Subject to Completion, Pricing Supplement dated September 13, 1995
PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 19 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 September , 1995
Rule 424(b)(3)
$25,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
Senior Fixed Rate Notes
EXCHANGEABLE NOTES DUE SEPTEMBER 30, 2000
Exchangeable For Shares of Common Stock of
THE BOEING COMPANY
The Exchangeable Notes due September 30, 2000 (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 $ ( % 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 % 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 September 30, 2000.
On any Exchange Date (as defined herein), the holder of a Note will have the
right (the "Exchange Right"), subject to a prior call of the Notes for cash 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 such date, to exchange each $1,000 principal amount of such Note for
shares (the "Exchange Ratio") of the common stock, par value $5.00 per share
("BA Stock"), of The Boeing Company ("Boeing"), subject to the Company's right
to pay cash in an amount equal to the Exchange Ratio times the Market Price
(as defined herein) of BA Stock on the Exchange Date in lieu of such shares.
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 BA Stock or cash received by the
holder upon exercise of the Exchange Right. An Exchange Date will be any NYSE
Trading Day (as defined herein) that falls during the period beginning 90 days
after the Original Issue Date and ending on the day prior to the earliest of
the Maturity Date, the Call Date (as defined below) and, in the event of a
call for cash as described under "Company Exchange Right" herein, the Notice
Date (as defined herein).
On or after March , 1999, the Company may call the Notes, in whole but not
in part, for mandatory exchange into BA Stock at the Exchange Ratio; provided
that, if Parity (as defined herein) as determined on the NYSE Trading Day
immediately prior to the Notice Date is less than the applicable Call Price
(as defined herein) for such Notice Date, the Company will pay such applicable
Call Price in cash on the date (the "Call Date") not less than 30 nor more
than 60 days after the Notice Date, as specified by the Company. If the Notes
are so called for mandatory exchange, the BA Stock or cash to be delivered to
holders of Notes will be delivered on the Call Date.
Boeing is neither affiliated with the Company nor involved in this offering of
the Notes. The Market Price of the BA Stock on the date of this Pricing
Supplement was $ (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-4 and PS-5 herein.
Application will be made to list the Notes on the New York Stock Exchnage
("NYSE"). It is not possible to know whether the Notes will trade in the
secondary market or if such market will be liquid or illiquid.
---------------
PRICE %
---------------
Agent's
Price to Public Commissions(1) Proceeds to Company
----------------- ---------------- ---------------------
Per Note... % % %
Total...... $ $ $
_______________
(1) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933.
MORGAN STANLEY & CO.
Incorporated
Information contained in this preliminary pricing supplement is subject to
completion or amendment. These securities may not be delivered prior to the
time a final pricing supplement is delivered. This pricing supplement and
the accompanying prospectus and prospectus supplement 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.
Capitalized terms not defined herein have the meanings given to such terms in
the accompanying Prospectus Supplement.
Principal Amount:..................... $25,000,000
Maturity Date:........................ September 30, 2000
Specified Currency:................... U.S. Dollars
Issue Price:.......................... %
Original Issue Date (Settlement Date): September , 1995
Book Entry Note or Certificated Note:. Book Entry
Senior Note or Subordinated Note:..... Senior
Minimum Denominations:................ $1,000
Trustee:.............................. Chemical Bank
Exchange Right:....................... On any Exchange Date, subject to a
prior call of the Notes for cash by
the Company as described under
"Company Exchange Right" below, the
holders of Notes will be entitled
upon 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
such date and delivery on such date
of such Notes to the Trustee, to
exchange each $1,000 principal
amount of Notes for shares (the
"Exchange Ratio") of BA Stock,
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 shares of BA Stock or
pay an amount in cash equal to the
Exchange Ratio times the Market
Price of BA Stock on the Exchange
Date, as determined by the Calculation
Agent, in lieu of such shares. Such
delivery or payment will be made 3
Business Days after any Exchange
Date, subject to delivery of such
Notes to the Trustee on the Exchange
Rate.
The Company shall, or shall cause the
Calculation Agent to, deliver such
shares of BA Stock 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 shares of
BA Stock, the Company will pay cash
in lieu of issuing fractional shares
of BA Stock in an amount equal to
the corresponding fractional Market
Price of BA Stock on such Exchange
Date.
Exchange Ratio........................ , subject to adjustment
for certain corporate events. See
"Adjustments to Exchange Ratio"
below.
Exchange Date......................... Any NYSE Trading Day that falls during
the period beginning 90 days after
the Original Issue Date 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 as described under
"Company Exchange Right" below, the
Notice Date.
Company Exchange Right................ On or after March __, 1999, the
Company may call the Notes, in whole
but not in part, for mandatory
exchange into BA Stock at the
Exchange Ratio; provided that, if
Parity on the NYSE Trading Day
immediately preceding the Notice
Date, as determined by the
Calculation Agent, is less than the
applicable Call Price for such
Notice Date, the Company will pay
such applicable Call Price in cash
on the Call Date. If the Notes are
so called for mandatory exchange,
then, unless (solely in the case of
an exchange for BA Stock) a holder
subsequently exercises the Exchange
Right, the BA Stock 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 mandatory exchange, upon
delivery of such Notes to the
Trustee. Upon a mandatory exchange,
the holder will not receive any
additional cash payment representing
any accrued OID. Such accrued OID
will be deemed paid by the delivery
of BA Stock or cash. The Company
shall, or shall cause the
Calculation Agent to, deliver such
shares of BA Stock or cash to the
Trustee for delivery to the holders.
Notice Date........................... Any NYSE Trading Day on or after March
, 1999 on which the Company
issues its notice of mandatory
exchange.
Parity:............................... With respect to any NYSE Trading Day,
an amount equal to the Exchange
Ratio times the Market Price (as
defined below) of BA Stock on such
NYSE Trading Day.
Call Price............................ Notice Date Call Price
----------- ------------
On or after March , 1999 103% of
and before September , principal
1999 amount
On or after September , 102% of
1999 principal
and before March , 2000 amount
On or after March , 2000 101% of
and before September 30, principal
2000 amount
Market Price:......................... If BA Stock is listed on a national
securities exchange, is a security
of The Nasdaq National Market
("NASDAQ NMS") or is included in the
OTC Bulletin Board Service ("OTC
Bulletin Board") operated by the
National Association of Securities
Dealers, Inc. (the "NASD"), the
Market Price for any NYSE Trading
Day means (i) the last reported sale
price, regular way, on such day on
the principal United States
securities exchange registered under
the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), on
which BA Stock is 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
Market Price for any NYSE Trading
Day shall be the mean, as determined
by the Calculation Agent, of the bid
prices for BA Stock obtained from as
many dealers in such stock, but not
exceeding three, as will make such
bid prices available to 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 New York
Stock Exchange, as determined by the
Calculation Agent, and on which a
Market Disruption Event has not
occurred.
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 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:.................. per $1,000 principal amount of
Notes
Original Yield to Maturity:........... % 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
Boeing and, although the Company as
of the date of this Pricing
Supplement does not have any
material non-public information
concerning Boeing, corporate events
of Boeing, including those described
below in "Adjustments to the
Exchange Ratio," are beyond the
Company's ability to control and are
difficult to predict.
Boeing 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.
Boeing 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 BA
Stock, including, but not limited
to, the volatility of BA Stock, the
dividend rate on BA Stock, market
interest and yield rates and the
time remaining to the first Exchange
Date, any Call Date or the maturity
of the Notes. In addition, the
value of BA Stock 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
Market Price of BA Stock 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 Market Price of BA
Stock is below, equal to or not
sufficiently above the Initial
Market Price. The historical Market
Prices of BA Stock should not be
taken as an indication of BA Stock's
future performance during the term
of any Note.
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 BA Stock is subject to a
stock split or reverse stock split,
then once such split has become
effective, the Exchange Ratio will
be adjusted to equal the product of
the prior Exchange Ratio and the
number of shares issued in such
stock split or reverse stock split
with respect to one share of BA
Stock.
2. If BA Stock is subject to a
stock dividend (issuance of
additional shares of BA Stock) that
is given ratably to all holders of
shares of BA Stock, then once the
dividend has become effective and BA
Stock is trading ex-dividend, the
Exchange Ratio will be adjusted so
that the new Exchange Ratio shall
equal the prior Exchange Ratio plus
the product of (i) the number of
shares issued with respect to one
share of BA Stock and (ii) the prior
Exchange Ratio.
3. There will be no adjustments to
the Exchange Ratio to reflect cash
dividends or other distributions
paid with respect to BA Stock other
than distributions described in
paragraph 6 below and Extraordinary
Dividends as described below. A
cash dividend or other distribution
with respect to BA Stock will be
deemed to be an "Extraordinary
Dividend" if such dividend or other
distribution exceeds the immediately
preceding non-Extraordinary Dividend
for BA Stock by an amount equal to
at least 10% of the Market Price of
BA Stock on the NYSE Trading Day
preceding the ex-dividend date for
the payment of such Extraordinary
Dividend (the "ex-dividend date").
If an Extraordinary Dividend occurs
with respect to BA Stock, the
Exchange Ratio with respect to BA
Stock will be adjusted on the ex-
dividend date with respect to such
Extraordinary 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 Market
Price on the NYSE Trading Day
preceding the ex-dividend date, and
the denominator of which is the
amount by which the Market Price on
the NYSE Trading Day preceding the
ex-dividend date exceeds the
Extraordinary Dividend Amount. The
"Extraordinary Dividend Amount" with
respect to an Extraordinary Dividend
for BA Stock will equal (i) in the
case of cash dividends or other
distributions that constitute
quarterly dividends, the amount per
share of such Extraordinary Dividend
minus the amount per share of the
immediately preceding non-
Extraordinary Dividend for BA Stock
or (ii) in the case of cash
dividends or other distributions
that do not constitute quarterly
dividends, the amount per share of
such Extraordinary Dividend. To the
extent an Extraordinary 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
BA Stock described in paragraph 6
below that also constitutes an
Extraordinary Dividend shall only
cause an adjustment to the Exchange
Ratio pursuant to paragraph 6.
4. If Boeing 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 BA
Stock so long as a Market Price for
BA Stock is available. If a Market
Price is no longer available for BA
Stock for whatever reason, including
the liquidation of Boeing or the
subjection of Boeing to a proceeding
under any applicable bankruptcy,
insolvency or other similar law,
then the value of BA Stock will
equal zero for so long as no Market
Price is available.
5. If there occurs any
reclassification or change of BA
Stock, or if Boeing 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 Boeing as an entirety or
substantially as an entirety, in
each case as a result of which the
holders of BA Stock shall be
entitled to receive stock, other
securities or other property or
assets (including cash) with respect
to or in exchange for such BA Stock,
then the holders of the Notes then
outstanding will be entitled
thereafter to exchange such Notes
into the kind and amount of shares
of stock, other securities or other
property or assets 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 MOT Stock immediately
prior to any such corporate event.
At such time, no adjustment will be
made to the Exchange Ratio of BA
Stock.
6. If Boeing issues to all of its
shareholders equity securities of an
issuer other than Boeing (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 BA Stock at the
time of the issuance of such new
equity securities times the number
of shares of the new equity
securities issued with respect to
one share of BA Stock.
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 Market
Price of the BA Stock.
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, with
respect to BA Stock:
(i) a suspension, absence or material
limitation of trading of BA Stock on
the primary market for BA Stock 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 BA Stock, 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 New
York Stock Exchange, any other self-
regulatory organization or the
Securities and Exchange Commission
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 BA Stock 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 BA Stock and
(5) an "absence of trading" on the
primary securities market on which
options contracts related to BA
Stock are traded will not include
any time when such securities market
is itself closed for trading under
ordinary circumstances.
BA Stock; Public Information.......... BA Stock is 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
Boeing 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 BA STOCK OR OTHER
SECURITIES OF BOEING. ALL
DISCLOSURES CONTAINED IN THIS
PRICING SUPPLEMENT REGARDING BOEING
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
BOEING. NEITHER THE COMPANY NOR THE
AGENT MAKES ANY REPRESENTATION THAT
SUCH PUBLICLY AVAILABLE DOCUMENTS OR
ANY OTHER PUBLICLY AVAILABLE
INFORMATION REGARDING BOEING 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 BA STOCK (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
BOEING 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 BA STOCK.
The Company or its affiliates may
presently or from time to time
engage in business with Boeing
including extending loans to, or
making equity investments in, Boeing
or providing advisory services to
Boeing, 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 Boeing and, in addition,
one or more affiliates of the
Company may publish research reports
with respect to Boeing. The Company
does not make any representation to
any purchaser of Notes with respect
to any matters whatsoever relating
to Boeing. Any prospective
purchaser of a Note should undertake
an independent investigation of
Boeing as in its judgment is
appropriate to make an informed
decision with respect to an
investment in BA Stock.
Historical Information................ The following table sets forth the
high and low Market Price during
1992, 1993, 1994, and during 1995
through September 11, 1995, and the
Market Price on September 11, 1995.
All Market Prices are rounded to the
nearest one-tenth of a cent, and
certain Market Prices have been
adjusted for stock splits. The
Market Prices listed below have been
derived from publicly disseminated
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 BA Stock should not be
taken as an indication of future
performance, and no assurance can be
given that the price of BA Stock
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.
Boeing High Low Last
------------- ------ ------ ------
(CUSIP
# 097023105)
1992......... 54.375 33.750
1993......... 44.625 33.625
1994......... 49.875 42.500
1995......... 68.875 44.500 68.875
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 BA Stock, in options contracts on
BA Stock 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
BA Stock, and therefore effectively
increase the level to which BA Stock
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 BA
Stock 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.
United States Federal Taxation:....... The following discussion 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 Note's Issue
Price and its "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 BA Stock, 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 BA Stock will have a basis
in the BA Stock 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. 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.
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.
Plan of Distribution.................. The Notes may be offered to investors
outside the United States. The
Agent has agreed that any offers and
sales made outside the United States
will be made in compliance with any
selling restrictions applicable in
the jurisdictions where such offers
and sales are made.
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated:[At least 90 days after the Original Issue Date]
Morgan Stanley Group Inc.
1251 Avenue of the Americas
New York, New York 10022
Morgan Stanley & Co. Incorporated, as
Calculation Agent
1251 Avenue of the Americas
New York, New York 10020
Fax No.: (212) 703-4377
(Attn: Richard P. Sandulli)
Dear Sirs:
The undersigned holder of the Medium Term Notes, Series C, Senior
Fixed Rate Notes due September 30, 2000 (Exchangeable for Shares of Common
Stock of The Boeing Company) 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 date hereof (or, if this letter is received
after 11:00 a.m. on any NYSE Trading Day, as of the next NYSE Trading Day,
provided that such day is prior to the earliest of (i) September 30, 2000,
(ii) the Call Date and (iii) in the event of a call for cash, the Notice
Date), the Exchange Right as described in Pricing Supplement No. 19 dated
September , 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, shares of the Common Stock of The Boeing
Company 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 ________________________
United States Federal Taxation. . . . Foreign Holders of the Notes. As used
herein, the term "Foreign Holder" is
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.
Foreign Holders of the BA Stock. The
following is a general discussion of
certain U.S. federal income and
estate tax consequences of the
ownership and disposition of BA Stock
by a Foreign Holder. This discussion
is based on the Internal Revenue Code
of 1986, as amended (the "Code"), and
administrative interpretations as of
the date hereof, all of which may be
changed either retroactively or
prospectively. This discussion does
not address all aspects of U.S.
federal income and estate taxation
that may be relevant to Foreign
Holders in light of their particular
circumstances and does not address
any tax consequences arising under
the laws of any state, local or
foreign taxing jurisdiction.
Prospective holders should consult
their tax advisors with respect to
the particular tax consequences to
them of holding and disposing of BA
Stock.
Dividends. Subject to the discussion
below, dividends paid to a Foreign
Holder of BA Stock generally will be
subject to withholding tax at a 30%
rate or such lower rate as may be
specified by an applicable income tax
treaty. A Foreign Holder may be
required to file certain forms with
Boeing and the Service in order to
claim treaty benefits.
Dividends paid to a Foreign Holder at
an address within the United States
may be subject to backup withholding
imposed at a rate of 31% if the
Foreign Holder fails to establish
that it is entitled to an exemption
or to provide a correct taxpayer
identification number and other
information to the payor.
Upon the filing of an Internal
Revenue Service Form 4224 with the
payor, there will be no withholding
tax on dividends that are effectively
connected with the Foreign Holder's
conduct of a trade or business within
the United States. Instead, the
effectively connected dividends will
be subject to regular U.S. income tax
in the same manner as if the Foreign
Holder were a U.S. resident. A non-
U.S. corporation receiving
effectively connected dividends also
may be subject to an additional
"branch profits tax" which is
imposed, under certain circumstances,
at a rate of 30% (or such lower rate
as may be specified by an applicable
treaty) of the non-U.S. corporation's
effectively connected earnings and
profits, subject to certain
adjustments.
Generally, U.S. corporations must
report to the U.S. Internal Revenue
Service the amount of dividends paid,
the name and address of the
recipient, and the amount, if any, of
tax withheld. A similar report is
sent to the holder. Pursuant to tax
treaties or other agreements, the
Service may make its reports
available to tax authorities in the
recipient's country of residence.
Gain on Disposition of BA Stock. A
Foreign Holder generally will not be
subject to U.S. federal income tax
with respect to gain realized on a
sale or other disposition of BA Stock
unless (i) the gain is effectively
connected with a trade or business of
such holder in the United States,
(ii) in the case of certain Foreign
Holders who are non-resident alien
individuals and hold the BA Stock as
a capital asset, such individuals are
present in the United States for 183
or more days in the taxable year of
the disposition, or (iii) the Company
is or has been a "U.S. real property
holding corporation" within the
meaning of Section 897(c)(2) of the
Code at any time within the shorter
of the five-year period preceding
such disposition or such holder's
holding period (unless the Foreign
Holder qualifies for certain
exceptions to tax on the sale of
stock of a "U.S. real property
holding corporation", including an
exception that may apply to certain
holders of 5% or less of a class of
stock).
Information Reporting Requirements
and Backup Withholding on Disposition
of BA Stock. Under current United
States federal income tax law,
information reporting and backup
withholding imposed at a rate of 31%
will apply to the proceeds of a
disposition of BA Stock paid to or
through a U.S. office of a broker
unless the disposing holder certifies
its non-U.S. status or otherwise
establishes an exemption. Generally,
U.S. information reporting and backup
withholding will not apply to a
payment of disposition proceeds if
the payment is made outside the
United States through a non-U.S.
office of a non-U.S. broker.
However, U.S. information reporting
requirements (but not backup
withholding) will apply to a payment
of disposition proceeds outside the
United States if (A) the payment is
made through an office outside the
United States of a broker that is
either (i) a U.S. person, (ii) a
foreign person which derives 50% or
more of its gross income for certain
periods from the conduct of a trade
or business in the United States or
(iii) a "controlled foreign
corporation" for U.S. federal income
tax purposes and (B) the broker fails
to maintain documentary evidence that
the holder is a Foreign Holder and
that certain conditions are met, or
that the holder otherwise is entitled
to an exemption.
Backup withholding is not an
additional tax. Rather, the tax
liability of persons subject to
backup withholding will be reduced by
the amount of tax withheld. If
withholding results in an overpayment
of taxes, a refund may be obtained,
provided that the required
information is furnished to the U.S.
Internal Revenue Service.
Federal Estate Tax. An individual
Foreign Holder who is treated as the
owner of or has made certain lifetime
transfers of an interest in the BA
Stock will be required to include the
value thereof in his gross estate for
U.S. federal estate tax purposes, and
may be subject to U.S. federal estate
tax unless an applicable estate tax
treaty provides otherwise.
