PROSPECTUS SUPPLEMENT
(To Prospectus dated December 28, 1996)
$8,000,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
FLOATING RATE MONTHLY DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(PERRINE OFFICE PROJECT)
Original Issue Date: January 10, 1985 Due: December 1, 2014
The Bonds were originally issued on (January 10, 1985), and are being
remarketed in accordance with their terms for delivery on (December 29, 1996)
(the "Remarketing Date"). Unless otherwise indicated herein, the information
contained in this Prospectus Supplement relates to the Bonds on or after the
Remarketing Date. The Bonds will bear interest at a rate determined monthly
as described herein. 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 35 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 provided by
FGIC SECURITIES PURCHASE, INC.
The FGIC-SPI Liquidity Facility will expire on January 1, 2002 unless
extended by 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.
--------------------
The obligations of FGIC Securities Purchase, Inc. under the FGIC-SPI
Liquidity Facility (the "Obligations") are not being sold separately from the
Bonds, which are being remarketed pursuant to a separate Supplemental
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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LEHMAN BROTHERS, INC.
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The date of this Prospectus Supplement is December 28, 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, June 29, 1996 and
September 28, 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 $8,000,000 aggregate
principal amount of Floating Rate Monthly Demand Industrial Revenue Bonds
(Perrine Office Project) issued by the Oklahoma County Finance Authority (the
"Authority" or the "Issuer"), on or about January 10, 1985 (the "Bonds").
FGIC-SPI has entered into a Standby Bond Purchase Agreement (the "FGIC-SPI
Liquidity Facility") with Boatmen's National Bank of Oklahoma (the "Trustee"
and the "Paying Agent"), pursuant to which FGIC-SPI is 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 has entered into a Standby Loan
Agreement with General Electric Capital Corporation ("GE Capital") under
which GE Capital is irrevocably obligated to lend funds as needed by FGIC-SPI
to purchase Bonds. The obligations of FGIC-SPI under the FGIC-SPI Liquidity
Facility will expire on January 1, 2002 unless extended, or sooner terminated
in accordance with its terms.
DESCRIPTION OF THE BONDS
General
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The Bonds were initially issued on January 10, 1985 and will mature on
December 1, 2014. All Bonds issued in exchange for, or upon registration of
transfer of, Bonds shall be dated the date of authentication thereof and
shall bear interest from such authentication date if such date is an Interest
Payment Date, otherwise from the Interest Payment Date next preceding the
authentication date to which interest has been paid or duly provided for.
Bonds authenticated prior to the first Interest Payment Date shall bear
interest from the date of the first authentication and delivery of Bonds.
The Bonds are issued in $100,000 (or, following conversion to a fixed
interest rate in accordance with the terms of the Indenture, $5,000)
denominations (the "Authorized Denomination") or integral multiples thereof.
Bonds may be transferred or exchanged for Bonds or integral multiples of the
Authorized Denomination thereof, at the principal office of the Registrar,
without cost, except for any tax or other governmental charge. The Bonds
were issued by the Authority and are secured by a financing agreement (the
"Agreement") which constitutes the unconditional obligation of Perrine
Acquisition Limited Partnership to provide for payment of the principal of,
premium, if any, on and interest on the Bond. The Bonds are further secured
by a bond insurance policy (the "Credit Facility") and bank letter of credit.
Boatmen's National Bank of Oklahoma is Trustee under the Indenture and
has its principal corporate trust office in Oklahoma City, Oklahoma. The
Trustee has also been appointed Registrar and Paying Agent. The Registrar
and the Paying Agent may be removed or replaced by the Issuer at the
direction of the Company.
Lehman Brothers, Inc. has, at the direction of the Company, been
appointed Remarketing Agent under the Indenture. The principal office of the
Remarketing Agent is located in New York, New York. The Remarketing Agent
may be removed or replaced by the Issuer at the direction of the Company.
Interest on the Bonds
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Interest on the Bonds will be paid on the fifteenth day of each calendar
month or, if such day is not a Business Day, the next preceding Business Day
(a "monthly Interest Payment Date"), except in the event of conversion to a
fixed interest rate in accordance with the Indenture, in which case interest
will be paid on June 1 and December 1 of each year after the date the fixed
interest rate becomes effective (a "Semiannual Interest Payment Date"). The
term "Business Day," as used herein, means a day on which banks in the city
in which the principal corporate trust office of the Trustee is located,
banks in the city in which the principal office of the Paying Agent is
located and banks in the city in which the principal office of the
Remarketing Agent is located are not required or authorized to remain closed
and on which The New York Stock Exchange is not closed. Interest on the
Bonds will be computed on the basis of a year of 365 or 366 days, as
appropriate, for the actual number of days elapsed (except that, in the event
of conversion to a fixed interest rate, interest shall be computed on the
basis of 360-day year of twelve 30-day months). Interest on the Bonds
accrues from and including the monthly Interest Payment Date in each calendar
month to and including the day next preceding the monthly Interest Payment
Date in the following calendar month (each such period being hereinafter
called an "Interest Period").
Except as described below, for each Interest Period for which there is
not a Fixed Interest Rate, the interest rate on the Bonds is determined as
follows:
(a) if any Bonds shall have been delivered (or deemed to have been
delivered) to the Remarketing Agent for purchase on a monthly
Interest Payment Date and if any or all of such Bonds shall have
been sold (or shall be deemed under the Indenture to have been
sold) by the Remarketing Agent the interest rate borne by all
Bonds for the Interest Period commencing on such monthly
Interest Payment Date will be a rate determined by the
Remarketing Agent, in its discretion, to be that rate which,
if borne by the Bonds, would, in its judgment having due
regard to prevailing financial market conditions, be the
interest rate necessary, but which would not exceed the
interest rate necessary, to enable the Remarketing Agent to sell
the Bonds so delivered to it at par; provided, however, that
the interest rate so determined will not be more than 120%,
nor less than 90%, of the Interest Index (selected by the
Indexing Agent based upon the average of at least five similar
securities issues (the "Interest Index")) for such Interest
Period;
(b) if any Bonds shall have been delivered (or deemed to have been
delivered) to the Remarketing Agent for purchase on a monthly
Interest Payment Date and if none of such Bonds shall have been
sold (or deemed under the Indenture to have been sold) on such
monthly Interest Payment Date, the interest rate borne by all
Bonds for the Interest Period commencing on such monthly Interest
Payment Date will be a percentage per annum equal to 120% of the
Interest Index for such Interest Period; provided, however, that
if all such Bonds shall have been purchased with moneys derived
from the source described in clause (a) under the caption
"PURCHASE OF BONDS--The Remarketing Agent--Funds for Purchase
of Bonds," the interest rate borne by all Bonds will be a
percentage per annum equal to the Interest Index for such
Interest Period; and
(c) if no Bonds shall have been delivered (or deemed to have been
delivered) to the Remarketing Agent for purchase on a monthly
Interest Payment Date, the interest rate borne by all Bonds for
the Interest Period commencing on such monthly Interest Payment
Date will be a percentage per annum equal to 100% of the
Interest Index for such Interest Period.
Notwithstanding the foregoing, in no event will the interest rate borne by
the Bonds exceed the lesser of 25% per annum or the maximum rate of interest
permitted from time to time under the laws of the State of Oklahoma.
For each Interest Period (other than after conversion to a fixed
interest rate), the Interest Index shall be computed by the Indexing Agent
as of, and made available in writing to the Trustee, the Company and the
Remarketing Agent, on the fourth Business Day next preceding the first day
of such Interest Period. The Interest Index shall be the arithmetic average
of not less than five component issues (i) the interest on which is exempt
from federal income taxes, (ii) which provide for adjustment of the interest
rate on the first Business Day of each calendar month, (iii) which must be
purchased on the demand of the owner thereof on any interest payment date or
at any time upon seven days notice, and (iv) which provide for monthly
payment of interest.
Issues of such bonds selected for use in the Interest Index shall be
rated by Moody's Investors Service ("Moody's") or Standard & Poor's Rating
Group, a division of the McGraw-Hill Companies, Inc. ("S&P") in a long-term
rating category correlative, in the judgment of the Indexing Agent, to the
rating assigned to the Bonds. The specific issues included in the component
issues may be changed from time to time by the Indexing Agent in its
discretion. A majority of the component issues shall be securities which
bear interest at a rate which is not established by the same company that is
acting as Indexing Agent under the Indenture, and no securities shall be
included in the component issues if, in the judgment of the Indexing Agent,
such securities bear interest at a rate which does not reflect the prevailing
market rate for such securities. Notice of such changes shall be given to
the Trustee.
In the event that the Indexing Agent no longer computes, or fails to
compute, the Interest Index and no other qualified municipal securities
evaluation service can be appointed by the Issuer, the Interest Index during
each Interest Period shall be sixty-five percentum (65%) of the interest rate
applicable to 13-week United States Treasury bills determined by the
Remarketing Agent on the basis of the average per annum discount rate at
which such 13-week Treasury bills shall have been sold at the most recent
Treasury auction during the next preceding Interest Period, or, if no such
auction shall have been conducted during the next preceding Interest Period,
or if the Remarketing Agent shall fail or refuse to determine the Interest
Index, the Interest Index during such Interest Period shall be the same as
for such preceding Interest Period.
The computation of the Interest Index by the Indexing Agent and the
determination of any variation from the Interest Index by the Remarketing
Agent shall be conclusive and binding upon the owners of the Bonds, the Bank,
the Insurer, the Issuer, the Company, the Trustee, the Paying Agent, the
Registrar and the Remarketing Agent.
The Issuer has appointed Lehman Brothers, Inc. as Indexing Agent under
the Indenture. The Issuer may from time to time, with the approval of the
Company, remove the Indexing Agent and appoint a different municipal
securities dealer or evaluation service to serve as Indexing Agent.
Special Obligations
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The Bonds are not general obligations of the Issuer but are special
obligations payable solely from Bond proceeds, the revenues of the Issuer
from the Agreement and other moneys pledged thereto and held by the Trustee
in trust under the Indenture. Such proceeds, revenues and other moneys are
pledged and assigned as security for the equal and ratable payment of the
Bonds and are to be used for no other purpose than to pay the principal of,
premium, if any, on and interest on the Bonds, except as may be otherwise
expressly authorized in the Indenture or the Agreement. The Bonds are not
a debt of the Issuer, the State of Oklahoma, or any political subdivision of
the State of Oklahoma within the meaning of any constitutional or statutory
provisions whatsoever; and neither the Issuer, the State of Oklahoma nor any
political subdivision thereof is liable thereon; nor in any event are the
Bonds or obligations payable out of any funds or properties other than moneys
held in trust by the Trustee for such purposes, and then only to the extent
provided in the Indenture. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER
OF THE STATE OF OKLAHOMA NOR ANY POLITICAL SUBDIVISION THEREOF ARE PLEDGED
TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, ON OR INTEREST ON THE
BONDS, NOR IS THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IN ANY MANNER
OBLIGATED TO MAKE ANY APPROPRIATE FOR PAYMENT. THE ISSUER HAS NO TAXING
POWER.
Neither the members of the Issuer nor any persons executing the Bonds shall
be liable personally on the Bonds by reason of such execution.
Optional Redemption
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Prior to conversion to a fixed interest rate in accordance with the
terms of the Indenture, the Bonds are subject to optional redemption by the
Issuer, in whole or in part, at the direction of the Company, on any monthly
Interest Payment Date at the principal amount thereof. While the Credit
Facility is in effect with respect to the Bonds, the redemption price to be
paid for such redemption shall be derived solely from moneys available
therefore pursuant to the terms of the Indenture on deposit with the Trustee
on the date notice of redemption is given, and not from moneys paid under
such Credit Facility.
Following conversion to a fixed interest rate, the Bonds will be subject
to optional redemption pursuant to the terms of the Indenture and will no
longer have the benefits of the Liquidity Facility.
Mandatory Redemption of Bonds
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The Bonds shall be subject to redemption as follows:
(a) The Bonds shall be subject to redemption by the Issuer, in whole
or in part, on the Interest Payment Date in December of each year, at the
principal amount thereof, from moneys in the Principal Account as set forth
in the Indenture when such moneys equal or exceed the Authorized
Denomination, in an amount equal to the largest Authorized Denomination of
Bonds which can be redeemed with such moneys. While the initial Credit
Facility is in effect with respect to the Bonds, the redemption price to be
paid under this paragraph shall be paid solely from moneys in the Principal
Account on deposit with the Trustee on the date notice of redemption is
given, and not from moneys paid under such Credit Facility.
(b) The Bonds shall be redeemed by the Issuer in the event of a
Determination of Taxability, as herein defined, at the principal amount
thereof plus accrued interest, if any, on a date specified by the Company
pursuant to the Agreement, which date shall be not more than 180 days
following such Determination of Taxability.
"Determination of Taxability" means (i) the filing by the Company of a
statement of capital expenditures as required under the Agreement and the
Internal Revenue Code of 1986, as amended (the "Code"), which statement
shows that the Company has exceeded the capital expenditure limitation under
Section 103(b)(6)(D) of the Code, or (ii) the entry of a final decree or
judgment of any federal court or the taking of a final action of the Internal
Revenue Service, which decree, judgment or action determines that the
interest paid or payable on any Bond is or was includable in the gross income
of the Owner thereof for federal income tax purposes under the Code (other
than an Owner who is a substantial user or related person within the meaning
of Section 103(b)(13) of the Code) due to causes other than change of law or
regulation subsequent to the issuance of the Bonds.
A Determination of Taxability may not occur for a substantial period of
time after interest first becomes includable in the gross income of owners
of the Bonds. In such event, the tax liability of owners of the Bonds may
extend to years for which interest was received on the Bonds and for which
the relevant statute of limitations has not yet run. Moreover, owners of
Bonds will not receive any additional interest, premium or other payment to
compensate them for federal income taxes, interest and penalties which may
be assessed with respect to such interest.
Mandatory Purchase of Bonds Upon
Conversion to Fixed Interest Rate
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The Bonds shall be subject to mandatory purchase by the Issuer, at the
principal amount thereof, on the monthly Interest Payment Date which is the
effective date of conversion of the interest rate borne by the Bonds to a
fixed interest rate. The purchase price of Bonds to be so purchased shall
be derived solely from the sources and in the order of priority as specified
under "PURCHASE OF BONDS--The Remarketing Agent--Funds for Purchase of
Bonds." Notwithstanding the foregoing, there shall not be so purchased (a)
Bonds which shall have been delivered to the Remarketing Agent or the Paying
Agent as specified under the caption "PURCHASE OF BONDS" for purchase on such
monthly Interest Payment Date or on any Business Day in the Interest Period
next preceding such monthly Interest Payment date which Business Day is on
or after the date on which notice of such purchase is given, (b) Bonds, or
integral multiples of the Authorized Denomination thereof, with respect to
which the Trustee shall have received directions not to so purchase the same
from the owners thereof as described in the following paragraph, (c) Bonds
purchased or deemed to have been purchased pursuant to the Indenture as
described below and (d) Bonds or integral multiples of the Authorized
Denomination thereof issued in exchange for or upon the registration of
transfer of Bonds referred to in preceding clause (a), (b) or (c).
An owner may direct the Issuer not to purchase any Bond, or integral
multiples of the Authorized Denomination thereof, owned by such owner by
delivering to the Trustee at its principal office on or before the third
Business Day preceding the date fixed for such redemption an instrument or
instruments in writing executed by such owner (i) stating that such person
is the owner of the Bonds and specifying the numbers and denominations of the
Bonds held by such owner, (ii) specifically acknowledging each of the matters
set forth in a notice given by the Trustee and (iii) directing the Issuer not
to purchase such Bonds, or integral multiples of the Authorized Denomination
thereof. Any such instrument delivered to the Trustee shall be irrevocable
with respect to the Bonds for which such instrument is delivered and shall
be binding upon subsequent owners of such Bonds, but such instrument shall
have no effect upon any subsequent purchase of Bonds.
If a Bond to be purchased pursuant to this section is not delivered by
the owner to the Trustee on the Interest Payment Date on which such Bond is
to be purchased, it will nevertheless be deemed to have been delivered for
purchase and to have been purchased from the sources and in the priority of
funds as set forth under "PURCHASE OF BONDS--The Remarketing Agent--Funds for
Purchase of Bonds." Accrued Interest payable to the date of purchase of
Bonds that are deemed to be purchased as provided in this paragraph shall be
paid to the owner as of the Record Date next preceding the date of purchase
of such Bonds in the same manner as if such Bonds were not purchased pursuant
to this paragraph. Moneys deposited with the Trustee for purchase of Bonds
pursuant to this paragraph shall be held in trust in a separate trust account
and shall be paid to the former owners of such Bonds upon presentation
thereof. The Trustee shall promptly give notice by mail to each owner whose
Bonds are deemed to have been purchased pursuant to this paragraph, which
notice shall state that interest on such Bonds ceased to accrue on the date
of purchase and that moneys representing the purchase price of such Bonds are
available against delivery thereof at the principal office of the Trustee.
Mandatory Purchase of Bonds Upon
Expiration of Liquidity Facility
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If the expiration of the term of the Liquidity Facility occurs before
the conversion of the interest rate borne by the Bonds to the Fixed Interest
Rate, the Bonds shall be subject to mandatory purchase by the Issuer, at the
principal amount thereof, on the monthly Interest Payment Date next preceding
the date of expiration of the Liquidity Facility. Funds for payment of the
purchase price of the Bonds shall be derived solely from (i) moneys made
available by the Company in accordance with the Indenture and (ii) moneys
paid under the Liquidity Facility. If a Bond to be purchased pursuant to
this paragraph is not delivered by the owner to the Trustee on the Interest
Payment Date on which such Bond is to be purchased, it will nevertheless be
deemed to have been delivered for purchase and to have been purchased from
the amounts specified in clauses (i) and (ii) above. Accrued interest
payable to the date of purchase of Bonds that are deemed to be purchased as
provided in this paragraph shall be paid to the owner as of the record date
next preceding the date of purchase of such Bonds in the same manner as if
such Bonds were not purchased pursuant to this paragraph. Moneys deposited
with the Trustee for purchase of Bonds pursuant to this paragraph shall be
held in trust in a separate trust account and shall be paid to the former
owners of such Bonds upon presentation thereof. The Trustee shall promptly
give notice by mail to each owner whose Bonds are deemed to have been
purchased pursuant to this paragraph, which notice shall state that interest
on such Bonds ceased to accrue on the date of purchase and that moneys
representing the purchase price of such Bonds are available against delivery
thereof at the principal office of the Trustee.
Mandatory Redemption of Bonds
Upon Expiration of Credit Facility
- ----------------------------------
The Bonds shall be subject to mandatory redemption on the Interest
Payment Date next preceding the expiration of the term of the Credit Facility
if an alternate Credit Facility has not been delivered to the Trustee as
provided in the Indenture, at the principal amount thereof; provided, that
is the interest rate borne by the Bonds shall have previously been converted
to the fixed interest rate and if the insurer under the Credit Facility shall
have given its written consent, there shall not be so redeemed (a) Bonds, or
integral multiples of the Authorized Denomination thereof, with respect to
which the Trustee shall have received written directions not to so redeem the
same from the owners thereof as described in the second paragraph below, (b)
Bonds purchased or deemed to have been purchased pursuant to the Indenture
as described in the first paragraph below and (c) Bonds issued in exchange
for or upon the registration of transfer of Bonds and integral multiples of
the Authorized Denomination thereof referred to in the preceding clauses (a)
and (b). In the event that the interest rate borne by the Bonds is to be
converted to a fixed Interest Rate on the Interest Payment Date next
preceding the expiration of the term of the Credit Facility, the Bonds shall
not be redeemed as provided herein but shall be purchased as described above
under "Mandatory Purchase of Bonds Upon Conversion to Fixed Interest Rate."
The Company shall have the right to purchase or cause to be purchased
Bonds to be redeemed as described above by delivering to the Trustee a
written notice specifying the principal amount of Bonds to be so purchased
and by depositing or causing to be deposited with the Trustee moneys
sufficient to pay the purchase price equal to 100% of the principal amount
of the Bonds to be so purchased plus accrued interest, if any, to the date
of purchase. Moneys for the payment of such purchase price shall be derived
solely from moneys provided by the Company and on deposit with the Trustee
in a special trust account on the date of such purchase in accordance with
the terms of the Indenture. Bonds to be so purchased pursuant to the
Indenture on the date fixed for redemption of such Bonds which are not
delivered on such date will nonetheless be deemed to have been tendered for
sale by the owners thereof and to have been purchased from the funds
described above pursuant to the Indenture. Accrued interest payable to the
date of purchase of Bonds purchased or deemed to be purchased as provided in
this paragraph shall be paid to the owner as of the Record Date next
preceding the date of purchase of such Bonds in the same manner as if such
Bonds were not purchased pursuant to this paragraph. Moneys deposited with
the Trustee for purchase of Bonds pursuant to this paragraph shall be held
in trust in a separate trust account and shall be paid to the former owners
of such Bonds upon presentation thereof. The Trustee shall promptly give
notice by mail to each owner whose Bonds are deemed to have been purchased
pursuant to this paragraph, which notice shall state that interest on such
Bonds ceased to accrue on the date of purchase and that moneys representing
the purchase price of such Bonds are available against delivery thereof at
the principal office of the Trustee.
If the conditions specified in the Indenture are met, an owner may
direct the Issuer not to redeem any Bond, or integral multiples of the
Authorized Denomination thereof, owned by such owner by delivering to the
Trustee at its principal office on or before the third Business Day preceding
the date fixed for such redemption an instrument or instruments in writing
executed by such owner (i) stating that such person is the owner of Bonds and
specifying the numbers and denominations of the Bonds held by such owner,
(ii) specifically acknowledging each of the matters set forth in a notice
given by the Trustee and (iii) directing the Issuer not to redeem such Bonds,
or integral multiples of the Authorized Denomination thereof. Any such
instrument delivered to the Trustee shall be irrevocable with respect to the
redemption for which such instrument was delivered and shall be binding upon
subsequent owners of such Bonds and integral multiples of the Authorized
Denomination thereof with respect to which such instrument was delivered,
including Bonds issued in exchange therefor or upon the registration of
transfer thereof; but such instrument shall have no effect upon any
subsequent redemption of Bonds.
Selection of Bonds and
Notice of Redemption or Purchase
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If less than all of the Bonds shall be called for redemption, the
particular Bonds or integral multiples of the Authorized Denomination thereof
to be redeemed shall be selected by the Trustee, in such manner as the
Trustee in its discretion may deem proper, in the principal amounts
designated by the Company or otherwise as required by the Indenture; provided
that, the Trustee shall select Bonds purchased by the Liquidity Provider
pursuant to the Liquidity Facility for redemption prior to other Bonds. Any
Bonds selected for redemption which are deemed to be paid in accordance with
the provisions of the Indenture will cease to bear interest on the date fixed
for redemption. Upon presentation and surrender of such Bonds at the place
or places of payment, such Bonds shall be paid and redeemed. Notice of
redemption or purchase shall be given by mail, not less than 10 days prior
to the redemption or purchase date.
PURCHASE OF BONDS
The following is a brief description of the procedures for the purchase
of Bonds.
Purchase on Monthly Interest
Payment Dates (All Bondholders)
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Any Bond shall be purchased, on the demand of the owner thereof, on any
monthly Interest Payment Date at a purchase price equal to the principal
amount thereof, upon:
(a) telephonic notice to the Remarketing Agent, at its
principal office, at or prior to 4:00 p.m., New York City time, on the
third Business Day prior to such monthly Interest Payment Date (provided,
however, that if the Trustee is serving as Remarketing Agent, written
notice shall be required) which (i) states the aggregate principal amount
of such Bond and (ii) states that such Bond is to be so purchased on
such monthly Interest Payment Date; and
(b) delivery to the Remarketing Agent of such Bond (with all
necessary endorsements and guarantee of signature), at its principal office
or such other address as shall be designated by the Remarketing Agent at or
prior to 10:00 a.m., New York City time, one Business Day prior to
such monthly Interest Payment Date. An owner who gives the notice set
forth in (a) above may repurchase the Bonds so tendered on such
monthly Interest Payment Date if the Remarketing Agent agrees to sell the
Bonds so tendered to such owner. If such owner decides to repurchase
such Bonds and the Remarketing Agent agrees to sell the specified Bonds
to such owner prior to delivery of such Bonds as described in this
paragraph (b), the delivery requirement described in this paragraph
(b) shall be waived; provided, however, that for purposes of determining
the interest rate on the Bonds for the immediately ensuing monthly Interest
Period, a delivery and sale shall be deemed to have occurred.
The provisions of this paragraph shall not apply to any Bond following the
effective date of the Fixed Interest Rate with respect to such Bond or during
any period in which the Liquidity Facility is not in effect with respect to
such Bond.
Purchase Upon Seven-Day
Notice (Investment Companies)
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Any Bond shall be purchased, on the demand of the owner thereof, if such
owner is an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended (an "Investment
Company") on any Business Day at a purchase price equal to the principal
amount thereof plus accrued interest, if any, to the date of purchase, upon:
(a) delivery to the Trustee and the Paying Agent at their
respective principal offices of a written notice which (i) states that such
owner is an Investment Company, (ii) states the aggregate principal amount
of such Bond and (iii) states the date on which such Bond is to be
purchased, which date shall be a Business Day not prior to the
seventh day next succeeding the date of the delivery of such notice to the
Paying Agent; and
(b) delivery of such Bond (with all necessary endorsements and
guarantee of signature) and, in the case of a Bond to be purchased prior to
the monthly Interest Payment Date for any Interest Period and after
the record date in respect thereof, a due-bill check, in form satisfactory
to the Paying Agent, for interest due on such monthly Interest payment
Date, at a aforesaid address of the Paying Agent at or prior to
10:00 a.m., New York City time, on such date specified in the aforesaid
notice; provided, however, that such Bond shall be so purchased only if
the Bond delivered to the Paying Agent shall conform in all respects
to the description thereof in the aforesaid notice.
The provisions of this paragraph shall not apply to any Bond following the
effective date of the Fixed Interest Rate with respect to such Bond or during
any period in which the Liquidity Facility is not in effect with respect to
such Bond.
Purchase Upon Seven-Day
Notice (All Bondholders)
- ------------------------
Any Bond shall be purchased on the demand of the owner thereof, on any
Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon:
(a) delivery to the Remarketing Agent, at its principal office
of a written notice which (i) states the aggregate principal amount of such
Bond and (ii) states the date on which such Bond is to be purchased, which
date shall be a Business Day not prior to the seventh day next succeeding
the date of the delivery of such notice to the Remarketing Agent; and
(b) delivery of such Bond (with all necessary endorsements and
guarantee of signature) and, in the case of a Bond to be purchased prior to
the monthly Interest Payment Date for any Interest Period and after
the record date in respect thereof, a due-bill check, in form satisfactory
to the Remarketing Agent for interest due on such monthly Interest Payment
Date, at the aforesaid address of the Remarketing Agent at or prior to
10:00 a.m., New York City time, on such date specified in the aforesaid
notice; provided, however, that such Bond shall be so purchased only if the
Bond delivered to the Remarketing Agent shall conform in all respects
to the description thereof in the aforesaid notice.
The provisions of this paragraph shall not apply to any Bond following the
effective date of the Fixed Interest Rate with respect to such Bond or during
any period in which the Liquidity Facility is not in effect with respect to
such Bond.
The Remarketing Agent
- ---------------------
Remarketing of the Bonds. Upon the delivery to the Remarketing Agent
-------------------------
of notice as specified above under "Purchase on Monthly Interest Payment
Dates (All Bondholders)," the Remarketing Agent shall offer such Bonds for
sale and shall use its best efforts to sell such Bonds, any such sale to be
at a price equal to 100% of the principal amount thereof on the monthly
Interest Payment Date on which such Bonds are to be purchased; provided,
however, that, to the extent that moneys derived from the Principal Account
in accordance with the terms of the Indenture shall be on deposit with the
Remarketing Agent shall be purchased with such moneys, shall not be sold by
the Remarketing Agent and shall be delivered to the Paying Agent for
cancellation.
Upon delivery to the Remarketing Agent of notice as specified above
under "Purchase Upon Seven-Day Notice (All Bondholders)," the Remarketing
Agent shall offer such Bonds for sale and shall use its best efforts to sell
such Bonds, any such sale to be on the date stated in the notice provided by
the owner of such Bonds; provided, that to the extent that moneys derived
from the Principal Account shall be on deposit with the Remarketing Agent
shall be purchased with such moneys, shall not be sold by the Remarketing
Agent and shall be delivered to the Paying Agent for cancellation.
Funds for Purchase of Bonds. On the date on which Bonds delivered to
---------------------------
the Remarketing Agent for purchase as specified above under "Purchase on
Monthly Interest Payment Dates (All Bondholders)" or "Purchase Upon Seven-Day
Notice (All Bondholders)" are to be purchased, such Bonds shall be purchased
with immediately available funds at a purchase price equal to 100% of the
principal amount thereof plus accrued interest to the date of purchase.
Funds for the payment of such purchase price shall be derived solely from the
following sources in the order of priority indicated, neither the Issuer nor
the Trustee being obligated to provide funds from any other source:
(a) moneys which are furnished to the Trustee by or at the
direction of the Company to pay the purchase price of Bonds in
accordance with the terms of the Indenture;
(b) moneys furnished to the Paying Agent representing moneys
received under the Liquidity Facility; and
(c) any other moneys furnished by the Company to the Paying
Agent for purchase of the Bonds.
Limit on Remarketing
- --------------------
Any Bond delivered to the Remarketing Agent or the Paying Agent for
purchase pursuant to the terms of the Indenture from the date notice of
redemption or purchase is given as described above under "THE BONDS --
Mandatory Purchase of Bonds upon Conversion to fixed interest rate" or "THE
BONDS--Mandatory Redemption of Bonds Upon Expiration of Credit Facility"
through the date of such redemption or purchase shall not be remarketed by
the Remarketing Agent except to a buyer who at the time of such purchase
either (i)(A) if purchase is due to conversion to a fixed interest rate,
agrees in writing to hold the Bond from the date of such purchase to a date
following the effective date of the fixed interest rate and to accept the
fixed interest rate when the fixed interest rate becomes effective, and
acknowledges in writing that the Liquidity Facility will terminate on the
first Business Day after such effective date and that any ratings of the
Bonds may be reduced or revoked, or (B) if redemption is due to the
expiration of the Credit Facility, agrees in writing to hold the Bond from
the date of such purchase to a date following the expiration of the Credit
Facility, and acknowledges in writing that the Credit Facility will terminate
on such redemption date and that any ratings of the Bonds may be reduced or
revoked or (ii) agrees in writing to require repurchase of the Bond by the
Remarketing Agent on the date established for such redemption or purchase.
On the date of such redemption or purchase, Bonds purchased by the
Remarketing Agent or the Paying Agent from the date of the notice of such
redemption or purchase through the date of such redemption or purchase and
not remarketed, including Bonds purchased by the liquidity provider under the
Liquidity Facility and Bonds purchased by the Company in lieu of redemption,
shall not be redeemed or purchased but shall remain outstanding and shall be
remarketed by the Remarketing Agent or its successor.
Bonds purchased by the Remarketing Agent or the Paying Agent from the
date of notice of purchase is given as described above under "THE BONDS--
Mandatory Purchase of Bonds Upon Expiration of Liquidity Facility" through
the date of such purchase and not remarketed, including Bonds purchased by
the liquidity provider under the Liquidity Facility, and Bonds purchased
pursuant to such notice of purchase shall not be remarketed unless the
interest rate borne by the Bonds is to be converted to a fixed interest rate
pursuant to the Indenture, in which case the Bonds shall be remarketed by the
Remarketing Agent as Bonds bearing the fixed interest rate.
THE FGIC-SPI 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
$2.95 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 FGIC-SPI Liquidity Facility.
Pursuant to the FGIC-SPI 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 FGIC-SPI Liquidity Facility will be sufficient to pay a Purchase
Price equal to the principal of and up to 35 days' interest on the Bonds at
an assumed rate of 12% per annum.
TERMINATION EVENTS
The scheduled expiration date of the FGIC-SPI Liquidity Facility is
January 1, 2002. Mandatory purchase of Bonds by FGIC-SPI shall occur under
the circumstances specified in the 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
FGIC-SPI 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 Authority and the Company; (b) the Authority shall fail to observe or
perform any covenant or agreement contained in the Indenture and, if such
failure is a result of a covenant breach which is capable of being remedied,
such failure continues for ninety (90) days following written notice thereof
to the Authority and the Company from FGIC-SPI; (c) any representation,
warranty, certification or statement made by the Authority (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 Authority or other party to a related document
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 Authority the obligation
and security for which under the Indenture or under any related document is
senior to, or on parity with, the Bonds; (e) the Authority or the Company
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 Authority or the Company insolvent, or adjudging it
bankrupt, or appointing a trustee or receiver of the Authority, or approving
a petition filed against the Authority seeking a reorganization of the
Authority or the Company 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 court of competent jurisdiction shall assume
custody or control of the Authority or the Company, 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 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 Authority or other
party thereto or the Authority or other party thereto shall contest the
validity or enforceability thereof; or (i) failure to pay when due any amount
payable under the Bonds or the Provider 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 Authority, the Company, the Remarketing Agent and the
Paying Agent regarding its intention to terminate the Liquidity Facility.
The FGIC-SPI 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 that are Variable Rate Bonds are subject to
mandatory tender for purchase from the proceeds of a drawing under the FGIC-
SPI Liquidity Facility. The termination of the FGIC-SPI Liquidity Facility,
however, does not result in an automatic acceleration of the Bonds.
The obligations of the Authority with respect to the Bonds are as
described in the Supplemental Official Statement relating to the Bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill its obligations under the FGIC-SPI
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
FGIC-SPI 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> Nine Months
Ended
Year Ended December 31, September 28, 1996
------------------------------------------------------------- ----------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
1.34 1.44 1.62 1.63 1.51 1.56
</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 Purchase 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 December 28, 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,
June 30, 1996 and September 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 LLP, 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 $8,000,000
information or to make any
representations other than those
contained in this Prospectus in principal amount
connection with the offer made by plus interest and premium,
this Prospectus, and, if given or if any
made, such information or
representations must not be relied
upon as having been authorized by LIQUIDITY FACILITY OBLIGATIONS
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 issued by
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 FGIC Securities
such offer or solicitation. Purchase, Inc.
in support of
Oklahoma County Finance Authority
---------------- Industrial Development Revenue Bonds
(Perrine Office Project)
TABLE OF CONTENTS
Page ------------------
----
PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT ------------------
Documents Incorporated By
Reference . . . . . . . . . . S-2
Introduction . . . . . . . . S-2 December 28, 1996
Description of the Bonds . . S-2
The FGIC-SPI Liquidity Facility
S-11
The Standby Loan Agreement; GE
Capital . . . . . . . . . . . S-12
Experts . . . . . . . . . . . S-13
PROSPECTUS
Available Information . . . . . 2
Documents Incorporated By
Reference . . . . . . . . . . . 3
Summary . . . . . . . . . . . . 4
The Company . . . . . . . . . . 5
The Liquidity Facilities . . . 6
The Standby Loan Agreement . . 6
Plan of Distribution . . . . . 6
Legal Matters . . . . . . . . . 6
Experts . . . . . . . . . . . . 7
