Amended and Restated
--------------------
Pricing Supplement No. 97-26 dated February 10, 1998 Rule 424 (b) (2)
(To Prospectus dated July 10, 1997 and File no. 333-30543
Prospectus Supplement dated July 10, 1997)
BENEFICIAL CORPORATION
Medium-Term Notes, Series 1
(Book Entry Notes)
UBS Securities LLC purchased $300,000,000 principal amount of these
Medium-Term Notes, Series I, maturing on February 18, 2013, and
Putable/Callable on February 18, 2003 at a purchase price of
$306,558,000.00, which includes compensation for the Call Option (as
defined below), for resale to investors from time to time at prices
based on market conditions at the time of resale.
Maturity Date: Settlement Date (Issue Date):
February 18, 2013, subject February 18, 1998
to mandatory repayment of
principal to existing holders Calculation Agent:
pursuant to the Call Option or Put UBS Securities LLC
Option on February 18, 2003, as
described on the Additional Terms CUSIP Number:
Attachment to this Pricing 08172MHU3
Supplement (the "Attachment")
Interest Rate Basis:
Prior to February 18, 2003 - 6.25%.
On and after February 18, 2003, as
described on the Attachment under
"Interest Rate and Interest
Payment Dates"
Interest Payment Dates:
February 18, and August 18 of
each year, commencing August
18, 1998
Call Option: Repayment/Put Option:
The Notes may be called by the The Notes may be required
Callholder prior to maturity, as to be repaid pursuant to
described on the Attachment under the Put Option prior to
"Call Option; Put Option" maturity as described on
the Attachment under
"Call Option; Put Option"
Original Issue Discount Note: ( ) Yes (X) No
Other Provisions: See the Attachment
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF
THE NOTES (AS DEFINED BELOW). SUCH TRANSACTIONS MAY INCLUDE
STABILIZING THE PURCHASE OF NOTES TO COVER SYNDICATE SHORT POSITIONS
AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING" IN THIS PRICING SUPPLEMENT AND "PLAN OF
DISTRIBUTION" IN THE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS.
ADDITIONAL TERMS ATTACHMENT
This Additional Terms Attachment constitutes a part of the Pricing
Supplement, dated February 10, 1998, of Beneficial Corporation (the
"Company") and contains a description of additional terms and
provisions applicable to the Medium-Term Notes, Series I due February
18, 2013 of the Company (the "Notes"), which represent a tranche of
Medium-Term Notes Due Nine Months or More from Date of Issue of the
Company. The Notes are described in the Prospectus Supplement and the
accompanying Prospectus for the Medium-Term Notes Due Nine Months or
More from Date of Issue referenced above, and reference is made thereto
for a detailed summary of additional provisions of the Notes. The
Notes are Fixed Rate Notes as described in the Prospectus Supplement,
subject to and as modified by the Coupon Reset Process (as defined
below) and other provisions described below. The following description
of the terms of the Notes supplements and, to the extent inconsistent
therewith, replaces, the description of the general terms of the
Securities (as defined in the Indenture (as defined below)) set forth
in the Prospectus Supplement and the accompanying Prospectus, to which
description reference is made. Capitalized terms used but undefined
herein shall have the meanings given such terms in such Prospectus and
Prospectus Supplement.
SUPPLEMENTAL DESCRIPTION OF THE NOTES
INTEREST RATE AND INTEREST PAYMENT DATES
The Notes will bear interest at the rate of 6.25% per annum from
the date of issuance to February 18, 2003 (the "Coupon Reset Date").
Union Bank of Switzerland, London branch, is the "Callholder" with
respect to the Notes. If the Callholder elects to purchase the Notes
pursuant to the Call Option (as defined below), the Calculation Agent
(as defined below) will reset the interest rate effective on the Coupon
Reset Date, pursuant to the Coupon Reset Process described below. In
such circumstance, (i) the Notes will be purchased by the Callholder,
in whole but not in part, at 100% of the principal amount thereof on
the Coupon Reset Date, on the terms and subject to the conditions
described herein, and (ii) on and after the Coupon Reset Date, the
Notes will bear interest at the rate (the "Coupon Reset Rate")
determined by the Calculation Agent in accordance with the procedures
set forth below (the "Coupon Reset Process"). See "Coupon Reset
Process" below.
If the Callholder for any reason does not purchase the Notes on
the Coupon Reset Date, the Trustee (as defined below) will be required
pursuant to the Notes to exercise the Put Option (as defined below)
without the consent of, or notice to, the holders of the Notes and,
upon such exercise, the Company will be required on the Coupon Reset
Date to repurchase the Notes from the holders thereof at 100% of the
principal amount thereof. See "Call Option; Put Option" below.
Interest will be payable on the Notes semi-annually on February 18
and August 18 of each year (each, an "Interest Payment Date"),
commencing August 18, 1998, to the persons in whose name the Notes are
registered on the fifteenth calendar day (whether or not a Business Day
(as defined below)) immediately preceding the related Payment Date
(each, a "Record Date"). Interest will be calculated based on a
360-day year consisting of twelve 30-day months. "Business Day" means
any day other than a Saturday, a Sunday or a day on which banking
institutions in The City of New York are authorized or obligated by
law, executive order or governmental decree to be closed.
The Notes will be issued in minimum denominations of $25,000 and
integral multiples of $1,000 in excess thereof.
MATURITY DATE
The Notes will mature on February 18, 2013 (the "Final Maturity
Date") unless repaid pursuant to the Put Option as described below. On
the Coupon Reset Date, the holders of the Notes will be entitled to
receive 100% of the principal amount thereof from either (i) the
exercise by the Callholder of the Call Option or (ii) in the event the
Callholder does not exercise the Call Option or fails for any reason to
pay the Call Price (as defined below) to the Trustee when required, the
exercise by the Trustee for and on behalf of the holders of the Notes
of the Put Option. The Trustee will exercise the Put Option without
the consent of, or notice to, the holders of the Notes.
The principal amount of Notes will be $300,000,000 (the "Principal
Amount") and the Notes will be issuable only in registered form.
GLOBAL SECURITIES
The Notes will initially be represented by global securities
deposited with, or on behalf of, The Depository Trust Company ("DTC")
and will not be issued as individual definitive securities to their
purchasers. Consequently, unless and until such individual definitive
securities are issued, such purchasers will not be recognized as
holders of the Notes under the Indenture, dated as of July 1, 1997,
between the Company and The Chase Manhattan Bank (the "Trustee") (the
"Indenture") and DTC will be the sole holder for all purposes under the
Indenture and the Notes. Hence, until such time, such purchasers will
only be able to exercise the rights of holders of the Notes indirectly
through DTC and its respective participating organizations and, as a
result, the ability of any such purchaser to pledge the Notes to
persons or entities that do not participate in DTC's system, or to
otherwise act with respect to the Notes, may be limited. See
"Description of Notes--Book-Entry System" in the accompanying
Prospectus Supplement and "Description of Securities-- Global
Securities" in the accompanying Prospectus.
CALL OPTION; PUT OPTION
Pursuant to the terms of the Notes, the Callholder has the right
to purchase the Notes in whole but not in part on the Coupon Reset Date
(the "Call Option"), at a price equal to 100% of the principal amount
thereof (the "Call Price"), by giving notice to the Trustee (the "Call
Notice"). In the event of exercise of the Call Option, then (i) not
later than 2:00 p.m. New York time on the Business Day prior to the
Coupon Reset Date, the Callholder shall deliver the Call Price in
immediately available funds to the Trustee for payment of the Call
Price on the Coupon Reset Date and (ii) the holders of the Notes shall
be required to deliver the Notes to the Callholder against payment
therefor on the Coupon Reset Date through the facilities of DTC. Such
Call Notice shall be given to the Trustee, in writing, no later than 15
calendar days prior to the Coupon Reset Date.
If the Callholder elects to exercise the Call Option, the
obligation of the Callholder to pay the Call Price is subject to the
conditions precedent that, (i) since the date of the Call Notice, no
Event of Default (as defined in the Indenture) with respect to the
Notes shall have occurred and be continuing; (ii) no Market Disruption
Event (as defined below) shall have occurred; and (iii) two or more
Dealers (as defined below), other than UBS Securities LLC, shall have
provided timely Bids (as defined below) in the manner described under
"Coupon Reset Process." No holder of Notes shall have any rights or
claims against the Callholder as a result of the Callholder not
purchasing the Notes.
If the Call Option has not been exercised, or in the event the
Callholder is not required or fails to deliver the Call Price to the
Trustee not later than 2:00 p.m. New York time on the Business Day
prior to the Coupon Reset Date, the Trustee will be required for and on
behalf of the holders of the Notes to exercise the option to put the
Notes to the Company pursuant to the Put Option under the terms of the
Notes (the "Put Option"). Upon exercise of the Put Option, the Company
will be required to purchase all of the Notes on the Coupon Reset Date,
at a purchase price equal to 100% of the entire principal amount
thereof (the "Put Redemption Price"). The Put Option will be exercised
automatically by the Trustee, on behalf of the holders, if the Call
Option has not been exercised. No holder has the right to consent or
object to the Trustee's duty to exercise the Put Option. If the
Trustee exercises the Put Option, the Company will deliver the Put
Redemption Price to the Trustee, together with the accrued and unpaid
interest due on the Coupon Reset Date, by no later than 12:00 noon New
York time on the Coupon Reset Date and the holders of Notes will be
required to deliver the Notes to the Company against payment therefor
on the Coupon Reset Date through the facilities of DTC.
COUPON RESET PROCESS
UBS Securities LLC has been appointed the "Calculation Agent" for
the Notes. If the Callholder has exercised the Call Option as set
forth above under "Call Option; Put Option," the Company and the
Calculation Agent shall complete the following steps in order to
determine the interest rate to be paid on the Notes from and including
such Coupon Reset Date to the Final Maturity Date. The Company and the
Calculation Agent shall use reasonable efforts to cause the actions
contemplated below to be completed in as timely a manner as possible.
(a) The Company shall provide the Calculation Agent with
a list (the "Dealer List"), no later than five Business Days prior to
the Coupon Reset Date, containing the names and addresses of at least
five and no more than fifteen dealers, one of which shall be UBS
Securities LLC or its successor as Calculation Agent, from which it
desires the Calculation Agent to obtain the Bids (as defined below) for
the purchase of the Notes.
(b) Within one Business Day following receipt by the
Calculation Agent of the Dealer List, the Calculation Agent shall
provide to each dealer (each, a "Dealer") on the Dealer List (i) the
name of the Company, (ii) a copy of the Pricing Supplement dated
February 10, 1998 relating to the offering of the Notes and the
Prospectus Supplement dated July 10, 1997, which includes the
Prospectus dated July 10, 1997, (iii) a copy of the form of Notes and
(iv) a written request that each Dealer submit a Bid to the Calculation
Agent by 12:00 noon New York time (the "Bid Deadline") on the third
Business Day prior to the Coupon Reset Date (the "Bid Date"). "Bid"
shall mean an irrevocable written offer given by a Dealer for the
purchase settling on the Coupon Reset Date, and shall be quoted by such
Dealer as a stated yield to maturity on the Notes (the "Yield to
Maturity"). Each Dealer shall be provided with (i) an estimate of the
Purchase Price (as defined below) (which shall be stated as a United
States dollar amount and be calculated by the Calculation Agent in
accordance with clause (c) below), (ii) the principal amount and
maturity of the Notes and (iii) the method by which interest will be
calculated on the Notes.
(c) The purchase price to be paid by any Dealer for the
Notes (the "Purchase Price") shall be equal to (i) the principal amount
of the Notes plus (ii) a premium (the "Notes Premium") which shall be
equal to the excess, if any, of (A) the discounted present value to the
Coupon Reset Date of a United States Treasury security with a maturity
of February 18, 2013 which has an interest rate of 5.65%, semi-annual
interest payments on each February 18 and August 18, commencing August
18, 2003 and a principal amount of $300,000,000, and assuming a
discount rate equal to the Treasury Rate (as defined below) over (B)
$300,000,000. "Treasury Rate" means the per annum rate equal to the
offer side yield to maturity of the current on-the-run 10-year United
States Treasury Security per Telerate page 500 at 11:00 a.m. New York
time on the Bid Date (or such other date that may be agreed upon by the
Company and the Calculation Agent), or, if such rate does not appear on
Telerate page 500 at such time, the rates on GovPx End-of-Day Pricing
at 3:00 p.m. New York time on the Bid Date.
(d) Following the receipt of the Bids, the Calculation
Agent shall provide written notice to the Company, setting forth (i)
the names of each of the Dealers from whom the Calculation Agent
received Bids on the Bid Date, (ii) the Bid submitted by each such
Dealer and (iii) the Purchase Price as determined pursuant to paragraph
(c) hereof. Except as provided below, the Calculation Agent shall
thereafter select from the Bids received by the Bid Deadline on the Bid
Date, the Bid with the lowest Yield to Maturity (the "Selected Bid")
and establish the Coupon Reset Rate equal to the interest rate which
would amortize the Notes Premium fully over the term of the Notes at
the Yield to Maturity indicated by the Selected Bid, provided, however,
that if any two or more of the lowest Bids submitted are equivalent,
the Company shall in its sole discretion select any of such equivalent
Bids (and such selected Bid shall be the Selected Bid).
(e) Immediately after calculating the Coupon Reset Rate,
and in no event later than 3 p.m. New York time on the third Business
Day prior to the Coupon Reset Date, the Calculation Agent shall provide
written notice to the Company and the Trustee setting forth such Coupon
Reset Rate. The Company shall thereafter establish the Coupon Reset
Rate as the new interest rate on the Notes, effective from and
including the Coupon Reset Date, by delivery to the Trustee on or
before the Coupon Reset Date of an officer's certificate.
(f) The Callholder shall sell the Notes to the Dealer
that made the Selected Bid at the Purchase Price, such sale to be
settled on the Coupon Reset Date in immediately available funds.
If the Calculation Agent determines that (i) since the Call
Notice, an Event of Default with respect to the Notes shall have
occurred and be continuing, (ii) a Market Disruption Event has occurred
or (iii) fewer than two Dealers, not including UBS Securities LLC, have
provided Bids in a timely manner substantially as provided above, the
Call Option will be automatically revoked, and the Trustee will
exercise the Put Option on behalf of the holders. "Market Disruption
Event" shall mean either of the following: (i) any outbreak or
escalation of hostilities or other calamity or crisis the effect of
which on the financial markets of the United States is such as to make
it, in the judgment of the Company and UBS Securities LLC,
impracticable to market the Notes or enforce contracts for the sale of
the Notes, or (ii) the suspension of trading in any securities of the
Company by the Securities Exchange Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange
or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges
or by order of the Securities Exchange Commission or any other
governmental authority, or if a banking moratorium has been declared by
either Federal or New York authorities.
The Indenture provides that the Calculation Agent may resign at
any time as Calculation Agent, such resignation to be effective ten
Business Days after the delivery to the Company and the Trustee of
notice of such resignation. In such case, the Company may appoint a
successor Calculation Agent.
The Calculation Agent, in its individual capacity, may buy, sell,
hold and deal in Notes and may exercise any vote or join in any action
that any holder of Notes may be entitled to exercise or take as if it
were not the Calculation Agent. The Calculation Agent, in its
individual capacity, may also engage in any transaction with the
Company as if it were not the Calculation Agent.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income
tax considerations relating to the purchase, ownership and disposition
of the Notes by an initial holder of Notes who purchases the Notes at
the time of issue. This summary is based upon laws, regulations,
rulings and decisions currently in effect, all of which are subject to
change. The discussion does not deal with all United States federal
tax considerations applicable to all categories of investors, some of
which may be subject to special rules. In addition, this summary is
limited to investors who will hold the Notes as "capital assets"
(generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code").
INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX
CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
NOTES.
An opinion of tax counsel is not binding on the Internal Revenue
Service (the "Service") or the courts. Prospective investors should
note that no rulings have been or are expected to be sought from the
Service with respect to any of the United States federal income tax
considerations discussed below, and no assurance can be given that the
Service will not take contrary positions.
Treatment of Notes
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
although there are no precedents directly applicable to instruments
such as the Notes, the Notes should be treated as fixed rate debt
instruments that mature on the Coupon Reset Date. Each holder should
include in income the interest paid or accrued on the Notes in
accordance with its usual method of accounting. Upon the sale,
exchange, redemption or other disposition by a holder of Notes, the
holder should recognize capital gain or loss equal to the difference
between the amount realized from the disposition of the Notes
(exclusive of amounts attributable to the payment of accrued interest
not previously included in income, which will be taxable as ordinary
income) and the holder's adjusted tax basis in the Notes at the time of
the sale, exchange, redemption or other disposition. A holder's
adjusted tax basis in Notes generally will equal the holder's purchase
price for such Notes. Pursuant to recently enacted legislation, in the
case of a holder who is an individual, any capital gain recognized on
the disposition of the Notes will generally be subject to United States
federal income tax at a rate of (i) 20%, if the holder's holding period
in the Notes was more than 18 months at the time of such sale,
exchange, redemption or other disposition, or (ii) 28%, if the holder's
holding period in such Notes was more than one year, but not more than
18 months, at the time of such sale, exchange, redemption or other
disposition. The ability to use capital losses to offset ordinary
income in determining taxable income is generally limited.
It is possible that the Service could contend that the Notes
mature on the Final Maturity Date rather than the Coupon Reset Date.
Because of the Coupon Reset Process, if the Notes were treated as
maturing on the Final Maturity Date, holders would be subject to
certain Treasury Regulations dealing with contingent debt obligations
(the "Contingent Debt Regulations"). Under the Contingent Debt
Regulations, each holder would be required (regardless of such holder's
usual method of accounting) to include in income original issue
discount for each interest accrual period in an amount equal to the
product of the adjusted issue price of the Notes at the beginning of
each interest accrual period and a projected yield to maturity of the
Notes. The projected yield to maturity would be based on the
"comparable yield" (i.e., the yield at which the Company would issue a
fixed rate debt instrument maturing on the Final Maturity Date, with
terms and conditions otherwise similar to those of the Notes). It is
possible, under such circumstances, that holders of the Notes could be
required to recognize ordinary income in advance of the receipt of cash
payments attributable to such income. In addition, if the Contingent
Debt Regulations applied, any gain recognized on the sale of Notes
would be treated as interest income, while any losses would generally
be ordinary to the extent of previously accrued original issue
discount, and any excess would be capital loss. The ability to use
capital losses to offset ordinary income in determining taxable income
is generally limited.
Foreign Holders of Notes
Interest paid to a holder (a "Foreign Holder") that is not a
United States person (as defined below) generally will not be subject
to the 30% withholding tax generally imposed with respect to United
States source interest paid to such persons, provided that such holder
is not engaged in a trade or business in the United States in
connection with which it holds such Notes, does not bear certain
relationships to the Company and fulfills certain certification
requirements. Under such certification requirements, the holder must
certify, under penalties of perjury, that it is not a United States
person and is the beneficial owner of the Notes, and must provide its
name and address. For this purpose, "United States person" means a
citizen or resident of the United States, a corporation, partnership,
or other entity created or organized in or under the laws of the United
States or any State thereof (including the District of Columbia), an
estate the income of which is includible in gross income for United
States federal income tax purposes, regardless of its source, or a
trust subject to the primary supervision of a court within the United
States and the control of one or more United States fiduciaries with
respect to substantial decisions.
A Foreign Holder generally will not be subject to United States
federal income tax with respect to any gain recognized upon the
disposition of Notes unless (i) such gain is effectively connected with
the conduct by the Foreign Holder of a trade or business in the United
States, (ii) in the case of an individual holder, such Foreign Holder
is present in the United States for 183 days or more in the taxable
year during which the disposition occurs and certain other conditions
are met or (iii) the Notes are treated as subject to the Contingent
Debt Regulations and the holder fails to satisfy the certification
requirements of the preceding paragraph.
Backup Withholding
Payments made on the Notes and proceeds from the sale of Notes
will not be subject to a "backup" withholding tax of 31% unless, in
general, the holder fails to comply with certain reporting procedures
and is not an exempt recipient under applicable provisions of the Code.
The United States Treasury Department has recently issued final
regulations that impose certain new requirements for establishing an
exemption from backup withholding.
UNDERWRITING
Subject to the terms and conditions set forth in the Terms
Agreement between the Company and UBS Securities LLC (the
"Underwriter"), the Company has agreed to sell to the Underwriter and
the Underwriter has agreed to purchase the entire principal amount of
the Notes at a price equal to 102.186% of the principal amount thereof,
which includes 2.8% of the principal amount thereof as compensation for
the Call Option.
The Underwriter proposes initially to offer the Notes to the
public from time to time for sale in negotiated transactions or
otherwise at prices relating to prevailing market prices at the time of
the sale. The Underwriter may effect such transactions by selling
Notes to or through certain dealers and such dealers may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter and any purchasers of Notes for whom
they act as agent. The Underwriter and any dealers that participate
with the Underwriter in the distribution of Notes may be deemed to be
underwriters, and any discounts or commissions received by them and any
profit on the resale of the Notes by them may be deemed to be
underwriting compensation.
The Company has been advised by the Underwriter that the
Underwriter intends to make a market in the Notes, but it is not
obligated to do so and may discontinue market making at any time
without notice.
The Company will indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the Underwriter may be required to
make in respect thereof.
The Underwriter may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty
bids with respect to the Notes in accordance with Regulation M under
the Securities Exchange Act of 1934, as amended. Over-allotment
transactions involve syndicate sales in excess of the offering size
creating a syndicate short position. Stabilizing transactions permit
bids to purchase the Notes so long as the bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases
of the Notes in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids
permit the Underwriter to reclaim a selling concession from a syndicate
member when the Notes originally sold by such syndicate member are
purchased in a syndicate covering transaction. Such over-allotment
transactions, stabilizing transactions, syndicate covering transactions
and penalty bids may cause prices of the Notes to be higher than they
would otherwise be in the absence of such transactions. Neither the
Company nor the Underwriter make any representation or prediction as to
the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition,
neither the Company nor the Underwriter make any representation that
the Underwriter will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
In the ordinary course of business, the Underwriter and its
affiliates have and may in the future engage in investment banking
transactions with the Company and certain of its affiliates.
LEGAL MATTERS
The legality of the Notes will be passed upon by Charles D. Brown,
Esq., Vice President and Assistant General Counsel of Beneficial
Management Corporation of America, a wholly owned subsidiary of the
Company, on behalf of the Company, and by Whitman Breed Abbott & Morgan
LLP, New York, New York, on behalf of the Underwriter. Certain legal
matters and certain Federal income tax matters will be passed upon on
behalf of the Company by Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York, special counsel to the Company.
