Subject to Completion, Pricing Supplement dated May [ ], 1996
PROSPECTUS Dated May 1, 1996 Pricing Supplement No. [13] to
PROSPECTUS SUPPLEMENT Registration Statement No. 333-01655
Dated May 1, 1996 Dated , 1996
Rule 424(b)(3)
$50,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
Senior Fixed Rate Notes
% EXCHANGEABLE NOTES DUE JULY 1, 2002
Exchangeable For Shares of Common Stock of
FIRST DATA CORPORATION
The % Exchangeable Notes due July 1, 2002 (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 Notes will bear interest at
the rate of % per annum payable semi-annually on January 1 and July 1 of
each year (each an "Interest Payment Date") commencing July 1, 1996. The
issue price of each Note will be $ . ( . % of the principal amount at
maturity) (the "Issue Price"). The Issue Price represents a yield to maturity
of [2.0]% per annum computed on a semiannual bond-equivalent basis based on
the Issue Price calculated from the date of issuance (the "Original Issue
Date"). The Notes are issued in minimum denominations of $1,000 per Note and
will mature on July 1, 2002.
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 delivery to 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 $0.01 per share
("FDC Stock"), of First Data Corporation, 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 FDC 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 FDC 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 Issue Date and ending on the day prior to the earliest of (i) the
Maturity Date, (ii) the Call Date (as defined below) and, (iii) in the event
of a call for cash as described under "Company Exchange Right" herein, the
Company Notice Date (as defined herein).
On or after December , 1998, the Company may call the Notes, in whole but
not in part, for mandatory exchange into FDC Stock at the Exchange Ratio;
provided that, if Parity (as defined herein) as determined on the NYSE Trading
Day immediately prior to the Company Notice Date is less than the applicable
Call Price (as defined herein) for such Company 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 Company Notice Date, as
specified by the Company. If the Notes are so called for mandatory
exchange, the FDC Stock or cash to be delivered to holders of Notes will be
delivered on the Call Date.
First Data Corporation is neither affiliated with the Company nor involved in
this offering of the Notes. The Market Price of the FDC Stock on the date of
this Pricing Supplement was $ (the "Initial Market Price"). See
"Historical Information" in this Pricing Supplement for information on the
range of Market Prices for FDC Stock.
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-6 and PS-7 herein.
Application will be made to list the Notes on the New York Stock Exchange
("NYSE"). It is not possible to predict whether the Notes will trade in the
secondary market or if such market will be liquid or illiquid.
PRICE % AND ACCRUED INTEREST
<TABLE>
<CAPTION>
Price to Public (1) Agent's Commissions (2) Proceeds to Company (1)
--------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Per Note............ % % %
Total............... $ $ $
</TABLE>
_______________
(1) Plus accrued interest, if any, from June , 1996
(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.
(This page intentionally left blank)
Capitalized terms not defined herein have the meanings given to such terms in
the accompanying Prospectus Supplement.
Principal Amount:.............. $50,000,000
Maturity Date:................. July 1, 2002
Interest Rate:................. % per annum
Interest Payment Dates......... January 1 and July 1, beginning July 1, 1996
Specified Currency:............ U.S. Dollars
Issue Price:................... %
Issue Date (Settlement Date):.. June , 1996
Book Entry Note or Certificated
Note:......................... Book Entry, DTC
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 (i) completion by the holder
and delivery to 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 (ii) 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
FDC 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 FDC Stock
or pay an amount in cash equal to the
Exchange Ratio times the Market Price of
FDC 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. Upon any exercise of the Exchange
Right, holders of such exchanged Notes
shall not be entitled to receive accrued
but unpaid interest thereon. If any Notes
are exchanged after a record date for the
payment of interest and prior to the next
succeeding Interest Payment Date, such
Notes must be accompanied by funds equal
to the interest payable on such succeeding
Interest Payment Date on the principal
amount so exchanged.
The Company shall, or shall cause the
Calculation Agent to, deliver such shares of
FDC 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 FDC Stock, the
Company will pay cash in lieu of delivering
fractional shares of FDC Stock in an amount
equal to the corresponding fractional Market
Price of FDC Stock as determined by the
Calculation Agent 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 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 Company Notice Date.
Company Exchange Right......... On or after December , 1998, the Company
may call the Notes, in whole but not in part,
for mandatory exchange into FDC Stock at the
Exchange Ratio; provided that, if Parity on
the NYSE Trading Day immediately preceding
the Company Notice Date, as determined by the
Calculation Agent, is less than the
applicable Call Price for such Company Notice
Date, the Company will pay such applicable
Call Price, plus any accrued and unpaid
interest to, but not including, the Call
Date, in cash on the Call Date. If the Notes
are so called for mandatory exchange by the
Company, then, unless a holder subsequently
exercises the Exchange Right (the exercise of
which will not be available to the holder
following a call for cash in an amount equal
to the Call Price), the FDC 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 FDC Stock or cash.
The Company shall, or shall cause the
Calculation Agent to, deliver such shares of
FDC Stock or cash to the Trustee for delivery
to the holders.
On or after the Company Notice Date (other
than with respect to a call of the Notes for
cash by the Company) holders of the Notes will
continue to be entitled to exercise the
Exchange Right and receive any amounts
described under "Exchange Right" above.
Company Notice Date............ Any NYSE Trading Day on or after December ,
1998 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 FDC Stock
on such NYSE Trading Day.
Call Price:.................... The table below shows indicative Call Prices
for each $1,000 principal amount of Notes on
December , 1998 and at each December
thereafter and on the Maturity Date. The
Call Price for each $1,000 principal amount
of Notes called for mandatory exchange on
Call Dates between such indicative dates
would include an additional amount reflecting
any additional accreted OID from the next
preceding date in the table through the
applicable Call Date at the rate of [ ]%
per annum. Such additional accreted amount,
as determined by the Calculation Agent, will
be calculated on a semiannual bond-equivalent
basis based on the Call Price for the
immediately preceding Call Date indicated in
the table below.
Call Date Call Price
------------------- ------------
December , 1998 $[ ]
December , 1999 $[ ]
December , 2000 $[ ]
December , 2001 $[ ]
Maturity $1,000.00
Market Price:.................. If FDC Stock (or any other security for
which a Market Price must be determined) is
listed on a national securities exchange, or
is traded on 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 one share of FDC Stock (or
one unit of any such other security) 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 FDC 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 FDC 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
NYSE, 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 First Data
Corporation and, although the Company as of
the date of this Pricing Supplement does not
have any material non-public information
concerning First Data Corporation, corporate
events of First Data Corporation, including
those described below in "Adjustments to the
Exchange Ratio," are beyond the Company's
ability to control and are difficult to
predict.
First Data Corporation 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. First Data
Corporation 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 FDC Stock, including, but not limited to,
the volatility of FDC Stock, the dividend
rate on FDC 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 FDC
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 FDC 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 FDC Stock is
below, equal to or not sufficiently above the
Initial Market Price. The historical Market
Prices of FDC Stock should not be taken as an
indication of FDC 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 FDC 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 FDC Stock.
2. If FDC Stock is subject to a stock
dividend (issuance of additional shares of
FDC Stock) that is given ratably to all
holders of shares of FDC Stock, then once the
dividend has become effective and FDC 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 FDC 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 FDC
Stock other than distributions described in
paragraph 6 below and Extraordinary Dividends
as described below. A cash dividend or other
distribution with respect to FDC Stock will
be deemed to be an "Extraordinary Dividend"
if such dividend or other distribution
exceeds the immediately preceding
non-Extraordinary Dividend for FDC Stock by
an amount equal to at least 10% of the Market
Price of FDC 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 FDC Stock,
the Exchange Ratio with respect to FDC 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 FDC 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 FDC 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 FDC 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 First Data Corporation 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 FDC Stock so long as
a Market Price for FDC Stock is available.
If a Market Price is no longer available for
FDC Stock for whatever reason, including the
liquidation of First Data Corporation or the
subjection of First Data Corporation to a
proceeding under any applicable bankruptcy,
insolvency or other similar law, then the
value of FDC Stock will equal zero for so
long as no Market Price is available.
5. If there occurs any reclassification or
change of FDC Stock, or if First Data
Corporation 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 First Data Corporation
as an entirety or substantially as an
entirety, in each case as a result of which
the holders of FDC Stock shall be entitled to
receive stock, other securities or other
property or assets (including cash) with
respect to or in exchange for such FDC 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 FDC Stock immediately prior to any
such corporate event. At such time, no
adjustment will be made to the Exchange Ratio
of FDC Stock.
6. If First Data Corporation issues to all
of its shareholders equity securities of an
issuer other than First Data Corporation
(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
FDC 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 FDC Stock.
7. If more than one of the events set forth
above occurs, the adjustments to the Exchange
Ratio for the second and subsequent events
shall be to the Exchange Ratio as adjusted
for the preceding events.
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 FDC 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 FDC Stock:
(i) a suspension, absence or material
limitation of trading of FDC Stock on the
primary market for FDC 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 FDC 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 FDC 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 FDC Stock and (5) a "suspension,
absence or material limitation of trading" on
the primary securities market on which
options contracts related to FDC Stock are
traded will not include any time when such
securities market is itself closed for
trading under ordinary circumstances.
FDC Stock;
Public Information:............ FDC 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 First Data
Corporation 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
FDC STOCK OR OTHER SECURITIES OF FIRST DATA
CORPORATION. ALL DISCLOSURES CONTAINED IN
THIS PRICING SUPPLEMENT REGARDING FIRST DATA
CORPORATION 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 FIRST DATA
CORPORATION. NEITHER THE COMPANY NOR THE
AGENT MAKES ANY REPRESENTATION THAT SUCH
PUBLICLY AVAILABLE DOCUMENTS OR ANY OTHER
PUBLICLY AVAILABLE INFORMATION REGARDING
FIRST DATA CORPORATION 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 FDC 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 FIRST DATA
CORPORATION 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
MAKES ANY REPRESENTATION TO ANY PURCHASER OF
NOTES AS TO THE PERFORMANCE OF FDC STOCK.
The Company or its affiliates may presently
or from time to time engage in business with
First Data Corporation including extending
loans to, or making equity investments in,
First Data Corporation or providing advisory
services to First Data Corporation, 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 First Data
Corporation and, in addition, one or more
affiliates of the Company may publish
research reports with respect to First Data
Corporation. The Company does not make any
representation to any purchaser of Notes with
respect to any matters whatsoever relating to
First Data Corporation. Any prospective
purchaser of a Note should undertake an
independent investigation of First Data
Corporation as in its judgment is appropriate
to make an informed decision with respect to
an investment in FDC Stock.
Historical Information......... The following table sets forth the high and
low Market Price during 1993, 1994, 1995 and
during 1996 through May , 1996. The Market
Price on May , 1996 was $ . 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 FDC
Stock should not be taken as an indication of
future performance, and no assurance can be
given that the price of FDC 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.
First Data Dividends per
---------- ---------------
Corporation High Low Share
- --------------------------- -------- ----- ---------------
(CUSIP # )
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.............
1996:
Through May ,
1996.......................
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 and others,
may hedge its anticipated exposure in
connection with the Notes by taking positions
in FDC Stock, in options contracts on FDC
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 FDC Stock,
and therefore effectively increase the level
to which FDC 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 FDC 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.
Supplemental Information Concerning
Plan of Distribution........... [Each Agent has represented and agreed that
(i) it has not offered or sold and, prior to
the expiry of the period of six months from
the Settlement Date, will not offer or sell
any Notes to persons in the United Kingdom
except to persons whose ordinary activities
involve them in acquiring, holding, managing
or disposing of investments (as principal or
agent) for the purposes of their businesses
or otherwise in circumstances which have not
resulted and will not result in an offer to
the public in the United Kingdom within the
meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and
will comply with all applicable provisions of
the Financial Services Act 1986 with respect
to anything done by it in relation to the
Notes in, from or otherwise involving the
United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on
in the United Kingdom any document received
by it in connection with the issue of the
Notes to a person who is of a kind described
in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements)
(Exemption) Order 1995 or is a person to whom
such document may otherwise lawfully be
issued or passed on.
The Notes may be offered to investors outside
the United States and the United Kingdom.
The Agent has further agreed that any offers
and sales made outside the United States and
the United Kingdom will be made in compliance
with any selling restrictions applicable in
the jurisdictions where such offers and sales
are made.]
United States Federal Taxation: [United States Holders of the Notes. The
Company intends to treat gain realized by a
holder on the retirement of a Note, to the
extent attributable to the exchange feature,
as interest income and to report any such
amount accordingly. See also "United States
Federal Taxation" in the accompanying
Prospectus Supplement.
Foreign Holders of the Notes. The following
discussion is based on the opinion of Davis
Polk & Wardwell, special tax counsel to the
Company. This discussion supplements the
"United States Federal Taxation" section in
the accompanying Prospectus Supplement. Any
limitations on disclosure and any defined
terms contained therein are equally
applicable to the summary below. In
addition, this discussion addresses only
initial holders purchasing at the issue price
of the Notes and that do not hold the
Notes as part of a hedging transaction or
"straddle." As used herein, the term
"Foreign Holder" means a person or entity
that, for United States federal income tax
purposes, is a non-resident alien
individual, a foreign corporation, a
foreign partnership, or a non-resident
fiduciary of a foreign estate or trust.
The Notes will be treated as debt for United
States federal income tax purposes.
Accordingly, 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.
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.
Foreign Holders of Notes should consult their
tax advisors regarding the application of
information reporting and backup withholding
in their particular situations, the
availability of an exemption therefrom, and
the procedure for obtaining such an
exemption, if available. Any amounts
withheld from a payment to a Foreign Holder
under the backup withholding rules will be
allowed as a credit against such Holder's
United States federal income tax liability
and may entitle such Holder to a refund,
provided that the required information is
furnished to the United States Internal
Revenue Service (the "Service").
A Note held by an individual who at the time
of his death is not a citizen or domiciliary
of the United States will not be subject to
United States federal estate tax as a result
of such individual's death; provided that (i)
interest paid to such individual on such Note
would not be effectively connected with the
conduct by such individual of a trade or
business within the United States and (ii)
such individual is not a person who owns
(directly or by attribution) ten percent or
more of the total combined voting power of
all classes of stock of the Company.
There can be no assurance that the ultimate
tax treatment of the Notes would not differ
significantly from the description herein.
Prospective investors are urged to consult
their tax advisors as to the possible
consequences of holding the Notes.
See also "United States Federal Taxation" in
the accompanying Prospectus Supplement for
additional discussion of the federal income
tax consequences of ownership and disposition
of the Notes. For information regarding the
federal income tax consequences of ownership
and disposition of the FDC Stock, please
refer to the publicly available documents
described in the first paragraph under the
heading "FDC Stock; Public Information."]
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated:[At 90 days after the Issue Date]
Morgan Stanley Group Inc.
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. Incorporated, as
Calculation Agent
1585 Broadway
New York, New York 10036
Fax No.: (212) 761-0028
(Attn: James C. Jurney)
Dear Sirs:
The undersigned holder of the Medium Term Notes, Series C, Senior
Fixed Rate Notes due July 1, 2002 (Exchangeable for Shares of Common Stock
of First Data Corporation) 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) July
1, 2002, (ii) the Call Date and (iii) in the event of a call for cash, the
Company Notice Date), the Exchange Right as described in Pricing Supplement
No. [13] dated , 1996 (the "Pricing Supplement") to the Prospectus
Supplement dated May 1, 1996 and the Prospectus dated May 1, 1996 related
to Registration Statement No. 333-01655. 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
below. Upon receipt of this notice, the Company will deliver, at its sole
option, shares of the Common Stock of First Data Corporation 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
----------------
