PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated November 2, 1999)
$38,045,000
principal amount plus interest
Liquidity Facility
Of
FGIC Securities Purchase, Inc.
in support of
STATE PUBLIC SCHOOL BUILDING AUTHORITY
Commonwealth of Pennsylvania
School Revenue Bonds (Parkland School District Project) Series D of 1999
Date of Bonds: Date of Delivery Due: March 1, 2019
-------------------
Liquidity Facility: We are providing a liquidity facility for the Bonds
described below (the "Liquidity Facility"). The Liquidity Facility will expire
on December 2, 2004 unless it is extended or terminated sooner in accordance
with its terms.
Terms of the Bonds: The Bonds are limited obligations of the State Public
School Building Authority, and are payable solely from payments to be made by
Parkland School District under a Loan Agreement dated as of December 2, 1999,
between the Authority and the School District, and from monies in the various
funds held by the trustee under the indenture governing the Bonds. The Bonds
are also subject to mandatory and optional redemption prior to maturity and to
optional and mandatory tender for purchase, as described in this Prospectus
Supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Our obligations under the Liquidity Facility (the "Obligations") are not
being sold separately from the Bonds. The Bonds are being remarketed under a
separate disclosure document. The Obligations 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 us.
--------------------------------------------
Hopper Soliday, A Division of Tucker Anthony Incorporated
--------------------------------------------
The date of this Prospectus Supplement is November 2, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
----
INTRODUCTION...............................................................................................S-2
DESCRIPTION OF THE BONDS...................................................................................S-2
THE LIQUIDITY FACILITY....................................................................................S-13
THE STANDBY LOAN AGREEMENT; GE CAPITAL....................................................................S-16
EXPERTS...................................................................................................S-18
</TABLE>
--------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to
provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
INTRODUCTION
We are providing you with this prospectus supplement to furnish
information regarding our obligations under a Liquidity Facility in support of
$38,045,000 aggregate principal amount of School Revenue Bonds, Series D of
1999 (Parkland School District) which the Authority will issue on or about
December 2, 1999. We will enter into a Standby Bond Purchase Agreement (the
"Liquidity Facility") with Chase Manhattan Trust Company, National
Association, as trustee of the Bonds, pursuant to which we will be obligated
under certain circumstances to purchase unremarketed Bonds from the holders
optionally or mandatorily tendering their Bonds for purchase. In order to
obtain funds to purchase the Bonds, we 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 to us as needed to
purchase Bonds. Our obligations under the Liquidity Facility will expire on
December 2, 2004 unless the Liquidity Facility is extended or terminated
sooner in accordance with its terms.
DESCRIPTION OF THE BONDS
General Description
The following is a summary of certain provisions of the Bonds. For a full
description of the Bonds, please consult the Bonds and the trust indenture to
be dated December 2, 1999 between the Authority and Chase Manhattan Trust
Company, National Association, as Trustee, forms of which may be obtained from
the Authority. The Bonds will be issuable in fully registered book-entry form,
without coupons, in the authorized denomination of $100,000 or in any whole
$5,000 multiples in excess of $100,000.
The Bonds are being issued in the principal amount and are stated to
mature on March 1, 2019. Until converted to another Interest Mode as described
below, the Bonds are to bear interest from the date of their initial delivery
at the Weekly Rate determined by Hopper Soliday & Co., Inc., A Division of
Tucker Anthony Incorporated as the Remarketing Agent as described below. The
Interest Mode for the Bonds may be converted to a Term Mode, as described
below. The interest rate on the Bonds while in the Weekly Mode is sometimes
referred to below as "Variable Rates." The interest rate on the Bonds in the
Term Mode is referred to as the "Fixed Rate." Bonds purchased and held by
FGIC-SPI in accordance with the Liquidity Facility will bear interest at a
rate one percent above the prime rate then in effect until such Bonds are
remarketed or are purchased by the School District. Only FGIC-SPI has any
right to receive interest at this higher rate and only on the Bonds which it
holds.
The Scheduled Interest Payment Dates for interest accrued on the Bonds
during the Weekly Mode is the first Business Day of each month, except the
first scheduled interest payment date which will be January 10, 2000, and the
Regular Record Date therefor is the Business Day preceding such Scheduled
Interest Payment Date. The Scheduled Interest Payment Dates for interest
accrued on Bonds during the Term Mode is the first (1st) day of each March and
September of such Bonds, as described below, and the Regular Record Date
therefor is that day (whether or not a Business Day) which is fifteen days
prior to each Scheduled Interest Payment Date.
Interest due on the Bonds on each Scheduled Interest Payment Date is to
be paid, except as described below, by check or draft mailed to the persons
appearing on the Regular Record Date as registered owners on the registration
books kept by the Trustee; provided, however, that if funds on any Scheduled
Interest Payment Date are insufficient to pay the interest then due, such
defaulted interest will cease to be payable to the registered owner as of the
Regular Record Date but will instead be payable on a Special Interest Payment
Date established by the Trustee for payment of such defaulted interest when
sufficient funds are available, to the registered owner as of a Special Record
Date to be established in accordance with the provisions of the Resolution.
Upon written request to the Trustee, on file at least one Business Day prior
to a Regular Record Date, beneficial owners of $1,000,000 or more in aggregate
principal amount of the Bonds may elect to receive payments of interest by
wire transfer to a designated account commencing on the first Scheduled
Interest Payment Date following such Regular Record Date.
Under certain circumstances as described below, the beneficial owner of a
Bond will have the right to tender to the Tender Agent a Bond (or any portion
thereof in an authorized denomination) for purchase from and to the extent of
the sources of funds described below at a price (the "Purchase Price") equal
to 100% of the principal amount thereof, plus accrued interest; provided,
however, that if such 1999 Bond is purchased on a Scheduled Interest Payment
Date, such Purchase Price is not to include accrued and unpaid interest, and
such interest is to be paid to the registered owner of such Bond as of the
Regular Record Date. Payment for Bonds so tendered is required to be made in
immediately available funds by 3:00 p.m., New York City time, on the Purchase
Date specified by the owner if the notice and tender requirements described
below and as set forth in the Resolution have been strictly complied with.
Subject to the provisions described below under "BOOK-ENTRY ONLY SYSTEM,"
notices of tender are to be delivered to the Tender Agent by the beneficial
owner. See "Bonds - Purchase of Tendered Bonds - Optional Tender" and
"BOOK-ENTRY ONLY SYSTEM."
Scheduled Interest Payment Date means, with respect to Bonds in the
Weekly Mode, the first business day of each calendar month, except that the
first Scheduled Interest Payment Date shall be January 10, 2000, and with
respect to Bonds in the Term Mode, each of March 1 and September 1 after
conversion to a Term Mode.
Hopper Soliday, A Division of Tucker Anthony Incorporated has been
appointed Remarketing Agent for the Bonds. The Remarketing Agent is to
remarket Bonds tendered for purchase and is to perform certain rate-setting
functions in connection with the Bonds as described below under "The Bonds -
Interest" pursuant to a Remarketing Agreement to be dated as of the date of
the initial sale of the Bonds (the "Remarketing Agreement"), between the
School District and the Remarketing Agent. See "Bonds - Remarketing."
So long as DTC, or its partnership nominee, Cede & Co., is the registered
owner of the Bonds, payments of the principal of and interest on the Bonds,
and payments of the Purchase Price of any Bonds subject to optional or
mandatory tender, are to be made by the Tender Agent directly to Cede & Co.
Disbursements of such payments to the DTC Participants (defined below) is the
responsibility of DTC. Disbursements of such payments to the owners of
beneficial interests in the Bonds is the responsibility of the DTC
Participants and the Indirect Participants (defined below). See "BOOK-ENTRY
ONLY SYSTEM" below.
Interest
General. The Bonds are being issued in the Weekly Mode. Until the
Interest Mode of the Bonds is converted to another Interest Mode as described
below, the Bonds will bear interest at the Weekly Rate which is the Market
Rate (defined below) determined by the Remarketing Agent by 4:30 p.m., New
York City time, on the Business Day preceding the initial Weekly Rate Period,
and each Wednesday thereafter, or, if any such Wednesday is not a Business
Day, on the next preceding Business Day. Each Weekly Rate Period is to
commence on a Thursday and end on the Wednesday of the following week. The
Interest Mode of the Bonds may be converted to another Variable Rate or to a
Term Mode, as elected by the School District pursuant to the Loan Agreement
with the Authority, following which the Bonds will bear interest at such
Variable Rate or Term Rate as determined by the Remarketing Agent. Such
conversion will result in the mandatory tender for purchase of the Bonds as
described below under "Purchase of Tendered Bonds - Mandatory Tender." When
Bonds bear interest at a Weekly Rate, interest will be computed on the basis
of a year of 365 days or 366 days, as appropriate, for the actual number of
days elapsed. When Bonds bear interest at a Term Rate, interest will be
computed on the basis of a year of 360 days, based upon twelve 30-day months.
The School District anticipates that a remarketing memorandum or other
disclosure document and a supplement to this Prospectus Supplement will be
prepared in the event the Bonds are converted to a Term Rate Mode and in the
event the Bonds are not supported by a Standby Agreement or are supported by
an Alternate Liquidity Facility.
Weekly Mode. In the Weekly Mode, Bonds will bear interest at the Weekly
Rate, which is the Market Rate (defined below) determined by the Remarketing
Agent by 4:30 p.m., New York City time, on the Business day immediately
preceding the commencement of the initial Weekly Rate Period and on each
subsequent Wednesday thereafter (or, if such Wednesday is not a Business Day,
on the next succeeding Business Day). Each Weekly Rate Period is to commence
on a Thursday and end on the Wednesday of the following week. In the case of a
conversion from a Weekly Mode to a Term Mode, the last Weekly Rate Period
prior to conversion will end on the last day immediately preceding the
Conversion Date.
Term Mode. In the Term Mode, Bonds will bear interest at the Term Rate
which is the Market Rate for such Term Rate Period determined by the
Remarketing Agent, with the consent of the School District, not more than 15
days preceding and not later than the last Business Day preceding the
commencement of such Rate Period. The Term Rate Period will be to the final
maturity date of the Bonds. Currently the Agreement does not cover the Term
Mode but may be amended to cover the Term Mode and provide additional
coverage.
Market Rate Determination. The Remarketing Agent is required to make each
determination of the "Market Rate" on the respective date described above for
each Weekly Mode (each a "Rate Determination Date"), such rate being the
lowest interest rate not in excess of the Maximum Interest Rate (defined
below) that, in the judgment of the Remarketing Agent, would cause such Bonds
to have a market value equal to 100 percent of the principal amount thereof,
plus accrued interest, if any, under prevailing market conditions as of the
Rate Determination Date. "Maximum Interest Rate" for the Bonds (other than
Bones owned by FGIC-SPI) means fifteen percent (15%) per annum or such higher
rate as may be set forth in the Liquidity Facility for the Bonds.
If for any reason the Remarketing Agent fails to determine or to notify
the Tender Agent of the Market Rate for any Bonds on a Rate Determination
Date, or if the Market Rate for any Bonds so determined by the Remarketing
Agent on such Rate Determination Date is determined by a court of competent
jurisdiction to be invalid or unenforceable, the Market Rate for such Bonds to
be determined on such Rate Determination Date is to be determined as follows:
the Market Rate for such Rate Period will be the lesser of (i) the Maximum
Interest Rate and (ii) 65 percent of the "11 Bond Municipal Bond Index" most
recently published by The Bond Buyer or any successor publication. If either
of such indices ceases to be published, the index designated by the School
District in writing to the Trustee, the Tender Agent and the Remarketing Agent
is required to be used for such Market Rate determination.
The Tender Agent is to inform the owners of Bonds that bear interest at a
Term Rate of the rates determined with respect to such Bonds promptly upon the
determination thereof by first class mail, postage prepaid. Owners of Bonds
may call the Remarketing Agent to obtain the interest rates in effect for such
Bonds for the Weekly Rate Period after 4:30 p.m. on the Wednesday preceding
the new Weekly Rate Period.
Determination of Interest Mode. The School District pursuant to the Loan
Agreement with the Authority is permitted to effect a conversion of Bonds from
the Weekly Mode to the Term Mode, by delivering notice to the Tender Agent,
except as otherwise provided in the Indenture, not fewer than 45 days prior to
any Conversion Date. The first day of any such new Rate Period (the "Rate
Adjustment Date"), as designated by the School District, is required to be the
last Scheduled Interest Payment Date relating to the Rate Period for the Mode
from which the Bonds are to be converted.
Notwithstanding the School District's delivery of notice of its exercise
of the option to effect a conversion to the Term Mode, such conversion or
change in Rate Period shall not take effect (1) if the School District
withdraws such notice not later than the Business Day preceding the date on
which such Term Rate is to be determined or if any condition to or requirement
for such conversion is not satisfied; or (2) if the School District fails to
deliver to the Tender Agent, the Trustee, the Bond Insurer and the Remarketing
Agent an opinion of Bond Counsel stating that the conversion is authorized
under the Resolution and will not adversely affect exclusion from gross income
of interest on the Bonds for purposes of federal income taxation or otherwise
to the effect that interest on the Bonds is excluded from gross income for
purposes of federal income taxation. In addition, such conversion shall not
take effect if the Remarketing Agent fails to determine the interest rate for
the new Term Rate Mode or, in the case of a conversion to the Term Mode, if
the School District and the Remarketing Agent do not receive from Standard &
Poor's Ratings Services, if such rating agency is then rating the Bonds, a
letter to the effect that such conversion will not result in a reduction or
withdrawal of the then-current rating on the Bonds. See "Purchased of Tendered
Bonds Mandatory Tender" below.
Notice to Bondholders. The Tender Agent is required to give to Bondowners
of the Bonds being converted 30 days' written notice of the effective date of
any change in Interest Mode.
Effect of Determination. The designation of an Interest Mode and each
determination of the duration of a Rate Period and each determination of a
Weekly Rate and the determination of the Term Rate or Fixed Rate by the
Remarketing Agent, shall be conclusive and binding upon the holders of the
Bonds, the Trustee, the Authority, the School District, the Tender Agent and
all other persons, and none of the School District, the Trustee, the
Authority, the Tender Agent or the Remarketing Agent will have any liability
to any holders of the Bonds for any such determination, whether due to any
error in judgment, failure to consider any information, opinion or resource or
otherwise or for failure to give any required notice or for failure of any
holders of the Bonds to receive any such notice.
Purchase of Tendered Bonds
Optional Tender. While the Bonds are in the Weekly Mode, a Bondholder
will have the right to tender the Bonds (or portions thereof in authorized
denominations) for purchase on the purchase dates and with prior notice and
delivery as described below, at the Purchase Price, but payable solely from
and to the extent of proceeds of the remarketing of such Bonds, amounts drawn
under the applicable Standby Agreement and payments made by the School
District for such purpose under the Resolution. See "Mandatory Tender" below.
Payment for Bonds so tendered is required to be made in immediately
available funds by 3:00 p.m., New York City time, on the date specified by the
Bondowner for purchase if the notice and, subject to the provisions described
under "BOOK-ENTRY ONLY SYSTEM," the tender requirements described below and as
set forth in the Resolutions have been strictly complied with. Subject to the
provisions of the book-entry system, each such 1999 Bond must be endorsed in
blank or accompanied by an instrument of transfer satisfactory to the Tender
Agent executed in blank by the Bondowner.
So long as DTC is the registered owner of the Bonds, a Beneficial Owner
(as defined below) of Bonds is required to give notice to elect to have its
Bonds purchased or tendered, through its Participant (as defined below), to
the Remarketing Agent and shall effect delivery of such Bonds by causing the
Direct Participant to transfer the Participant's interest in the Bonds, on
DTC's records, to the Tender Agent.
WEEKLY MODE. During a Weekly Mode, Bonds may be tendered to the Tender
Agent for purchase as described above on any Business Day by delivering:
(1) a written notice (which shall be irrevocable and effective upon
receipt) to the Tender Agent and the Remarketing Agent by 5:00 p.m.,
New York City time, on a Business Day not less than five business
days prior to the designated Purchase Date, stating the principal
amount of such Bonds (or portion thereof in an authorized
denomination) that the Bondholder irrevocably demands be purchased,
the designated purchase date, the series designation and CUSIP
number of such Bonds and the payment instructions with respect to
Purchase Price, and
(2) deliver such Bonds to the Tender Agent by 1:30 p.m., New York City
time on the designated purchase date.
Notice of tender is to be delivered to the Tender Agent and the
Remarketing Agent by the beneficial owners of the Bonds. The determination of
the Tender Agent and the Remarketing Agent as to whether a notice of tender
has been properly delivered pursuant to the Indenture will be conclusive and
binding upon the Bondowner. The Tender Agent and the Remarketing Agent may
waive any irregularity or nonconformity in any tender.
As provided in the Indenture, all notices of optional tender shall be
irrevocable. Bonds (or portions thereof), for which a notice is received but
that are not delivered in accordance with the Indenture will be deemed to have
been tendered and, upon deposit of the Purchase Price with the Tender Agent,
the owners of such undelivered Bonds will have no further rights with respect
to such Bonds (or portions thereof), other than payment of the Purchase Price
therefor. See "Undelivered Bonds. "
In accepting a notice of tender pursuant to the Indenture, the Tender
Agent and the Remarketing Agent may conclusively assume that the person
providing the notice of tender is the Beneficial Owner of the Bonds and
therefore entitled to tender them. The Tender Agent and the Remarketing Agent
assume no liability to anyone in accepting a notice of tender from a person
whom it reasonably believes to be a Beneficial Owner of the Bonds.
Mandatory Tender. The owners of Bonds will be required to tender, and in
any event will be deemed to have tendered, their Bonds to the Tender Agent for
purchase at the Purchase Price, but payable solely from and to the extent of
proceeds of the remarketing of such Bonds and amounts drawn under the Standby
Agreement and payments made by the School District for such purpose under the
Loan Agreement, on each of the following mandatory tender dates:
(1) STANDBY AGREEMENT EXPIRATION
(a) the Scheduled Interest Payment Date (but in any case not less
than 5 days) next preceding the expiration date of the Standby
Agreement for Bonds, unless on or prior to such Scheduled Interest
Payment Date the Trustee has received an extension of the Standby
Agreement or an Alternate Liquidity Facility has been provided to
the Trustee in accordance with the terms of the Indenture; or
(b) the date of the replacement of the Standby Agreement with an
Alternate Liquidity Facility that does not meet the requirements of
an Alternate Liquidity Facility as described in the Indenture if
such replacement will result in a reduction or withdrawal of the
then-current short-term rating on the Bonds; and
(2) UNSCHEDULED STANDBY AGREEMENT TERMINATION: The fifteenth Business
Day after the Tender Agent receives notice that FGIC-SPI's
commitment under the Standby Agreement will be terminated because an
event of default or a termination event has occurred under the
Standby Agreement, if FGIC-SPI is required to give prior notice of
termination.
Except as otherwise provided, the Tender Agent is required to give notice
of mandatory tender, as provided in the Indenture, to each owner of the Bonds
of the applicable series by first-class mail at least 10 days prior to a
mandatory tender date. The Bondowners shall have no right to elect to retain
Bonds that are subject to mandatory tender.
Undelivered Bonds. Any bond (or portion thereof) for which notice of
optional or mandatory tender has been given in accordance with the provisions
of the indenture, but that is not tendered for purchase by the required time,
will be deemed to have been tendered and sold on the designated purchase date
and, upon deposit in the purchase fund established by the tender agent of an
amount sufficient to pay the purchase price of such bond on such purchase
date, the owner of such 1999 bond will not be entitled to any payment
(including any interest accrued subsequent to such date) in respect thereof
other than the purchase price for such bond and accrued interest as of the
purchase date, unless the purchase date is a scheduled interest payment date
in which case the owner of such bond as of the regular record date is entitled
to such accrued interest as of the purchase date. Such bond will no longer be
entitled to the benefit of the resolution, except for the purpose of payment
of such purchase price and, except as described above, accrued interest as of
the purchase date.
Remarketing
The School District and the Remarketing Agent are entering into the
Remarketing Agreement. Pursuant to the Loan Agreement between the Authority
and the School District, the School District will agree to pay to the
Remarketing Agent a fee for its services as Remarketing Agent and the
Remarketing Agent will agree, among other things, to perform the duties of the
Remarketing Agent set forth in the Indenture. The Remarketing Agreement may be
amended by the School District and the Remarketing Agent without the consents
of the Trustee, the Tender Agent and the Bond owners.
The Remarketing Agreement provides that the Remarketing Agent may be
removed by the School District or may resign, upon 30 days prior notice. In
addition, under certain circumstances the Remarketing Agent may cease
reoffering and selling the Bonds with immediate effect. The School District
has agreed in the Remarketing Agreement to indemnify the Remarketing Agent
against certain liabilities, including certain liabilities under federal
securities laws.
Redemption
Optional Redemption. The Bonds are subject to redemption prior to their
scheduled maturity at the option of the Authority upon written direction of
the School District in whole, or in part by lot from time to time, on any
date, at a redemption price equal to 100% of the principal amount thereof plus
interest accrued to the date fixed for redemption.
Subject to certain conditions, including provision of an opinion of Bond
Counsel that a change in the redemption provisions of the Bonds will not
adversely affect the exclusion from gross income of interest on the Bonds for
federal income tax purposes, the foregoing redemption periods and redemption
prices may be revised effective as the date of such change. Any such revisions
of the redemption period and redemption price will not be considered an
amendment of or a supplement to the Indenture and will not require the consent
of a Bondholder or any other person or entity.
Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory
sinking fund redemption prior to stated maturity, on the first Business Day in
March and September of the years and in the principal amounts set forth in the
following schedule, as drawn by lot by the Trustee.
<TABLE>
<CAPTION>
Month Year Amount Month Year Amount
- ----- ---- ------ ----- ---- ------
<S> <C> <C> <C> <C> <C>
September 2000 $ 540,000 March 2009 $1,445,000
March 2001 1,005,000 September 2009 365,000
September 2001 755,000 March 2010 1,520,000
March 2002 1,045,000 September 2010 380,000
September 2002 790,000 March 2011 1,600,000
March 2003 1,090,000 September 2011 400,000
September 2003 825,000 March 2012 1,685,000
March 2004 1,140,000 September 2012 410,000
September 2004 865,000 March 2013 1,775,000
March 2005 1,195,000 September 2013 430,000
September 2005 900,000 March 2014 1,870,000
March 2006 1,250,000 March 2015 1,975,000
September 2006 315,000 March 2016 2,090,000
March 2007 1,310,000 March 2017 2,210,000
September 2007 335,000 March 2018 2,335,000
March 2008 1,375,000 March 2019 2,470,000
September 2008 350,000
</TABLE>
*Maturity
Any such redemption shall be upon application of the moneys available for
such purpose under the Indenture, upon payment of the redemption price equal
to 100% of the principal amount thereof, together with accrued interest, if
any, from the most recent Scheduled Interest Payment Date to the date fixed
for redemption.
Selection of Bonds to be Redeemed. If fewer than all the Bonds are to be
redeemed, Provider Bonds will be selected for redemption prior to any other
Bonds. After all Provider Bonds have been redeemed, the Trustee shall select
Bonds for redemption by lot, except that Bonds owned by the holders of less
than $1,000,000 in aggregate principal amount of the Bonds shall be selected
for redemption prior to the selection of any Bonds owned by the holders of
$1,000,000 or more in aggregate principal amount of Bonds. Bonds may be
redeemed in part in denominations of $5,000 or any integral multiple thereof,
but no portion of a Bond may be redeemed that would result in a Bond which is
not in an "Authorized Denomination, unless the moneys scheduled for redemption
cannot be used for redemption. For this purpose, the Trustee will consider
each Bond in a denomination larger than the minimum Authorized Denomination to
be separate Bonds each in the denomination of $5,000.
Upon surrender of a Bond redeemed in part, the Trustee will authenticate
and deliver to the surrendering holder a new Bond or Bonds in Authorized
Denominations equal in aggregate principal amount to the unredeemed portion of
the Bond surrendered.
Notwithstanding anything to the contrary herein and in the Indenture,
there shall be no redemption of less than all of the Bonds if there shall have
occurred and be continuing an Event of Default.
Notice of Redemption. A notice of redemption shall be mailed, not more
than forty-five (45) days (sixty (60) days if the Bonds are in the Term Mode)
and not less than ten (10) days (thirty (30) days if the Bonds are in the Term
Mode) prior to the date fixed for redemption to all registered owners of Bonds
to be redeemed as a whole or in part. Such redemption notice is to set forth
the details with respect to the redemption in accordance with the provisions
of the Resolution and state that from the date fixed for redemption that
interest will cease to accrue on the Bonds so called for redemption. Failure
to give such notice by mail to any owner of Bonds to be redeemed, or any
defect therein, will not affect the validity of any proceedings for the
redemption of any other Bonds. If at the time of mailing of any notice of
redemption (other than a mandatory sinking fund redemption), the School
District shall not have deposited with the Paying Agent moneys sufficient to
redeem all the Bonds called for redemption, such notice shall state that it is
subject to the deposit of sufficient moneys with the Paying Agent not later
than the opening of business on the redemption date and shall be of no effect
unless such moneys are so deposited.
So long as DTC or its nominee is the registered owner of the Bonds, any
failure on the part of DTC or failure on the part of a nominee of a Beneficial
Owner (having received notice from a Participant or otherwise) to notify the
Beneficial Owner affected by any redemption of such redemption, shall not
affect the validity of the redemption. So long as DTC or its nominee is the
registered owner of the Bonds, if less than all of the Bonds are called for
redemption, the particular Bonds or portions of Bonds to be redeemed are to be
selected by lot by DTC, the Participants and Indirect Participants in such
manner as they may determine. See "BOOK-ENTRY ONLY SYSTEM" below.
Transfer and Exchange
Subject to the provisions described below under "BOOK-ENTRY ONLY SYSTEM,"
a Bond may be transferred or exchanged only upon presentation thereof to the
Trustee. Such Bond must be accompanied by an endorsement duly executed by the
registered owner. No charge will be imposed in connection with any transfer or
exchange, except for taxes or governmental charges related thereto.
<TABLE>
<CAPTION>
SUMMARY OF INTEREST MODES
Weekly Mode
- -----------
<S> <C>
Interest Payment and Calculation First Business Day of month; on actual days over 365/366 day year Method, first
payment on January 10, 2000
Record Date Business Day preceding the Scheduled Interest Payment Date
Authorized Denominations $100,000 and $5,000 multiples in excess of $100,000
Rate Determination Date Business Day immediately preceding the commencement of the
Weekly Mode, and each subsequent Wednesday thereafter or, if not a Business
Day, on the next succeeding Business Day (by 4:30 p.m., New York City time)
Rate Period Period beginning Thursday of one week and ending Wednesday of the following
week (1)
Rate Adjustment Date Each Thursday
Notice of Interest Rate Owners may call the Remarketing Agent to obtain interest rates for the week
after 4:30 p.m. on the Wednesday preceding the new Weekly Rate Period
Optional Tender Dates Any Business Day at least five business days after delivery of notice Notice
of Optional Tender Irrevocable written notice of tender to Tender Agent and
Remarketing Agent not later than 5:00 p.m., New York City time, on any
Business Day not less than seven days prior to the Purchase Date, and
delivery of the Bonds to the Tender Agent by 1:30 p.m., New York City time
on the Purchase Date
Purchase Date for Mandatory Tender First Business Day of each new Interest Mode
Upon Changes in Interest Mode or
Rate Period
Notice of Change in Interest Mode Tender Agent to mail notice to Bondholder by 30th day preceding Conversion Date
</TABLE>
(1) In the event of a conversion to a different Interest Mode, the last Weekly
Rate Period will end on the Conversion Date.
<TABLE>
<CAPTION>
Term Mode
- ---------
<S> <C>
Interest Payment and Calculation Semiannually on the first day of each March and September on 360-day year of
twelve 30-day months
Record Date That day (whether or not a Business Day) which is 15 days prior to each
Scheduled Interest Payment Date
Authorized Denominations $100,000 and $5,000 multiples
Rate Determination Date A day not more than 15 days preceding nor later than the last Business Day
preceding such Rate period
Term Period Final maturity date of the Bond
Rate Adjustment Date First day in each Rate Period
Notice of Interest Rate Tender Agent to mail notice to Bondowner promptly after Rate Determination
Date.
Optional Tender Dates Any Rate Adjustment Date Notice of Optional Tender Irrevocable written
notice of tender to Tender Agent and Remarketing Agent and delivery of Bonds
to the Tender Agent not later than 3:00 p.m., New York City time on a Business
Day not less than 15 days nor more than 30 days prior to the Purchase Date
Purchase Date for Mandatory Tender First Business Day of a new Rate Period or of a new Interest Mode
Notice of Change in Interest Mode Tender Agent to mail notice to Bondholder by 30th day preceding Conversion
Date
</TABLE>
BOOK-ENTRY ONLY SYSTEM
The information set forth in this Prospectus Supplement concerning The
Depository Trust Company, New York, New York ("DTC") and the book-entry system
described below has been extracted from materials provided by DTC for such
purpose, is not guaranteed as to accuracy or completeness and is not to be
construed as a representation by the School District, School District counsel,
the Bond Counsel, the Trustee, the Authority or the Underwriter.
DTC will serve as securities depository under a book-entry system for the
Bonds. Unless such system is discontinued, the provisions described below
(including provisions regarding payments to and transfers by the owners of
beneficial interests in the Bonds) will be applicable to all the Bonds. If
such system is discontinued, the provisions described under "Discontinuation
of Book-Entry Only System" will be applicable.
The ownership of one fully registered Bond will be registered in the name
of Cede & Co., as nominee for DTC. So long as Cede & Co. is the registered
owner of the bonds, as nominee of DTC, references herein to the bondholders,
bondowners or registered owners of the bonds shall mean CEDE & CO. and shall
not mean the beneficial owners of the bonds.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold
securities of its participants (the "DTC Participants") and to facilitate the
clearance and settlement of securities transactions among DTC Participants in
such securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. DTC is
owned by several DTC Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect Participants").
Beneficial ownership interests in the Bonds may be purchased by or
through DTC Participants. Such DTC Participants and the persons for whom they
acquire interests in the Bonds as nominees (the "Beneficial Owners") will not
receive a Bond certificate, but each DTC Participant will receive a credit
balance in the records of DTC in the amount of such DTC Participant's interest
in the Bonds, which will be confirmed in accordance with DTC's standard
procedures. Beneficial Owners will not receive certificates representing their
beneficial ownership interests in the Bonds, unless use of the book- entry
only system is discontinued as described below.
Transfers of beneficial ownership interests in the Bonds which are
registered in the name of Cede & Co., as nominee of DTC, will be accomplished
by book entries made by DTC and in turn by the DTC Participants and Indirect
Participants who act on behalf of the Beneficial Owners. For every transfer
and exchange of beneficial ownership in the Bonds, the Beneficial Owner may be
charged a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in relation thereto.
For so long as the Bonds are registered in the name of DTC or its
nominee, Cede & Co., the School District and the Trustee will recognize DTC or
its nominee, Cede & Co., as the owner of the Bonds for all purposes, including
notices and voting. Conveyance of notices and other communications by DTC to
DTC Participants, by DTC Participants to Indirect Participants and by DTC
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among DTC, DTC Participants, Indirect Participants and
Beneficial Owners, subject to any statutory and regulatory requirements as may
be in effect from time to time.
Under the Indenture, payments made by the Trustee to DTC or its nominee
shall satisfy the payment obligations of the Authority under the Indenture and
the School District's obligations under the Loan Agreement to the extent of
the payments so made.
Principal, redemption price and interest payments on the Bonds will be
made by the Trustee to DTC or to its nominee, Cede & Co., as registered owner
of the Bonds. Disbursement of such payments to the Beneficial Owners is the
responsibility of DTC, the DTC Participants and, where appropriate, the
Indirect Participants. Upon receipt of moneys, DTC's current practice is to
credit immediately the accounts of the DTC Participants in accordance with
their respective holdings shown on the records of DTC. Payments by DTC
Participants and Indirect Participants to Beneficial Owners will be governed
by standing instructions of the Beneficial Owners and customary practices, as
is now the case with municipal securities held for the accounts of customers
in bearer form or registered in "street name." Such payments will be the
responsibility of such DTC Participants or Indirect Participants and not of
DTC, the School District, the Trustee or the Authority and will be subject to
any statutory and regulatory requirements as may be in effect from time to
time.
A Beneficial Owner shall give notice to elect to have its Bonds purchased
or tendered, to the Tender Agent and shall effect delivery of such Bonds by
causing the DTC Participant or the Indirect Participant to transfer the DTC
Participant's interest in the Bonds, on DTC's records, to the Tender Agent.
The requirement for physical delivery of Bonds in connection with a demand for
purchase or mandatory purchase will be deemed satisfied when the ownership
rights in the Bonds are transferred by DTC Participants on DTC's records.
The authority, the school district and the trustee cannot and do not give
any assurances that DTC, the DTC participants or the indirect participants
will distribute to the beneficial owners (1) payments of principal or
redemption price of or interest on the bonds, (2) certificates representing an
ownership interest or other confirmation of beneficial ownership interests in
bonds, or (3) redemption or other notices sent to DTC or Cede & Co., Its
nominee, as the registered owner of the bonds, or that they will do so on a
timely basis or that DTC, DTC participants or indirect participants will serve
and act in the manner described in this official statement. The current
"rules" applicable to DTC are on file with the securities and exchange
commission, and the current "procedures" of DTC to be followed in dealing with
DTC participants are on file with DTC.
The authority, the school district and the trustee will have no
responsibility or obligation to any DTC participant, indirect participant or
beneficial owner or any other person with respect to: (1) the bonds; (2) the
accuracy of any records maintained by DTC or any DTC participant or indirect
participant; (3) the payment by DTC or any DTC participant or indirect
participant of any amount due to any beneficial owner in respect of the
principal or redemption price of or interest on the bonds; (4) the delivery by
DTC or any DTC participant or indirect participant of any notice to any
beneficial owner which is required or permitted under the terms of the
resolution to be given to bondholders; (5) the selection of the beneficial
owners to receive payment in the event of any partial redemption of the bonds;
or (6) any consent given or other action taken by DTC as bondholder.
Discontinuation of Book-Entry Only System
DTC may determine to discontinue providing its service with respect to
the Bonds at any time by giving notice to the Authority and the Trustee and
discharging its responsibilities with respect thereto under applicable law. In
addition, under certain circumstances set forth in the Indenture, the
Authority may determine to discontinue the book-entry only system.
In the event that the book-entry only system for the Bonds is
discontinued, the provisions set forth in the Indenture would apply.
SECURITY AND SOURCES OF PAYMENT FOR THE Bonds
Security For The Bonds
The Authority will enter into a Loan Agreement with the School District
dated as of December 2, 1999, pursuant to which the Authority will lend the
proceeds of the Bonds to the School District. The Bonds will be equally and
ratably secured under the Indenture on a parity with any additional bonds
which may be issued hereafter under the Indenture, except with respect to
sinking funds and redemption accounts or funds and debt service reserve funds
established under the Indenture to separately secure any particular series of
bonds issued under the Indenture. Under the Loan Agreement the School District
has agreed to repay such loan in such amounts and at such times as will
provide sufficient funds to meet the debt service requirements on the Bonds.
The School District will deliver its general obligation promissory note dated
as of December 2, 1999 (the "Note") to the Authority evidencing its
obligations under the Loan Agreement.
The Bonds will be secured under the Indenture by the assignment and
pledge to the Trustee of the rights of the Authority under the Note and the
Loan Agreement, including the right to payments thereunder by the School
District. The payment obligations of the School District under the Note and
the Loan Agreement are general obligations of the School District and the full
faith, credit and taxing power of the School District has been pledged for the
timely payment of payments due under the Note and the Loan Agreement. The
payments due under the Note and Loan Agreement are payable from the School
District's tax and other general revenues, from whatever source derived, which
include ad valorem taxes (unlimited as to rate or amount for the payment of
debt) and reimbursements by Pennsylvania as described below.
Provisions of the Public School Code of 1949, as amended (the "Public
School Code") require that, should any school district fail to make its
required debt service payment with respect to a general obligation debt such
as the Note and the Loan Agreement, the Secretary of Education of Pennsylvania
is required to withhold from such school district, out of any subsidy payment
of any type due such school district by Pennsylvania, an amount equal to the
debt service payment owed by such school district. Any amounts so withheld are
assigned to the sinking fund depository for such general obligation debt.
These withholding provisions are not part of any contract with the holder of
the Note and the Loan Agreement and may be amended by future legislation.
In addition, the Pennsylvania Local Government Unit Debt Act (the "Debt
Act"), which is applicable to the general obligation debt of the School
District, prescribes certain other remedies for the holder of the Note and the
lender under the Loan Agreement. In the event of failure of the School
District to pay principal of or interest on general obligation debts such as
the Note and the Loan Agreement for a period of 30 days from the date when it
becomes due and payable, the holder of the Note and the lender under the Loan
Agreement shall have the right to recover the amount due by bringing an action
in assumpsit in the Court of Common Pleas in the county in which the School
District is located. The Debt Act provides that any judgment shall have an
appropriate priority upon moneys next coming into the treasury of the School
District. The Debt Act further provides that upon a default in the payment of
principal or interest which continues at least 30 days, holders of at least
25% of such defaulted debt may appoint a trustee to represent them. The Debt
Act provides certain other remedies and further qualifies the above-described
remedies. See "School District Borrowing Capacity" for a description of the
outstanding debt of the School District.
All public school subsidies in Pennsylvania are subject to appropriation
by the General Assembly. Although the Constitution of Pennsylvania provides
that "the General Assembly shall provide for the maintenance and support of a
thorough and efficient system of public education to serve the needs of the
Commonwealth", the General Assembly is not legally obligated to appropriate
such subsidies and there can be no assurance that it will do so in the future.
The allocation formula pursuant to which Pennsylvania distributes such
subsidies to the various school districts throughout Pennsylvania may be
amended at any time by the General Assembly. Moreover, Pennsylvania's ability
to make such disbursements will be dependent upon its own financial condition.
At various times in the past, the enactment of budget and appropriation laws
by Pennsylvania has been delayed, resulting in interim borrowing by school
districts pending the authorization and payment of state aid. Consequently,
there can be no assurance that financial support from Pennsylvania for school
districts, either for capital projects or education programs in general, will
continue at present levels or that moneys will be payable to a school district
if indebtedness of such school district is not paid when due.
THE LIQUIDITY FACILITY
The Obligations will rank equally with all of our other general unsecured
and unsubordinated obligations. The Obligations are not issued under an
indenture. As of the date of this prospectus supplement, we have approximately
$2.6 billion of obligations currently outstanding, including the Obligations
we are issuing under this prospectus supplement.
Owners of the Bonds to which the Obligations relate will be entitled to
the benefits and will be subject to the terms of the Liquidity Facility. Under
the Liquidity Facility, we agree to make available to a specified
intermediary, upon receipt of an appropriate demand for payment, the purchase
price for the Bonds. Our obligation under the Liquidity Facility will be
sufficient to pay a purchase price equal to the principal of and up to 38
days' interest on the Bonds at an assumed rate of 15% per year.
Termination Events
The scheduled expiration date of the Liquidity Facility is December 2,
2004. The Indenture relating to the Bonds will specify certain circumstances
where we must purchase Bonds which a holder tenders for purchase pursuant to
an optional or mandatory tender, which have not been remarketed. Under certain
circumstances, we may terminate our obligation to purchase Bonds. The
following events would permit such termination:
(a) (i) any portion of the commitment fee for the Liquidity Facility has
not been paid when due on the quarterly payment date, or (ii) any other amount
payable under the Liquidity Facility has not been paid when due and any such
failure shall continue for three Business Days after notice thereof to the
District;
(b) the Commonwealth of Pennsylvania takes any action which impairs the
power of the Authority or the District to comply with the covenants and
obligations of the Authority or the Borrower under the Related Documents or
any right or remedy of FGIC-SPI or any owners of the Bonds from time to time
to enforce such covenants and obligations;
(c) (i) the Authority or the District fails to observe or perform any
covenant or agreement contained in the Related Documents and, if such failure
is the result of a covenant breach which is capable of being remedied, such
failure continues for ninety days following written notice thereof to the
Authority and the District from FGIC-SPI, provided that if any such failure
(other than a payment default) shall be such that it cannot be cured or
corrected within such ninety day period, it shall not constitute an Event of
Default if curative or corrective action is instituted within such period and
diligently pursued until the failure of performance is cured or corrected, or
(ii) there has not been, at all times a Remarketing Agent performing the
duties set forth in the Indenture;
(d) an event of default has occurred and is continuing under any of the
Related Documents;
(e) any representation, warranty, certification or statement made by the
Authority or the District 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;
(f) any default by the Authority or the District has occurred and
continues in the payment of principal of or premium, if any, or interest on
any bond, note or other evidence of indebtedness of the Authority or the
District which is senior to, or on parity with, the Bonds;
(g) the Authority or the District 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;
(h) a court of competent jurisdiction shall enter an order, judgment or
decree declaring the Authority or the District insolvent, or adjudging it
bankrupt, or appointing a trustee or receiver of the Authority or the District
proving a petition filed against the Authority or the District seeking
reorganization of the Authority or the District 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;
(i) 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 District and such custody or control shall not be
terminated within (60) days from the date of assumption of such custody or
control;
(j) any material provision of the Liquidity Facility, the Authorizing
Document, the Remarketing Agreement, any Related Document, or any Bond shall
cease for any reason whatsoever to be a valid and binding agreement of the
Authority or the District or the Authority or the District shall contest the
validity or enforceability thereof; or
(k) failure to pay when due any amount payable under any Bonds
(regardless of any waiver thereof by the holders of the Bonds). Upon the
occurrence of a termination event, we may deliver notice to the Trustee, the
Authority, the Remarketing Agent and any applicable paying agent or tender
agent regarding our intention to terminate the Liquidity Facility.
In that case, the Liquidity Facility would terminate, effective at the
close of business on the 30th day following the date of the notice, or if that
date is not a business day, on the next business day. Before the time at which
termination takes effect, the Bonds will be 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 Authority under the Bonds are as described in the
Authority's separate disclosure document relating to the Bonds.
<PAGE>
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill our obligations under the Liquidity
Facility, we 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 us as needed to purchase Bonds. The amount of each loan under
the Standby Loan Agreement will be no greater than the purchase price for
tendered Bonds. The purchase price represents the outstanding principal amount
of the tendered Bonds and interest accrued on the principal to but excluding
the date we borrow funds under the Standby Loan Agreement. Each loan will
mature on a date specified in the Standby Loan Agreement, which date will be
set forth in the applicable prospectus supplement. The proceeds of each loan
will be used only for the purpose of paying the purchase price for tendered
Bonds. When we wish to borrow funds under the Standby Loan Agreement, we must
give GE Capital prior written notice by a specified time on the proposed
borrowing date. No later than a specified time on each borrowing date (if GE
Capital has received the related notice of borrowing by the necessary time 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 our obligations under the Liquidity
Facility. GE Capital will not have any responsibility or incur any liability
for any act, or any failure to act, by us which results in our failure to
purchase tendered Bonds with the funds provided under the Standby Loan
Agreement.
<PAGE>
Ratio of Earnings to Fixed Charges
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 25, 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998
1.63 1.51 1.53 1.48 1.50 1.62
</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, interest capitalized (net of amortization) and fixed
charges. Fixed charges consist of interest on all indebtedness and one-third
of annual rentals, which we believe reasonably approximates the interest
factor of such rentals.
Where You Can Find More Information Regarding GE Capital
GE Capital files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements or other information GE Capital files at the SEC's public reference
rooms located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661
and 7 World Trade Center, Suite 1300, New York, NY 10048. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. GE
Capital's SEC filings are also available to the public from commercial
document retrieval services and at the web site maintained by the SEC at
"http://www.sec.gov."
Incorporation of Information Regarding GE Capital
The SEC allows us to "incorporate by reference" information into this
prospectus supplement, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus
supplement, except for any information superseded by information in this
prospectus supplement. This prospectus supplement incorporates by reference
the documents set forth below that GE Capital has previously filed with the
SEC. These documents contain important information about GE Capital, its
business and its finances.
<TABLE>
<CAPTION>
Document Period
- -------- ------
<S> <C>
Annual Report on Form 10-K.............................. Year ended December 31, 1998
Quarterly Reports on Form 10-Q.......................... Quarters ended March 27, 1999, June 26, 1999 and
September 25, 1999
</TABLE>
<PAGE>
EXPERTS
The financial statements and schedule of General Electric Capital
Corporation and consolidated affiliates as of December 31, 1998 and 1997, and
for each of the years in the three year period ended December 31, 1998,
appearing in GE Capital's Annual Report on Form 10-K for the year ended
December 31, 1998, have been incorporated by reference in the prospectus
supplement, in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference in the prospectus supplement,
and upon the authority of said firm as experts in accounting and auditing.
<PAGE>
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.
<PAGE>
$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 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 November 2, 1999
<PAGE>
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 Northwestern Atrium Center, 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, 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. In addition, the Commission maintains a Website that
contains reports, proxy and other information regarding registrants that file
electronically, such as FGIC-SPI. The address of the Commission's Website is
http:/www.sec.gov. 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.
<PAGE>
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, 1998 and
the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999, 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.
<PAGE>
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, such
owner may elect to purchase from VRDN holders an amount of VRDNs equal to the
principal amount of INFLOs for which such INFLO owner 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, the
owner may "de-link" his or her 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 or her 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.
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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.
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, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998 appearing in FGIC Securities Purchase, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1998 have been incorporated
herein by reference in the prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference in the
prospectus and upon the authority of said firm as experts in accounting and
auditing.
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<S> <C>
TABLE OF CONTENTS $38,045,000
Page principal amount
---- plus interest and premium,
if any
Prospectus Supplement
Introduction.....................................S-2
Description of the Bonds.........................S-2 LIQUIDITY FACILITY OBLIGATIONS
The Liquidity Facility..........................S-13
The Standby Loan Agreement; GE Capital..........S-16
Experts.........................................S-18
Appendix A.......................................A-1 issued by
Prospectus
Available Information..............................2
Documents Incorporated By Reference................3 FGIC Securities
Summary............................................4 Purchase, Inc.
The Company........................................5
The Liquidity Facilities...........................5
The Standby Loan Agreement.........................5
Plan of Distribution...............................6 in support of
Legal Matters......................................6
Experts............................................6 State Pubic School Building Authority
Commonwealth of Pennsylvania
School Revenue Bonds
(Parkland School District Project)
Series D of 1999
PROSPECTUS SUPPLEMENT
December , 1999
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