PRELIMINARY PROSPECTUS SUPPLEMENT DATED JANUARY 7, 2000
(To Prospectus dated January 7, 2000)
$25,000,000
principal amount plus interest
Liquidity Facility
of
FGIC Securities Purchase, Inc.
in support of
COUNTY OF LANCASTER, PENNSYLVANIA
General Obligation Bonds, Series of 2000
Date of Bonds: Date of Delivery Due: May 1, 2030
Price: 100%
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Liquidity Facility: We are providing a Liquidity Facility for the
Bonds described below. The Liquidity Facility will expire on January 20, 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
County of Lancaster, Pennsylvania, and are payable solely from taxes and other
revenues of the County. 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.
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Hopper Soliday, A Division of Tucker Anthony Incorporated
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The date of this Prospectus Supplement is January , 2000
<PAGE>
TABLE OF CONTENTS
Page
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
$25,000,000 aggregate principal amount of County of Lancaster Pennsylvania
General Obligations Bonds, Series of 2000 which the County will issue on or
about January 20, 2000. We will enter into a Standby Bond Purchase Agreement
(the "Liquidity Facility") with Chase Manhattan Trust Company, National
Association, 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 January 20, 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 Ordinance No. 49
adopted by the County on December 15, 1999, a form of which may be obtained
from the County. 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 $25,000,000 and
are stated to mature on May 1, 2030. 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 Hopper Soliday, A Division of Tucker
Anthony Incorporated, 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 County. 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 February
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 County. 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
Ordinance. 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 Ordinance 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 County pursuant to the Ordinance, 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 County, 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 County 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 County pursuant to the Ordinance
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 Ordinance, 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 County, 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 County'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 County 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 County 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
Ordinance 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 County 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 County 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 of the
"20-Bond Municipal Bond Index" (or equivalent index) published by the Bond
Buyer reaches or exceeds 10%.
Notice to Bondholders. The Tender Agent is required to give to
Bondowners 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 County, the Tender Agent and all other persons,
and none of the County, 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 County for such purpose
under the Ordinance.
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 Ordinances 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 Ordinance 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 Ordinance, 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 Ordinance 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 Ordinance, 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 County for such purpose under the
Ordinance, 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 Ordinance; 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 Ordinance 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 Ordinance, 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 ordinance, 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 ordinance, except for the purpose of payment of such
purchase price and, except as described above, accrued interest as of the
purchase date.
Remarketing
The County and the Remarketing Agent are entering into the
Remarketing Agreement pursuant to which the County 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 Ordinance. The Remarketing Agreement may be
amended by the County 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 County 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 County 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 County upon written direction of
the County 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 Ordinance 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, except the 2001 maturity which will be the first Business Day of
November, 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
----- ------ ----- ------
2001 100,000 2016 260,000
2002 0 2017 1,150,000
2003 0 2018 1,220,000
2004 0 2019 1,290,000
2005 0 2020 1,365,000
2006 0 2021 1,450,000
2007 0 2022 1,535,000
2008 0 2023 1,630,000
2009 0 2024 1,730,000
2010 0 2025 1,835,000
2011 0 2026 1,945,000
2012 0 2027 2,070,000
2013 100,000 2028 2,195,000
2014 150,000 2029 2,335,000
2015 160,000 2030* 2,480,000
*Maturity - Estimated
Any such redemption shall be upon application of the moneys available
for such purpose under the Ordinance, 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 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 Ordinance 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 County 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 February 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
4:45 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
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 County, 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 County 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 Ordinance, payments made by the Paying Agent to DTC or its
nominee shall satisfy the payment obligations of the County under the
Ordinance.
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 County 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 County 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 County 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 ordinance 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 County and the Paying Agent
and discharging its responsibilities with respect thereto under applicable
law. In addition, under certain circumstances set forth in the Ordinance, the
County 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 Ordinance would apply.
SECURITY AND SOURCES OF PAYMENT FOR THE Bonds
Security for the Bonds
The Bonds are general obligations of the County and are payable from
taxes and other revenues of the County. The County has covenanted in the
Ordinance 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 County has irrevocably pledged its full faith, credit and taxing power.
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 January
20, 2005. The Ordinance 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 County;
(b) the Commonwealth of Pennsylvania takes any action which impairs
the power of the County to comply with the covenants and obligations of the
County under the Ordinance, the Bonds, the Liquidity Facility, the Payment
Agreement and all other documents relating to the issuance of the Bonds, 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 County fails to observe or perform any covenant or
agreement contained in the Ordinance, the Bond, the Remarketing Agreement, the
Liquidity Facility, the Payment Agreement and all other documents relating to
the issuance of the Bonds 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 County 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 Ordinance;
(d) an event of default has occurred and is continuing under any of
the Ordinance, the Bonds, Remarketing Agreement, the Liquidity Facility, the
Payment Agreement and all other documents relating to the issuance of the
Bonds;
(e) any representation, warranty, certification or statement made by
the County in the Ordinance, the Bonds, the Remarketing Agreement, the
Liquidity Facility, the Payment Agreement and all other documents relating to
the issuance of the Bonds, or in any certificate, financial statement or other
document delivered pursuant thereto shall prove to have been incorrect in any
material respect when made;
(f) any default by the County 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 County which is senior to, or on parity
with, the Bonds;
(g) the County 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 County insolvent, or adjudging it bankrupt, or
appointing a trustee or receiver of the County proving a petition filed
against the County seeking reorganization of the County 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 County 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 Ordinance,
the Remarketing Agreement, and all other documents relating to the issuance of
the Bonds or the Bonds (including Provider Bonds) shall cease for any reason
whatsoever to be a valid and binding agreement of the County or the County
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 Paying Agent, the County, 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 County are as described in the County'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 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, 1998
Quarterly Reports on Form 10-Q......... Quarters ended March 27, 1999,
June 26, 1999 and September 25, 1999
<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>
A-1
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 January 7, 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, 1998 and
the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June
30, 1999, and September 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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TABLE OF CONTENTS $25,000,000
<S> <C> <C>
principal amount
plus interest and premium,
if any
Page
Prospectus Supplement
Introduction................................S-2
Description of the Bonds....................S-2 LIQUIDITY FACILITY OBLIGATIONS
The Liquidity Facility......................S-12
The Standby Loan Agreement; GE Capital......S-14
Experts.....................................S-16
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 in support of
Plan of Distribution..........................6
Legal Matters.................................6 County of Lancaster, Pennsylvania
Experts.......................................6 Series of 2000
PROSPECTUS SUPPLEMENT
January , 2000
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