PROSPECTUS SUPPLEMENT
(To Prospectus dated October 1, 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.
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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.
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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.
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BA SECURITIES, INC.
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The date of this Prospectus Supplement is October 1, 1996.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN 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 l5th 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 in the case of the initial Weekly
Interest Rate Period and thereafter on the Wednesday immediately proceeding
the first day of each succeeding 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 Wednesday, except if
such period begins on a Wednesday, 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
second Wednesday thereafter. Thereafter, each Weekly Interest Rate shall
apply to the period commencing on Thursday and ending on the next succeeding
Wednesday, unless such Weekly Interest Rate Period shall end on a day other
than Wednesday, in which event the last Weekly Interest Rate for such Weekly
Interest Rate Period shall apply to the period commencing on the Thursday
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; (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; and (E) written
confirmation from Moody's and Standard & Poor's as to the ratings on the 1996
Bonds to be in effect during the Term Interest Period.
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
10:30 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 10:30 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 10:30 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 10:30 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 10:30 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:
<TABLE>
<CAPTION> Six Months
Year Ended December 31, June 29, 1996
- ------------------------------------------------------------ -------------
1991 1992 1993 1994 1995
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.34 1.44 1.62 1.63 1.51 1.52
</TABLE>
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. 2:15 p.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 October 1, 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.
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No dealer, salesman or any
other individual has been
authorized to give any information
or to make any representations $5,000,000
other than those contained in this
Prospectus in connection with the
offer made by this Prospectus, and, principal amount
if given or made, such information plus interest and premium,
or representations must not be if any
relied upon as having been
authorized by FGIC-SPI. This
Prospectus does not constitute an LIQUIDITY FACILITY OBLIGATIONS
offer or solicitation by anyone in
any jurisdiction in which an offer
or solicitation is not authorized issued by
or in which the person making such
offer or solicitation is not
qualified to do so or to anyone to FGIC SECURITIES
whom it is unlawful to make such PURCHASE, INC.
offer or solicitation.
------------ in support of
TABLE OF CONTENTS
Tulsa International Airport
Page General Revenue Bonds,
---- Variable Rate Demand
Series 1996
PROSPECTUS SUPPLEMENT
Documents Incorporated By
Reference . . . . . . . . . . S-2
Introduction . . . . . . . . . S-2 -------------
Description of the Bonds . . . S-2
The Liquidity Facility . . . . S-14 PROSPECTUS SUPPLEMENT
The Standby Loan Agreement;
GE Capital . . . . . . . . . S-16 -------------
Experts . . . . . . . . . . . . S-17
PROSPECTUS
Available Information . . . . . A-3 October 1, 1996
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
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