PRELIMINARY PROSPECTUS SUPPLEMENT DATED APRIL 25, 2000
(To Prospectus dated April 25, 2000)
$9,995,000
principal amount plus interest
Liquidity Facility
of
FGIC Securities Purchase, Inc.
in support of
DALLASTOWN AREA SCHOOL DISTRICT
York County, Pennsylvania
General Obligation Bonds, Series of 2000
Date of Bonds: Date of Delivery Due: May 1, 2020
Price: 100%
-------------------
Liquidity Facility: We are providing a Liquidity Facility for the Bonds
described below. The Liquidity Facility will expire on May , 2005 unless it is
extended or terminated sooner in accordance with its terms.
Terms of the Bonds: The Bonds are the general obligations of the
Dallastown Area School District, York Count, Pennsylvania, and are payable
solely from taxes and other revenues of the District. 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.
--------------------------------------------
Tucker Anthony
MIDATLANTIC DIVISION
--------------------------------------------
The date of this Prospectus Supplement is May , 2000
<PAGE>
TABLE OF CONTENTS
Page
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INTRODUCTION...............................................................S-2
DESCRIPTION OF THE BONDS...................................................S-2
THE LIQUIDITY FACILITY....................................................S-12
THE STANDBY LOAN AGREEMENT; GE CAPITAL....................................S-14
EXPERTS...................................................................S-16
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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
$9,995,000 aggregate principal amount of Dallastown Area School District, York
Count, Pennsylvania, General Obligations Bonds, Series of 2000 which the
District will issue on or about May 1, 2000. We will enter into a Standby Bond
Purchase Agreement (the "Liquidity Facility") with Allfirst Bank, Harrisburg,
Pennsylvania as Paying Agent and Tender Agent for 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 May , 2005 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 Resolution of the Board
of the District adopted April 13, 2000, a form of which may be obtained from
the District. 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 of $9,995,000 and are
stated to mature on May 1, 2020. Until converted to the Term Mode as described
below, the Bonds are to bear interest from the date of their initial delivery
at the Weekly Rate determined by Tucker Anthony Incorporated, Midlantic
Division, the Remarketing Agent as described herein. The Bonds may be
converted to the Term Mode, as described below. The interest rate on the Bonds
while in the Weekly Mode is referred to herein as "Weekly Rate" or "Variable
Rate." The interest rate on the Bonds in the Term Mode is referred to herein
as the "Term Rate" or "Fixed Rate." Bonds purchased by FGIC-SPI and referred
to as Provider Bonds in accordance with the Liquidity Facility will bear
interest at Provider Rate (as defined in the Liquidity Facility) until such
Provider Bonds are remarketed or are purchased by the District. Only FGIC-SPI
has any right to receive interest at Provider Rate.
The Scheduled Interest Payment Dates for interest accrued on the Bonds
(other than Provider Bonds) during the Weekly Mode is the first Business Day
of each month. The first scheduled interest payment date will be June 1, 2000,
and the Regular Record Date therefor is the Business Day preceding such
Scheduled Interest Payment Date. For Provider Bonds, accrued interest will be
paid on the Scheduled Interest Payment Dates and on the dates such Provider
Bonds are remarketed or are purchased by the District. The Scheduled Interest
Payment Dates for interest accrued on Bonds during the Term Mode is the first
(1st) day of each May and November of such Bonds, as described below, and the
Regular Record Date therefor is the fifteenth day of the calendar month next
preceding 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 mailed to the persons appearing
on the Regular Record Date as registered owners on the registration books kept
by the Paying Agent; 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 Paying Agent 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 Paying Agent, 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 the circumstances 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 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
herein 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.
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 (as hereinafter
defined) 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 (as hereinafter defined).
Interest
General. The Bonds are initially being issued in the Weekly Mode. Until
the Interest Mode of the Bonds is converted to the Term Mode, the Bonds will
bear interest at the Weekly Rate 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 the Term Mode, as elected by
the District pursuant to the Resolution, following which the Bonds will bear
interest at such Term Rate as determined by the Remarketing Agent. Such
conversion will result in the mandatory tender for purchase of the Bonds.
After such conversion to the Term Mode, the Bonds shall remain in the Term
Mode until maturity. 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 the Term
Rate, interest will be computed on the basis of a year of 360 days, based upon
twelve 30-day months.
Weekly Mode. In the Weekly Mode, Bonds will bear interest at the Weekly
Rate, which is 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 the
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 District, not more than 15 days
preceding and not later than the last Business Day preceding the commencement
of such Term Rate Period. The Term Rate Period will end on the final maturity
date of the Bonds.
Weekly Rate Determination. The Remarketing Agent is required to make each
determination of the "Weekly Rate" on the respective date described above for
each Weekly Mode (each a "Determination Date"), such rate being the lowest
interest rate not in excess of the Maximum Interest Rate (as hereinafter
defined) that, in the judgment of the Remarketing Agent, will cause such Bonds
to have a market value equal to 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 Provider
Bonds) 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 District
in writing to the Paying Agent, 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 District pursuant to the Resolution
is permitted to effect the conversion of Bonds from the Weekly Mode to the
Term Mode, by delivering notice to the Tender Agent, except as otherwise
provided in the Resolution, not fewer than 45 days prior to the Conversion
Date. The first day of the Term Mode (the "Rate Adjustment Date"), as
designated by the District, is required to be the last Scheduled Interest
Payment Date relating to the Rate Period for the Weekly Mode from which the
Bonds are to be converted.
Notwithstanding the District's delivery of notice of its exercise of the
option to effect the conversion to the Term Mode, such conversion or change in
Rate Period shall not take effect (1) if the 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 District fails to deliver to the Tender Agent,
the Paying Agent, 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 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
Conversion of Bonds to Term Mode - Optional/Mandatory. The District is
permitted to convert the interest rate on the Bonds from a Weekly Rate to the
Term Rate at any time and is required to commence such conversion at least 90
days prior to the scheduled expiration of the Liquidity Facility and at least
five (5) days following the mandatory tender of Bonds for purchase if the
Local Government Unit fails to comply with budgeting and redemption
requirements as set fort5h in the Resolution, unless waived by the Bond
Insurer.
Notice to Bondholders. The Tender Agent is required to give to holders of
the Bonds 30 days' written notice of the effective date of any conversion to
the Term Mode.
Effect of Determination. The designation of an Interest Mode and each
determination of a Weekly Rate and the determination of the Term Rate by the
Remarketing Agent, shall be conclusive and binding upon the Holders of the
Bonds, the Paying Agent, the District, the Tender Agent and all other persons,
and none of the District, the Paying Agent, 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 Liquidity Facility and payments made by the District for such
purpose under the Resolution.
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 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 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 described below) of Bonds is required to give notice to elect to have its
Bonds purchased or tendered, through its Participant (as described 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 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) 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 Resolution 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 Resolution, 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 Resolution 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.
In accepting a notice of tender pursuant to the Resolution, 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 District for such purpose under the
Resolution, on each of the following mandatory tender dates:
(1) LIQUIDITY FACILITY EXPIRATION OR REPLACEMENT:
(a) the Scheduled Interest Payment Date (but in any case not less
than 5 days) next preceding the expiration date of the Liquidity
Facility for Bonds, unless on or prior to such Scheduled Interest
Payment Date the Paying Agent has received an extension of the
Liquidity Facility or an alternate liquidity facility has been
provided to the Paying Agent in accordance with the terms of the
Resolution; or
(b) the date of the replacement of the Liquidity Facility with an
alternate liquidity facility that does not meet the requirements of
an alternate liquidity facility in accordance with the Resolution if
such replacement will result in a reduction or withdrawal of the
then-current short-term rating on the Bonds; and
(2) LIQUIDITY FACILITY TERMINATION: The fifteenth (15th) day (or if such
day is not a Business Day, than the next succeeding Business Day)
after the Paying Agent receives notice that FGIC-SPI's commitment
under the Liquidity Facility will be terminated because an event of
default or a termination event has occurred under the Liquidity
Facility, as described below.
(3) CONVERSION DATE: on the Conversion Date, or if such Conversion Date
is not a Business Day, the first Business Day succeeding such
Conversion .
(4) RISE IN INTEREST RATES: On the fifteenth (15th) Business Day
following the first day during the term of the Bonds on which the
"20-Bond Municipal Bond Index" (or equivalent index) published by
The Bond Buyer reaches or exceeds ten percent (10%).
Except as otherwise provided, the Tender Agent is required to give notice
of mandatory tender, as provided in the Resolution, to each owner of the Bonds
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 Resolution, 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 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 District and the Remarketing Agent are entering into the Remarketing
Agreement pursuant to which the 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 Resolution. The Remarketing Agreement may be amended by the
District and the Remarketing Agent without the consents of the Paying Agent,
the Tender Agent and the Bondowners.
The Remarketing Agreement provides that the Remarketing Agent may be
removed by the 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 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 District upon written direction of the
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 Resolution 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
May of the years and in the principal amounts set forth in the following
schedule, as drawn by lot by the Paying Agent.
Years Amount Years Amount
----- ------ ----- ------
2002 $365,000 2012 535,000
2003 380,000 2013 555,000
2004 395,000 2014 575,000
2005 410,000 2015 600,000
2006 430,000 2016 620,000
2007 445,000 2017 645,000
2008 460,000 2018 670,000
2009 480,000 2019 695,000
2010 500,000 2020* 720,000
2011 515,000
*Maturity - Estimated
Any such redemption shall be upon application of the moneys available for
such purpose under the Resolution, 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.
Special Mandatory Redemption. The Bonds shall be subject to special
mandatory redemption from the sources described under the heading "School
District Debt Service Budgeting Covenant". Such redemption shall occur on the
first permissible interest payment date following the end of the District's
fiscal year (which fiscal year ends on June 30), and for which proper notice
may be given as described under the heading "Redemption - Notice of
Redemption" below.
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 Paying Agent shall
select Bonds for redemption by lot. 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 Paying Agent 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 Paying Agent 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.
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 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.
Transfer and Exchange
A Bond may be transferred or exchanged only upon presentation thereof to
the Paying Agent. 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.
SUMMARY OF INTEREST MODES
Weekly Mode
-----------
Interest Payment and Calculation First Business Day of month; on actual
days over 365/366 day year Method,
first payment on June 1, 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 five Business 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
Conversion Date An interest payment date selected on
which to convert the Bonds from the
Weekly Mode to the Term Mode
Purchase Date for Mandatory Tender First Business Day of the Term Mode
Upon Change to Term Mode
Notice of Change to Term Mode Tender Agent to mail notice to
Bondholder by 30th day preceding
Conversion Date
(1) In the event of a conversion to the Term Mode, the last Weekly Rate Period
will end on the Conversion Date.
Term Mode
---------
Interest Payment and Calculation Semiannually on the first day of each
May and November 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 $5,000 and multiples thereof
Term Rate Calculation Date A Business day on which the Term Rate
is determined by the Remarketing
Agreement, being not more than 15 days
preceding nor later than the last
Business Day preceding such Rate
period
Term Rate Period Final maturity date of the Bonds
Notice of Interest Rate Tender Agent to mail notice to
Bondowner promptly after the Term Rate
Calculation Date.
BOOK-ENTRY ONLY SYSTEM
The information set forth herein 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 District, the Bond Counsel, the Paying Agent 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 District and the Paying Agent 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 Resolution, payments made by the Paying Agent to DTC or its
nominee shall satisfy the payment obligations of the District under the
Resolution.
Principal, redemption price and interest payments on the Bonds will be
made by the Paying Agent 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 District or the Paying Agent 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 DISTRICT and the Paying Agent 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 District and the Paying Agent 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 District and the Paying Agent
and discharging its responsibilities with respect thereto under applicable
law. In addition, under certain circumstances set forth in the Resolution, the
District 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 Resolution would apply.
SECURITY AND SOURCES OF PAYMENT FOR THE Bonds
Security for the Bonds
The Bonds are general obligations of the District and are payable from
taxes and other revenues of the District. The District has covenanted in the
Resolution that it will provide in its budget for each fiscal year, and will
appropriate in each such year, the amount of the debt service on the Bonds for
such year and will duly and punctually pay, or cause to be paid, the principal
of every Bond and the interest thereon on the dates, at the place and in the
manner stated in the Bonds, and for such budgeting, appropriation and payment,
the District has irrevocably pledged its full faith, credit and taxing power.
School District Debt Service Budgeting Covenant
While the Bonds are outstanding and in the weekly mode, the District
shall, in preparing its annual budget, apply the assumption that the interest
rate on the Bonds for the budget period is equal to the greater of (i) 95% of
the Bond Buyer 20-Bond Index as published on the Friday prior to the sale of
the Bonds or (ii) the arithmetic average of The Bond Market Association
Municipal Swap Index (or any successor index) for each of the fifty-two (52)
weeks ending on or about February 1 in each year, plus 100 basis points
(1.0%).
Immediately following the end of the District's fiscal year, the District
shall apply to the redemption of Bonds (as described under the heading
"Redemption - Notice of Redemption" above) one half (1/2) of any tax levy
surplus generated as a result of the budgeting covenant described in the
preceding paragraph. As used herein, the "tax levy surplus" shall be equal to
the difference between budgeted debt service and actual debt service paid on
the Bonds for the applicable fiscal year.
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
$2.7 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 May , 2005.
The Resolution 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 Standby Agreement shall
not be paid when due on the quarterly payment date therefor as set forth in
the Payment Agreement (which embodies the School District's obligation to pay
to FGIC-SPI annual fees for the Standby 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 School
District;
(b) the Commonwealth of Pennsylvania shall take any action which would
impair the power of the School District to comply with their respective
covenants and obligations under the Resolution, the Bonds, the Remarketing
Agreement, the Standby Agreement, the Payment Agreement and all other
documents relating to the issuance of the Bonds (collectively, 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 School District shall fail 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 (90) days following written notice thereof to the School
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 (90) day period, it shall not constitute an Event of Default
hereunder 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 shall not be, at all times a Remarketing Agent performing the
duties thereof contemplated by the Resolution;
(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
School District (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;
(f) any default by the School District 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 of the School District which
is senior to, or on parity with, the Bonds;
(g) the School 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
Paying Agent or receiver for itself;
(h) a court of competent jurisdiction shall enter an order, judgement or
decree declaring the School District insolvent, or adjudging it bankrupt, or
appointing a Paying Agent or receiver of the School District, or approving a
petition filed against the School District seeking reorganization thereof
under any applicable law or statute of the United States of America or any
state thereof, and such order, judgement 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 provision of any other law for the relief of aid of
debtors, any court of competent jurisdiction shall assume custody or control
of the School District and such custody or control shall not be terminated
within sixty (60) days from the date of assumption of such custody or control;
(j) any material provision of the Standby Agreement, the Resolution, the
Remarketing Agreement, any Related Document or the Bonds (including Provider
Bonds) shall cease for any reason whatsoever to be a valid and binding
agreement of the School District or the School District shall contest the
validity or enforceability thereof; or
(k) failure to pay when due any amount payable under the Bonds or
Provider 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 Paying Agent, the District, 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 15th 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 District are as described in the District'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:
Year ended December 31,
- -------------- ----------- ---------- ---------- ----------
1995 1996 1997 1998 1999
1.51 1.53 1.48 1.50 1.60
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 GE Capital believes 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.
Document Period
- -------- ------
Annual Report on Form 10-K.......... Year ended December 31, 1999
<PAGE>
EXPERTS
The financial statements and schedule of General Electric Capital
Corporation and consolidated affiliates as December 31, 1999 and 1998, and for
each of the years in the three year period ended December 31, 1999, appearing
in GE Capital's Annual Report on Form 10-K for the year ended December 31,
1999, 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)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
---------------- ---------------------- ----------------------- ----------------
<S> <C> <C> <C>
11:30 a.m. 11:45 a.m. 2:15 p.m. 2:30 p.m.
[1] [2] [3] [4]
</TABLE>
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 April 25, 2000
<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, 1999
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.
<PAGE>
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, 1999 and 1998, and for each of the years in the three-year period ended
December 31, 1999 appearing in FGIC Securities Purchase, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1999 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.
<PAGE>
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Introduction......................................S-2
Description of the Bonds..........................S-2
The Liquidity Facility...........................S-12
The Standby Loan Agreement; GE Capital...........S-14
Experts..........................................S-16
Appendix A........................................A-1
Prospectus
Available Information...............................2
Documents Incorporated By Reference.................3
Summary.............................................4
The Company.........................................5
The Liquidity Facilities............................5
The Standby Loan Agreement..........................5
Plan of Distribution................................6
Legal Matters.......................................6
Experts.............................................6
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$9,995,000
principal amount
plus interest and premium,
if any
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
Dallastown Area School District
York County, Pennsylvania
General Obligation Bonds
Series of 2000
PROSPECTUS SUPPLEMENT
May , 2000
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