Subject to Completion, Pricing Supplement dated March 5, 1996
PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 57 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 March , 1996
Rule 424(b)(3)
$50,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
Senior Fixed Rate Notes
% EXCHANGEABLE NOTES DUE MARCH 29, 2002
Exchangeable For Shares of Common Stock of
JOHNSON & JOHNSON
The % Exchangeable Notes due March 29, 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 March 30 and September 30
of each year (each an "Interest Payment Date") commencing September 30, 1996.
The Notes are issued in minimum denominations of $1,000 per Note and will
mature on March 29, 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 $1.00 per share ("Johnson & Johnson Stock"), of Johnson & Johnson,
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 Johnson &
Johnson 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
one year after the Issue Date and ending on the day prior to the earliest
of the Maturity Date, the Call Date (as defined below) and, in the event of
a call for cash as described under "Company Exchange Right" herein, the
Company Notice Date (as defined herein).
On or after September , 1998, the Company may call the Notes, in whole but
not in part, for mandatory exchange into Johnson & Johnson 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 Johnson & Johnson Stock or cash to be delivered to holders of
Notes will be delivered on the Call Date.
Johnson & Johnson is neither affiliated with the Company nor involved in this
offering of the Notes. The Market Price of the Johnson & Johnson 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 Johnson & Johnson 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-5 and PS-6 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 100% AND ACCRUED INTEREST
-------------------------------
<TABLE>
<CAPTION>
Price to Public (1) Agent's Commissions (2) Proceeds to Company (1)
--------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Per Note............ 100% % %
Total............... $ $ $
<FN>
_______________
(1) Plus accrued interest, if any, from March , 1996
(2) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933.
</TABLE>
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:................. March 29, 2002
Interest Rate:................. % per annum
Interest Payment Dates......... March 30 and September 30, beginning
September 30, 1996
Specified Currency:............ U.S. Dollars
Issue Price:................... 100%
Issue Date (Settlement Date):.. March , 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
Johnson & Johnson 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
Johnson & Johnson Stock or pay an amount
in cash equal to the Exchange Ratio times
the Market Price of Johnson & Johnson
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 such shares of
Johnson & Johnson 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 Johnson &
Johnson Stock, the Company will pay cash in
lieu of delivering fractional shares of
Johnson & Johnson Stock in an amount equal to
the corresponding fractional Market Price of
Johnson & Johnson 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 one year 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 September , 1998, the Company
may call the Notes, in whole but not in part,
for mandatory exchange into Johnson & Johnson
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 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 Johnson & Johnson 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. The Company shall, or
shall cause the Calculation Agent to, deliver
such shares of Johnson & Johnson Stock or
cash to the Trustee for delivery to the
holders.
Company Notice Date............ Any NYSE Trading Day on or after September ,
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 Johnson &
Johnson Stock on such NYSE Trading Day.
Call Price..................... 100% of principal amount.
Market Price:.................. If Johnson & Johnson 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 Johnson & Johnson
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 Johnson & Johnson 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 (as defined below) 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 Company is not affiliated with Johnson &
Johnson and, although the Company as of the
date of this Pricing Supplement does not have
any material non-public information
concerning Johnson & Johnson, corporate
events of Johnson & Johnson, including those
described below in "Adjustments to the
Exchange Ratio," are beyond the Company's
ability to control and are difficult to
predict.
Johnson & Johnson 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. Johnson &
Johnson 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 Johnson & Johnson Stock, including, but
not limited to, the volatility of Johnson &
Johnson Stock, the dividend rate on Johnson
& Johnson 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
Johnson & Johnson 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 Johnson & Johnson 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 Johnson & Johnson Stock
is below, equal to or not sufficiently above
the Initial Market Price. The historical
Market Prices of Johnson & Johnson Stock
should not be taken as an indication of
Johnson & Johnson 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 Johnson & Johnson 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 Johnson & Johnson Stock.
2. If Johnson & Johnson Stock is subject to
a stock dividend (issuance of additional
shares of Johnson & Johnson Stock) that is
given ratably to all holders of shares of
Johnson & Johnson Stock, then once the
dividend has become effective and Johnson &
Johnson 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 Johnson & Johnson 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
Johnson & Johnson Stock other than
distributions described in paragraph 6 below
and Extraordinary Dividends as described
below. A cash dividend or other distribution
with respect to Johnson & Johnson Stock will
be deemed to be an "Extraordinary Dividend"
if such dividend or other distribution
exceeds the immediately preceding
non-Extraordinary Dividend for Johnson &
Johnson Stock by an amount equal to at least
10% of the Market Price of Johnson & Johnson
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 Johnson & Johnson Stock, the
Exchange Ratio with respect to Johnson &
Johnson 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 Johnson &
Johnson 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
Johnson & Johnson 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 Johnson & Johnson 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 Johnson & Johnson 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 Johnson & Johnson Stock so
long as a Market Price for Johnson & Johnson
Stock is available. If a Market Price is no
longer available for Johnson & Johnson Stock
for whatever reason, including the
liquidation of Johnson & Johnson or the
subjection of Johnson & Johnson to a
proceeding under any applicable bankruptcy,
insolvency or other similar law, then the
value of Johnson & Johnson Stock will equal
zero for so long as no Market Price is
available.
5. If there occurs any reclassification or
change of Johnson & Johnson Stock, or if
Johnson & Johnson 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 Johnson &
Johnson as an entirety or substantially as an
entirety, in each case as a result of which
the holders of Johnson & Johnson Stock shall
be entitled to receive stock, other
securities or other property or assets
(including cash) with respect to or in
exchange for such Johnson & Johnson 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 Johnson & Johnson Stock immediately
prior to any such corporate event. At such
time, no adjustment will be made to the
Exchange Ratio of Johnson & Johnson Stock.
6. If Johnson & Johnson issues to all of
its shareholders equity securities of an
issuer other than Johnson & Johnson (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 Johnson &
Johnson 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 Johnson &
Johnson 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 Johnson & Johnson 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 Johnson & Johnson Stock:
(i) a suspension, absence or material
limitation of trading of Johnson & Johnson
Stock on the primary market for Johnson &
Johnson 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 Johnson &
Johnson 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 Johnson & Johnson 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
Johnson & Johnson Stock and (5) an
"absence of trading" on the primary
securities market on which options
contracts related to Johnson & Johnson
Stock are traded will not include any time
when such securities market is itself
closed for trading under ordinary
circumstances.
Johnson & Johnson Stock;
Public Information:............ Johnson & Johnson 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 Johnson & Johnson 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 JOHNSON & JOHNSON STOCK OR OTHER
SECURITIES OF JOHNSON & JOHNSON. ALL
DISCLOSURES CONTAINED IN THIS PRICING
SUPPLEMENT REGARDING JOHNSON & JOHNSON 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 JOHNSON
& JOHNSON. NEITHER THE COMPANY NOR THE
AGENT MAKES ANY REPRESENTATION THAT SUCH
PUBLICLY AVAILABLE DOCUMENTS OR ANY OTHER
PUBLICLY AVAILABLE INFORMATION REGARDING
JOHNSON & JOHNSON 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
JOHNSON & JOHNSON 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
JOHNSON & JOHNSON 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 JOHNSON &
JOHNSON STOCK.
The Company or its affiliates may presently
or from time to time engage in business with
Johnson & Johnson including extending loans
to, or making equity investments in, Johnson
& Johnson or providing advisory services to
Johnson & Johnson, 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 Johnson & Johnson and, in
addition, one or more affiliates of the
Company may publish research reports with
respect to Johnson & Johnson. The Company
does not make any representation to any
purchaser of Notes with respect to any matters
whatsoever relating to Johnson & Johnson.
Any prospective purchaser of a Note should
undertake an independent investigation of
Johnson & Johnson as in its judgment is
appropriate to make an informed decision
with respect to an investment in Johnson &
Johnson Stock.
Historical Information......... The following table sets forth the high and
low Market Price during 1993, 1994, 1995 and
during 1996 through March 4, 1996. The
Market Price on March 4, 1996 was $96 3/4.
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 Johnson & Johnson Stock should not be
taken as an indication of future performance,
and no assurance can be given that the price
of Johnson & Johnson 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.
Dividends per
---------------
Johnson & Johnson High Low Share
- -------------------------- -------- -------- ---------------
(CUSIP # 478160104)
1993:
First Quarter............. 49 1/2 39 1/4 .23
Second Quarter............ 45 3/4 38 1/2 .26
Third Quarter............. 41 35 5/8 .26
Fourth Quarter............ 45 3/8 38 5/8 .26
1994:
First Quarter............. 45 1/2 37 1/8 .26
Second Quarter............ 44 1/2 36 3/4 .29
Third Quarter............. 51 3/4 42 3/8 .29
Fourth Quarter............ 55 3/4 50 1/8 .29
1995:
First Quarter............. 62 3/8 53 3/4 .29
Second Quarter............ 71 1/8 59 .33
Third Quarter............. 74 5/8 64 7/8 .33
Fourth Quarter............ 91 1/2 73 1/2 .33
1996:
Through March 4,
1996..................... 99 1/8 83 3/4 .33
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 Johnson & Johnson Stock, in
options contracts on Johnson & Johnson
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 Johnson & Johnson Stock, and
therefore effectively increase the level
to which Johnson & Johnson 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 Johnson & Johnson
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
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."
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 retirement of a Note
(including retirement pursuant to the
exercise of the Exchange Right or the
Company Exchange Right), a United States
Holder will recognize gain or loss equal
to the difference between the amount
realized on the retirement (which, if the
Company delivers Johnson & Johnson Stock,
will be the fair market value of such
stock at the time of the retirement, plus
any cash received in lieu of fractional
shares) and such Holder's tax basis in the
Note. A United States Holder receiving
Johnson & Johnson Stock will have a basis
in the Johnson & Johnson Stock equal to
its fair market value at the time of the
retirement and a holding period in such
stock beginning the day after the date of
the retirement. Any loss recognized on
any retirement will be treated as capital
loss. It is unclear, however, under
existing law whether gain recognized on
any retirement 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 retirement.
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 other
than upon retirement 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.
Foreign Holders of the Notes. As used
herein, the term "Foreign Holder" means a
person or entity that, for United States
federal income tax purposes, is a
non-resident alien individual, a foreign
corporation, a foreign partnership, or a
non-resident fiduciary of a foreign estate or
trust.
A Foreign Holder will generally not be
subject to United States federal income
taxes, including withholding taxes, on
payments of principal, premium, if any, or
interest on a Note, or any gain arising from
the sale or disposition of a Note provided
that (i) any such income is not effectively
connected with the conduct of a trade or
business within the United States, (ii) such
Foreign Holder is not a person who owns
(directly or by attribution) ten percent or
more of the total combined voting power of
all classes of stock of the Company, (iii)
the Foreign Holder (if an individual) is not
present in the United States 183 days or more
during the taxable year of the disposition
and (iv) the required certification of the
non-United States status of the beneficial
owner is provided.
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 Johnson & Johnson
Stock, please refer to the publicly available
documents described in the first paragraph
under the heading "Johnson & Johnson Stock;
Public Information."
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated:[At least one year 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: Richard P. Sandulli)
Dear Sirs:
The undersigned holder of the Medium Term Notes, Series C, Senior
Fixed Rate Notes due March 29, 2002, (Exchangeable for Shares of Common Stock
of Johnson & Johnson) 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) March 29, 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. 57 dated
March , 1996 (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 Johnson &
Johnson 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
---------------
