Use of Proceeds and Hedging:... The net proceeds to be received by the
Company from the sale of the Notes will be
used for general corporate purposes and, in
part, by the Company or one or more of its
affiliates in connection with hedging the
Company's obligations under the Notes. See
also "Use of Proceeds" in the accompanying
Prospectus.
On the date of this Pricing Supplement, the
Company, through its subsidiaries, may hedge
its anticipated exposure in connection with
the Notes by taking positions in SBH ADRs or
A Shares, in options contracts on SBH ADRs or
A Shares listed on major securities markets
or positions in any other instruments that it
may wish to use in connection with such
hedging. In the event that the Company
pursues such a hedging strategy, the price at
which the Company is able to purchase such
positions may be a factor in determining the
Exchange Ratio. Purchase activity could
potentially increase the prices of SBH ADRs
or A Shares, and therefore effectively
increase the level to which SBH ADRs or A
Shares must rise before a holder of a Note
will receive more than the accreted principal
amount on any Exchange Date or Call Date.
Although the Company has no reason to believe
that its hedging activity will have a
material impact on the price of SBH ADRs or A
Shares or such options, there can be no
assurance that the Company will not affect
such prices as a result of its hedging
activities. The Company, through its
subsidiaries, is likely to modify its hedge
position throughout the life of the Notes by
purchasing and selling the securities and
instruments listed above and other available
securities and instruments.
Supplemental Information Concerning
Plan of Distribution........... Each Agent has represented and agreed that
(i) it has not offered or sold and, prior to
the expiry of the period of six months from
the Settlement Date, will not offer or sell
any Notes to persons in the United Kingdom
except to persons whose ordinary activities
involve them in acquiring, holding, managing
or disposing of investments (as principal or
agent) for the purposes of their businesses
or otherwise in circumstances which have not
resulted and will not result in an offer to
the public in the United Kingdom within the
meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and
will comply with all applicable provisions of
the Financial Services Act 1986 with respect
to anything done by it in relation to the
Notes in, from or otherwise involving the
United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on
in the United Kingdom any document received
by it in connection with the issue of the
Notes to a person who is of a kind described
in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements)
(Exemption) Order 1995 or is a person to whom
such document may otherwise lawfully be
issued or passed on.
The Notes may be offered to investors outside
the United States and the United Kingdom.
The Agent has further agreed that any offers
and sales made outside the United States and
the United Kingdom will be made in compliance
with any selling restrictions applicable in
the jurisdictions where such offers and sales
are made.
United States Federal Taxation: United States Holders of the Notes. The
following discussion of the federal income
tax consequences of ownership and disposition
of the Notes supplements the "United States
Federal Taxation" section in the accompanying
Prospectus Supplement. The Notes will be
issued with original issue discount ("OID")
equal to the difference between the Notes'
Issue Price and their "stated redemption
price at maturity." For this purpose, the
stated redemption price at maturity of the
Notes is equal to the principal amount. The
federal income tax consequences of Notes
issued with OID, as well as other tax
considerations relevant to the Notes, are
discussed in the accompanying Prospectus
Supplement. Any limitations on disclosure
and any defined terms contained therein are
equally applicable to the summary below.
The Notes will be treated as debt for United
States federal income tax purposes. Although
proposed Treasury regulations addressing the
treatment of contingent debt instruments were
issued on December 15, 1994, such
regulations, which generally would require
current accrual of contingent amounts and
would affect the character of gain on the
sale, exchange or retirement of a Note, by
their terms apply only to debt instruments
issued on or after the 60th day after the
regulations are finalized.
Under general United States federal income
tax principles, upon exercise of the Exchange
Right or upon payment pursuant to the Company
Exchange Right, a United States Holder will
recognize gain or loss equal to the
difference between the amount realized
(which, if the Company delivers SBH ADRs,
will be the fair market value of such stock
at the time of the exchange, plus any cash
received in lieu of fractional shares) on the
exchange and such Holder's tax basis in the
Note. A United States Holder receiving SBH
ADRs will have a basis in the SBH ADRs equal
to its fair market value at the time of the
exchange and a holding period in such stock
beginning the day after the date of the
exchange. With respect to accrual basis
taxpayers receiving the Call Price in cash
pursuant to the Company Exchange Right, such
accrual basis taxpayers may recognize gain or
loss at the time the Notice is received
rather than at the time of payment. Any loss
recognized on any exchange will be treated as
capital loss. It is unclear, however, under
existing law whether gain recognized on any
exchange will be treated as ordinary or
capital in character. Subject to further
guidance from the Internal Revenue Service,
the Company intends to treat such gain as
interest income and to report such amounts
accordingly. Prospective investors should
consult with their tax advisors regarding the
character of gain recognized upon exercise of
the Exchange Right or the Company Exchange
Right.
United States Holders that have acquired debt
instruments similar to the Notes and have
accounted for such debt instruments under
proposed, but subsequently withdrawn,
Treasury regulation Section 1.1275-4 may be
deemed to have established a method of
accounting that must be followed with respect
to the Notes, unless consent of the
Commissioner of the Internal Revenue Service
is obtained to change such method. Absent
such consent, such a Holder would be required
to account for the Note in the manner
prescribed in withdrawn Treasury regulation
Section 1.1275-4. The Internal Revenue
Service, however, would not be required to
accept such method as correct.
Any gain or loss recognized on the sale or
other taxable disposition of a Note prior to
maturity will be treated as capital in
character.
Foreign Holders of the Notes. As used
herein, the term "Foreign Holder" means a
person or entity that, for United States
federal income tax purposes, is a
non-resident alien individual, a foreign
corporation, a foreign partnership, or a
non-resident fiduciary of a foreign estate or
trust.
A Foreign Holder will generally not be
subject to United States federal income
taxes, including withholding taxes, on
payments of principal, premium, if any, or
interest on a Note, or any gain arising from
the sale or disposition of a Note provided
that (i) any such income is not effectively
connected with the conduct of a trade or
business within the United States, (ii) such
Foreign Holder is not a person who owns
(directly or by attribution) ten percent or
more of the total combined voting power of
all classes of stock of the Company, (iii)
the Foreign Holder (if an individual) is not
present in the United States 183 days or more
during the taxable year of the disposition
and (iv) the required certification of the
non-United States status of the beneficial
owner is provided to the Company or the Agent.
The 31% "backup" withholding and information
reporting requirements will generally not
apply to payments by the Company or its
agents of principal, premium, if any, and
interest on a Note, and to proceeds of the
sale or redemption of a Note before maturity,
if the required certification of the holder's
non-United States status is provided to the
Company or the Agent.
Foreign Holders of Notes should consult their
tax advisors regarding the application of
information reporting and backup withholding
in their particular situations, the
availability of an exemption therefrom, and
the procedure for obtaining such an
exemption, if available. Any amounts
withheld from a payment to a Foreign Holder
under the backup withholding rules will be
allowed as a credit against such Holder's
United States federal income tax liability
and may entitle such Holder to a refund,
provided that the required information is
furnished to the United States Internal
Revenue Service (the "Service").
A Note held by an individual who at the time
of his death is not a citizen or domiciliary
of the United States will not be subject to
United States federal estate tax as a result
of such individual's death; provided that (i)
interest paid to such individual on such Note
would not be effectively connected with the
conduct by such individual of a trade or
business within the United States and (ii)
such individual is not a person who owns
(directly or by attribution) ten percent or
more of the total combined voting power of
all classes of stock of the Company.
There can be no assurance that the ultimate
tax treatment of the Notes would not differ
significantly from the description herein.
Prospective investors are urged to consult
their tax advisors as to the possible
consequences of holding the Notes.
See also "United States Federal Taxation" in
the accompanying Prospectus Supplement for
additional discussion of the federal income
tax consequences of ownership and disposition
of the Notes. For information regarding the
federal income tax consequences of ownership
and disposition of the SBH ADRs, please refer
to the publicly available documents described
in the first paragraph under the heading "SBH
ADRs; Public Information."
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated:[On or after March 13, 1996]
Morgan Stanley Group Inc.
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. Incorporated, as
Calculation Agent
1585 Broadway
New York, New York 10036
Fax No.: (212) 761-0028
(Attn: Richard P. Sandulli)
Dear Sirs:
The undersigned holder of the Medium Term Notes, Series C, Senior
Fixed Rate Notes due December 31, 2001 (Exchangeable for American Depositary
Receipts ("SBH ADRs") Representing five (5) Class A Ordinary Shares of
SmithKline Beecham plc) of Morgan Stanley Group Inc. (the "Notes") hereby
irrevocably elects to exercise with respect to the principal amount of the
Notes indicated below, as of the next Exchange Date hereafter (or, if this
letter is received after 11:00 a.m. on any Business Day, as of the second
Exchange Date hereafter, provided that such day is prior to the earliest of
(i) December 31, 2001, (ii) the Call Date and (iii) in the event of a call for
cash in an amount equal to the Call Price, the Company Notice Date), the
Exchange Right as described in Pricing Supplement No. 23 dated December 6,
1995 (the "Pricing Supplement") to the Prospectus Supplement dated March 29,
1995 and the Prospectus dated March 29, 1995 related to Registration Statement
No. 33-57833. Capitalized terms not defined herein have the meanings given to
such terms in the Pricing Supplement. Please date and acknowledge receipt of
this notice in the place provided below on the date of receipt, and fax a copy
to the fax number indicated, whereupon the Company will deliver, at its sole
option, SBH ADRs of SmithKline Beecham or cash 3 Business Days after the
Exchange Date in accordance with the terms of the Notes, as described in the
Pricing Supplement.
Very truly yours,
_____________________________________
[Name of Holder]
By:____________________________________
[Title]
____________________________________
[Fax No.]
$______________________________________
Principal Amount of Notes
surrendered for exchange
Receipt of the above Official
Notice of Exchange is hereby acknowledged
MORGAN STANLEY GROUP INC., as Issuer
MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By:____________________________________________
Title:
Date and time of acknowledgement_______________
