Subject to Completion, Pricing Supplement dated November 7, 1995
PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 20 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 November , 1995
Rule 424(b)(3)
$ 10,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
Senior Fixed Rate Notes
% MANDATORILY EXCHANGEABLE NOTES DUE MAY 30, 1998
% Mandatorily Exchangeable For Shares of Common Stock of
[UNDERLYING COMPANY]
The % Mandatorily Exchangeable Notes due May 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 principal amount of each of the Notes being offered hereby will be $
(the Market Price (as defined herein) of the common stock, par value $ per
share, of [Underlying Company] ("UnderCo") on November , 1995) (the "Initial
Price"). The Notes will mature on May 30, 1998. Interest on the Exchangeable
Notes, at the rate of % of the principal amount per annum, is payable
quarterly in arrears on each February , May , August and November ,
beginning February , 1996.
At maturity (including as a result of acceleration or otherwise), the
principal amount of each Note will be mandatorily exchanged by the Company
into a number of shares of the common stock of UnderCo (the "UnderCo Stock")
(or, at the Company's option, cash with an equal value in the case of clause
(b) below) at the Exchange Rate. The Exchange Rate is equal to, subject to
certain adjustments, (a) if the product of the Exchange Factor (as defined
below) and the Market Price per share of UnderCo Stock determined as of the
maturity of the Notes (the "Maturity Price") is greater than or equal to $
per share of UnderCo Stock (the "Threshold Appreciation Price"), . of the
product of the Exchange Factor and one share of UnderCo Stock per Note, (b) if
the Maturity Price is less than the Threshold Appreciation Price but is
greater than the Initial Price, a fractional share of the product of the
Exchange Factor and one share of UnderCo Stock so that the value of such
fractional share (determined at the Maturity Price) equals the Initial Price
and (c) if the Maturity Price is less than or equal to the Initial Price, the
product of the Exchange Factor and one share of UnderCo Stock per Note. The
Exchange Factor will be set initially at 1.0, but will be subject to
adjustment upon the occurrence of certain corporate events. Because the
Exchange Rate varies depending on the Maturity Price, holders of the Notes
will not necessarily receive at maturity an amount equal to the principal
amount thereof. See "Exchange at Maturity," "Exchange Factor" and
"Antidilution Adjustments" in this Pricing Supplement.
Interest on the Notes will accrue at a higher rate than the rate at which
dividends have been paid on the UnderCo Stock. The opportunity for equity
appreciation afforded by an investment in the Notes is less than that afforded
by an investment in the UnderCo Stock because at maturity a holder may receive
less than one share of UnderCo Stock per Note. The value of the UnderCo Stock
received by a holder of the Notes upon exchange at maturity, determined as
described herein, may be more or less than the principal amount of the Notes.
UnderCo is not affiliated with the Company, is not involved in this offering
of the Notes and will have no obligations with respect to the Notes. See
"Historical Information" in this Prospectus Supplement for information on the
range of Market Prices for UnderCo Stock.
The Company will cause the Market Price, any adjustments to the Exchange
Factor and any other antidilution adjustments 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- and PS- herein.
_____________
PRICE 100% AND ACCRUED INTEREST
_____________
Proceeds to
Agent's -------------------
Price to Public(1) Commissions(2) Company(1)
------------------- --------------- -------------------
Per Note.. 100% % %
Total..... $ $ $
_______________
(1) Plus accrued interest, if any, from November , 1995.
(2) 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:.............. $10,000,000
Maturity Date:................. May 30, 1998
Interest Rate:................. % per annum
Interest Payment Dates:........ February , May , August and November
Specified Currency:............ U.S. Dollars
Issue Price:................... 100%
Original Issue Date (Settlement
Date):....................... November , 1995
Book Entry Note or Certificated
Note:........................ Book Entry
Senior Note or Subordinated
Note:........................ Senior
Minimum Denominations:......... $
Trustee:....................... Chemical Bank
Exchange at Maturity:.......... At maturity (including as a result of
acceleration or otherwise), the principal
amount of each Note will be mandatorily
exchanged by the Company, upon delivery of
such Note to the Trustee, into a number of
shares of UnderCo Stock (or, at the
Company's option, cash with an equal value
in the case of clause (b) below) at the
Exchange Rate. The Exchange Rate is equal
to (a) if the Maturity Price is greater
than or equal to $ (the "Threshold
Appreciation Price"), . of the product
of the Exchange Factor (as defined below) and
one share of UnderCo Stock per Note, (b)
if the Maturity Price is less than the
Threshold Appreciation Price but is
greater than the Initial Price, a
fractional share of the product of the
Exchange Factor and one share of UnderCo
Stock so that the value of such fractional
share (determined at the Maturity Price)
equals the Initial Price and (c) if the
Maturity Price is less than or equal to
the Initial Price, the product of the
Exchange Factor and one share of UnderCo
Stock per Note, subject in each case to
any applicable antidilution adjustments as
set forth under "Antidilution Adjustments"
below. Such delivery or payment will be
made 3 Business Days after the Exchange
Date.
The Company shall, or shall cause the
Calculation Agent to, deliver such shares of
UnderCo Stock or cash to the Trustee for
delivery to the holders.
No Fractional Shares:.......... Upon mandatory exchange of the Notes, the
Company will pay cash in lieu of issuing
fractional shares of UnderCo Stock in an
amount equal to the corresponding fractional
Market Price as of the maturity of the Notes.
Exchange Factor:............... The Exchange Factor will be set initially at
1.0, but will be subject to adjustment upon
the occurrence of certain corporate events.
See "Antidilution Adjustments" below.
Initial Price:................. $
Maturity Price:................ Maturity Price means the product of (i) the
Market Price of UnderCo Stock and (ii) the
Exchange Factor, each determined as of the
maturity of the Notes.
Market Price:.................. If UnderCo Stock (or any other security
for which a Market Price must be
determined) 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
UnderCo 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 UnderCo 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 Factor or
other antidilution adjustments or
determining any Market Price or whether a
Market Disruption Event has occurred. See
"Antidilution Adjustments" 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 combine features of equity and debt
instruments. Accordingly, the terms of the
Notes differ from those of ordinary debt
securities in that the value of the UnderCo
Stock that a holder of the Notes will receive
upon mandatory exchange of the principal
amount thereof at maturity is not fixed, but
is based on the price of the UnderCo Stock
and the Exchange Rate as determined at such
price. Because the price of the UnderCo
Stock is subject to market fluctuations, the
value of the UnderCo Stock received by a
holder of Notes upon exchange at maturity,
determined as described herein, may be more
or less than the principal amount of the
Notes. If the Maturity Price of the UnderCo
Stock is less than the Initial Price, the
amount receivable upon exchange will be less
than the principal amount of the Notes, in
which case an investment in the Notes may
result in a loss.
The opportunity for equity appreciation
afforded by an investment in the Notes is
less than that afforded by an investment in
the UnderCo Stock because at maturity a
holder will receive less than one share of
UnderCo Stock per Note if the value of such
UnderCo Stock (as adjusted by the Exchange
Factor) has appreciated above the Initial
Price.
Although the amount that holders of the Notes
are entitled to receive at maturity is
subject to adjustment for certain corporate
events, such adjustments do not cover all
events that could affect the Market Price of
the UnderCo Stock, including, without
limitation, the occurrence of a partial
tender or exchange offer for the UnderCo
Stock by UnderCo or any third party, and
consequently such other events may adversely
affect the market value of the Notes.
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.
Securities with characteristics similar to
the Notes are novel securities and there is
currently no secondary market for the Notes.
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 UnderCo Stock, including, but
not limited to, the volatility of UnderCo
Stock, the dividend rate on UnderCo Stock,
market interest and yield rates and the time
remaining to the maturity of the Notes. In
addition, the value of UnderCo Stock depends
on a number of interrelated factors,
including economic, financial and political
events, that can affect the capital markets
generally and the market segment of which
UnderCo is a part and over which the Company
has no control. The market value of the
Notes is expected to depend primarily on
changes in the Market Price of UnderCo Stock.
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 UnderCo Stock is
below, equal to or not sufficiently above the
Initial Price. The historical Market Prices
of UnderCo Stock should not be taken as an
indication of UnderCo Stock's future
performance during the term of any Note.
The Notes will not be listed on any national
securities exchange or accepted for quotation
on a trading market and, as a result, pricing
information for the Notes may be difficult to
obtain.
The Company is not affiliated with UnderCo
and, although the Company as of the date of
this Pricing Supplement does not have any
material non-public information concerning
UnderCo, corporate events of UnderCo,
including those described below in
"Antidilution Adjustments," are beyond the
Company's ability to control and are
difficult to predict.
UnderCo 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.
UnderCo 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.
Holders of the Notes will not be entitled to
any rights with respect to the UnderCo Stock
(including, without limitation, voting
rights, the rights to receive any dividends
or other distributions in respect thereof and
the right to tender or exchange in any
partial tender or exchange offers by UnderCo
or any third party) until such time, as the
Company shall deliver shares of Stock to
holders of the Notes at maturity or earlier
redemption.
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 Factor and other antidilution
adjustments that may influence the
determination of the amount of UnderCo Stock
or other property receivable at the maturity
of the Notes. See "Antidilution Adjustments"
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.
Antidilution Adjustments:...... The Exchange Factor (and, in the case of
paragraph 5 below, the determination of the
Exchange Rate) will be adjusted as follows:
1. If UnderCo Stock is subject to a stock
split or reverse stock split, then once such
split has become effective, (i) the Exchange
Factor will be adjusted to equal the product
of the prior Exchange Factor and the number
of shares issued in such stock split or
reverse stock split with respect to one share
of UnderCo Stock.
2. If UnderCo Stock is subject to a stock
dividend (issuance of additional shares of
UnderCo Stock) that is given ratably to all
holders of shares of UnderCo Stock, then once
the dividend has become effective and UnderCo
Stock is trading ex-dividend, the Exchange
Factor will be adjusted so that the new
Exchange Factor shall equal the prior
Exchange Factor plus the product of (i) the
number of shares issued with respect to one
share of UnderCo Stock and (ii) the prior
Exchange Factor.
3. There will be no adjustments to the
Exchange Factor to reflect cash dividends or
other distributions paid with respect to
UnderCo Stock other than distributions
described in clause (vi) of paragraph 5 below
and Extraordinary Dividends as described
below. A cash dividend or other distribution
with respect to UnderCo Stock will be deemed
to be an "Extraordinary Dividend" if such
dividend or other distribution exceeds the
immediately preceding non-Extraordinary
Dividend for UnderCo Stock by an amount equal
to at least 10% of the Market Price of
UnderCo 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 UnderCo
Stock, the Exchange Factor with respect to
UnderCo Stock will be adjusted on the
ex-dividend date with respect to such
Extraordinary Dividend so that the new
Exchange Factor will equal the product of (i)
the then current Exchange Factor 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 UnderCo
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
UnderCo 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 UnderCo
Stock described in clause (vi) of paragraph 5
below that also constitutes an Extraordinary
Dividend shall only cause an adjustment to
the Exchange Factor pursuant to clause (vi)
of paragraph 5.
4. If UnderCo issues rights or warrants to
all holders of UnderCo Stock to subscribe for
or purchase UnderCo Stock at an exercise
price per share less than the Market Price of
the UnderCo Stock and the expiration date of
such rights or warrants precedes the maturity
of the Notes, then the Exchange Factor will
be adjusted to equal the product of the prior
Exchange Factor and a fraction, the numerator
of which shall be the number of shares of
UnderCo Stock outstanding on the date of
issuance of such rights or warrants,
immediately prior to such issuance, plus the
number of additional shares of UnderCo Stock
offered for subscription or purchase pursuant
to such rights or warrants and the
denominator of which shall be the number of
shares of UnderCo Stock outstanding on the
date of issuance of such rights or warrants,
immediately prior to such issuance, plus the
number of additional shares of UnderCo Stock
which the aggregate offering price of the
total number of shares of UnderCo Stock so
offered for subscription or purchase
pursuant to such rights or warrants would
purchase at the Market Price, which shall
be determined by multiplying such total
number of shares offered by the exercise
price of such rights or warrants and
dividing the product so obtained by such
Market Price.
5. If (i) there occurs any
reclassification or change of UnderCo
Stock, (ii) UnderCo, or any surviving
entity or subsequent surviving entity of
UnderCo (a "UnderCo Successor") has been
subject to a merger, combination or
consolidation and is not the surviving
entity, (iii) if there occurs a sale or
conveyance to another corporation of the
property and assets of UnderCo as an
entirety or substantially as an entirety,
(iv) any statutory exchange of securities
of UnderCo or any UnderCo Successor with
another corporation occurs (other than
pursuant to clause (ii) above), (v)
UnderCo is being liquidated or is subject
to a proceeding under any applicable
bankruptcy, insolvency or other similar
law, (vi) UnderCo issues to all of its
shareholders equity securities of an
issuer other than UnderCo (other than in a
transaction described in clauses (ii),
(iii), (iv) or (v) above) (a "Spin-off
Event") or (vii) a tender or exchange
offer is consummated for all the
outstanding shares of UnderCo Stock (any
such event in clauses (i) through (vii) a
"Reorganization Event"), the method of
determining the Exchange Rate in respect
of the amount payable upon exchange at
maturity for each Note will be adjusted to
provide that each holder of Notes will
receive at maturity securities, cash or
any other assets distributed in any such
Reorganization Event, including, in the
case of a Spin-off Event, the share of
UnderCo Stock with respect to which the
spun-off security was issued
(collectively, the "Exchange Property")
(or cash, in the case of clause (b) below)
in an amount equal to (a) if the
Transaction Value (as defined below) is
greater than or equal to the Threshold
Appreciation Price, [. ] multiplied by the
Transaction Value, (b) if the Transaction
Value is less than the Threshold
Appreciation Price but greater than the
Initial Price, the Initial Price and (c)
if the Transaction Value is less than or
equal to the Initial Price, the
Transaction Value ; provided that, if the
Exchange Property received in any such
Reorganization Event consists only of
cash, the maturity date of the Notes will
be deemed to be accelerated to the date on
which such cash is distributed to holders
of UnderCo Stock. If Exchange Property
consists of more than one type of
property, holders of Notes will receive at
maturity a pro rata share of each such
type of Exchange Property. "Transaction
Value" means (i) for any cash received in
any such Reorganization Event, the amount
of cash received per share of UnderCo
Stock, as adjusted by the Exchange Factor,
(ii) for any property other than cash or
securities received in any such
Reorganization Event, the market value of
such Exchange Property received for each
share of UnderCo Stock, as adjusted by the
Exchange Factor, as determined by the
Calculation Agent and (iii) for any
security received in any such
Reorganization Event, an amount equal to
the Market Price per share of such
security at the maturity of the Notes
multiplied by the quantity of such
security received for each share of
UnderCo Stock, as adjusted by the Exchange
Factor.
For purposes of paragraph 5 above, in the
case of a consummated tender or exchange
offer for all Exchange Property of a
particular type, Exchange Property shall be
deemed to include the amount of cash or other
property paid by the offeror in the tender or
exchange offer with respect to such Exchange
Property (in an amount determined on the
basis of the rate of exchange in such tender
or exchange offer). In the event of a tender
or exchange offer with respect to Exchange
Property in which an offeree may elect to
receive cash or other property, Exchange
Property shall be deemed to include the kind
and amount of cash and other property
received by offerees who elect to receive
cash.
No adjustments to the Exchange Factor or
Exchange Rate will be required unless such
adjustment would require a change of at least
0.1% in the Exchange Factor or Exchange Rate
then in effect. The Exchange Factor or
Exchange Rate 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 Factor or
Exchange Rate 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 UnderCo Stock.
The Calculation Agent shall be solely
responsible for the determination and
calculation of any adjustments to the
Exchange Factor or Exchange Rate 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 Factor or Exchange Rate upon written
request by any holder of the Notes.
Market Disruption Event:....... "Market Disruption Event" means, with respect
to UnderCo Stock:
(i) a suspension, absence or material
limitation of trading of UnderCo Stock on the
primary market for UnderCo 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
UnderCo 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 UnderCo 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 UnderCo Stock and (5) an "absence
of trading" on the primary securities market
on which options contracts related to UnderCo
Stock are traded will not include any time
when such securities market is itself closed
for trading under ordinary circumstances.
UnderCo Stock; Public
Information:................. UnderCo 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 UnderCo 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
UNDERCO STOCK OR OTHER SECURITIES OF UNDERCO.
ALL DISCLOSURES CONTAINED IN THIS PRICING
SUPPLEMENT REGARDING UNDERCO 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 UNDERCO.
NEITHER THE COMPANY NOR THE AGENT MAKES ANY
REPRESENTATION THAT SUCH PUBLICLY AVAILABLE
DOCUMENTS OR ANY OTHER PUBLICLY AVAILABLE
INFORMATION REGARDING UNDERCO 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 UNDERCO STOCK (AND THEREFORE
THE INITIAL PRICE, THE THRESHOLD APPRECIATION
PRICE AND THE EXCHANGE RATE APPLICABLE ABOVE
THE THRESHOLD APPRECIATION PRICE), HAVE BEEN
PUBLICLY DISCLOSED. SUBSEQUENT DISCLOSURE OF
ANY SUCH EVENTS OR THE DISCLOSURE OF OR
FAILURE TO DISCLOSE MATERIAL FUTURE EVENTS
CONCERNING UNDERCO COULD AFFECT THE VALUE
RECEIVED AT MATURITY 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 UNDERCO STOCK.
The Company or its affiliates may presently
or from time to time engage in business with
UnderCo including extending loans to, or
making equity investments in, UnderCo or
providing advisory services to UnderCo,
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
UnderCo and, in addition, one or more
affiliates of the Company may publish
research reports with respect to UnderCo. The
Company does not make any representation to
any purchaser of Notes with respect to any
matters whatsoever relating to UnderCo. Any
prospective purchaser of a Note should
undertake an independent investigation of
UnderCo as in its judgment is appropriate to
make an informed decision with respect to an
investment in UnderCo Stock.
Historical Information:........ The following table sets forth the high and
low Market Price during 1992, 1993, 1994, and
during 1995 through November , 1995, and
the Market Price on November , 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
UnderCo Stock should not be taken as an
indication of future performance, and no
assurance can be given that the price of
UnderCo Stock will not decrease so that the
beneficial owners of the Notes will receive
at maturity shares of UnderCo Stock worth
less than the principal amount of the Notes.
Nor can assurance be given that the price of
UnderCo Stock will increase above the
Threshold Appreciation Price so that at
maturity the beneficial owners of the Notes
will receive an amount in excess of the
principal amount of the Notes.
<TABLE>
<CAPTION>
Dividends
UnderCo High Low Per Share
------------------------ ---------- ----- -----------
(CUSIP # )
<S> <C> <C> <C>
1992:
First Quarter...........
Second Quarter..........
Third Quarter...........
Fourth Quarter..........
1993:
First Quarter...........
Second Quarter..........
Third Quarter...........
Fourth Quarter..........
1994:
First Quarter...........
Second Quarter..........
Third Quarter...........
Fourth Quarter..........
1995:
First Quarter...........
Second Quarter..........
Third Quarter...........
Fourth Quarter
through November
, 1995..............
</TABLE>
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 UnderCo
Stock, in options contracts on UnderCo 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
Initial Price, the Threshold Appreciation
Price and the Exchange Rate applicable above
the Threshold Appreciation Price. Purchase
activity could potentially increase the
prices of UnderCo Stock, and therefore
effectively increase the level to which
UnderCo Stock must rise before a holder of a
Note will receive at maturity an amount of
UnderCo Stock worth as much as or more than
the principal amount of the Notes. Although
the Company has no reason to believe that its
hedging activity will have a material impact
on the price of UnderCo 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. Because of
the absence of authority on point, there are
substantial uncertainties regarding the U.S.
federal income tax consequences of an
investment in the Notes.
The Company intends to treat the Notes as
indebtedness of the Company and such
treatment is binding on the Company and on all
holders except for holders who disclose on
their tax returns that they are treating the
Notes in a manner that is inconsistent with
the Company's treatment of the Notes. The
Company's treatment is not, however, binding
upon the Internal Revenue Service or the
Courts, and there can be no assurance that it
will be accepted.
The Company presently intends to treat the
coupon interest on the Notes as reportable
interest. Under this approach, such interest
would be taxable to a United States Holder as
ordinary interest income at the time it
accrues or is received in accordance with the
United States Holder's method of accounting
for United States 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 debt, 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 maturity of the Note,
a United States Holder will recognize gain
or loss, if any, equal to the difference
between the amount realized at maturity
and such Holder's tax basis in the Note.
It is unclear under existing law whether
gain recognized at maturity will be
treated as ordinary or capital in
character. Subject to further guidance
from the Internal Revenue Service,
however, 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 at maturity.
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 regulations 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 such withdrawn
Treasury regulations. The Internal Revenue
Service, however, would not be required to
accept such method as correct.
Any gain or loss recognized on the sale or
exchange 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.
