Prospectus Supplement No. 2
The Prospectus dated November 14, 1996 (the "Prospectus") relating to the offer
for resale of up to $115,000,000 aggregate principal amount of 5 1/2%
Convertible Subordinated Debentures due 2006 of Aames Financial Corporation
(the "Company") and 4,107,142 shares of the common stock of the Company, par
value $0.001 per share, into which such Debentures are convertible is hereby
amended as follows:
(1) The fourth paragraph appearing on the cover page of the Prospectus is
deleted and replaced in its entirety as follows:
"The Debentures are general unsecured obligations of the Company,
subordinated to all existing and future Senior Indebtedness (as defined
herein), which at October 31, 1996 was approximately $256 million,
including $23.0 million of the Company's 10.5% Senior Notes due 2002, $150
million of the Company's 9.125% Senior Notes due 2003 and Company
guarantees of approximately $82.9 million of warehouse indebtedness
outstanding on such date incurred by a wholly owned subsidiary of the
Company. See 'Description of the Debentures.'"
(2) The following entities are hereby named as Selling Security Holders
as contemplated on page 33 of the Prospectus:
SELLING SECURITY HOLDER PRINCIPAL AMOUNT OF DEBENTURES
----------------------- ------------------------------
Argent Classic Convertible Arbitrage $1,000,000
Fund (Bermuda) L.P.
c/o Carrigaholt Holdings, Ltd.
10 Queen Street
Hamilton, Bermuda, HM 11
Carrigaholt Capital (Bermuda) L.P. $1,700,000
Milner House, 18 Parliament Street
Hamilton, Bermuda
Class 1 C, L.P. $ 850,000
c/o Trident Trust Company
4 Columbus Centre, Wickams Cay, Road Town
Tortola, British Virgin Islands
McMahan Securities Co. L.P. $ 500,000
591 West Putnam Avenue
Greenwich, CT 06830
Mariner Atlantic Ltd. $ 500,000
65 East 55th Street
New York, NY 10022
Sage Capital $1,120,000
P.O. Box 3629, 314 S. River Street
Hailey, ID 83333
Salomon Brothers Equity Arbitrage $ 750,000
7 World Trade Center, 38th Floor
New York, NY 10048
Salomon Brothers US Hybrid Equity $ 150,000
7 World Trade Center, 38th Floor
New York, NY 10048
Smith Barney Inc. $5,100,000
390 Greenwich Street
New York, NY 10013
Smith Barney Inc. has in the past provided to the Company investment
banking services for which it has received customary fees and may in the future
provide such services.
The date of this Prospectus Supplement is November 22, 1996.
