PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated May 4, 2000)
$75,000,000
principal amount plus interest
Liquidity Facility
of
FGIC Securities Purchase, Inc.
in support of
CITY OF FRESNO, CALIFORNIA
Sewer System Subordinate Lien
Variable Rate Revenue Refunding Bonds
2000 SERIES A
Date of Bonds: Date of Delivery Due: September 1, 2026
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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 special obligations of the City of
Fresno, California (the "City") payable exclusively from, and secured by a
lien on, Subordinate Lien Net Revenues consisting of the Net Revenues of the
Sewer system, less the amounts required for the operation and maintenance of
the Sewer System The Bonds are also subject to extraordinary, optional and
mandatory sinking fund 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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PaineWebber Incorporated
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The date of this Prospectus Supplement is May 4, 2000
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TABLE OF CONTENTS
Page
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INTRODUCTION...............................................................................................S-2
DESCRIPTION OF THE BONDS...................................................................................S-2
BOOK-ENTRY SYSTEM .........................................................................................S-9
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
$74,000,000 aggregate principal amount Sewer System Subordinate Lien Variable
Rate Revenue Refunding Bonds, 2000 Series A which will be issued on or about
May, 2000 by the City of Fresno, California and will be governed by the terms
of an indenture with BNY Western Trust Company, as trustee (the "Trustee") for
the Bonds. We will enter into a Standby Bond Purchase Agreement with the
Trustee (the "Liquidity Facility"), 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
The Bonds will be issued and delivered as fully registered bonds without
coupons and, when executed and delivered, will be registered in the name of
Cede & Co., as nominee for The Depository Trust Company, New York, New York
("DTC"). Principal of and premium, if any, and interest on the Bonds will be
payable through the Trustee. Purchases of beneficial interests from DTC in the
Bonds will be made in book-entry only form (without certificates) in
authorized denominations. For so long as Cede & Co., as nominee of DTC, is
registered owner of the Bonds, payments of the principal of and premium, if
any, and interest on the Bonds will be made directly to DTC. Disbursement of
such payment to the beneficial owners is the responsibility of the DTC
Participants and the Indirect Participants, each such term as hereinafter
defined.
The Bonds will initially bear interest at a Weekly Rate for a Weekly Rate
Period. The Bonds may bear interest from time to time at (i) a Daily Rate
during a Daily Rate Period and (ii) a Weekly Rate during a Weekly Rate Period.
The Bonds may also be converted to an Extended Rate or a Fixed Rate as
provided in the Indenture. Interest will be computed, in the case of the
Weekly Rate or the Daily Rate, on the basis of a 365 or 366-day year, as
appropriate, for the number of days elapsed. While the Bonds are in the Weekly
Rate Mode or the Daily Rate Mode, the authorized denominations will be
$100,000 and whole multiples thereof, except that one Bond may be in the
amount of $100,000 and a whole multiple of $5,000 in excess thereof.
At no time shall any Bonds (other than Provider Bonds, defined below)
bear interest in excess of the lesser of (i) twelve percent (12%) per annum
and (ii) the maximum interest rate allowed by law (the "Maximum Rate"). Any
Bonds purchased with amounts drawn on the Liquidity Facility and registered to
and owned by the Liquidity Provider ("Provider Bonds") shall not bear interest
in excess of the lesser of (i) Provider Rate (as described in the Liquidity
Facility) or (ii) the maximum interest rate allowed by law.
Interest on the Bonds will be payable by the Trustee on an "Interest
Payment Date" which means while the Bonds are in the Weekly Rate Mode and in
the Daily Rate Mode, the first business day of each calendar month beginning
June 1, 2000, and any mandatory tender date as described under the caption
"Mandatory Tender Provisions" below, for the applicable Interest Accrual
Period (described below).
Except as otherwise provided with respect to Provider Bonds, each Bond
will bear interest during its applicable Interest Accrual Period. "Interest
Accrual Period" means (i) with respect to Bonds bearing interest at a Weekly
Rate or a Daily Rate, the period from and including the first business day of
each month (with the exception of (1) the first Interest Accrual Period, which
commences on the date of delivery of the Bonds, and (2) the first Interest
Accrual Period following conversion to a Weekly Rate or Daily Rate which
commences on the Conversion Date) to and including the day before the first
business day of the next month (except in the event of a change to an Extended
Rate or a Fixed Rate, in which event to and including the last day of such
month).
Interest Rate Provisions
Weekly Rate. The Bonds will initially bear interest at the Weekly Rate
(based on 365 or 366 day years, as applicable, and actual number of days
elapsed). Weekly Rate Periods shall be from Wednesday of each week to but
excluding Wednesday of the following week, except that the first Weekly Rate
Period shall be from the date of delivery of the Bonds to but excluding
Wednesday of the following week, (i) in the case of a conversion of the Bonds
to a Weekly Rate Mode from an Extended Rate Mode, the initial Weekly Rate
Period upon such conversion shall be from the Conversion Date to but excluding
Wednesday of the following week, (ii) in the case of a conversion of the Bonds
from a Weekly Rate Mode to an Extended Rate Mode, the last Weekly Rate Period
shall end on the Conversion Date, and (iv) in case the Weekly Rate Mode is in
effect as of the stated maturity date for the Bonds, the last Weekly Rate
Period shall end on such stated maturity date.
The Remarketing Agent shall determine the Weekly Rate for each Weekly
Rate Period not later than 4:00 p.m. on the last business day which is
immediately prior to the commencement date of the Weekly Rate Period to which
such Weekly Rate relates. The Weekly Rate so to be determined shall be the
rate of interest which, if borne by such Bonds, would, in the judgment of the
Remarketing Agent, having due regard for the prevailing financial market
conditions for bonds or other securities the interest on which is excluded
from gross income for federal income tax purposes and of the same general
nature as such Bonds and which are comparable as to credit and maturity (or
period for tender) with the credit and maturity (or period for tender) of such
Bonds, be the lowest interest rate which would enable the Remarketing Agent to
remarket the Bonds at a price of par (plus accrued interest, if any) on such
business day. Notwithstanding the foregoing, in no event shall any Weekly Rate
exceed the Maximum Rate, which is equal to 12% per annum.
Daily Rate. During each Daily Rate Period, the Daily Rate for the Bonds
shall be determined by the Remarketing Agent by 9:30 a.m. New York City time
on each business day and shall be the rate of interest which, if borne by such
Bonds, would, in the judgment of the Remarketing Agent, having due regard for
the prevailing financial market conditions for bonds or other securities the
interest on which is excluded from gross income for federal income tax
purposes and of the same general nature as such Bonds and which are comparable
as to credit and maturity (or period for tender) with the credit and maturity
(or period for tender) of such Bonds, be the lowest interest rate which would
enable the Remarketing Agent to remarket the Bonds at a price of par (plus
accrued interest, if any) on such business day. The Daily Rate for any
non-business day will be the rate for the last business day on which a Daily
Rate was set. Notwithstanding the foregoing, in no event shall any Daily Rate
exceed the Maximum Rate, which is equal to 12% per annum.
Default Rate. If the Remarketing Agent fails for any reason to determine
or notify the Trustee of the interest rate for any Variable Rate Mode period
when required under the Indenture, or if any interest rate for any Variable
Rate Mode period is determined by a court of competent jurisdiction to be
invalid or unenforceable, and if the Variable Rate Mode period for which such
interest rate is to be in effect is less than or equal to six months, the
interest rate for such Variable Rate Mode period shall be with respect to the
Bonds, the lesser of (A) the Maximum Interest Rate, or (ii) 110% of the Tax
Exempt Commercial Paper Rate (30 days), as published in The Bond Buyer or any
successor publication. If such index ceases to be published, it shall be
replaced by a comparable published index designated in writing by the
Remarketing Agent, upon consultation with the City, with notice being given in
writing to the Trustee and the bond insurance provider and the Liquidity
Provider.
All determinations of Weekly Rates and Daily Rates pursuant to the
provisions of the Indenture shall be conclusive and binding upon the City, the
Trustee, the Liquidity Provider, the bond insurance provider and the owners of
the Bonds. The City, the Trustee, the Liquidity Provider and the Remarketing
Agent shall not be liable to the owner of any Bond for failure to give any
notice required above or for failure of the owner of any Bond to receive any
such notice.
Other Modes. For information relating to the determination of interest
rates during the Extended Rate Mode or the Fixed Rate Mode, please consult the
indenture, which may be obtained from the City. The Liquidity Facility does
not support Bonds that are in the Extended Rate Mode or the Fixed Rate Mode.
Optional Tender Provisions During Weekly Rate Mode or Daily Rate Mode
Optional Tenders During Weekly Rate Mode. During any Weekly Rate Mode,
owners of Bonds (other than Provider Bonds) may elect to have their Bonds (or
portions thereof in authorized denominations) purchased at the purchase price
on any business day upon delivery of a written notice of tender meeting the
requirements of the Indenture to the Trustee not later than 5:00 p.m. on a
business day not less than seven days prior to the date the Bonds are
purchased.
Optional Tenders During Daily Rate Mode. During any Daily Rate Mode, the
owners of the Bonds shall have the right to tender any Bond (or portion
thereof in an authorized denomination, provided the untendered portion thereof
is also in an authorized denomination) (other than Provider Bonds) to the
Trustee for purchase at the applicable purchase price on any business day, but
only upon the giving or delivery to the Tender Agent and the Remarketing Agent
at their principal offices by 11:00 a.m., New York City time, on such business
day of an irrevocable telephonic, facsimile or telegraphic notice which states
(i) the aggregate principal amount of Bonds to be purchased and (ii) that such
Bonds (or portion thereof in an authorized denomination, provided the
untendered portion thereof is also in an authorized denomination) shall be
purchased on such business day.
Bonds to be Remarketed. Not later than 11:00 a.m. on the business day of
any notice of tender of Bonds in the Daily Rate Mode and not later than 4:00
p.m. on the business day immediately following the date of receipt of any
notice of tender of Bonds in the Weekly Rate Mode, the Trustee shall notify
the Remarketing Agent and the Liquidity Provider of the principal amount of
the Bonds or portions thereof to be tendered and remarketed and the date on
which such Bonds or portions thereof are to be tendered and remarketed. Such
notices shall be given by telephone, telegram, telecopy, telex or other
similar communication and shall be promptly confirmed in writing.
Each tender notice shall automatically constitute (A) an irrevocable
offer to sell the Bond or portion thereof to which the notice relates on the
date the Bonds are purchased to any purchaser selected by the Remarketing
Agent, at the purchase price, (B) an irrevocable authorization and instruction
to the Trustee to effect transfer of such Bond or portion thereof upon payment
of such purchase price to the Trustee on the date the Bonds are purchased, (C)
an irrevocable authorization and instruction to the Trustee to effect the
exchange of the Bond to be purchased in whole or in part for other Bonds
evidencing principal in an equal aggregate amount so as to facilitate the sale
of such Bond or portion thereof, and (D) an acknowledgment that such owner
will have no further rights with respect to such Bond or portion thereof upon
payment of the purchase price by the Trustee on the date the Bonds are
purchased, except for the right of such owner to receive such purchase price
upon surrender of such Bond to the Trustee.
Remarketing of Tendered Bonds. The Remarketing Agent shall offer for sale
and use its best efforts to find purchasers for all Bonds or portions thereof
properly tendered. The terms of any sale by the Remarketing Agent of tendered
Bonds shall provide for the purchase of the remarketed Bonds at the purchase
price and the payment of such purchase price to the Trustee by the Remarketing
Agent in immediately available funds against delivery of the remarketed Bonds
to the Trustee at or before 11:30 a.m. on the date the Bonds are purchased.
The Remarketing Agent shall first offer any Provider Bonds for such
remarketing. Notwithstanding the foregoing, the Remarketing Agent shall not
offer for sale any Bond if (i) notice of any extraordinary, optional or
mandatory redemption or any conversion from the Daily Rate Mode or the Weekly
Rate Mode to another Mode has been given to the owner of such Bond pursuant to
the provisions of the Indenture, or (ii) any defeasance of such Bond in
accordance with the provisions of the Indenture has occurred, unless the
Remarketing Agent has advised the person in writing to whom the offer is made
of such occurrence and the effect of the same on the rights of the owner of
such Bond, including, but not limited to, the rights of such owner to tender
such Bond, as described in the conversion notice from the Trustee to the owner
of such Bond.
Mandatory Tender Provisions
Mandatory Tenders On Conversion Dates. The Bonds are subject to mandatory
tender for purchase on each Conversion Date (described below), and the
owners will not be entitled to retain such Bonds. Notice of conversion to
a different Variable Rate Mode shall be given to the owners in the manner
provided in the Indenture. Any Bond not tendered for purchase on a
Conversion Date, as required by the Indenture, will be deemed tendered
and purchased on such Conversion Date, and thereafter the Holder thereof
shall have no further rights hereunder except to receive such purchase
price. The term "Conversion Date" means any date on which the Mode
applicable to the Bonds is converted from one Variable Rate Mode to
another Variable Rate Mode or to the Fixed Rate Mode.
Mandatory Tenders Upon Expiration or Substitution of Liquidity Facility
or Event of Default with Respect Thereto. The Bonds shall be subject to
mandatory tender for purchase at the purchase price:
(i) on the last business day which is at least five days prior to
expiration of the Liquidity Facility;
(ii) on the fifth business day following the Trustee's receipt of a
"Termination Notice" from the Liquidity Provider; and
(iii) while the Bonds accrue interest at the Daily Rate, the Weekly
Rate or the Extended Rate, on the last business day which is at
least five days prior to the substitution of an alternate
liquidity facility provided by another entity for the Liquidity
Facility pursuant to the provisions of the Indenture which
results in a reduction or withdrawal by the Rating Agencies of
the rating then maintained on the Bonds and which fails to
satisfy other criteria set forth in the indenture.. This
Liquidity Facility is not available to Bonds in the Extended
Rate.
The owners may not elect to retain their Bonds in the event of mandatory
tender required as a result of events described under this sub-caption.
Remarketing of Tendered Bonds
The Remarketing Agent will offer for sale and use its best efforts to
find purchasers for the Bonds to be tendered while they bear interest at a
Weekly Rate or a Daily Rate; provided that in the event of mandatory tender as
a result of substitution of an alternate liquidity facility provided by
another entity, the Remarketing Agent shall inform prospective Purchasers of
the identity of the Liquidity Provider issuing such alternate liquidity
facility provided by another entity and the ratings to be in effect on the
Bonds following such substitution. The terms of any sale by the Remarketing
Agent of tendered Bonds shall provide for the purchase of the remarketed Bonds
at the purchase price and the payment of such purchase price to the Trustee by
the Remarketing Agent in immediately available funds against the delivery of
the remarketed Bonds to the Trustee at or before 11:30 a.m. on the date the
Bonds are purchased. Notwithstanding the foregoing, the Bonds shall not be
offered for sale unless the Liquidity Facility or an alternate liquidity
facility provided by another entity is in place at the time of the
remarketing.
Purchase of Tendered Bonds
At or before 3:30 p.m. on the business day immediately preceding each
date the Bonds are purchased, the Remarketing Agent shall notify by telephone,
telegram, telecopy, telex or other similar communication to the Trustee and
the Liquidity Provider of the principal amount of tendered Bonds which have
been remarketed and of the names, addresses and taxpayer identification
numbers of the purchasers and the denominations of remarketed Bonds to be
delivered to each purchaser. On the date the Bonds are purchased, the Trustee
shall make a draw on the Liquidity Facility in accordance with the terms
thereof at the times and to the extent necessary to timely pay the purchase
price with regard to the Bonds for which remarketing proceeds have not been
paid to the Trustee; and the Trustee shall hold the moneys received pursuant
to such draw under the Liquidity Facility in trust in a separate segregated
account for the benefit of the owners of such tendered Bonds. The Remarketing
Agent shall pay to the Trustee, on the date the Bonds are purchased, all
amounts representing proceeds of the remarketing of tendered Bonds, such
payments to be made in the manner and at the time specified in the Indenture.
Before 4:00 p.m. on the date the Bonds are purchased and upon receipt by
the Trustee of 100% of the aggregate purchase price of the tendered Bonds, the
Trustee shall pay the purchase price of such Bonds to the owners thereof at
its principal office or by bank wire transfer. Such payments shall be made in
immediately available funds. Payments of such purchase price are to be made
from the following sources in the order of priority indicated:
(i) the proceeds of the sale of the Bonds which have been remarketed by
the Remarketing Agent; and
(ii) moneys paid pursuant to draws on the Liquidity Facility to pay the
purchase price of Bonds, including accrued but unpaid interest.
Undelivered Bonds
All Bonds to be purchased on any date shall be required to be delivered
to the principal office of the Trustee at or before 11:30 a.m. on the date the
Bonds are purchased. If the owner of any Bond or portion thereof that is
subject to purchase fails to surrender such Bond to the Trustee for purchase
on the date the Bonds are purchased, and if the Trustee is in receipt of the
purchase price therefor, such Bond or portion thereof shall nevertheless be
deemed purchased on the date the Bonds are purchased and ownership of such
Bond or portion thereof shall be transferred to the purchaser thereof as
provided in the Indenture. Any owner who fails to deliver a Bond for purchase
as required above shall have no further rights with respect thereto except the
right to receive the purchase price therefor upon presentation and surrender
of said Bond to the Trustee.
Provider Bonds
In the event that any Bonds are purchased with amounts drawn on the
Liquidity Facility pursuant to the Indenture and registered to and owned by
the Liquidity Provider or its nominee or transferee) pursuant to the
provisions of the Indenture, the Remarketing Agent shall continue to offer for
sale and use its best efforts to sell such Provider Bonds (other than Provider
Bonds that become such as a result of mandatory tender pursuant to the
provisions of the Indenture at the purchase price until such Provider Bonds
are sold or until the Remarketing Agent and the City determine that such
Provider Bonds cannot be sold at such price). The Trustee shall deliver such
Provider Bonds to the Liquidity Provider or its designee which shall hold the
same pending such remarketing. Upon the remarketing of any Provider Bond, and
receipt of the proceeds of such remarketing, such Provider Bond shall cease to
be a Provider Bond (unless and until it again becomes a Provider Bond pursuant
to the provisions of the Indenture). While the Liquidity Facility is effective
and prior to the release of any Provider Bond, upon receipt of the proceeds of
the remarketing of Provider Bonds, the Trustee shall deliver to the Liquidity
Provider the notices required pursuant to the Liquidity Facility in order to
reinstate the Liquidity Facility to an amount equal to the principal and
interest evidenced by the Outstanding Bonds in accordance with its terms. The
Trustee shall deliver a copy of such notices to the Remarketing Agent.
Notwithstanding the foregoing, the Trustee shall not release any remarketed
Provider Bonds which, upon such remarketing, would be in a Variable Rate Mode,
unless and until the Trustee receives notice from the Liquidity Provider
pursuant to the Liquidity Facility has been reinstated as provided therein.
If the Liquidity Facility or then-existing alternate liquidity facility
provided by another entity is about to expire or terminates by its terms and
has not theretofore been extended or replaced by an alternate liquidity
facility provided by another entity satisfactory to the bond insurance
provider, then the City and the Remarketing Agent shall use their best efforts
to commence the remarketing of the Bonds and the conversion thereof to a fixed
interest rate, in either case, not later than 90 days prior to the scheduled
expiration date of the Liquidity Facility or then-existing alternate liquidity
facility provided by another entity, and, in the event of termination, as soon
as possible (but in no event more than 180 days) thereafter.
Remarketing
The City will enter into a Remarketing Agreement, dated as of May 1, 2000
(the "Remarketing Agreement"), with PaineWebber Incorporated, as remarketing
agent (the "Remarketing Agent"), pursuant to which the Remarketing Agent
undertakes, among other things, to use its best efforts to remarket all Bonds
tendered for repurchase while they accrue interest at the Weekly Rate or the
Daily Rate. The City or the Remarketing Agent may terminate the Remarketing
Agreement under the circumstances and in the manner described in the
Remarketing Agreement. Upon termination of the Remarketing Agreement, the City
will appoint a replacement remarketing agent in accordance with the Indenture.
Notwithstanding the foregoing, there shall not be any remarketing of the
Bonds if there shall have occurred and be continuing an Event of Default (as
defined in the Indenture) or if any event shall have occurred which with
notice or the lapse of time would constitute an Event of Default.
Conversion of Interest Rate Mode
Optional Conversion between Variable Rate Modes. At the option of the
City and upon delivery of an opinion of Counsel to the effect that such
conversion will not, in and of itself, adversely affect the exclusion from
gross income of interest on the Bonds for federal income tax purposes, all of
the Bonds may be converted from the then current Variable Rate Mode to another
Variable Rate Mode as provided in the Indenture.
At the direction of the City, the Remarketing Agent shall give written
notice of any conversion to the City, the Trustee, the bond insurance provider
and the Liquidity Provider not less than five business days prior to the date
on which the Trustee is required to notify the owners of the conversion
pursuant to the Indenture. Such notice shall specify (i) the proposed
Conversion Date, (ii) the Mode to which the conversion will be made, and (iii)
in the case of conversion to the Extended Rate Mode, the initial Extended Rate
Period. Not less than 10 days prior to any such Conversion Date, the Trustee
shall mail a written notice of the conversion to all of the owners of Bonds,
setting forth such information as provided in the Indenture.
The Variable Rate for the Variable Rate Period commencing on the
Conversion Date shall be determined by the Remarketing Agent in the manner and
on the date provided in the Indenture. In addition to determining the Extended
Rate, the Remarketing Agent shall determine a Weekly Rate or a Daily Rate, as
applicable, at the time specified in the Indenture, and give notice thereof to
the Trustee, the bond insurance provider and the Liquidity Provider, which
Weekly Rate or a Daily Rate, as applicable, shall take effect, if required,
pursuant to the Indenture. Notwithstanding the delivery of notice of the
conversion pursuant to the Indenture, conversion to a new Variable Rate Mode
shall not take effect in the event the conditions provided in the Indenture
are not satisfied. For purposes of this prospectus supplement and the
discussion contained in this heading, the term "Variable Rate" or "Variable
Rate Mode" shall mean only the Weekly Rate or the Daily Rate.
Conversion to the Extended Rate Mode or the Fixed Rate Mode. All of the
Bonds may be converted from the then current Variable Rate Mode to the
Extended Rate Mode or the Fixed Rate Mode at the option of the City as
provided in the Indenture. Prior to such conversion, all of the Bonds shall be
subject to mandatory tender for purchase and a new offering document or a
supplement to this Official Statement will be prepared in connection with such
conversion. This prospectus supplement describes only such provisions while
the Bonds bear interest in the Weekly Rate Mode or the Daily Rate Mode. The
Liquidity Facility does not apply to Bonds in the Extended Rate Mode or the
Fixed Rate Mode.
Redemption Provisions
Extraordinary Redemption. The Bonds are subject to redemption by the City
on any date prior to their respective stated maturities, upon notice as
provided in the Indenture, as a whole, or in part by lot (if in part, from
such maturities as are designated by the City to the Trustee and by lot within
a maturity), from Net Proceeds received by the City from a condemnation award
or insurance recovery and not applied to repair or replace the Project, at the
principal amount thereof and interest accrued thereon to the date fixed for
redemption, without premium.
Optional Redemption. While the Weekly Rate Mode or the Daily Rate Mode is
in effect, the Bonds are subject to redemption prior to their stated maturity
date, on any Interest Payment Date, at the option of the City, as a whole or
in part, in authorized denominations, from any source of available funds, at a
redemption price equal to the principal thereof, plus accrued interest
thereon, to the date fixed for redemption, without premium; provided that the
Provider Bonds shall be subject to redemption prior to their stated maturity
date, on any date, at the option of the City, in whole or in part, from any
source of available funds, at a redemption price equal to the principal
thereof, plus accrued interest thereon, without premium.
Mandatory Sinking Account Redemption. The Bonds are subject to redemption
prior to their stated maturity date, in part, from mandatory sinking account
payments, on each September 1 specified below, at a redemption price equal to
the principal thereof, plus accrued interest thereon to the date fixed for
redemption, without premium.
The principal of such Bonds to be so redeemed and the dates therefor
shall be as follows:
Year Mandatory Sinking
September 1 Fund Amount
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*Maturity
The amount of each such redemption shall be reduced proportionately,
to the extent possible, in authorized denominations, in the event and to the
extent of any and all redemptions of the Bonds, other than redemptions made
pursuant to the preceding paragraph.
Selection of Bonds for Redemption. Whenever less than all the Outstanding
Bonds are to be redeemed on any one date, the City shall select the Bonds of
such maturity date to be redeemed or, if not so specified, the Trustee shall
select the Series 2000 A Bonds to be redeemed by lot in any manner that the
Trustee deems fair and appropriate, which decision shall be final and binding
upon the City and the owners. Notwithstanding the foregoing, all Provider
Bonds shall be redeemed prior to the redemption of any other Bonds. The
Trustee shall promptly notify the City in writing of the numbers of the Bonds
so selected for redemption on such date. For purposes of such selection, any
Bond may be redeemed in part in authorized denominations.
Notice of Redemption. When redemption of Bonds is authorized pursuant to
the Indenture, the Trustee shall give notice, at the expense of the City, of
the redemption of the Bonds. The notice of redemption shall specify the Bonds
or designated portions thereof (in the case of redemption of the Bonds in part
but not in whole) which are to be redeemed, the date of redemption, the place
or places where the redemption will be made, including the name and address of
any paying agent, the redemption price, the CUSIP numbers assigned to the
Bonds to be redeemed, and the numbers of the Bonds to be redeemed in whole or
in part and, in the case of any Bond to be redeemed in part only, the
principal of such Bond to be redeemed. Such notice of redemption shall further
state that on the specified date there shall become due and payable upon each
Bond or portion thereof being redeemed the redemption price and that from and
after such date interest thereon shall cease to accrue and be payable. In
addition, at least 30 but not more than 45 days prior to any redemption date,
notice of redemption shall be given to the respective owners of Bonds
designated for redemption by first-class mail, postage redeemed, at their
addresses appearing on the registration books maintained by the Trustee as of
the close of business on the day before such notice of redemption is given.
BOOK-ENTRY SYSTEM
DTC will act as securities depository for the Bonds. The Bonds will be
issued as fully-registered bonds in the name of Cede & Co. (DTC's partnership
nominee). One fully-registered Bond will be issued for each maturity of the
Bonds, each in the aggregate principal amount of such maturity, and will be
deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, 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. DTC holds securities that its participants (the
"Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Direct 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 securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
Purchases of the Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Bonds on DTC's
records. The ownership interest of each actual purchaser of each Bond
("Beneficial owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial owners will not receive written confirmation
from DTC of their purchase, but Beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect
Participants through which Beneficial owners entered into the transaction.
Transfers of ownership interests in the Bonds are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
owners. Beneficial owners will not receive certificates representing their
ownership interests in the Bonds, except in the event that use of the
book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of Bonds with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial owners of the Bonds; DTC's records reflect only the identity of the
Direct Participants to whose accounts such securities are credited, which may
or may not be the Beneficial owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements which may be in effect from time to time.
Prepayment notices will be sent to Cede & Co. If less than all of the
bonds within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to an issuer as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Bonds are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Principal, mandatory sinking fund payments, interest payments and
payments of purchase price with respect to the Bonds will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on payment dates in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on the date payable.
Payments by Participants to Beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee or
the City subject to any statutory or regulatory requirements which may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the City or the Trustee, disbursement of such payments to
Direct Participants will be the responsibility of DTC, and disbursement of
such payments to the Beneficial owners will be the responsibility of Direct
and Indirect Participants.
Notwithstanding the foregoing, in the event any Bond is tendered but not
remarketed, with the result that such Bond becomes a Liquidity Bond, the
Trustee and the City shall, if requested by the Liquidity Provider, take all
such actions as shall be necessary to remove the Bonds from the book-entry
system of DTC and to register such tendered but not remarketed Bond in the
name of the Liquidity Provider. Provider Bonds not in the book-entry system of
DTC shall be held by the Liquidity Provider, or at the option of the Liquidity
Provider, by the Trustee on behalf, and for the benefit, of the Liquidity
Provider. At such time as all Provider Bonds have been remarketed such that no
Provider Bonds remain outstanding and the Liquidity Facility has been
reinstated in full, the Trustee and the City shall take all such actions as
shall be necessary to return the Bonds to the full book-entry system of DTC.
DTC management is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year
2000 problems." DTC has informed its Participants and other members of the
financial community (the "Industry") that it has developed and is implementing
a program so that its Systems, as the same relate to the timely payment of
distributions (including principal and income payments) to securityholders,
book-entry deliveries, and settlement of trades within DTC ("DTC Services"),
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plans include a testing phase, which is expected to be completed within
appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service
providers, among others. DTC has informed the Industry that it is contacting
(and will continue to contact) third party vendors from whom DTC acquires
services to: (i) impress upon them the importance of such services being Year
2000 compliant, and (ii) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In addition, DTC
is in the process of developing such contingency plans, as it deems
appropriate.
The foregoing information with respect to DTC's Year 2000 compliance has
been provided to the Industry for information purposes only and is not
intended to serve as a representation, warranty, or contract modification of
any kind.
The City, the Corporation and the Underwriter cannot and do not give any
assurances that DTC, the Participants or others will distribute payments of
principal, interest or premium with respect to the Bonds paid to DTC or its
nominee as the registered owner, or will distribute any prepayment notices or
other notices, to the Beneficial owners, or that they will do so on a timely
basis or will serve and act in the manner described in this Official
Statement. The City, the Corporation and the Underwriter are not responsible
or liable for the failure of DTC or any Participant to make any payment or
give any notice to a Beneficial owner with respect to the Bonds or an error or
delay relating thereto.
The foregoing description of the procedures and record-keeping with
respect to beneficial ownership interests in the Bonds, payment of principal,
interest and other payments on the Bonds to DTC Participants or Beneficial
owners, confirmation and transfer of beneficial ownership interests in such
Bonds and other related transactions by and between DTC, the DTC Participants
and the Beneficial owners is based solely on information provided by DTC.
Accordingly, no representations can be made concerning these matters and
neither the DTC Participants nor the Beneficial owners should rely on the
foregoing information with respect to such matters, but should instead confirm
the same with DTC or the DTC Participants, as the case may be.
DTC may discontinue providing its services with respect to the Bonds at
any time by giving notice to the Trustee and discharging its responsibilities
with respect thereto under applicable law or the City may terminate
participation in the system of book-entry transfers through DTC or any other
securities depository at any time. In the event that the book-entry system is
discontinued, replacement certificates will be printed and delivered.
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
$2.5 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 34
days' interest on the Bonds at an assumed rate of 12% per year.
Termination Events
The scheduled expiration date of the Liquidity Facility is May , 2005,
unless it is extended or terminated sooner in accordance with its terms.
The Indenture relating to the Bonds will specify certain circumstances
where we must purchase Bonds which a holder tenders for purchase pursuant to
an optional or mandatory tender, which have not been remarketed. Under certain
circumstances, we may terminate our obligation to purchase Bonds. The
following events would permit such termination:
(a) (i) any portion of the commitment fee for the Liquidity Facility has
not been paid when due on the quarterly payment date, or (ii) any other amount
payable under the Liquidity Facility has not been paid when due and any such
failure shall continue for three business days after notice thereof to the
City;
(b) the State of California takes any action which impairs the power of
the City to comply with the covenants and obligations of the City under the
Trust Agreement, 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 City fails to observe or perform any covenant or agreement
contained in the Trust Agreement, 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 City 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 Trust Agreement;
(d) an event of default has occurred and is continuing under any of the
Trust Agreement, 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
City in the Trust Agreement, 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 City 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 City which is senior to, or on parity with,
the Bonds;
(g) the City 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 City insolvent, or adjudging it bankrupt, or appointing a
trustee or receiver of the City proving a petition filed against the City
seeking reorganization of the City 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 City 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 Trust
Agreement, 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 City or the
City 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 City, 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 City are as described in a 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>
Three Months
Ended
- ------------------------------------------------------------------------------------ ----------------------------------
Year Ended December 31, April 1, 2000
---------- ---------- ---------- ---------- ----------
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
1.51 1.53 1.48 1.50 1.60 1.67
</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.
<TABLE>
<CAPTION>
Document Period
- -------- ------
<S> <C>
Annual Report on Form 10-K.............................. Year ended December 31, 1999
Quarterly Report on Form 10-Q........................... Quarter ended April 1, 2000
</TABLE>
<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 of 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>
-----------------------------------------------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
---------------- ------------ ------------ ------------ ----------- -------------
11:30 a.m. 11:45 a.m. 2:15 p.m. 2:30 p.m.
[1] [2] [3] [4]
</TABLE>
1. Tender Agent shall give immediate telephonic notice, in any event
not later than 11:30 a.m. on the date the Bonds are purchased, to
FGIC-SPI specifying the aggregate principal amount of Bonds to be
purchased by FGIC-SPI on such date the Bonds are purchased.
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 date the Bonds are purchased, 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 date the Bonds are purchased.
<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 May 4, 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 and
the Quarterly Reports on Form 10-Q for the quarters ended March 31, 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.
<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>
TABLE OF CONTENTS
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Page
----
Prospectus Supplement
Introduction......................................S-2
Description of the Bonds..........................S-2
Book Entry System...................................9
The Liquidity Facility...........................S-12
The Standby Loan Agreement; GE Capital...........S-14
Experts..........................................S-16
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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$75,000,000
principal amount
plus interest and premium,
if any
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
City of Fresno, California
Sewer System Subordinate Lien
Variable Rate Revenue Refunding Bonds
2000 Series A
PROSPECTUS SUPPLEMENT
May 4, 2000
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