PRELIMINARY PROSPECTUS SUPPLEMENT DATED SEPTEMBER 20, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 20, 1996)
$5,000,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
TULSA INTERNATIONAL AIRPORT
GENERAL REVENUE BONDS, VARIABLE RATE DEMAND
SERIES 1996
Date of Bonds: Date of Issuance Due: June 1, 2018
The Bonds will initially bear interest at an initial Weekly
Interest Rate from and including the date of issuance to and including
October 8, 1996 (the "First Interest Period"); thereafter, until adjustment
to a different type of rate period as the Issuer shall determine, all Bonds
shall continue to bear interest at a Weekly Rate. The Bonds are subject
to mandatory and optional tender and to redemption prior to maturity,
as described herein. Payment of the purchase price equal to the
principal of and up to 34 days' accrued interest at a maximum rate of 12%
per annum on the Bonds tendered for purchase as described herein will be
made pursuant and subject to the terms of the Liquidity Facility described
herein provided by
FGIC SECURITIES PURCHASE, INC.
The Liquidity Facility will expire on October 1, 2001 unless extended
or sooner terminated in accordance with the terms thereof.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The obligations of FGIC Securities Purchase, Inc. under the
Liquidity Facility (the "Obligations") are not being sold separately from
the Bonds, which are being offered pursuant to a separate Official
Statement. The Obligations are not severable from the Bonds and may not be
separately traded. This Prospectus Supplement and the accompanying
Prospectus, appropriately supplemented, may also be delivered in
connection with any remarketing of Bonds purchased by FGIC Securities
Purchase, Inc.
-------------------
BA SECURITIES, INC.
--------------------
The date of this Prospectus Supplement is September 20, 1996.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE IN
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
DOCUMENTS INCORPORATED BY REFERENCE
There is hereby incorporated herein by reference the Annual Report
on Form 10-K for the year ended December 31, 1995 and the Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 30, 1996 and June 29,
1996 and the current report on Form 8-K dated June 28, 1996 of General
Electric Capital Corporation ("GE Capital"), all heretofore filed with the
Securities and Exchange Commission (the "Commission") pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"), to which
reference is hereby made.
INTRODUCTION
This Prospectus Supplement is provided to furnish information on
the obligations of FGIC Securities Purchase, Inc. ("FGIC-SPI" or the
"Liquidity Provider") under the liquidity facility in support of
$5,000,000 aggregate principal amount of Tulsa International Airport
General Revenue Bonds, Variable Rate Demand Series 1996 to be issued by
the Trustees of the Tulsa Airports Improvement Trust (the "Issuer" ), on or
about October 1, 1996 (the "Bonds"). FGIC-SPI will enter into a Standby
Bond Purchase Agreement (the "Liquidity Facility") with Bank of Oklahoma,
N.A. (the "Bond Trustee" and the "Tender Agent"), pursuant to which
FGIC-SPI will be obligated under certain circumstances to purchase
unremarketed Bonds from the Holders thereof optionally or mandatorily
tendering their Bonds for purchase. In order to obtain funds to
purchase the Bonds, FGIC-SPI will enter into a Standby Loan Agreement
with General Electric Capital Corporation ("GE Capital") under which GE
Capital will be irrevocably obligated to lend funds as needed by
FGIC-SPI to purchase Bonds. The obligations of FGIC-SPI under the
Liquidity Facility will expire on October 1, 2001 unless extended or
sooner terminated in accordance with its terms.
DESCRIPTION OF THE BONDS
GENERAL
The Bonds will be issued pursuant to an Indenture, dated as of
December 1, 1984, by and between the Issuer and the Bond Trustee, and
as further amended and supplemented by a Twelfth Supplemental Bond
Indenture, dated as of September 1, 1996, by and between the Issuer and
the Bond Trustee (collectively, the "Bond Indenture"). The Bonds will be
issued as fully registered bonds and will be dated the date of issuance.
The Bonds will mature on June 1, 2018. The Bonds are subject to
redemption prior to scheduled maturity upon the occurrence of certain
events. The Bonds may bear interest at a variable Daily Interest Rate, a
variable Weekly Interest Rate, a variable Monthly Interest Rate or a
non-variable Term Interest Rate, as may be directed by the Trustees of the
Tulsa Airports Improvement Trust (the "Airport Trustees") from time to
time in accordance with the Bond Indenture, all as described herein.
While bearing interest at any of the aforementioned rates (other than a
Term Interest Rate set to the maturity of the Bonds), the interest rate
of the Bonds will be redetermined periodically in accordance with the
Bond Indenture by the remarketing agent appointed pursuant to the
Bond Indenture (the "Remarketing Agent"). BA Securities Inc. will serve
as the initial Remarketing Agent with respect to the Bonds, and will
receive a fee for serving in such capacity.
The Bonds will initially bear interest at a rate determined
each seven-day period, Wednesday through Tuesday (a "Weekly Interest
Rate"). For so long as the Bonds continue to bear interest at a Weekly
Interest Rate, interest on the Bonds shall accrue from and including the
first day of each calendar month (or, with respect to the first Interest
Payment Date, from the date of delivery of the Bonds), through and
including the last day of such calendar month but payable on the first
Business Day of the following month commencing November 1, 1996. While the
Bonds bear interest at a Weekly Interest Rate and except during the
continuance of an Event of Default as described in the Bond Indenture
the owner of any such 1996 Bond may require the purchase of such 1996
Bond upon seven (7) days' notice. Upon a change of the interest rate
determination method from a Weekly Interest Rate to a Daily Interest Rate,
a Monthly Interest Rate or a Term Interest Rate (or if a new Term Interest
Rate Period is commencing), the Bonds will be subject to mandatory
tender as provided herein.
When the Bonds bear interest at a variable Daily Interest Rate,
a variable Weekly Interest Rate, a variable Monthly Interest Rate or a
non-variable Term Interest Rate if the Bonds are not rated at an
Investment Grade Rating upon the commencement of the related Term Interest
Rate Period, the authorized denominations of the Bonds will be
$100,000 and any integral multiple thereof. When the Bonds bear interest
at a Term Interest Rate if the Bonds are rated at an Investment Grade
Rating upon the commencement of the related Term Interest Rate Period, the
authorized denominations of the Bonds will be $5,000 and any integral
multiple of $5,000. Exchanges and transfers shall be made on the books
of Depositary Trust Company ("DTC") without charge to the Beneficial Owners,
except for any tax, fee or governmental charge required.
PAYMENT OF PRINCIPAL AND INTEREST
General. For so long as the Bonds are held in book-entry only form
on the books of the DTC, payments of principal of, premium, if any, and
interest on the Bonds will be made to DTC. Transfers of such payments to
the Beneficial Owners are the responsibility of DTC, participants and
indirect participants in the DTC system. If the Bonds are not held in
book-entry form, the principal of and premium, if any, on the Bonds shall
be payable to the owners upon presentation and surrender thereof at the
principal corporate trust office of the Bond Trustee currently located in
the City of Tulsa, Oklahoma, and interest shall be payable by the Paying
Agent (i) by check mailed to the registered owners as of the Record Date;
or (ii) upon written request of any owner of $1,000,000 or more in
principal amount of Bonds, by wire transfer to an account within the
continental United States. The Bond Trustee shall also serve as the
Registrar and Paying Agent and the Tender Agent for the Bonds.
Establishment of Interest Rate. The Remarketing Agent will notify
the Airport Trustees, the Bond Trustee, the Registrar and Paying Agent, the
Tender Agent and FGIC- SPI at the times required by the Bond Indenture
of the interest rates on the Bonds as determined by the Remarketing
Agent.
Using the interest rates so supplied, the Bond Trustee will
calculate the amount of interest payable on the Bonds. The Registrar
and Paying Agent or the Remarketing Agent will confirm the effective
interest rate by telephone to any owner who requests it of the Registrar and
Paying Agent in writing or of the Remarketing Agent in any manner.
The establishment of the interest rates as provided in the
Bond Indenture will be conclusive and binding on the Airport Trustees,
the Bond Trustee, the Registrar and Paying Agent, the Remarketing Agent,
the Tender Agent, FGIC-SPI and the owners of the Bonds. The
calculation of interest payable on the Bonds as provided in the Bond
Indenture will be conclusive and binding on the Airport Trustees, FGIC-SPI,
the Bond Trustee, the Registrar and the Paying Agent, the Tender Agent,
the Remarketing Agent and the owners of the Bonds, absent manifest error.
INTEREST PAYMENT DATES AND RECORD DATES
The Bonds shall bear interest from the most recent date to
which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from the Issue Date of the Bonds and shall
continue to bear interest until payment of the principal or redemption
price thereof shall have been made or provided for in accordance with the
provisions of the Bond Indenture, whether at maturity, upon redemption
or acceleration, or otherwise. When interest is payable at the interest
rate mode shown in the first column below, interest accrued from and
including the first day through and including the last day of the period
(an "Interest Period") shown in the second column will be paid on the date
(an "Interest Payment Date") shown in the third column to owners of record
at the close of business on the date (a "Record Date") shown in the fourth
column:
<TABLE>
<CAPTION>
Interest Interest Interest
Rate Mode Period Payment Date Record Date
- --------- -------- ------------ ------------
<S> <C> <C> <C>
Daily Calendar Month Fifth Business Day of the Last Business Day of
next Calendar Month the Calendar Month
Weekly Calendar Month First Business Day of the Last Business Day of
next Calendar Month the Calendar Month
Monthly Calendar Month First Business Day of Last Business Day of
next Calendar Month the Calendar Month
Term Term (equal to or greater June or December 1 or first 15th day of the
than six months) ending Business Day after last day Calendar Month
on last day of May or of Term Interest Rate Period, preceding Interest
November or ending on if earlier Payment Date (or, if
last day of Term Interest not a Business Day, the
Rate Period, if earlier next preceding Business
(subject to following Day)
paragraph)
</TABLE>
If the day immediately following the last day of a Term Interest
Rate Period is not a Business Day, then the term of the Term Interest
Rate Period shall end the least number of days earlier such that the
immediately following day is a Business Day. No premium shall be payable
on the Bonds due to the shortening of a Term Interest Rate Period as
described in the preceding sentence.
Upon a change from a Daily Interest Rate Period to a Weekly or
Monthly Interest Rate Period, the first Interest Payment Date following
such change shall be the Interest Payment Date applicable to such Weekly
or Monthly Interest Rate Period. Upon a change from a Weekly or Monthly
Interest Rate Period to a Daily Interest Rate Period, the first Interest
Payment Date following such change shall be the Interest Payment Date
applicable to a Daily Interest Rate Period. The effective date of a change
in the interest rate determination method to a Term Interest Rate Period will
also be an Interest Payment Date, except that the Interest Payment Date
upon a change from a Daily Interest Rate Period to a Term Interest Rate
Period shall be the date which is five Business Days after the last day
of such Daily Interest Rate Period. The day on which the Bonds are
redeemed or paid in full will also be an Interest Payment Date.
"Business Day" means any day that (i) is not a Saturday, Sunday or
legal holiday in the State of California, the State of New York or the State
of Oklahoma; (ii) is not a day on which banking institutions chartered by
the State of California, the State of New York, the State of Oklahoma or
the United States of America are legally required or authorized to close;
and (iii) is not a day on which the New York Stock Exchange is closed.
Payment of defaulted interest will be made to the owners in whose
name the subject Bonds are registered as of the close of business on the
fifth-to-last Business Day preceding the date of payment of such defaulted
interest.
When interest on the Bonds is payable at any rate other than a
Term Interest Rate, it will be computed on the basis of the actual number
of days elapsed over a year of 365 or 366 days, as appropriate, and when
payable at a Term Interest Rate on the Bonds, on the basis of a 360-day
year that consists of twelve 30-day months.
INTEREST RATE DETERMINATION METHODS
Interest on the Bonds initially will be paid at a Weekly Interest
Rate and thereafter at a Daily Interest Rate, a Weekly Interest Rate, a
Monthly Interest Rate or a Term Interest Rate, as selected by the Airport
Trustees and determined in accordance with the Bond Indenture, subject to
a maximum interest rate equal to the lesser of (a) twelve percent (12%)
per annum, or (b) the maximum interest rate for which coverage under
the Security Arrangement then in effect with respect to the Bonds is
available. Subject to certain conditions set forth in the Bond
Indenture, the Airport Trustees may change the interest rate determination
method for the Bonds from time to time. The establishment of the
interest rates and the calculation of interest payable on the Bonds as
provided in the Bond Indenture will be conclusive and binding on all
owners of the Bonds.
Daily Interest Rate. During each Daily Interest Rate Period, the
Bonds shall bear interest at a Daily Interest Rate, which shall be
determined by the Remarketing Agent either on each Business Day for such
Business Day or on the next preceding Business Day for any day that is not
a Business Day.
Each Daily Interest Rate shall be the minimum rate of interest which,
in the opinion of the Remarketing Agent, would be necessary to sell the
Bonds on such date of determination in a secondary market sale at the
principal amount thereof without regard to accrued interest. If the
Remarketing Agent shall not have determined a Daily Interest Rate for any
day, the Daily Interest Rate for such day shall be the same as the Daily
Interest Rate for the next preceding day.
Weekly Interest Rate. During each Weekly Interest Rate Period,
the Bonds shall bear interest at a Weekly Interest Rate, determined by
the Remarketing Agent no later than 10:00 a.m., New York City time, on
the first day of such Weekly Interest Rate Period and thereafter on
Wednesday of each week during such Weekly Interest Rate Period, except if a
Wednesday is not a Business Day, the Weekly Interest Rate will be
determined on the next preceding Business Day.
Each Weekly Interest Rate shall be the minimum rate of interest
which, in the opinion of the Remarketing Agent, would be necessary to sell
the Bonds on such date of determination in a secondary market sale at the
principal amount thereof without regard to accrued interest. If the
Remarketing Agent shall not have determined a Weekly Interest Rate for any
week, the Weekly Interest Rate for such week shall be the same as the
Weekly Interest Rate for the next preceding week.
The first Weekly Interest Rate determined for each Weekly Interest
Rate Period shall apply to the period commencing on the first day of such
Weekly Interest Rate Period and ending on the next succeeding Tuesday,
except if such period begins on a Tuesday, in which case it shall apply
only for such Tuesday; provided, however, that the Weekly Interest
Rate for the Weekly Interest Rate Period commencing upon the initial
issuance of the Bonds shall apply to the period commencing on such date
of issuance and ending on the next succeeding Tuesday. Thereafter, each
Weekly Interest Rate shall apply to the period commencing on Wednesday and
ending on the next succeeding Tuesday, unless such Weekly Interest
Rate Period shall end on a day other than Tuesday, in which event the last
Weekly Interest Rate for such Weekly Interest Rate Period shall apply to
the period commencing on the Wednesday preceding the last day of such
Weekly Interest Rate Period and ending on such last day.
Monthly Interest Rate. During each Monthly Interest Rate Period,
the Bonds shall bear interest at a Monthly Interest Rate, determined by the
Remarketing Agent no later than the first day of each Monthly Interest
Rate Period and thereafter no later than the first day of each calendar
month during such Monthly Interest Rate Period. Notwithstanding
the foregoing, if, during any Monthly Interest Rate Period, any Bonds
shall have been tendered and purchase thereof demanded by the owners
thereof on a date not described in the preceding sentence and if the
Remarketing Agent provides notification to the Airport Trustees, the
Tender Agent, the Registrar and Paying Agent and the Bond Trustee in
writing or by telephone promptly confirmed in writing that in its
determination the Bonds bearing interest at the Monthly Interest Rate
then in effect will not have a market value of the principal amount
thereof (without regard to accrued interest) on the date of such
purchase, the Remarketing Agent shall determine, and notify the Airport
Trustees, the Tender Agent, the Registrar and Paying Agent and the Bond
Trustee of, a new Monthly Interest Rate for all the Bonds effective on
such date of purchase for the remainder of the calendar month in which such
determination is made (unless subsequently redetermined as described in
this sentence). The Remarketing Agent shall notify the Registrar and
Paying Agent of any such redetermination and the Registrar, upon the
direction of the Remarketing Agent, shall notify registered owners of
the Bonds of such redetermination.
Each Monthly Interest Rate shall be the minimum rate of interest
which, in the opinion of the Remarketing Agent, would be necessary to sell
the Bonds on such date of determination in a secondary market sale at the
principal amount thereof without regard to accrued interest. If the
Remarketing Agent shall not have determined a Monthly Interest Rate for
any month, the Monthly Interest Rate for such month shall be the same
as the Monthly Interest Rate for the next preceding month.
Each Monthly Interest Rate determined for each calendar month
shall apply to the period commencing on the first day of such calendar
month, or the Business Day of such calendar month upon which a change in
the interest rate determination method to a Monthly Interest Rate Period
occurs and ending on the last day of such calendar month, unless such
Monthly Interest Rate Period shall end on a day other than the last day
of such calendar month, in which event the last Monthly Interest Rate for
such Monthly Interest Rate Period shall apply to the period commencing on
the first day of the calendar month in which such Monthly Interest Rate
Period ends, and ending on such last day.
Term Interest Rate. During each Term Interest Rate Period, the
Bonds shall bear interest at the Term Interest Rate determined by the
Remarketing Agent on a Business Day selected by the Remarketing Agent, not
more than 15 days prior to and not later than the effective date of such
Term Interest Rate Period.
The Term Interest Rate shall be the minimum rate of interest (or
minimum rates of interest if the Airport Trustees elects to establish
serial redemption bonds during such Term Interest Rate Period) which, in the
opinion of the Remarketing Agent, would be necessary to sell the Bonds on
such date of determination in a secondary market sale at the Principal
amount thereof without regard to accrued interest.
CHANGE IN INTEREST RATE DETERMINATION METHOD
Changes in the interest rate determination method for the Bonds may
be made at the direction of the Airport Trustees; provided, however, that no
such change may be made if (i) the Bond Trustee and the Registrar and
Paying Agent receive written notice prior to such change that a required
Opinion of Bond Counsel has been rescinded or will not be delivered with
regard to such change; or (ii) an Event of Default under the Bond
Indenture has occurred and is continuing. The effective date of any
change in the interest rate determination method for the Bonds will
constitute a mandatory tender date for the Bonds. See "DESCRIPTION OF
THE BONDS--Tender Feature of Bonds--Mandatory Tender".
Adjustment to Daily Interest Rate. The Airport Trustees, by
written direction to DTC, the Bond Trustee, the Remarketing Agent, the
Registrar and Paying Agent, the Tender Agent and FGIC-SPI, may elect at any
time that the Bonds shall bear interest at a Daily Interest Rate. Such
direction (A) shall specify the effective date of the adjustment to a
Daily Interest Rate which shall be (i) a Business Day (which must be the
first Business Day of a calendar month) not earlier than the 15th day
following the third Business Day after the date of receipt by the Bond
Trustee of such direction; or (ii) in the case of an adjustment from a Term
Interest Rate Period, the day immediately following the last day of the
then current Term Interest Rate Period (except as otherwise provided in the
Bond Indenture as described below in "-- Adjustment During Term Interest
Rate Period"); (B) shall specify the dates prior to such effective date
on or prior to which owners of the Bonds are required to deliver (i)
notice regarding their election to retain such Bonds upon the
corresponding mandatory tender; or (ii) any such Bonds held by the owners
thereof; and (C) shall be accompanied by an Opinion of Bond Counsel stating
that such adjustment (i) is authorized or permitted by the Bond Indenture
and the Act; and (ii) will not adversely affect the exclusion from gross
income of the interest on the Bonds for federal income tax purposes.
Adjustment to Weekly Interest Rate. The Airport Trustees, by
written direction to DTC, the Bond Trustee, the Remarketing Agent, the
Registrar and Paying Agent, the Tender Agent and FGIC-SPI, may elect at
any time that the Bonds shall bear interest at a Weekly Interest Rate.
Such direction (A) shall specify the effective date of such adjustment to
a Weekly Interest Rate which shall be (i) a Business Day (which must be the
first Business Day of a calendar month) not earlier than the 15th day
following the third Business Day after the date of receipt by the Bond
Trustee of such direction; or (ii) in the case of an adjustment from a
Term Interest Rate Period, the day immediately following the last day of
the then current Term Interest Rate Period (except as otherwise provided
in the Bond Indenture as described below in "--Adjustment During Term
Interest Rate Period"); (B) shall specify the dates prior to such
effective date on or prior to which owners of the Bonds are required
to deliver (i) notice regarding their election to retain such Bonds
upon the corresponding mandatory tender; or (ii) any such Bonds held by
the owners thereof; and (C) shall be accompanied by an Opinion of Bond
Counsel stating that such adjustment (i) is authorized or permitted by the
Bond Indenture and the Act; and (ii) will not adversely affect the
exclusion from gross income of the interest on the Bonds for federal
income tax purposes.
Adjustment to Monthly Interest Rate. The Airport Trustees, by
written direction to DTC, the Bond Trustee, the Remarketing Agent, the
Registrar and Paying Agent, the Tender Agent and FGIC-SPI, may elect at
any time that the Bonds shall bear interest at a Monthly Interest Rate.
Such direction (A) shall specify the effective date of such adjustment to
a Monthly Interest Rate which shall be (i) a Business Day (which must be
the first Business Day of a calendar month) not earlier than the 15th day
following the third Business Day after the date of receipt by the Bond
Trustee of such direction; or (ii) in the case of an adjustment from a
Term Interest Rate Period, the day immediately following the last day of
the then current Term Interest Rate Period (except as otherwise provided in
the Bond Indenture as described below in "-Adjustment During Term
Interest Rate Period"); (B) shall specify the dates prior to such
effective date on or prior to which owners of the Bonds are required
to deliver (i) notice regarding their election to retain such Bonds
upon the corresponding mandatory tender; or (ii) any such Bonds held by
the owners thereof; and (C) shall be accompanied by an Opinion of Bond
Counsel stating that such adjustment (i) is authorized or permitted by
the Bond Indenture and the Act; and (ii) will not adversely affect the
exclusion from gross income of the interest on the Bonds for federal income
tax purposes.
Adjustment to or Continuation of Term Interest Rate at the Direction
of the Airport Trustees. The Airport Trustees, by written direction to
DTC, the Bond Trustee, the Remarketing Agent, the Registrar and Paying
Agent, the Tender Agent and FGIC- SPI, may elect at any time that the Bonds
shall bear, or continue to bear, interest at a Term Interest Rate, and
if it shall so elect, shall determine the duration of the Term Interest
Rate Period during which the Bonds shall bear interest at such Term
Interest Rate. Such direction (A) shall specify the effective date of
such Term Interest Rate Period which shall be (i) a Business Day (x) not
earlier than the 30th day following the third Business Day after the date of
receipt by the Bond Trustee of such direction; and (y) which is the first
Business Day of a calendar month; or (ii) in the case of an adjustment
from one Term Interest Rate Period to another, the Business Day
immediately following the last day of the then current Term Interest
Rate Period (except as otherwise provided in the Bond Indenture as
described below in "--Adjustment During Term Interest Rate
Period")(provided that if prior to the Airport Trustees' making such
election, any Bonds shall have been called for redemption and such
redemption shall not have theretofore been effected, the effective date
of such Term Interest Rate Period shall not precede such redemption
date); (B) shall specify the last day of such Term Interest Rate Period
(which shall be any May 31 or November 30 which is at least six months from
the last day of the calendar month immediately preceding the first day of
such Term Interest Rate Period); (C) shall specify the dates prior to such
effective date on or prior to which owners of the Bonds are required to
deliver (i) notice regarding their election to retain such Bonds upon the
corresponding mandatory tender; or (ii) any such Bonds held by the owners
thereof; and (D) shall be accompanied by an Opinion of Bond Counsel stating
that such adjustment (i) is authorized or permitted by the Bond Indenture
and the Act; and (ii) will not adversely affect the exclusion from gross
income of the interest on the Bonds for federal income tax purposes.
At the time the Airport Trustees so elect an adjustment to a
Term Interest Rate, the Airport Trustees may specify one or more
consecutive Term Interest Rate Periods and, if the Airport Trustees so
specify, shall specify the duration of each of such Term Interest Rate
Periods as described herein; provided, however, that the last day of any
such consecutive Term Interest Rate Periods shall be no later than June 1,
2018 or earlier if the Interest Rate Period is changed. If the Airport
Trustees have so specified consecutive Term Interest Rate Periods of the
same duration, no Opinion of Bond Counsel shall be required at the outset of
the second and each succeeding consecutive Term Interest Rate Period
which has been so specified.
At the time the Airport Trustees so elect an adjustment to a
Term Interest Rate, some or all of the Bonds may at that time be
preselected by the Airport Trustees and designated for redemption on
specified mandatory sinking fund redemption dates in such manner as to
create serial redemptions of all or a portion of such Bonds and to
determine the interest rates thereon on the basis of such serial
redemptions; provided, however, that such serial redemptions and the
determination of interest rates on the basis of such redemptions shall
not be permitted unless there has first been delivered to the Bond Trustee,
FGIC- SPI, the Airport Trustees and the Remarketing Agent an Opinion of
Bond Counsel to the effect that such redemptions and determination of
interest rates thereon will not adversely affect (i) the exclusion of
interest on the Bonds from the gross income of the recipients thereof for
federal income tax purposes. If Bonds being converted are to be
preselected for mandatory sinking fund redemption, the Bond Trustee will
select Bonds by lot with respect to each year that such Bonds are to be
subject to serial mandatory redemption and for each year in the amount
determined for such year in a schedule prepared by the Remarketing
Agent. The Bonds so selected will be redeemed on the dates assigned to such
Bonds (as determined by the Remarketing Agent) and the redemption dates
shall be printed on the Bonds. In connection with the conversion of any of
the Bonds to a Term Interest Rate, the Remarketing Agent shall determine
the principal amount or amounts of such Bonds which shall be serial bonds
and term bonds and mandatory sinking fund redemption payments which will
provide the lowest net interest rate on such Bonds which maintains (as
nearly as practicable) level debt service on all outstanding long-term
indebtedness of the Airport Trustees taking into account the amortization
of principal then anticipated with respect to any unissued Bonds,
including the particular Bonds to be converted. Such determinations shall
be conclusive and binding upon the Remarketing Agent, the Bond Trustee,
FGIC-SPI or other Credit Provider, the Airport Trustees and the owners of
such Bonds.
If, at least three Business Days prior to the ninth day before the
last day of any Term Interest Rate Period, the Airport Trustees have not
elected that the Bonds shall bear interest at a Daily Interest Rate, a
Weekly Interest Rate, a Monthly Interest Rate or a Term Interest Rate, the
next succeeding Interest Rate Period shall be a Term Interest Rate Period
of the same duration as the immediately preceding Term Interest Rate Period
and no Opinion of Bond Counsel shall be required; provided that if such
Term Interest Rate Period would end after June 1, 2018, such Term Interest
Rate Period shall end on June 1, 2018 or earlier if the Interest Rate
Period is changed as provided in the Bond Indenture.
Adjustment During Term Interest Rate Period. At any time during a
Term Interest Rate Period after the end of the no-call period as
described below in "--Redemption of Bonds and Purchases in Lieu
Thereof--Optional Redemption--Optional Redemption or Purchase During
Term Interest Rate Period", the Airport Trustees may elect that the
Bonds no longer shall bear interest at the Term Interest Rate then in
effect and shall instead bear interest as otherwise permitted under the
Bond Indenture; provided that the Airport Trustees shall cause to be paid
to the owners of the Bonds an adjustment premium equal to the
redemption premium (if any) which would have been due pursuant to an
optional redemption during a Term Interest Rate Period if the Bonds had
been redeemed on the effective date of the new Interest Rate Period.
Notice to Owners of Change in Interest Rate Determination Method.
When a change in the interest rate determination method is to be made and
prior to the start of each consecutive Term Interest Rate Period, the
Registrar (upon the direction of the Bond Trustee) is required to notify
the owners of the Bonds and FGIC-SPI by first-class mail at least ten days
(30 days upon an adjustment to a Term Interest Rate Period) but not more
than 60 days before the effective date of the change. The effective
date of such change will constitute a mandatory tender date as
hereinafter described. The notice will be accompanied by the Opinion of
Bond Counsel, if required by the Bond Indenture, as described above.
The notice, subject to receipt by the Registrar from the Airport Trustees,
the Remarketing
Agent and the Bond Trustee of appropriate notices, opinions and information
in a timely
fashion, will state:
(1) that the interest rate determination method will be changed
(or continued, in the case of a Term Interest Rate) and what the new method
will be;
(2) the effective date of the new interest rate determination
method, which shall be a mandatory tender date;
(3) a description of the new interest rate determination method,
a statement that the Remarketing Agent will provide each new rate upon
request and a description of how to make such request;
(4) the Interest Payment Dates and Record Dates for the new
interest rate determination method;
(5) information relating to any Security Arrangement that will be
in place following such change;
(6) whether the owners have a right to tender their Bonds on or
after the effective date of the change and, if they do, the procedures to
follow;
(7) the redemption provisions that are applicable to the Bonds after
the effective date of the change; and
(8) any ratings assigned the Bonds by the Rating Agency effective on
the change, and whether any existing rating is being reduced or withdrawn
upon such change.
In addition, if the change is to a Term Interest Rate Period, the notice
will state:
(1) that the Term Interest Rate for such Term Interest Rate Period
will be determined not later than the effective date thereof;
(2) how such Term Interest Rate may be obtained from the
Remarketing Agent; and
(3) that during the Term Interest Rate Period, if the Bonds are rated
at an Investment Grade Rating upon the commencement of such Term Interest
Rate Period, Bonds may be issued in denominations of $5,000 or any integral
multiple of $5,000.
TENDER FEATURE OF BONDS
"Tender" means to require, or the act of requiring, the purchase of
a Bond except a Bond owned or purchased with the moneys provided by the
Airport Trustees or FGIC- SPI or other credit provider or any portion
thereof at its owner's option or mandatorily under certain circumstances,
at 100% of the principal amount thereof plus interest accrued (if any) from
the first day of the then current Interest Period to, but not including, the
date of purchase, plus a premium in certain circumstances, as described
below in "--Mandatory Tender--Purchase Price of Bonds Subject to Mandatory
Tender".
No Bonds may be tendered at the option of the owners thereof
following acceleration of the principal of the Bonds.
Optional Tender by Owner
- ------------------------
Daily Interest Rate. When interest on the Bonds is payable at a
Daily Interest Rate, a Beneficial Owner may tender a 1996 Bond or
portions thereof in authorized denominations:
(a) if records of beneficial ownership of the Bonds are
maintained pursuant to the book-entry only system maintained by DTC (or
pursuant to a similar book-entry only system maintained by another
securities depository), by delivering to the Remarketing Agent
(address below) by 11:00 a.m., New York City time, on the Business Day on
which such 1996 Bond (or a portion thereof) is to be purchased, (1) an
irrevocable written or telephone notice (which written or telephone notice
must also be delivered to the Bond Trustee by such time) stating the
principal amount of the 1996 Bond or portion thereof in an authorized
denomination to be purchased and the date (which must be a Business Day and
may be the date the notice is delivered) the 1996 Bond or a portion
thereof is to be purchased, and (2) if the DTC Participant (or other
securities depository participant) through whom the beneficial ownership of
such 1996 Bond is maintained is not the Remarketing Agent, such 1996 Bond
by such DTC Participant (or other securities depository participant)
through DTC's (or other securities depository's) system; or
(b) if records of beneficial ownership of the Bonds are
not maintained pursuant to the book-entry only system maintained by DTC
(or pursuant to a similar book-entry only system maintained by another
securities depository), (i) by delivering to the Remarketing Agent or
the Tender Agent (address below), by 11:00 a.m., New York City time, on
the Business Day on which such 1996 Bond (or a portion thereof) is to be
purchased, irrevocable written or telephone notice (which written or
telephone notice must also be delivered to the Bond Trustee by the such
time) stating the principal amount of the 1996 Bond or portion thereof in
an authorized denomination to be purchased and the bond number of the 1996
Bond or portion thereof to be purchased on such date; and (ii) by
delivering to the Tender Agent, at or prior to 11:00 a.m., New York City
time, on the date of such purchase, the 1996 Bond accompanied by an
instrument of transfer satisfactory to the Tender Agent, executed in blank
by the registered owner with the signature guaranteed by a commercial
bank, trust company or member firm of the New York Stock Exchange.
Weekly or Monthly Interest Rate. When interest on the Bonds is
payable at a Weekly or Monthly Interest Rate, a Beneficial Owner may tender
a 1996 Bond or portions thereof in authorized denominations:
(a) if records of beneficial ownership of the Bonds are
maintained pursuant to the book-entry only system maintained by DTC (or
pursuant to a similar book-entry only system maintained by another
securities depository), by delivering to the Remarketing Agent (1) on
a Business Day, an irrevocable written or telephone notice (which written
or telephone notice must also be delivered to the Bond Trustee by the
same time) stating the principal amount of the 1996 Bond or portion
thereof in an authorized denomination to be purchased and the date
(which must be a Business Day at least seven days after the notice
is received by the Remarketing Agent) the 1996 Bond or portion thereof is
to be purchased, and (2) if the DTC Participant (or other securities
depository participant) through whom the beneficial ownership of such 1996
Bond is maintained is not the Remarketing Agent, by 11:00 a.m., New York
City time, on the date on which such Bond or portion thereof will be
purchased, such 1996 Bond by such DTC Participant (or other securities
depository participant) through DTC's (or other securities depository's)
system; or
(b) if records of beneficial ownership of the Bonds are
not maintained pursuant to a book-entry only system maintained by DTC
(or pursuant to a similar book-entry only system maintained by another
securities depository), (i) by delivering to the Remarketing Agent or
the Tender Agent irrevocable written notice (which written notice must
also be given to the Bond Trustee at the same time) by 4:00 p.m., New
York City time, on any Business Day, stating the principal amount of the
1996 Bond or portion thereof in an authorized denomination to be
purchased, the bond number and the date (which must be a Business Day
at least seven days after the notice is received by the Tender Agent or
the Remarketing Agent) the 1996 Bond or portion thereof is to be
purchased; and (ii) by delivering to the Tender Agent, at or prior to
11:00 a.m., New York City time, on the date of such purchase, the 1996
Bond accompanied by an instrument of transfer satisfactory to the Tender
Agent, executed in blank by the registered owner with the signature
guaranteed by a bank, trust company or member firm of the New York Stock
Exchange.
Mandatory Tender
- ----------------
The Bonds are subject to mandatory tender and purchase by the
Tender Agent on behalf of the Airport Trustees at the purchase price
described below in "--Purchase Price of Bonds Subject to Mandatory Tender"
upon the occurrence of any of the following events. (The Bond Indenture
provides that the extension or renewal of the Standby Bond Purchase
Agreement or other Security Arrangement is not deemed to be an expiration,
termination or substitution of the Standby Bond Purchase Agreement or
other Security Arrangement for purposes of the mandatory tender
provisions described below.)
Mandatory Tender Upon a Change in Interest Rate Period. The Bonds
shall be subject to mandatory tender (i) on the first Business Day of any
Term Interest Rate Period, Daily Interest Rate Period, Weekly Interest
Rate Period or Monthly Interest Rate Period if the Interest Rate Period
for the Bonds in effect immediately prior to the effective date
thereof was a different Interest Rate Period; or (ii) if a new Term
Interest Rate Period is commencing with respect to the Bonds. The Bonds
subject to mandatory tender on the first day of an Interest Rate Period
upon an adjustment from a Term Interest Rate Period after the end of the
no-call period as described below in "--Redemption of Bonds and Purchases
in Lieu Thereof--Optional Redemption--Optional Redemption or Purchase
During Term Interest Rate Period", but before the last day of such Term
Interest Rate Period, shall be so purchased at the optional redemption
price then applicable to such Bonds. See "--Purchase Price of Bonds Subject
to Mandatory Tender" below.
Mandatory Tender Upon Expiration of Termination of Security
Arrangement. The Bonds shall be subject to mandatory tender on the
fifth Business Day immediately preceding the date of expiration or
termination of Security Arrangement.
Mandatory Tender Upon Substitution of Standby Bond Purchase Agreement
or Alternate Security Arrangement. The Bonds shall be subject to mandatory
tender on the fifth Business Day immediately preceding the effective date
of a Substitute Standby Bond Purchase Agreement or Alternate Security
Arrangement.
Purchase Price of Bonds Subject to Mandatory Tender. During a
Daily Interest Rate Period, a Weekly Interest Rate Period or a Monthly
Interest Rate Period, any Bonds which are subject to mandatory tender will
be purchased at a price equal to 100% of the principal amount thereof plus
accrued interest, if any, from the first day of the then current Interest
Period to but not including the date of tender. The Bonds subject to
mandatory tender during a Term Interest Rate Period will be purchased at
a price equal to 100% of the principal amount thereof, plus a premium
equal to the redemption premium, if any, that would have been payable had
such Bonds been optionally redeemed on such date, plus accrued interest, if
any, from the first day of the then current Interest Period to, but not
including, the mandatory tender date, except that a price of 102% of
the principal amount thereof plus accrued interest from the first day of
the then current Interest Period to, but not including, the tender date
shall apply in the event the mandatory tender occurs prior to the date
optional redemption is permitted during a Term Interest Rate Period.
Procedure for Mandatory Tender. If the Bonds are held in
book-entry form on the books of DTC and if the DTC Participant through
whom a Beneficial Owner owns its Bonds is not the Remarketing Agent, Bonds
subject to mandatory tender must be delivered by such DTC Participant to
the Remarketing Agent through DTC's system at or prior to 10:00 a.m., New
York City time, on the date selected for mandatory tender. If the
Bonds are held in certificated form, Bonds subject to mandatory tender
must be tendered to the Tender Agent at or prior to 10:00 a.m., New York
City time, on the date selected for mandatory tender, accompanied by an
instrument of transfer, in form satisfactory to the Tender Agent, executed
in blank by the registered owner with the signature guaranteed by a
commercial bank, trust company or member firm of the New York Stock Exchange.
Any Bonds subject to mandatory tender which are
not so tendered to the Remarketing Agent or the Tender Agent, as
applicable (for which the Tender Agent or the Remarketing Agent has not
been notified of an election to retain), shall be deemed tendered for
purchase and may be remarketed.
Election to Retain Bonds Subject to Mandatory Tender
- ----------------------------------------------------
The Beneficial Owners or owners of Bonds subject to mandatory
tender have the right to elect to retain such Bonds; provided that such
Beneficial Owners or owners provide a direction to the Tender Agent or the
Remarketing Agent not to purchase their Bonds (or portions thereof in
authorized denominations) on the tender date. Such direction must be
delivered to the Tender Agent or the Remarketing Agent on or prior
to the fifth day immediately preceding the tender date and must (i)
specify the numbers and denominations of Bonds owned by such Beneficial
Owner or owner; (ii) acknowledge receipt of the mandatory tender notice;
(iii) direct that such Bonds or a portion thereof not be purchased; (iv)
include an agreement not to sell such Bonds or portion thereof prior to the
mandatory tender date; (v) agree not to exercise any optional tender
applicable to such Bonds or portion thereof prior to the mandatory tender
date; (vi) acknowledge that such election is irrevocable; (vii)
acknowledge, where applicable, that a different Security Arrangement or
that no Security Arrangement will secure the Bonds after the tender date;
(viii) acknowledge the rating on the Bonds, if any, following the mandatory
tender date and that such rating may be modified or withdrawn upon the
occurrence of certain events; and (ix) acknowledge, where applicable, that
a current right to tender such Bonds will not be available after such
mandatory tender date.
If the Bonds are not held in book-entry form on the books of DTC,
upon direction of the Registrar, owners who elect to retain Bonds upon
the occurrence of a mandatory tender event may be required to deliver
their Bonds to the Registrar for exchange for new Bonds of the same
principal amount containing the terms and provisions applicable after
the mandatory tender date.
Notice of Mandatory Tender
- --------------------------
Notice of any mandatory tender of Bonds will be given by the
Registrar at the direction of the Bond Trustee by first-class mail not
less than 15 days and not more than 60 days prior to the mandatory tender
date to the Airport Trustees, FGIC-SPI and the owners (but not the
Beneficial Owners) of the Bonds. Such notice will contain the
detailed information for such tender event, as specified in the Bond
Indenture.
The Registrar will give a notice of mandatory tender as described
above under the captions "--Mandatory Tender Upon Expiration or
Termination of a Security Assignment" if the Bond Trustee has not
received notice of the extension, renewal or substitution of the then
existing Security Arrangement by the 30th day before the end of the
last Interest Period before the expiration of a Security Arrangement.
Tendered Bonds Not Remarketed/Pledged Bonds
- -------------------------------------------
Any 1996 Bonds tendered at the option of the owners thereof and,
1996 Bonds tendered pursuant to a mandatory tender event which are not
successfully remarketed by the Remarketing Agent will be purchased by the
Tender Agent with moneys furnished by FGIC-SPI under the Standby Bond
Purchase Agreement. The Remarketing Agent shall offer for sale, on a best
efforts basis, 1996 Bonds optionally tendered and, 1996 Bonds subject
to mandatory tender events, and 1996 Bonds purchased with moneys furnished
by FGIC-SPI under the Standby Bond Purchase Agreement.
Payment of Purchase Price
- -------------------------
The purchase price for a 1996 Bond following a tender or purchase
in lieu of redemption will be paid in immediately available funds by the
close of business on the date of purchase.
The Bonds to be tendered for purchase as described above and which
are not delivered by the owners thereof or by the DTC Participants
through whom the beneficial ownership of such Bonds is maintained to the
Remarketing Agent or the Tender Agent, as applicable, on the date
specified for purchase will be deemed to have been tendered for purchase
and purchased on such date. The former Beneficial Owners or owners of such
Bonds will thereafter have no rights with respect to such Bonds except to
receive payment of the purchase price therefor upon surrender of such
Bonds to the Remarketing Agent or the Tender Agent, as applicable.
THE LIQUIDITY FACILITY
The Obligations will rank equally with all other general unsecured
and unsubordinated obligations of FGIC-SPI. The Obligations are not
issued pursuant to an indenture. As of the date hereof FGIC-SPI has
approximately $( ) billion obligations currently outstanding
after giving effect to the Obligations.
Owners of the Bonds to which the Obligations relate will be entitled
to the benefits and subject to the terms of the Liquidity Facility.
Pursuant to the Liquidity Facility, FGIC-SPI agrees to make available to
a specified intermediary, upon receipt of an appropriate demand for
payment, the Purchase Price for such Bonds. The obligation of FGIC-SPI
under the Liquidity Facility will be sufficient to pay a Purchase Price
equal to the principal of and up to 34 days' interest on the Bonds at an
assumed rate of 12% per annum.
TERMINATION EVENTS
The scheduled expiration date of the Liquidity Facility is October
1, 2001, unless extended by FGIC-SPI for additional five years upon notice
to the Issuer two years prior to the scheduled expiration date. Mandatory
purchase of Bonds by FGIC-SPI shall occur under the circumstances specified
in the Bond Indenture. Under certain circumstances, the obligation of
FGIC-SPI to purchase Bonds tendered for purchase pursuant to an optional
or mandatory tender, which have not been remarketed, may be terminated.
The following events constitute "Termination Events" under the Liquidity
Facility:
(a) (i) any portion of the commitment fee shall not be paid when due
on the quarterly payment date as set forth in the Standby Bond Purchase
Agreement and related payment agreement (the Payment Agreement"), or (ii)
any other amount payable thereunder shall not be paid when due and any
such failure shall continue for three (3) Business Days after notice
thereof to the Issuer; (b) (i) the Issuer shall fail to observe or perform
any covenant or agreement contained in the Bond Indenture and, if such
failure is a result of a covenant breach which is capable of being
remedied, such failure continues for sixty (60) days following written
notice thereof to the Issuer from FGIC-SPI, or (ii) there shall not be,
at all times a Remarketing Agent performing the duties thereof
contemplated by the Bond Indenture; (c) any representation, warranty,
certification or statement made by the Issuer (or incorporated by
reference) in any related document or in any certificate, financial
statement or other document delivered pursuant thereto or any related
document shall prove to have been incorrect in any material respect when
made; (d) any default by the Issuer shall have occurred and be continuing
in the payment of principal of or premium, if any, or interest on any bond,
note or other evidence of indebtedness issued, assumed or guaranteed by the
Issuer the obligation and security for which under the Bond Indenture or
under any related document is senior to, or on parity with, the Bonds; (e)
the Issuer files a petition in voluntary bankruptcy, for the composition
of its affairs or for its corporate reorganization under any state or
federal bankruptcy or insolvency law, or makes an assignment for the
benefit of creditors, or admits in writing to its insolvency or inability
to pay debts as they mature, or consents in writing to the appointment
of a trustee or receiver for itself; (f) a court of competent
jurisdiction shall enter an order, judgment or decree declaring the Issuer
insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of
the Issuer, or approving a petition filed against the Issuer seeking a
reorganization of the Issuer under any applicable law or statute of the
United States of America or any state thereof, and such order,
judgment or decree shall not be vacated or set aside or stayed within sixty
(60) days from the date of the entry thereof; (g) under the provisions of
any other law for the relief or aid of debtors, any count of competent
jurisdiction shall assume custody or control of the Issuer or of the Gross
Revenues (as defined in the Bond Indenture), and such custody or
control shall not be terminated within sixty (60) days from the date of
assumption of such custody or control; (h) any material provision of the
Standby Bond Purchase Agreement, the Bond Indenture, any related
document, the Bonds or the Bonds purchased by FGIC-SPI shall cease for
any reason whatsoever to be a valid and binding agreement of the Issuer or
the Issuer shall contest the validity or enforceability thereof; or (i)
failure to pay when due any amount payable under the Bonds or the
Purchased Bonds (regardless of any waiver thereof by the Holders of the
Bonds).
Upon the occurrence of a Termination Event, FGIC-SPI may deliver
notice to the Trustee, the City, the Remarketing Agent and the Tender Agent
regarding its intention to terminate the Liquidity Facility. The Liquidity
Facility would terminate, effective at the close of business on the 30th
day following the date of such notice, or if such date is not a Business
Day, the next Business Day. Prior to the effectiveness of such
termination, all Bonds in a Variable Mode are subject to mandatory tender
for purchase from the proceeds of a drawing under the Liquidity Facility.
The termination of the Liquidity Facility, however, does not result in an
automatic acceleration of the Bonds.
The obligations of the Issuer with respect to the Bonds are as
described in the Official Statement relating to the Bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill its obligations under the
Liquidity Facility, FGIC-SPI will enter into a standby loan agreement
with GE Capital (the "Standby Loan Agreement") under which GE Capital
will be irrevocably obligated to lend funds to FGIC-SPI as
needed to purchase such Bonds. Each loan under the Standby Loan
Agreement will be in an amount not exceeding the purchase price for
tendered Bonds which represents the outstanding principal amount of such
tendered Bonds together with accrued interest thereon to but excluding
the date a borrowing is made and will mature on the date which is five
years from the effective date of the Standby Loan Agreement. The proceeds
of each loan shall be used only for the purpose of paying the purchase
price for tendered Bonds. When FGIC-SPI desires to make a borrowing under
the Standby Loan Agreement, it must give GE Capital prior written notice of
such borrowing by at least 11:45 a.m., New York City time, on the proposed
borrowing date. No later than 2:15 p.m., New York City time, on each
borrowing date (if the related notice of borrowing has been received by
11:45 a.m. on such date), GE Capital will make available the amount of the
borrowing requested.
The Standby Loan Agreement will expressly provide that it is not
a guarantee by GE Capital of the Bonds or of FGIC-SPI's obligations
under the Liquidity Facility. GE Capital will not have any responsibility
for, or incur any liability in respect of, any act, or any failure to
act, by FGIC-SPI which results in the failure of FGIC-SPI to effect the
purchase for the account of FGIC-SPI of tendered Bonds with the funds
provided pursuant to the Standby Loan Agreement.
GE Capital is subject to the informational requirements of the 1934
Act and in accordance therewith files reports and other information with
the Commission. Such reports and other information can be inspected and
copied at Room 1024 at the Office of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the Regional Offices of
the Commission at 500 W. Madison, 14th Floor, Chicago, Illinois
60661-2511, and 7 World Trade Center, New York, New York 10048 and copies
can be obtained by mail from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Reports and other information concerning GE Capital can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005 on which certain of GE Capital's securities are
listed.
The following table sets forth the consolidated ratio of earnings to
fixed charges of GE
Capital for the periods indicated:
Six Months
Ended
Year Ended December 31, June 29, 1996
- --------------------------------------------- -------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
1.34 1.44 1.62 1.63 1.51 1.52
</PAGE>
For purposes of computing the consolidated ratio of earnings to
fixed charges, earnings consist of net earnings adjusted for the provision
for income taxes, minority interest and fixed charges. Fixed charges
consist of interest and discount on all indebtedness and one-third of
rentals, which the Company believes is a reasonable approximation of the
interest factor of such rentals.
EXPERTS
The financial statements and schedule of General Electric
Capital Corporation and consolidated affiliates as of December 31, 1995 and
1994, and for each of the years in the three year period ended December 31,
1995, appearing in GE Capital's Annual Report on Form 10-K for the year
ended December 31, 1995, incorporated by reference herein, have been
incorporated herein by reference in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing.
APPENDIX A
TENDER TIMELINE
TENDERS FOR BONDS
PURCHASE DATE
(New York City time)
11:30 a.m. 11:45 a.m 2:15p.m. 2:30 p.m.
(1) (2) (3) (4)
1. Trustee shall give immediate telephonic notice, in any event not
later than 11:30 a.m. on the Purchase Date, to FGIC-SPI specifying the
aggregate principal amount of Bonds to be purchased by FGIC-SPI on such
Purchase Date.
2. FGIC-SPI must give GE Capital prior written notice of a borrowing under
the Standby Loan Agreement by 11:45 a.m. on the date of the proposed
borrowing.
3. No later than 2:15 p.m. on each Optional Tender Date, GE Capital will
make available the amount of borrowing requested.
4. FGIC-SPI purchases Bonds, for which remarketing proceeds are unavailable,
by 2:30 p.m. on the Purchase Date.
$1,000,000,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY OBLIGATIONS
OF
FGIC SECURITIES PURCHASE, INC.
FGIC Securities Purchase, Inc. ("FGIC-SPI" or the "Company") intends
to offer from time to time, in connection with the issuance by municipal
authorities or other issuers of adjustable or floating rate debt
securities (the "Securities"), its obligations (the "Obligations")
under one or more liquidity facilities (the "Liquidity Facilities").
The Obligations will not be sold separately from the Securities, which
will be offered pursuant to a separate prospectus or offering statement.
The Obligations will not be severable from the Securities and may not
be separately traded. This Prospectus, appropriately supplemented, may
also be delivered in connection with any remarketing of Securities
purchased by FGIC Securities Purchase, Inc. or its affiliates.
Unless otherwise specified in a prospectus supplement to the
Prospectus (a "Prospectus Supplement"), the Obligations will be issued
from time to time to provide liquidity for certain adjustable or
floating rate Securities issued by municipal authorities or other
issuers. The specific terms of the Obligations and the Securities to
which they relate will be set forth in a Prospectus Supplement. Each issue
of Obligations may vary, where applicable, depending upon the terms of the
Securities to which the issuance of Obligations relates.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURI-
TIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------
The date of this Prospectus is September 20, 1996.
The information contained in this Prospectus has been obtained from
FGIC Securities Purchase, Inc. This Prospectus is submitted in
connection with the future sale of securities as referred to herein, and
may not be reproduced or used, in whole or in part, for any other
purposes.
No dealer, salesman or any other person has been authorized by
FGIC-SPI to give any information or to make any representation, other than
as contained in this Prospectus or a Prospectus Supplement, in connection
with the offering described herein, and if given or made, such other
information or representation must not be relied upon as having been
authorized by any of the foregoing. This Prospectus does not constitute
an offer of any securities other than those described herein or a
solicitation of an offer to buy in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or sale.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and in accordance
therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at Room 1024 at the Office of the Commission,
450 Fifth Street N.W., Washington, D.C. 20549, as well as at the
Regional Offices of the Commission at 500 W. Madison, 14th Floor, Chicago,
Illinois 60661-2511, and 7 World Trade Center, New York, New York 10048
and copies can be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. FGIC-SPI does not intend to deliver to holders of its
obligations offered hereby an annual report or other report containing
financial information.
This Prospectus and the applicable Prospectus Supplement constitute
a prospectus with respect to the Obligations of FGIC-SPI under the
Liquidity Facilities to be issued from time to time by FGIC-SPI in
support of the Securities. It is not anticipated that registration
statements with respect to the Securities issued by municipal authorities
or other issuers will be filed under the Securities Act of 1933, as amended,
in reliance on an exemption therefrom.
---------------
DOCUMENTS INCORPORATED BY REFERENCE
There are hereby incorporated in this Prospectus by reference
the Company's Annual Report on Form 10-K for the year ended December 31,
1995 and the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996 and June 30, 1996 all heretofore filed with the Commission pursuant to
Section 13 of the 1934 Act, to which reference is hereby made.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the 1934 Act after the date of this Prospectus and prior
to the termination of the offering of the Obligations and the Securities
shall be deemed to be incorporated in this Prospectus by reference and to
be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, on the
written or oral request of such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents. Requests for such copies should be directed to Corporate
Communications Department, FGIC Corporation, 115 Broadway, New York, New
York 10006, Telephone No. (212) 312-3000.
SUMMARY
The proposed structure will be utilized to provide liquidity through
a "put" mechanism for floating or adjustable rate securities and
other derivative debt securities issued by municipal authorities or other
issuers. Such securities typically include a tender feature that permits
broker-dealers to establish interest rates on a periodic basis which would
enable the securities to be remarketed at par and that provides a
secondary market liquidity mechanism for holders desiring to sell their
securities. Such securities will be remarketed pursuant to an agreement
under which the broker-dealers will be obligated to use "best efforts" to
remarket the securities. In the event that they cannot be remarketed,
FGIC-SPI will be obligated, pursuant to a standby purchase agreement
or similar contractual arrangement with the issuer, remarketing agent,
tender agent or trustee of the securities, to purchase unremarketed
securities, from the holders desiring to tender their securities (the "put
option") or upon certain other events. This facility will assure the
holders of liquidity for their securities even when market conditions
preclude successful remarketing.
The proposed structure may also be used in connection with
concurrent offerings of variable rate demand securities ("VRDNs") and
convertible inverse floating rate securities ("INFLOs"). VRDNs and INFLOs
are municipal derivative securities pursuant to which (i) the interest rate
on the VRDNs is a variable interest rate which is re-set by the remarketing
agent from time to time (not to exceed a stated maximum rate) (the
"VRDN Rate") and (ii) the interest rate on the INFLOs is concurrently re-set
at a rate equal to twice a specified Linked Rate minus the fee charged by
FGIC-SPI for the Liquidity Facility. The owners of VRDNs have the
optional right to tender their VRDNs to the issuer for purchase and, in
the event the remarketing agent does not successfully remarket the tendered
VRDNs, FGIC-SPI is obligated to pay the purchase price therefor pursuant
to the terms of its liquidity facility.
If an owner of INFLOs desires a fixed rate of interest not subject
to fluctuation based on the inverse floating rate equation described
above, he may elect to purchase from VRDN holders an amount of VRDNs
equal to the principal amount of INFLOs for which such holder desires a
fixed rate of interest. The net effect of such purchase is to "link"
an equal principal amount of VRDNs and INFLOs and thereby set a fixed
interest rate on the combined securities. If the owner of such combined
securities so elects, he may "de- link" his VRDNs and INFLOs. The
remarketing agent will then remarket the VRDNs at a re-set interest rate
and the INFLOs retained by the de-linking owner will again continue to
vary and to be re-set whenever the interest rate of the VRDNs are re-set.
An INFLOs owner may also elect to permanently link his INFLOs with an
equal principal amount of VRDNs and thereby permanently fix the interest
rate on the combined securities to their stated maturity; once permanent
linkage is effected, no subsequent de-linkage is permitted.
Until such time as VRDNs are permanently linked to INFLOs, the
VRDNs will remain subject to remarketing in the manner noted above and
FGIC-SPI will remain obligated to purchase unremarketed VRDNs in connection
with the optional right of holders to tender their VRDNs for purchase.
The fees for providing the liquidity mechanism will be paid by
the issuer or other entity specified in the applicable Prospectus
Supplement, typically over the life of the liquidity agreement or, in the
case of VRDNs, until such time as a VRDN is permanently linked with an
INFLO. Except as otherwise provided in a Prospectus Supplement, in order
to obtain funds to purchase unremarketed securities, FGIC-SPI will enter
into standby loan agreements with one or more financial institutions
(the "Standby Lenders") under which the Standby Lenders will be
irrevocably obligated to lend funds to FGIC-SPI as needed to purchase
Securities for which the put option has been exercised. Except as
otherwise provided in a Prospectus Supplement, the standby purchase
agreement or similar contractual agreement between FGIC-SPI and the
trustee, issuer or other specified entity will provide that, without the
consent of the issuer and the trustee for the security holders, FGIC-SPI
will not agree or consent to any amendment, supplement or
modification of the related standby loan agreement, nor waive any provision
thereof, if such amendment, supplement, modification or waiver would
materially adversely affect the issuer or other specified entity, or the
security holders. Except as otherwise provided in a Prospectus
Supplement, the obligations of FGIC-SPI under the standby purchase
agreement or similar contractual agreement may only be terminated upon the
occurrence of certain events of non-payment, default or insolvency on the
part of the issuer or other specified entity. In the event of a termination
of the obligations of FGIC-SPI under the standby purchase agreement
or similar contractual agreement, the securities will be subject to a
mandatory tender. Prior to such time, security holders will have the
option to tender their securities, all as set forth in the applicable
Prospectus Supplement.
The above structure is intended to receive the highest ratings from
the rating agencies and to provide public issuers with the lowest cost of
financing. There can be no assurances, however, that such ratings will be
maintained.
THE COMPANY
FGIC-SPI was incorporated in 1990 in the State of Delaware.
All outstanding capital stock of FGIC-SPI is owned by FGIC Holdings, Inc., a
Delaware corporation.
Unless otherwise specified in a Prospectus Supplement, the business
of FGIC-SPI consists and will consist of providing liquidity for certain
adjustable and floating rate Securities issued by municipal authorities
or other issuers through "liquidity facilities". The securities are
typically remarketed by registered broker-dealers at par on a periodic
basis to establish the applicable interest rate for the next interest period
and to provide a secondary market liquidity mechanism for security holders
desiring to sell their securities. Pursuant to standby purchase
agreements or similar contractual agreements with issuers of the
securities, FGIC-SPI will be obligated to purchase unremarketed
securities from the holders thereof who voluntarily or mandatorily tender
their Securities for purchase. In order to obtain funds to purchase the
Securities, FGIC-SPI will enter into one or more standby loan agreements
with Standby Lenders under which the Standby Lenders will be
irrevocably obligated to lend funds as needed to FGIC-SPI to purchase
Securities as required.
FGIC-SPI's principal executive offices are located at 115 Broadway,
New York, New York 10006, Telephone No. (212) 312-3000.
THE LIQUIDITY FACILITIES
The Obligations will rank equally with all other general unsecured
and unsubordinated obligations of FGIC-SPI. The Obligations are not
issued pursuant to an indenture.
Registered owners of the Securities will be entitled to the benefits
and subject to the terms of the applicable Liquidity Facility as
specified in the Prospectus Supplement. Pursuant to the Liquidity
Facilities, FGIC-SPI will agree to make available to a specified
intermediary, upon receipt of an appropriate demand for payment, the
purchase price for the Securities to which such Liquidity Facility
relates. The obligation of FGIC-SPI under each Liquidity Facility will
be sufficient to pay a purchase price equal to the principal of the
Security to which such facility relates and up to a specified amount of
interest at a specified rate set forth in the applicable Prospectus
Supplement.
THE STANDBY LOAN AGREEMENT
In order to obtain funds to fulfill its obligations under the
Liquidity Facilities, FGIC-SPI will enter into one or more Standby Loan
Agreements with one or more Standby Lenders under which the Standby Lenders
will be irrevocably obligated to lend funds to FGIC-SPI as needed to
purchase the Securities to which the applicable Liquidity Facility
relates. Each Standby Loan Agreement will have the terms set forth in
the applicable Prospectus Supplement. It is anticipated that each loan
under a Standby Loan Agreement will be in an amount not exceeding the
purchase price for the Securities tendered by the holders which will
represent the outstanding principal amount of such securities, premium, if
any, and accrued interest thereon for a specified period. The proceeds of
each loan shall be used only for the purpose of paying the purchase price
for tendered Securities. It is not anticipated that a Standby Lender
will guarantee the Securities to which its Standby Loan Agreement
relates or FGIC-SPI's obligation under any Standby Purchase Agreement.
Standby Lenders will be identified in the appropriate Prospectus Supplement.
PLAN OF DISTRIBUTION
The Obligations will not be sold separately from the Securities,
which will be offered pursuant to a separate prospectus, official statement
or offering circular. In the event that Kidder, Peabody & Co.,
Incorporated, an affiliate to FGIC-SPI and FGIC Corporation,
participates in the distribution of the Obligations and related
Securities, such distribution will conform to the requirements set forth
in the applicable sections of Schedule E to the By-Laws of the National
Association of Securities Dealers, Inc.
LEGAL MATTERS
The legality of the Obligations has been passed upon for FGIC-SPI
by Brown & Wood, One World Trade Center, New York, New York 10048.
EXPERTS
The financial statements of FGIC Securities Purchase, Inc. at
December 31, 1995 and 1994, and for each of the years in the three-year
period ended December 31, 1995 appearing in FGIC Securities Purchase,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1995
incorporated by reference herein, have been incorporated by reference
herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting
and auditing.
================================================
No dealer, salesman or any
other individual has been authorized to give any
information or to make any representations other
than those contained in this Prospectus in
connection with the offer made by this
Prospectus, and, if given or made, such information
or representations must not be relied upon as having
been authorized by FGIC-SPI. This Prospectus does
not constitute an offer or solicitation by anyone
in any jurisdiction in which an offer or solicitation
is not authorized or in which the person making such
offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such offer
or solicitation.
-------------
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT
Document Incorporated by Reference . . . .S-2
Introduction. . . . . . . . . . . . . . . S-2
Description of the Bonds. . . . . . . . . S-2
The Liquidity Facility. . . . . . . . . . S-14
The Standby Loan Agreement; GE Capital . . S-16
Experts. . . . . . . . . . . . . . . . . . S-17
PROSPECTUS
Available Information. . . . . . . . . . . A-3
Documents Incorporated By Reference . . . .A-4
Summary . . . . . . . . . . . . . . . . . .A-5
The Company . . . . . . . . . . . . . . . .A-6
The Liquidity facilities. . . . . . . . . .A-6
The Standby Loan Agreement. . . . . . . . .A-7
Plan of Distribution . . . . . . . . . . . A-7
Legal Matters . . . . . . . . . . . . . . A-7
Experts . . . . . . . . . . . . . . . . . A-7
===============================================
$5,000,000
principal amount
plus interest and premium,
if any
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
Tulsa International Airport
General Revenue Bonds,
Variable Rate Demand
Series 1996
-----------------------
PROSPECTUS SUPPLEMENT
-----------------------
September 20, 1996
=========================================
