|
|
|
|
|
|
|
|
|
|
|
|
|
PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 18 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 September 6, 1995
Rule 424(b)(3)
$10,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
Senior Fixed Rate Notes
EXCHANGEABLE NOTES DUE SEPTEMBER 30, 1998
Exchangeable For Shares of Common Stock of
MOTOROLA, INC.
The Exchangeable Notes due September 30, 1998 (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 100% of the principal amount at maturity, and there will be no periodic
payments of interest. The Notes are issued in minimum denominations of $1,000
per Note and will mature on September 30, 1998.
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 following 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
11.4239 shares (the "Exchange Ratio") of the common stock, par value $3.00 per
share ("MOT Stock"), of Motorola, Inc. ("Motorola"), 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 MOT Stock on the Exchange Date in lieu of such
shares. The Exchange Ratio will be adjusted for certain corporate events.
See "Adjustments to Exchange Ratio" in this Pricing Supplement. An Exchange
Date will be any NYSE Trading Day (as defined herein) that falls during the
period beginning December 13, 1995 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 13, 1997 the Company may call the Notes, in whole but not in
part, for mandatory exchange into MOT Stock at the Exchange Ratio; provided
that, if Parity (as defined herein) is less than $1,000 on the NYSE Trading
Day immediately preceding the Notice Date, the Company shall pay $1,000 per
Note 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 MOT Stock or cash to be delivered
to holders of Notes will be delivered on the Call Date.
Motorola is neither affiliated with the Company nor involved in this offering
of the Notes. The Market Price of the MOT Stock on the date of this Pricing
Supplement was $78 (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.
PRICE 100%
Agent's
Price to Public Commissions(1) Proceeds to Company
----------------- ---------------- ---------------------
Per Note... 100 % 0.25% 99.75%
Total...... $10,000,000 $25,000 $9,975,000
_______________
(1) The Company has agreed to indemnify the Agent against certain
liabilities, including liabilities under the Securities Act of 1933.
MORGAN STANLEY & CO.
Incorporated
Capitalized terms not defined herein have the meanings given to such terms in
the accompanying Prospectus Supplement.
Principal Amount:...................... $10,000,000
Maturity Date:......................... September 30, 1998
Specified Currency:.................... U.S. Dollars
Issue Price:........................... 100%
Original Issue Date (Settlement Date):. September 13, 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 11.4239
shares (the "Exchange Ratio") of
MOT 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 MOT Stock
or pay an amount in cash equal
to the Exchange Ratio times the
Market Price of MOT 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 Date.
The Company shall, or shall cause
the Calculation Agent to,
deliver any such shares of MOT
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 MOT Stock, the Company
will pay cash in lieu of issuing
fractional shares of MOT Stock
in an amount equal to the
corresponding fractional Market
Price of MOT Stock on such
Exchange Date.
Exchange Ratio......................... 11.4239, 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
December 13, 1995 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 13, 1997, the
Company may call the Notes, in
whole but not in part, for
mandatory exchange into MOT
Stock at the Exchange Ratio;
provided that, if Parity, as
determined by the Calculation
Agent, is less than $1,000 on
the NYSE Trading Day immediately
preceding the Notice Date, the
Company shall pay $1,000 per
Note 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 MOT Stock) a holder
subsequently exercises its
Exchange Right, the MOT 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 the Notes to
the Trustee. The Company shall,
or shall cause the Calculation
Agent to, deliver such shares of
MOT Stock or cash to the Trustee
for delivery to the holders.
Notice Date............................ Any NYSE Trading Day on or after
March 13, 1997 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 MOT
Stock on such NYSE Trading Day.
Market Price:.......................... If MOT 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 MOT
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 MOT 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.
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.
Therefore a holder of the Notes
will forego the interest that
would be payable on a non-
exchangeable debt security if
the Company were to issue such a
security at the same time it
issues the Notes.
The Company is not affiliated
with Motorola and, although the
Company as of the date of this
Pricing Supplement does not have
any material non-public
information concerning Motorola,
corporate events of Motorola,
including those described below
in "Adjustments to the Exchange
Ratio," are beyond the Company's
ability to control and are
difficult to predict.
Motorola 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. Motorola 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 MOT
Stock, including, but not
limited to, the volatility of
MOT Stock, the dividend rate on
MOT 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 MOT 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
MOT 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 principal
amount thereof, if, at such
time, the Market Price of MOT
Stock is below, equal to or not
sufficiently above the Initial
Market Price. The historical
Market Prices of MOT Stock
should not be taken as an
indication of MOT 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 MOT 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 MOT
Stock.
2. If MOT Stock is subject to a
stock dividend (issuance of
additional shares of MOT Stock)
that is given ratably to all
holders of shares of MOT Stock,
then once the dividend has
become effective and MOT 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 MOT
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 MOT Stock other than
distributions described in
paragraph 6 below and
Extraordinary Dividends as
described below. A cash
dividend or other distribution
with respect to MOT Stock will
be deemed to be an
"Extraordinary Dividend" if such
dividend or other distribution
exceeds the immediately
preceding non-Extraordinary
Dividend for MOT Stock by an
amount equal to at least 10% of
the Market Price of MOT 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
MOT Stock, the Exchange Ratio
with respect to MOT 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 MOT 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 MOT
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 MOT 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 Motorola 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
MOT Stock so long as a Market
Price for MOT Stock is
available. If a Market Price is
no longer available for MOT
Stock for whatever reason,
including the liquidation of
Motorola or the subjection of
Motorola to a proceeding under
any applicable bankruptcy,
insolvency or other similar law,
then the value of MOT Stock will
equal zero for so long as no
Market Price is available.
5. If there occurs any
reclassification or change of
MOT Stock, or if Motorola 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 Motorola as an
entirety or substantially as an
entirety, in each case as a
result of which the holders of
MOT Stock shall be entitled to
receive stock, other securities
or other property or assets
(including cash) with respect to
or in exchange for such MOT
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 MOT
Stock.
6. If Motorola issues to all of
its shareholders equity
securities of an issuer other
than Motorola (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 MOT
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 MOT 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
MOT 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 MOT Stock:
(i) a suspension, absence or
material limitation of trading
of MOT Stock on the primary
market for MOT 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 MOT 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 MOT 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 MOT Stock
and (5) an "absence of trading"
on the primary securities market
on which options contracts
related to MOT Stock are traded
will not include any time when
such securities market is itself
closed for trading under
ordinary circumstances.
MOT Stock; Public Information......... MOT 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 Motorola
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 MOT STOCK
OR OTHER SECURITIES OF MOTOROLA.
ALL DISCLOSURES CONTAINED IN
THIS PRICING SUPPLEMENT
REGARDING MOTOROLA 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 MOTOROLA. NEITHER
THE COMPANY NOR THE AGENT MAKES
ANY REPRESENTATION THAT SUCH
PUBLICLY AVAILABLE DOCUMENTS OR
ANY OTHER PUBLICLY AVAILABLE
INFORMATION REGARDING MOTOROLA
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 MOT 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 MOTOROLA 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 MOT STOCK.
The Company or its affiliates
may presently or from time to
time engage in business with
Motorola including extending
loans to, or making equity
investments in, Motorola or
providing advisory services to
Motorola, 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
Motorola and, in addition, one
or more affiliates of the
Company may publish research
reports with respect to
Motorola. The Company does not
make any representation to any
purchaser of Notes with respect
to any matters whatsoever
relating to Motorola. Any
prospective purchaser of a Note
should undertake an independent
investigation of Motorola as in
its judgment is appropriate to
make an informed decision with
respect to an investment in MOT
Stock.
Historical Information................. The following table sets forth the
high and low Market Price during
1992, 1993, 1994, and during
1995 through September 6, 1995,
and the Market Price on
September 6, 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 MOT
Stock should not be taken as an
indication of future
performance, and no assurance
can be given that the price of
the MOT 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.
Motorola High Low Last
-------------------- --------- -------- --------
(CUSIP #620076109)
1992................ 26.313 16.375
1993................ 53.000 25.500
1994................ 61.000 43.500
1995................ 79.000 52.250 78.000
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 MOT Stock,
in options contracts on MOT
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 MOT
Stock, and therefore effectively
increase the level to which MOT
Stock must rise before a holder
of a Note will receive more than
the 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
MOT 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 and should
be read in conjunction
therewith. 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 MOT 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 MOT
Stock will have a basis in the
MOT 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 the
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.
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated:[December 13, 1995 or thereafter]
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, 1998 (Exchangeable for Shares of Common
Stock of Motorola, Inc.) 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, 1998,
(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. 18 dated
September 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, shares of the Common Stock of Motorola, Inc.
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
--------------
|
|