<PAGE>
<PAGE>
This prospectus relates to the Registration Statement File No. 333-48415
and is being filed pursuant to Rule 424(b)(5) of the Securities Act of 1933,
as amended.
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 5, 1998)
[LOGO] [LOGO]
$500,000,000
AT&T CAPITAL CORPORATION
8.25% SENIOR PUBLIC INCOME NotES (PINES'sm') DUE 2028
GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
NEWCOURT CREDIT GROUP INC.
------------------------------------
This is an offering of 8.25% Senior Public Income NotES ('PINES') due 2028
to be issued by AT&T Capital Corporation (the 'Company'). The PINES will be
general unsecured, unsubordinated obligations of the Company, and will be
guaranteed as to payment of principal, premium, if any, and interest by Newcourt
Credit Group Inc. The PINES will mature on November 15, 2028. The Company will
pay interest on the PINES on January 15, April 15, July 15 and October 15 of
each year. The first such payment will be on January 15, 1999. The PINES will be
redeemable at the option of the Company, in whole or part, at any time on or
after November 15, 2003 at a redemption price equal to 100% of the principal
amount redeemed plus accrued and unpaid interest to the redemption date. The
PINES will be issued in minimum denominations of $25 and will be increased in
multiples of $25.
THE PINES ARE NOT GUARANTEED OR SUPPORTED IN ANY WAY BY AT&T CORP.
AT&T CAPITAL CORPORATION IS NOT OWNED BY, OR AN AFFILIATE OF, AT&T CORP.
The Company intends to list the PINES on the New York Stock Exchange and
expects trading in the PINES on the New York Stock Exchange to begin within 30
days after the original issue date. The PINES are expected to trade 'flat.' This
means that purchasers will not pay and sellers will not receive any accrued and
unpaid interest on the PINES that is not included in the trading price.
SEE 'RISK FACTORS' BEGINNING ON PAGE S-3 IN THIS PROSPECTUS SUPPLEMENT AND
ON PAGE 3 IN THE PROSPECTUS TO READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER
BEFORE BUYING THE PINES.
------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------
<TABLE>
<CAPTION>
PER PINES TOTAL
--------- ------------
<S> <C> <C>
Initial public offering price........................................................ 100.00% $500,000,000
Underwriting discounts............................................................... 3.15% $ 15,750,000
Proceeds, before deducting expenses, to the Company.................................. 96.85% $484,250,000
</TABLE>
The Company has given the underwriters an option to purchase an additional
$75,000,000 aggregate principal amount of the PINES.
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the PINES will accrue from November 9, 1998 and
must be paid by the purchaser if the PINES are delivered after November 9, 1998.
------------------------------------
The underwriters are severally underwriting the PINES being offered. The
underwriters expect to deliver the PINES in book-entry form only through the
facilities of The Depository Trust Company against payment in New York, New York
on November 9, 1998.
'PINES'sm'' is a service mark of Salomon Smith Barney Inc.
SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
November 4, 1998
<PAGE>
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF
THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE
DATE ON THE FRONT OF THIS PROSPECTUS SUPPLEMENT.
-----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company................................................................................................ S-3
Risk Factors............................................................................................... S-3
Description of the PINES................................................................................... S-4
Recent Developments........................................................................................ S-7
Material Federal Income Tax Consequences................................................................... S-7
Underwriting............................................................................................... S-9
PROSPECTUS
Available Information...................................................................................... 2
Incorporation of Documents by Reference.................................................................... 3
Risk Factors............................................................................................... 3
The Company................................................................................................ 7
Use of Proceeds............................................................................................ 10
Ratio of Earnings to Fixed Charges......................................................................... 11
Description of the Debt Securities......................................................................... 12
Description of the Warrants................................................................................ 20
Description of the Guarantee............................................................................... 27
Global Securities.......................................................................................... 27
Material Federal Income Tax Consequences................................................................... 29
Plan of Distribution....................................................................................... 29
Validity of Securities..................................................................................... 30
Experts.................................................................................................... 30
Unaudited Pro Forma Consolidated Financial Statements...................................................... F-1
</TABLE>
S-2
<PAGE>
<PAGE>
In this prospectus supplement, the 'Company' refers to AT&T Capital Corporation
and 'we,' 'us' and 'our' refer to Newcourt Credit Group Inc. and its
consolidated subsidiaries, including the Company. 'Newcourt' refers to Newcourt
Credit Group Inc.
THE COMPANY
The Company is a full-service, diversified equipment leasing and finance
company that operates principally in the United States. We also have operations
in Western Europe, Canada, Australia, New Zealand, the Asia/Pacific region and
Latin America. We are one of the largest equipment leasing and finance companies
in the United States and are the largest lessor of telecommunications equipment
in the United States, in each case, based on the aggregate value of equipment
leased or financed. On January 12, 1998, the Company became a wholly-owned
subsidiary of Newcourt. Newcourt is an independent financial services company
which originates and manages asset-based financings. Newcourt was formed in 1984
as an investment bank which originated and structured asset based financings for
the corporate and institutional asset finance market and syndicated such
financings to Canadian financial institutions. In 1988, Newcourt broadened its
activities to include vendor and direct equipment financing. Newcourt is one of
the largest providers of vendor finance in the world, and one of the world's
largest non-bank commercial asset finance companies.
Our long-term debt is rated 'A-', 'BBB+', 'Baa3' and 'BBB' by Duff & Phelps
Credit Rating Company, Fitch IBCA, Inc., Moody's Investors Services Inc. and
Standard & Poor's Ratings Services, a division of The McGraw Hill Companies,
respectively.
The Company's principal executive offices are located at 2 Gatehall Drive,
Parsippany, New Jersey 07054. The telephone number is (973) 606-3500.
RISK FACTORS
An investment in the PINES involves a number of risks, some of which relate
to the PINES and others of which relate to the Company. You should carefully
consider the following information about these risks, together with the other
information in this prospectus supplement and the accompanying prospectus,
before buying any PINES.
LACK OF PRIOR MARKET FOR THE PINES AND
TRADING CHARACTERISTICS OF THE PINES
Prior to this offering, there has been no market for the PINES. We expect
that the PINES will be approved for listing on the New York Stock Exchange
('NYSE'). Trading of the PINES on the NYSE is expected to begin within 30 days
after the original issue date. However, a listing does not guarantee that a
trading market for the PINES will develop or, if a trading market for the PINES
does develop, the depth of that market. The PINES are expected to trade 'flat'.
This means that purchasers will not pay and sellers will not receive any
accrued and unpaid interest on the PINES that is not included in the trading
price.
RECENT VOLATILITY IN CAPITAL MARKETS
The capital markets we access to fund our businesses, specifically, the
commercial paper markets, the public and private fixed income markets, the
asset-backed securitization markets and the equity capital markets have recently
experienced a high degree of volatility and uncertainty. In response to current
market conditions, we have adjusted our financing mix. If such conditions
persist for an extended period of time, we may experience higher financing costs
and potential limitations on availability of funds. Such developments could have
a material adverse impact on our profitability, operations and financial
condition.
See 'Risk Factors' in the prospectus for additional information.
S-3
<PAGE>
<PAGE>
DESCRIPTION OF THE PINES
GENERAL
We provide information to you about the PINES in two separate documents
that progressively provide more detail: (1) the prospectus and (2) this
prospectus supplement. Because the specific terms of the PINES may differ from
the general information we have provided, you should rely on the information in
this prospectus supplement over different information in the prospectus.
The Company is issuing the PINES as a part of its Medium-Term Notes, Series
F (the 'Medium-Term Notes') under the Indenture, dated as of April 1, 1998 (the
'Indenture') by and among the Company, Newcourt and The Chase Manhattan Bank, as
trustee (the 'Trustee'). The Medium-Term Notes have been registered with the
Securities and Exchange Commission under Registration Statement No. 333-48415
(the 'Registration Statement'), pursuant to which the Company has registered
debt securities and certain other securities having an aggregate purchase price
of U.S. $5,000,000,000 (or the equivalent thereof in other currencies or
currency units).
The following statements about the PINES are summaries and are subject to
the more detailed provisions of the Trust Indenture Act of 1939, as amended, and
the Indenture, a copy of the form of which is filed as an exhibit to the
Registration Statement. The following statements, therefore, do not contain all
the information that may be important to you. Not all the terms used in this
prospectus supplement are defined herein, and you should refer to the prospectus
or Indenture for the definitions of such terms. You should note that the
provisions of the Indenture set forth the terms of the PINES in greater detail
than this prospectus supplement or the prospectus. If the statements herein
differ from provisions in the Indenture, the provisions of the Indenture
control.
The Indenture does not limit the aggregate principal amount of securities
which may be issued thereunder. From time to time, the Company may issue a
single series or two or more separate series of securities up to the aggregate
principal amount authorized by the Company for each series. The Company may
issue Medium-Term Notes, including the PINES, with an aggregate offering price
of up to U.S. $5,000,000,000; however, such amount may be reduced if the Company
issues any other securities pursuant to the Registration Statement. The Company
has $1,334,000,000 aggregate principal amount of Medium-Term Notes, Series F
currently issued and outstanding under the Indenture.
The PINES
(1) will be unsecured obligations of the Company,
(2) will rank equally with all other unsecured and unsubordinated
indebtedness of the Company from time to time outstanding,
(3) are guaranteed by Newcourt with respect to payment of principal,
premium, if any, and interest; such guarantee ranks equally with all
other unsecured and unsubordinated indebtedness of Newcourt from time
to time outstanding,
(4) will be limited in aggregate principal amount to $500,000,000; however,
the Underwriters have the option to purchase an additional $75,000,000
aggregate principal amount of PINES,
(5) will mature on November 15, 2028,
(6) will be issued in minimum denominations of $25 and will be increased in
multiples of $25,
(7) will be redeemable at the option of the Company, in whole or in part,
at any time on or after November 15, 2003 on any Interest Payment Date
at a redemption price equal to 100% of the principal amount redeemed
plus accrued and unpaid interest to the redemption date,
(8) are expected to be listed on the NYSE, and
(9) are expected to receive ratings equivalent to our long-term debt
ratings as described on page S-3.
The Company may, from time to time, without your consent, issue additional
medium-term notes, PINES or other debt securities under the Indenture in
addition to the $5,000,000,000 aggregate principal amount of securities
authorized as of the date of this prospectus supplement. See 'Description of the
Debt Securities' in the prospectus.
S-4
<PAGE>
<PAGE>
QUARTERLY PAYMENTS
Interest on the PINES will accrue from the date of original issuance at a
rate of 8.25% per annum and will be payable quarterly in arrears on January 15,
April 15, July 15 and October 15 of each year, commencing January 15, 1999 (each
an 'Interest Payment Date'). On an Interest Payment Date, the Company will make
interest payments to the persons in whose names the PINES were registered as of
the record date. With respect to any Interest Payment Date, the record date will
be the date fifteen calendar days prior to such Interest Payment Date, whether
or not such date shall be a Business Day. The amount of interest payable on
January 15, 1999 to holders of PINES will be $0.38 per $25 principal amount of
PINES.
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full quarterly interest period, will be computed on the basis of the actual
number of days elapsed in such 90-day quarterly interest period. If any Interest
Payment Date falls on a day that is not a Business Day, such Interest Payment
Date will be postponed to the next succeeding Business Day and no additional
interest will accrue as a result of such delayed payment.
A 'Business Day' shall mean any day, other than a Saturday or Sunday, that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation (including any executive order) to
close in The City of New York.
REDEMPTION AND REPAYMENT
The PINES will be redeemable at the option of the Company, in whole or in
part, at any time on or after November 15, 2003 on any Interest Payment Date and
prior to maturity, upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount redeemed plus accrued and
unpaid interest to the redemption date. Additionally, the Company may at any
time repurchase PINES at any price in the open market and may hold, resell or
surrender such PINES to the Trustee for cancellation. You will not have the
right to require the Company to repay PINES prior to maturity.
THE REGISTRAR; THE PAYING AGENT AND THE AUTHENTICATING AGENT
The Company has initially designated The Chase Manhattan Bank, acting
through its principal corporate trust office at 450 West 33rd Street, New York,
New York, as the registrar and transfer agent for the PINES, as the paying agent
for the PINES and as the authenticating agent for the PINES. Payments of
principal and premium, if any, and interest will be payable, and the PINES will
be transferable, at the office of the paying agent. The Company may, however,
pay interest by check mailed to registered holders of the PINES. At the maturity
of the PINES, the principal, together with accrued interest thereon, will be
payable in immediately available funds upon surrender of such PINES at the
office of the Trustee.
BOOK-ENTRY ONLY
The PINES will be issued only in book-entry form through the facilities of
The Depository Trust Company (the 'Depositary') and will be in denominations of
$25. The PINES will be represented by a single global security (the 'Global
Security') and will be registered in the name of a nominee of the Depositary.
The Depositary has advised us that it 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, as amended. The Depositary holds
securities that its participants deposit with the Depositary. The Depositary
also facilitates the settlement among its participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in its participants' accounts. By
doing so, the Depositary eliminates the need for physical movement of
securities. The Depositary's participants include securities brokers and dealers
(including the Underwriters), banks, trust companies, clearing corporations, and
certain other organizations, some which own the Depositary. The Depositary is
also owned by the New York Stock Exchange, Inc., the
S-5
<PAGE>
<PAGE>
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary's 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 participant, either directly or
indirectly. Persons who are not participants may beneficially own securities
held by the Depositary only through participants. The rules applicable to the
Depositary and its participants are on file with the Securities and Exchange
Commission.
Upon the issuance of the Global Security, the Depositary will credit its
participants' account on its book-entry registration and transfer system their
respective principal amounts of the PINES represented by such Global Security.
The Underwriters designate which participants' accounts will be credited. The
only persons who may own beneficial interests in the Global Security will be the
Depositary's participants or persons that hold interests through such
participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary or its nominee (with respect to interests
of its participants) and on the records of its participants (with respect to
interests of persons other than such participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and laws may impair your ability to
transfer your interest in PINES.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the PINES represented by such Global
Security for all purposes under the Indenture. Except as provided below or as we
may otherwise agree in our sole discretion, owners of beneficial interests in a
Global Security will not be entitled to have PINES represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of PINES in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Principal, premium, if any, and interest payments on PINES registered in
the name of the Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such PINES. None of the Company, Newcourt, the Trustee, any
paying agent or the registrar for such PINES will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial interests in such Global Security for such PINES or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
We expect that the Depositary for the PINES or its nominee, upon receipt of
any payment of principal, premium or interest, will credit immediately its
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
for such PINES as shown on the records of the Depositary or its nominee. We also
expect that payments by such participants to owners of beneficial interest in
such Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in 'street name'
(i.e., the name of a securities broker or dealer). Such payments will be the
responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue PINES in definitive form in exchange for the entire
Global Security representing such PINES. In addition, the Company may at any
time, and in its sole discretion, determine not to have the PINES represented by
the Global Security and, in such event, will issue PINES in definitive form in
exchange for the Global Security representing such PINES. In any such instance,
an owner of a beneficial interest in the Global Security will be entitled to
physical delivery in definitive form of PINES represented by such Global
Security equal in principal amount to such beneficial interest and to have such
PINES registered in its name. PINES so issued in definitive form will be issued
as registered PINES in denominations that are integral multiples of $25.
S-6
<PAGE>
<PAGE>
EVENTS OF DEFAULT
See 'Description of the Debt Securities -- Events of Default, Notice and
Waiver' in the accompanying prospectus.
DESCRIPTION OF GUARANTEE
Newcourt unconditionally guarantees the due and punctual payment of the
principal, premium, if any, and interest on the PINES when and as the same shall
become due and payable, whether at maturity, upon redemption, or otherwise. This
guarantee will rank equally with all other unsecured and unsubordinated
obligations of Newcourt. The right of Newcourt and, hence, the right of
creditors of Newcourt (including holders of the PINES, as beneficiaries
of this guarantee) to participate in any distribution of the assets of any
subsidiary of Newcourt, whether upon liquidation, reorganization, or otherwise,
is subject to prior claims of creditors of each such subsidiary, except to the
extent that claims of Newcourt itself as a creditor of a subsidiary may be
allowed.
RECENT DEVELOPMENTS
Because it is a wholly-owned subsidiary of Newcourt, as of November 15,
1998, the Company will cease to file reports under Sections 13 and 15(d) of the
Securities Exchange Act of 1934. Certain summarized financial information
concerning the Company is included in the notes to the consolidated
financial statements of Newcourt. Newcourt is subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and accordingly,
files periodic reports and other information with the Securities and Exchange
Commission. See 'Available Information' in the accompanying prospectus.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of PINES constitutes the
opinion of Sidley & Austin, special tax counsel to the Company. It deals only
with original purchasers that acquire and hold the PINES as capital assets and
does not deal with special situations, such as those of dealers in securities or
currencies, financial institutions, life insurance companies, persons holding
PINES as a part of a hedging or conversion transaction or a straddle, investors
whose 'functional currency' is not the U.S. dollar, or foreign investors (as
described below) who own (actually or constructively) ten percent or more of the
combined voting power of all classes of voting stock of the Company, who are
present in the United States or who have any other special status with respect
to the United States. This summary is based on the Internal Revenue Code of
1986, as amended to the date hereof (the 'Code'), administrative pronouncements,
judicial decisions and existing and proposed Treasury Regulations, changes to
any of which subsequent to the date of this prospectus supplement may affect the
tax consequences described herein, possibly with retroactive effect. Persons
considering the purchase, ownership or disposition of PINES should consult their
own tax advisors concerning the federal income tax consequences in light of
their particular situations as well as any consequences arising under the laws
of any other taxing jurisdiction.
PAYMENTS OF INTEREST
An investor will be taxed on the amount of payments of interest on PINES as
ordinary interest income at the time it accrues or is received in accordance
with the investor's regular method of accounting for United States federal
income tax purposes.
SALE OR OTHER DISPOSITION OF THE PINES
An investor who disposes of PINES, whether by sale, exchange for other
property, or payment by the Company, will recognize taxable gain or loss equal
to the difference between the amount realized on the sale or other disposition
(not including any amount attributable to accrued but unpaid interest) and the
investor's adjusted tax basis in the PINES. In such case, an investor must
include accrued but unpaid interest in such investor's ordinary income. In
general, the investor's adjusted tax basis in PINES will be equal to the initial
purchase price. Any gain or loss recognized upon the sale or other disposition
of PINES will be capital gain or loss. For non-corporate investors, any capital
gain recognized on the sale or other disposition of PINES held by the investor
for more than one year will be taxed at a maximum rate of 20%. Any capital gain
for PINES held for one year
S-7
<PAGE>
<PAGE>
or less is taxed at the rates applicable to ordinary income (i.e., up to 39.6%).
Taxpayers must aggregate capital gains and losses for each taxable year. In the
event a taxpayer realizes a net capital loss for any year, there are limits on
the amount of such capital losses which can be deducted.
FOREIGN INVESTORS
Special tax rules apply to the purchase of PINES by foreign persons. For
U.S. tax purposes, foreign investors include any person who is not (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is includible in gross
income for U.S. federal income tax purposes, regardless of its source, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust.
Interest paid or accrued to a foreign investor that is not effectively
connected with the conduct of a trade or business within the United States by
the investor will generally be considered 'portfolio interest' and generally
will not be subject to United States federal income tax or withholding tax, as
long as the foreign investor (i) is not actually or constructively a 10%
shareholder of the Company or a controlled foreign corporation related to the
Company through stock ownership, and (ii) provides (or has a financial
institution provided on its behalf) an appropriate statement (Form W-8) to the
Company or paying agent that is signed under penalties of perjury, certifying
that the beneficial owner of the PINES is a foreign person and providing that
foreign person's name and address. If the information provided in this statement
changes, the foreign investor must provide a new Form W-8 within 30 days. The
Form W-8 is generally effective for three years. If the foreign investor fails
to satisfy these requirements so that interest on the investor's PINES was not
portfolio interest, interest payments would be subject to United States federal
income and withholding tax at a rate of 30% unless reduced or eliminated
pursuant to an applicable income tax treaty. To qualify for any reduction as the
result of an income tax treaty, the foreign investor must provide the paying
agent with Form 1001. This form is also effective for three years.
Any capital gain realized on the sale or other taxable disposition of PINES
by a foreign investor will be exempt from United States federal income and
withholding tax, provided that (i) the gain is not effectively connected with
the conduct of a trade or business in the United States by the investor and
(ii) in the case of an individual foreign investor, the investor is not present
in the United States for 183 days or more during the taxable year. If an
individual foreign investor is present in the U.S. for 183 days or more during
the taxable year, the gain on the sale or other disposition of the PINES could
be subject to a 30% withholding tax unless reduced by treaty.
Treasury Regulations which will become effective for PINES payments made
after December 31, 1999 (regardless of when a foreign investor acquired PINES)
may change reporting requirements for certain withholding agents.
INFORMATION REPORTING
AND BACKUP WITHHOLDING
The Company (or an agent acting on its behalf) will be required to report
annually to the Internal Revenue Service, and to each non-corporate holder of
PINES other than foreign persons, the amount of interest paid on the PINES for
each calendar year. Each non-corporate holder of PINES (other than holders of
PINES who are not subject to the reporting requirements) who is not a foreign
person will be required to provide, under penalties of perjury, a certificate
(Form W-9) containing the holder's name, address, correct federal taxpayer
identification number and a statement that the holder is not subject to backup
withholding. Should a holder of PINES fail to provide the required
certification, the Company will be required to withhold (or cause to be
withheld) 31% of the interest otherwise payable to the holder, and remit the
withheld amounts to the Internal Revenue Service as a credit against the
holder's federal income tax liability.
Similarly, if a foreign investor fails to provide necessary documentation
to the Company or its paying agent regarding the investor's taxpayer
identification number or certification of exempt status, a 31% backup
withholding tax may be applied to PINES payments to that investor. Any amounts
S-8
<PAGE>
<PAGE>
withheld under the backup withholding rules will be allowed as a refund or a
credit against the foreign investor's U.S. federal income tax liability
provided the required information is furnished to the Internal Revenue
Service.
UNDERWRITING
We and the underwriters named below (the 'Underwriters') have entered into
an underwriting agreement and a pricing agreement with respect to the PINES.
Subject to certain conditions, each Underwriter has severally agreed to purchase
the aggregate principal amount of PINES indicated in the following table.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS PINES
- ------------------------------------------------------------------------------ ------------
<S> <C>
Salomon Smith Barney Inc. .................................................... $ 65,750,000
A.G. Edwards & Sons, Inc. .................................................... 65,250,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated............................ 65,250,000
Morgan Stanley & Co. Incorporated............................................. 65,250,000
PaineWebber Incorporated...................................................... 65,250,000
Prudential Securities Incorporated............................................ 65,250,000
J.C. Bradford & Co. .......................................................... 4,000,000
Bear, Stearns & Co. Inc. ..................................................... 4,000,000
BT Alex. Brown Incorporated................................................... 4,000,000
Chase Securities Inc. ........................................................ 4,000,000
CIBC Oppenheimer Corp. ....................................................... 4,000,000
Credit Suisse First Boston Corporation........................................ 4,000,000
Dain Rauscher Incorporated.................................................... 4,000,000
EVEREN Securities, Inc. ...................................................... 4,000,000
First Chicago Capital Markets, Inc. .......................................... 4,000,000
Fleet Securities, Inc......................................................... 4,000,000
Legg Mason Wood Walker, Incorporated.......................................... 4,000,000
Lehman Brothers Inc. ......................................................... 4,000,000
NationsBanc Montgomery Securities LLC......................................... 4,000,000
Piper Jaffray Inc. ........................................................... 4,000,000
Raymond James & Associates, Inc. ............................................. 4,000,000
The Robinson-Humphrey Company, LLC............................................ 4,000,000
SG Cowen Securities Corporation............................................... 4,000,000
Wheat First Securities, Inc. ................................................. 4,000,000
Craigie Incorporated.......................................................... 1,500,000
Crowell, Weedon & Co. ........................................................ 1,500,000
Doley Securities, Inc. ....................................................... 1,500,000
Fahnestock & Co. Inc. ........................................................ 1,500,000
Fidelity Capital Markets, a Division of National Financial Services
Corporation................................................................. 1,500,000
Fifth Third/The Ohio Company.................................................. 1,500,000
First Albany Corporation...................................................... 1,500,000
First of Michigan Corporation................................................. 1,500,000
Gibraltar Securities Co. ..................................................... 1,500,000
Gruntal & Co., L.L.C. ........................................................ 1,500,000
Interstate/Johnson Lane Corporation........................................... 1,500,000
J.J.B. Hilliard, W.L. Lyons, Inc. ............................................ 1,500,000
Janney Montgomery Scott Inc. ................................................. 1,500,000
McDonald & Company Securities, Inc. .......................................... 1,500,000
Mesirow Financial, Inc. ...................................................... 1,500,000
Morgan Keegan & Company, Inc. ................................................ 1,500,000
Muriel Siebert & Co., Inc. ................................................... 1,500,000
Roney Capital Markets......................................................... 1,500,000
Scott & Stringfellow, Inc. ................................................... 1,500,000
</TABLE>
(table continued on next page)
S-9
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS PINES
- ------------------------------------------------------------------------------ ------------
<S> <C>
Stephens Inc. ................................................................ $ 1,500,000
TD Securities (USA) Inc. ..................................................... 1,500,000
Tucker Anthony Incorporated................................................... 1,500,000
Utendahl Capital Partners, L.P. .............................................. 1,500,000
Wedbush Morgan Securities..................................................... 1,500,000
------------
Total.................................................................... $500,000,000
------------
------------
</TABLE>
PINES sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus
supplement, and, in part, to certain securities dealers at such price less a
concession of $0.50 per PINES. The Underwriters may allow, and such dealers may
reallow a concession not in excess of $0.40 per PINES to certain brokers and
dealers. After all the PINES are released for sale to the public, the
Underwriters may change the offering price and the other selling terms.
The Company has granted the Underwriters an option to purchase up to an
additional $75,000,000 aggregate principal amount of PINES at the initial public
offering price, less the underwriting discount. Such option, which will expire
30 days after the date of this prospectus supplement, may be exercised solely to
cover over-allotments. To the extent that the Underwriters exercise such option,
each of the Underwriters will have a firm commitment, subject to certain
conditions, to purchase from the Company approximately the same percentage of
the aggregate principal amount of PINES as the amount set forth next to such
Underwriter's name in the above table bears to the aggregate principal amount of
PINES set forth as the total to be purchased in the above table.
Prior to the Offering, there has been no public market for the PINES. The
PINES will be listed on the NYSE, and we expect trading in the PINES on the NYSE
to begin within 30 days after the original issue date. In order to meet one of
the requirements for listing the PINES, the Underwriters will undertake to sell
lots of 100 or more to a minimum of 400 beneficial holders.
The PINES are a new issue of securities with no established trading market.
The Underwriters have advised the Company that the Underwriters intend to make a
market in the PINES but are not obligated to do so and may discontinue market
making at any time without notice. Neither the Company nor the Underwriters
can assure you that the trading market for the PINES will be liquid.
In connection with this offering, the Underwriters may purchase and sell
PINES in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater total
principal amount of PINES than they are required to purchase in this offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the PINES
while this offering is in progress.
The Underwriters also may impose a penalty bid. This may occur when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount because the Underwriters have repurchased PINES sold by or for the
account of that Underwriter in stabilizing or short covering transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the PINES. As a result, the price of the PINES may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected on the NYSE, in the over-the-counter
market or otherwise.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
The Company expects to have an estimated $550,000 of expenses in connection
with this offering.
S-10
<PAGE>
<PAGE>
PROSPECTUS
$5,000,000,000
[LOGO]
DEBT SECURITIES, DEBT WARRANTS, CURRENCY WARRANTS,
INDEX WARRANTS, AND INTEREST RATE WARRANTS
------------------------
AT&T Capital Corporation ('AT&T Capital' or the 'Company'), an indirect
wholly-owned subsidiary of Newcourt Credit Group Inc. ('Newcourt'), directly,
through agents designated from time to time, or through dealers or underwriters
also to be designated, may offer and sell from time to time, one or more series
of (i) debt securities (the 'Debt Securities') of the Company, (ii) warrants to
purchase Debt Securities (the 'Debt Warrants'), (iii) warrants entitling the
holders thereof to receive from the Company, upon exercise, an amount in cash
equal to the cash value of the right to purchase (the 'Currency Call Warrants')
or to sell (the 'Currency Put Warrants' and, together with the Currency Call
Warrants, the 'Currency Warrants') a certain amount of one currency or currency
unit for a certain amount of a different currency or currency unit, all as shall
be designated by the Company at the time of offering, (iv) warrants entitling
the holders thereof to receive from the Company, upon exercise, an amount in
cash determined by reference to decreases (the 'Index Put Warrants') or
increases (the 'Index Call Warrants') in the level of a specified index (an
'Index') which may be based on one or more U.S. or foreign stocks, bonds or
other securities, one or more U.S. or foreign interest rates, one or more
currencies or currency units, or any combination of the foregoing, or determined
by reference to the differential between any two Indices (the 'Index Spread
Warrants' and, together with the Index Put Warrants and the Index Call Warrants,
the 'Index Warrants') or (v) warrants entitling the holders thereof to receive
from the Company, upon exercise, an amount in cash determined by reference to
decreases (the 'Interest Rate Put Warrants') or increases (the 'Interest Rate
Call Warrants' and, together with the Interest Rate Put Warrants, the 'Interest
Rate Warrants' and, together with the Index Warrants, the Currency Warrants and
the Debt Warrants, the 'Warrants') in the yield or closing price of one or more
specified debt instruments issued either by the United States government or by a
foreign government (the 'Sovereign Debt Instrument'), in the interest rate or
interest rate swap rate established from time to time by one or more specified
financial institutions (the 'Rate') or in any specified combination of Sovereign
Debt Instruments and/or Rates, for an aggregate offering price of up to
$5,000,000,000, or the equivalent thereof in one or more foreign currencies or
currency units (such amount being the aggregate proceeds to the Company from all
Debt Securities, Debt Warrants, Currency Warrants, Index Warrants and Interest
Rate Warrants (collectively, the 'Securities') issued and the aggregate exercise
price of any Debt Securities issuable upon the exercise of any Debt Warrants).
Securities may be offered either together or separately and in one or more
series or amounts, at prices and on terms to be determined at the time of sale.
The Securities will receive the benefit of an irrevocable unconditional Newcourt
guarantee. See 'The Company -- Relationship with Newcourt.' If this Prospectus
is being delivered in connection with the offering and sale of Debt Securities,
the specific designation, aggregate principal amount, the currency or currency
unit for which the Debt Securities may be purchased and in which the principal
and interest, if any, is payable, the rate (or method of calculation) and time
of payment of interest, if any, authorized denominations, maturity, any
redemption terms, and any other terms in connection with such offering and sale
are set forth in the accompanying Prospectus Supplement and pricing supplement
(together, the 'Prospectus Supplement'). If this Prospectus is being delivered
in connection with the offering and sale of Warrants, the specific designation
and aggregate number thereof, the currency or currency unit for which the
Warrants may be purchased and/or in which the cash settlement value or the
exercise price, if applicable, is payable, the method of calculation of the cash
settlement value, if applicable, the date on which such Warrants become
exercisable and the expiration date, provisions, if any, for the automatic
exercise and/or cancellation prior to the expiration date, and any other terms
in connection with such offering and sale will be set forth in the Prospectus
Supplement. The Company reserves the sole right to accept and, together with its
agents from time to time, to reject in whole or in part any proposed purchase of
Securities to be made directly or through agents. The Debt Securities and Debt
Warrants may be issued in registered or bearer form (in the case of Debt
Securities, with or without interest coupons) or both or, in the case of Debt
Securities, in uncertificated form. The Currency Warrants, Index Warrants and
Interest Rate Warrants will be issued in registered form only. In addition, all
or a portion of the Securities of a series may be issued in temporary or
permanent global form. Debt Securities in bearer form will be offered only
outside the United States to non-United States persons and to offices located
outside the United States of certain United States institutions. See
'Description of the Debt Securities -- Limitations on Issuance of Bearer Debt
Securities.' The initial public offering price, the agent, dealer or
underwriter, if any, in connection with the offering and sale of the Securities,
a discussion of certain federal income taxation consequences to holders of
Securities and, if applicable, a discussion of certain risks associated with an
investment in Securities will be set forth in the Prospectus Supplement.
THE SECURITIES ARE NOT GUARANTEED OR SUPPORTED IN ANY WAY BY AT&T CORP.
('AT&T').
------------------------
SEE RISK FACTORS ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT
IN THE SECURITIES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES 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.
------------------------
If an agent of the Company or a dealer or an underwriter is involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the agent's commission or dealer's or underwriter's discount is set forth in, or
may be calculated from, the Prospectus Supplement, and the net proceeds to the
Company from such sale will be the purchase price of such Securities less such
commission in the case of an agent, the purchase price of such Securities less
such discount in the case of a dealer or the public offering price less such
discount in the case of an underwriter, and less, in each case, the other
attributable issuance expenses. The aggregate proceeds to the Company from all
the Securities will be the purchase price of the Securities sold, less the
aggregate of agents' commissions and dealers' and underwriters' discounts and
other expenses of issuance and distribution. The net proceeds to the Company
from the sale of Securities offered pursuant to a particular Prospectus
Supplement are also set forth in such Prospectus Supplement. See 'Plan of
Distribution' for possible indemnification arrangements for the agents, dealers
and underwriters.
May 5, 1998
<PAGE>
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
AND PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS AND PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH THEY RELATE.
------------------------
THE GUARANTOR IS A CANADIAN ISSUER THAT IS PERMITTED, UNDER A
MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED BY THE UNITED STATES, TO PREPARE
THIS PROSPECTUS INSOFAR AS IT RELATES TO THE GUARANTOR AND THE GUARANTEE IN
ACCORDANCE WITH THE DISCLOSURE REQUIREMENTS OF ITS HOME JURISDICTION.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT SUCH REQUIREMENTS ARE DIFFERENT FROM
THOSE OF THE UNITED STATES. THE FINANCIAL STATEMENTS OF THE GUARANTOR INCLUDED
OR INCORPORATED BY REFERENCE HEREIN, HAVE BEEN PREPARED IN ACCORDANCE WITH
CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND ARE SUBJECT TO CANADIAN
AUDITING AND AUDITOR INDEPENDENCE STANDARDS, AND SUCH FINANCIAL STATEMENTS MAY
NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES COMPANIES.
THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER THE FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT THE GUARANTOR IS
INCORPORATED AND ORGANIZED UNDER THE LAWS OF THE PROVINCE OF ONTARIO, THAT SOME
OR ALL OF ITS OFFICERS AND DIRECTORS MAY BE RESIDENTS OF CANADA, THAT SOME OR
ALL OF THE EXPERTS NAMED IN THE REGISTRATION STATEMENT MAY BE RESIDENTS OF
CANADA AND THAT A SUBSTANTIAL PORTION OF THE ASSETS OF THE GUARANTOR AND SAID
PERSONS MAY BE LOCATED OUTSIDE THE UNITED STATES.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form S-3, pursuant to the Securities
Act of 1933, as amended (the 'Securities Act'), and the rules and regulations
promulgated thereunder, with respect to the Securities offered hereby. Newcourt
has filed with the Commission a Registration Statement on Form F-9 pursuant to
the Securities Act and the rules and regulations promulgated thereunder with
respect to the Guarantee of the Securities offered hereby. The term
'Registration Statement' means the combined Registration Statement of the
Company on Form S-3 and the Registration Statement of Newcourt on Form F-9 and
includes all amendments, exhibits and schedules thereto. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made.
The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith files periodic reports and other information with the
Commission. The Registration Statement, as well as such reports and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of such Web site is http://www.sec.gov.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
2
<PAGE>
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by the Company (File No. 001-11237)
with the Commission and are incorporated by reference in the Prospectus that
constitutes a part of the Registration Statement on Form S-3:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1997; and
(2) The Company's Current Reports on Form 8-K dated March 9, 1998, March 4,
1998, February 20, 1998, February 9, 1998, January 12, 1998, January 5,
1998, November 19, 1997, May 30, 1997, May 12, 1997 and February 12,
1997, respectively and the Company's Current Reports on Form 8-K/A
dated March 17, 1998 (amending the Report on Form 8-K dated January 12,
1998), February 18, 1998 (amending the Report on Form 8-K dated
February 9, 1998) and February 11, 1998 (amending the Report on Form
8-K dated November 19, 1997).
The following documents have been filed by Newcourt (File No. 001-14604)
with the Commission and are incorporated by reference in the Prospectus that
constitutes a part of the Registration Statement on Form F-9:
(1) the Renewal Annual Information Form of Newcourt dated May 2, 1997
on Form 40-F;
(2) the audited comparative consolidated financial statements of
Newcourt and the auditors' report there on for the fiscal year ended
December 31, 1997 on Form 6-K; and
(3) the Management Information Circular of Newcourt dated February 4,
1998, except the sections entitled 'Compensation and Conduct Review
Committee', 'Report on Executive Compensation', 'Corporate Governance' and
the 'Share Performance Graph' on Form 6-K.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference in this Prospectus 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 or in the accompanying Prospectus
Supplement 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.
COPIES OF THE ABOVE DOCUMENTS OF THE COMPANY MAY BE OBTAINED UPON REQUEST
WITHOUT CHARGE FROM AT&T CAPITAL CORPORATION, 44 WHIPPANY ROAD, MORRISTOWN, NJ
07962-1983 (TELEPHONE NUMBER 973-397-3000), ATTENTION: TREASURY DEPARTMENT;
COPIES OF THE ABOVE DOCUMENTS OF NEWCOURT MAY BE OBTAINED UPON REQUEST WITHOUT
CHARGE FROM NEWCOURT CREDIT GROUP INC., BCE PLACE, 181 BAY STREET, SUITE 3500,
P.O. BOX 827, TORONTO, ONTARIO, CANADA M5J2T3 (TELEPHONE NUMBER 416-777-6066),
ATTENTION: COMMUNICATIONS DEPARTMENT.
RISK FACTORS
The following risk factors in addition to the other information included in
this Prospectus should be given careful consideration. To the extent any of the
information constitutes a 'forward-looking statement' for purposes of Section
21E(i) of the Exchange Act or Section 27A(i) of the Securities Act, the risk
factors set forth below are meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward looking statements, and no assurance can be
given that actual results will not in fact differ materially.
RISKS RELATED TO PLANS INVOLVING NEWCOURT
Integration of Business. Both the Company and Newcourt have completed a
number of acquisitions during the past five years. Integration of these two
businesses will require a significant amount of management's time. Diversion of
management attention from the Company's existing business could have a material
adverse impact on the revenues and operating results of the Company.
Guarantee of Certain Newcourt Debt. In connection with the Newcourt
Acquisition (as defined below), on February 20, 1998 the Company entered into an
agreement pursuant to which the Company
3
<PAGE>
<PAGE>
will guarantee (the 'Company Guarantee') the payment of certain indebtedness and
liquidity facilities issued, guaranteed or entered into by Newcourt (as amended,
supplemented, restated or replaced, collectively, the 'Newcourt Debt
Securities') for the timely benefit of the holders of the Newcourt Debt
Securities (collectively, the 'Newcourt Noteholders'). A copy of the Company
Guarantee is filed as Exhibit 10 to the Company's Current Report on Form 8-K
dated February 20, 1998 filed on March 12, 1998.
Because the Company Guarantee is anticipated to cover future indebtedness
under various documents evidencing or relating to the Newcourt Debt Securities,
as well as amendments, supplements, restatements or replacements of or to the
Newcourt Debt Securities, the aggregate outstanding principal amount of the
Newcourt Debt Securities to be covered by the Company Guarantee is expected to
increase in the future.
The Company's obligations under the Company Guarantee represent an
irrevocable and unconditional guarantee of the due and punctual payment to the
Newcourt Noteholders, on demand, whether at stated maturity or otherwise, of all
debts, liabilities and obligations of Newcourt under the Newcourt Debt
Securities, including present and future, direct and indirect, absolute and
contingent and matured and unmatured debts, liabilities and obligations. The
liability of the Company under the Company Guarantee is anticipated to be
unlimited as to amount and to be absolute and unconditional irrespective of any
conditions or circumstances that might otherwise constitute a defense available
to the Company or Newcourt, including any defense based on the lack of validity
or the unenforceability of the Newcourt Debt Securities or any defense or
counterclaim available to Newcourt.
Sensitivity to Ratings on Debt. As a result of the consummation of the
Newcourt Acquisition, each of the four statistical rating organizations that
have been rating the Company's securities maintained or upgraded their
respective ratings on the Company's short-term and (where applicable) long-term
senior unsecured debt. No assurance can be given that any or all of such rating
organizations will not at any future time or from time to time establish
different ratings on the Company's senior unsecured short-term or long-term
debt. To the extent that any of such rating organizations assigns a lower rating
than the existing ratings, such downgrading would result in relatively higher
borrowing costs for the Company, reduce its access to its traditional funding
sources and reduce its competitiveness, particularly if any such assigned rating
is in a generic rating category that signifies that the relevant debt of the
Company is less than investment grade. In addition, certain ratings downgrading
could result in the termination of one or more of the License Agreements with
AT&T and NCR (as defined below) or the 1998 Lucent Agreement (as defined below).
See ' -- Changes in Relationship with AT&T/Lucent/NCR -- Operating and Certain
Other Agreements with AT&T/Lucent/NCR' below. Any such downgrading could have a
material adverse effect on the Company.
Liquidity and Debt Service. The Company's business requires substantial
amounts of cash to support its growth and operations. The Merged Company's (as
defined below) ability to obtain funds and the cost of such funds could be
affected by its credit rating and restrictions contained in existing or future
debt instruments and by other events beyond its control, such as interest rates,
general economic conditions and the perception of its business, results of
operations, leverage, financial condition and business prospects.
Securitization Program. The Company's securitization transactions,
structured as both private conduit programs and the sale of publicly offered
securities, are an important part of the Company's financing to manage its
leverage ratio and to transfer credit risk. Any delay in the securitization of
finance receivables would cause leverage to fluctuate, postpone the recognition
of the gain on such finance receivables and cause the Company's net income to
fluctuate from period to period.
CONTINUITY OF MANAGEMENT
The Merged Company's success depends to a significant extent upon the
continued services of its management. There is no assurance that any of
Newcourt's or the Company's existing officers and key employees will remain in
their current positions for any period of time following the date hereof. The
unavailability of the continued services of such persons could have a material
adverse effect on the Company's business.
4
<PAGE>
<PAGE>
CHANGES IN RELATIONSHIPS WITH AT&T/LUCENT/NCR
RELIANCE ON MAJOR VENDORS. A substantial portion of the Company's net
income is attributable to the financing provided by the Company to customers of
AT&T Corp. ('AT&T'), Lucent Technologies Inc. ('Lucent') and NCR Corporation
('NCR') with respect to products manufactured or distributed by them
('AT&T/Lucent/NCR Products') and, to a lesser extent, to AT&T, Lucent and NCR as
end-users, primarily with respect to the lease of information technology and
other equipment to them as end-users and the administration and management of
certain leased assets on behalf of AT&T, Lucent and NCR. The Company's
commercial relationships with AT&T, Lucent and NCR are currently governed by
certain agreements.
Although the proportion of the Company's total revenues from sources not
attributable to AT&T, Lucent and NCR has grown over the last several years, a
substantial portion of the Company's net income has been generated by the
Company's relationship with AT&T, Lucent and NCR. A significant decrease in the
portion of the sales of the AT&T/Lucent/NCR Products that are financed by the
Company, or in the absolute amount of AT&T, Lucent and/or NCR product sales (in
either case, particularly with respect to Lucent), or in the amount of
transactions effected by the Company with AT&T, Lucent and/or NCR as end-user
(particularly with respect to AT&T) would have a material adverse effect on the
Company's results of operations and financial condition.
Operating and Certain Other Agreements with AT&T/Lucent/NCR. The initial
terms of each of the Operating Agreements (see 'The Company -- Relationship with
AT&T/Lucent/NCR') (pursuant to which, among other things, the Company serves as
preferred provider of financing services and has certain related and other
rights and privileges in connection with the financing of equipment of the
customers of AT&T and NCR) will expire on August 4, 2000, but will be
automatically renewed for successive two-year periods unless either party
thereto gives the other a non-renewal notice at least one year prior to the end
of the initial or renewal term. Neither AT&T nor NCR is required to renew the
term of its Operating Agreement beyond the expiration of the current term on
August 4, 2000.
On March 9, 1998, Newcourt signed a new five-year agreement with Lucent
(the '1998 Lucent Agreement') which expands the global financing program
established to serve Lucent's business systems customers. The term of the 1998
Lucent Agreement is from October 1, 1997 through September 30, 2002. The 1998
Lucent Agreement replaces the Lucent Operating Agreement (as defined below) and
the letter agreements between the Company and Lucent, the initial terms of which
were scheduled to expire on August 4, 2000. See 'The Company -- Relationship
with AT&T/Lucent/NCR' below. In addition to the extended term of the 1998 Lucent
Agreement, other changes from the previous Lucent Operating Agreement include
Newcourt being the preferred provider of financing services for a greater
portion of Lucent's equipment and related product sales, a change in the
methodology in calculating the amount required to be paid to Lucent (based upon
specific financial, service and performance levels tied to compensation) which
is expected to result in an increase in such amount, and a single point of
contact for customers. The 1998 Lucent Agreement also includes certain early
termination provisions and a buy-out option that could have a material impact on
the Company's future operations, if exercised. Lucent is not required to renew
the term of the 1998 Lucent Agreement beyond the current term. In the event of
either (a) an early termination or buy-out or (b) a non-renewal of the 1998
Lucent Agreement by Lucent, Newcourt will have an extended wind-down period with
cost recovery.
The impact of the 1998 Lucent Agreement on the Company's future net income
is at this time unknown. While there is a possibility that the Company's future
net income from Lucent transactions may increase as a result of an anticipated
increase in financing volume arising from Newcourt being the preferred provider
of financing services for a greater portion of Lucent's equipment and related
product sales, there also is a possibility that the Company's future net income
from Lucent transactions may decrease as a result of the increased amounts due
to Lucent under the 1998 Lucent Agreement.
Although the Company intends to seek to maintain and improve its existing
relationships with Lucent, NCR and AT&T, no assurance can be given that the
Operating Agreements or the 1998 Lucent Agreement, will be extended beyond their
respective termination dates or, if extended, that the terms and conditions
thereof will not be modified in a manner adverse to the Company. Failure to
renew the Operating Agreements and the 1998 Lucent Agreement, on terms not
adverse to the Company could have a material adverse effect on the Company.
Moreover, in certain circumstances the Operating
5
<PAGE>
<PAGE>
Agreements and the 1998 Lucent Agreement may be terminated prior to their
respective expiration dates.
CERTAIN INCREASED COSTS AND EXPENSES
As a result of the Newcourt Acquisition and the related integration plan
for the Merged Company, AT&T Capital's net income will be adversely impacted
over the next eighteen months. Such integration plan is expected to result in
additional costs which include, but are not limited to, severance and other
employee benefit costs, systems conversions, location closures and other
restructuring costs.
AT&T Capital is targeting to reduce its ratio of operating expenses to
owned and managed assets over the next few years. These reductions are expected
to result from extensive cost savings programs and economies of scale in
processing operations, administration and centralized services. While it is
anticipated that these savings will be recognized, any unanticipated event in
the integration of the businesses by both Newcourt and AT&T Capital may require
significant management time and cause a delay in recognition of the cost
savings.
COMPETITION
The equipment leasing and finance industry in which the Company operates is
highly competitive and is undergoing a process of consolidation. As a result,
certain of the Company's competitors' relative cost bases have been reduced.
Participants in the industry compete through price (including the ability to
control costs), risk management, innovation and customer services. Principal
cost factors include the cost of funds, the cost of selling to or obtaining new
end-user customers and vendors and the cost of managing portfolios. The
Company's competitors include captive or related leasing companies (such as
General Electric Capital Corporation and IBM Credit Corporation), independent
leasing companies (such as Comdisco, Inc.), certain banks engaged in leasing,
lease brokers and investment banking firms that arrange for the financing of
leased equipment, and manufacturers and vendors which lease their own products
to customers. In addition, the Company competes with all banking and other
financial institutions, manufacturers, vendors and others who extend or arrange
credit for the acquisition of equipment, and in a sense, with end-users'
available cash resources to purchase equipment that the Company may otherwise
finance. Many of the competitors of the Company are large companies that have
substantial capital, technological and marketing resources; some of these
competitors are significantly larger than the Company and have access to debt at
a lower cost than the Company. In addition, the Company may not have, in the
immediate future, access to sufficient U.S. Federal tax capacity to pursue
efficiently U.S. tax based lease financing.
CERTAIN OTHER RISKS
The Company is subject to certain other risks including the risk that its
allowance for credit losses may not prove adequate to cover ultimate losses and
that its estimated residual values will not be realized at the end of the lease
terms. There can be no assurance that such allowance will prove adequate to
cover losses in connection with the Company's investment in finance receivables,
capital leases and operating leases or that such residual values (which have
historically been a significant element of the net income of the Company) will
be realized.
READINESS FOR YEAR 2000
Prior to its acquisition by Newcourt, AT&T Capital had begun addressing the
Year 2000 issue, also known as the 'millennium bug'. This included inventories
of most systems as well as some conversion effort on major systems.
The Merged Company (as defined below) is addressing the Year 2000 issue
from a global perspective. In early 1998, the Merged Company established a
global Year 2000 Program Office to provide oversight from both a business and
technical perspective. The program will coordinate vendors, consultants and
regional Year 2000 resources. The Merged Company, including AT&T Capital, plans
to convert its critical systems by the end of 1998 with conversion of remaining
systems and compliance testing and certification to be completed in 1999. As
part of the integration strategy, the Merged Company plans to aggressively
consolidate onto a limited set of identified Year 2000 compliant systems in
order to achieve operational efficiencies and to minimize the Year 2000
exposures and costs.
Management does not anticipate that the total cost to the Company of these
Year 2000 compliance activities will be material to its financial position or
results of operations in any given year.
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THE COMPANY
GENERAL
AT&T Capital Corporation ('AT&T Capital' or the 'Company') is a
full-service, diversified equipment leasing and finance company that operates
principally in the United States and also has operations in Europe, Canada, the
Asia/Pacific region, Mexico and South America. The Company is one of the largest
equipment leasing and finance companies in the United States and is the largest
lessor of telecommunications equipment in the United States, in each case, based
on the aggregate value of equipment leased or financed.
AT&T Capital's principal executive offices are located at 44 Whippany Road,
Morristown, New Jersey 07962 and its telephone number is (973) 397-3000.
AT&T Capital, through its various subsidiaries, leases and finances a wide
variety of equipment, including telecommunications equipment (such as private
branch exchanges, telephone systems and voice processing units), information
technology equipment (such as personal computers, retail point of sale systems
and automated teller machines), general office, manufacturing and medical
equipment ('General Equipment'), and transportation equipment. In addition, AT&T
Capital provides franchise financing for franchisees and financing
collateralized by real estate. At December 31, 1997, the Company's portfolio
assets (investment in finance receivables, capital leases and operating leases)
were comprised of, or collateralized by, General Equipment (33%), information
technology equipment (22%), telecommunications equipment (22%), loans secured by
real estate (12%) and transportation equipment (11%). The Company's leasing and
financing services are marketed (i) to customers of equipment manufacturers,
distributors and dealers with which the Company has a marketing relationship for
financing services and (ii) directly to end-users of equipment. The Company's
approximately 500,000 customers include large global companies, small and
mid-sized businesses and federal, state and local governments and their
agencies.
During the period since its founding in 1985, the Company has achieved
significant growth in assets, finance volume (total principal amount of loans
and total cost of equipment associated with finance and lease transactions
recorded by the Company and the increase, if any, in outstanding inventory
financing and asset-based lending transactions), revenues and net income. At
December 31, 1997, the Company's total assets were $8.8 billion, an increase of
8.4% over the prior year-end; finance volume for 1997 was $5.7 billion, an
increase of 8.0% over 1996; total revenues for 1997 were $1.8 billion, a
decrease of 7.1% from 1996; and net income of $21.0 million for 1997 was 87.5%
less than the Company's net income for 1996. The 1997 decrease in total revenues
was primarily due to lower capital lease revenue resulting from the Company's
securitization program, introduced by its $3.1 billion asset securitization in
October 1996, and lower securitization gains, net of service fee revenue. The
1997 decrease in net income was due to the decline in total revenues as
previously discussed, higher costs due to increased leverage associated with the
Company's post-1996 merger capital structure and certain restructure charges of
$23.0 million, certain other severance charges of $13.9 million and a net loss
on the December sales of the Company's commercial fleet automotive and inventory
finance businesses and the anticipated sale of the Company's remaining U.S.
consumer automotive business of $12.2 million, all on an after-tax basis. The
restructure charges and net loss on sales of businesses were the result of the
Company's continued objective to streamline costs, improve operating
efficiencies and exit non-strategic businesses.
AT&T Capital provides its financial products and services to its worldwide
customers and clients through three principal market channels: Vendor Finance,
Direct Customer Finance and International Finance. For the year ended December
31, 1997, the percentage of the Company's aggregate finance volume derived from
the Company's Vendor Finance, Direct Customer Finance and International Finance
programs was 40%, 33% and 27%, respectively. See 'The Merged Company' below.
AT&T Capital seeks to implement its strategies by taking advantage of what
it believes are its competitive strengths: (i) high-volume processing
capabilities that enable it to serve a large number of customers in a timely and
efficient manner; (ii) significant experience in structuring and managing
financing programs tailored to specific customer needs; (iii) risk management
skills (including initial credit review and residual value assessment and
continuing portfolio management capabilities); (iv)
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asset management skills (including equipment remarketing skills that enhance the
ability of the Company to realize the residual values of its equipment); and (v)
financial structuring capabilities.
The Company was founded in 1985 by AT&T as a captive finance company to
assist AT&T's equipment marketing and sales efforts by providing its customers
with sophisticated financing. AT&T Capital has operated independently since its
initial public offering in 1993 (the 'IPO').
On October 1, 1996, the Company consummated a merger (the 'Merger') with
Antigua Acquisition Corporation, a Delaware corporation ('Merger Sub'), pursuant
to an Agreement and Plan of Merger (the 'Merger Agreement') among AT&T, the
former indirect owner of approximately 86% of the outstanding common stock of
the Company, Hercules Holdings (Cayman) Limited, a Cayman Islands corporation
('Holdings'), and Merger Sub, a majority-owned subsidiary of Holdings. Pursuant
to the Merger Agreement, Merger Sub was merged with and into the Company, with
the Company continuing its corporate existence under Delaware law as the
surviving corporation.
NEWCOURT ACQUISITION
On November 17, 1997, Newcourt agreed to acquire all of the issued and
outstanding common shares of the Company. On January 12, 1998 the acquisition of
the shares of the Company by Newcourt (the 'Newcourt Acquisition') was completed
and the Company became an indirect wholly-owned subsidiary of Newcourt. The
aggregate purchase price paid by Newcourt on the acquisition closing was
approximately $1.6 billion (C$2.3 billion). Of this amount, approximately $1.0
billion (C$1.5 billion) was paid in cash and the remaining approximately $0.6
billion (C$0.8 billion) was satisfied by the issuance of approximately 17.6
million common shares of Newcourt to Holdings, which is indirectly owned by
Nomura International plc and which owned 97.4% of the outstanding shares of the
Company. Holdings has agreed, subject to certain exceptions, that such Newcourt
common shares shall not be sold, transferred or otherwise disposed of for
periods of six, twelve and eighteen months following the acquisition closing.
THE MERGED COMPANY
The resulting combination of Newcourt and the Company (the 'Merged
Company') has created one of the largest providers of vendor finance in the
world, and one of the world's largest non-bank commercial asset finance
companies. With corporate headquarters in Toronto, Canada, the Merged Company
has approximately $23.5 billion (C$33.7 billion) of owned and managed assets at
December 31, 1997. In addition, the Merged Company remains well capitalized with
equity of $2.7 billion (C$3.9 billion) resulting in a leverage ratio (defined as
total debt to total equity plus preferred securities) of 3.2 times at December
31, 1997.
The Merged Company's international origination and servicing capabilities
now span 24 countries around the globe. The acquisition provides a platform that
enables both Newcourt and the Company to better serve their respective
manufacturing clients in Canada, the U.S. and the U.K. and creates new
opportunities for serving clients in the Asia/Pacific region, Europe, Mexico and
South America.
The businesses of Newcourt and the Company are complementary in many
respects. The Company possesses asset management and processing skills, systems
capabilities, a broad range of clients, a solid credit underwriting performance
and a consistent operating history. Newcourt originates asset finance business
through innovative financing techniques, provides focused client services and
complementary product offerings. In addition, both Newcourt and the Company have
a conservative risk management culture.
The Merged Company will offer its financing services to clients through
three primary business units: Newcourt Financial, Newcourt Capital, and Newcourt
Services. Newcourt Financial, the Merged Company's commercial finance business,
will provide asset-based financing for a variety of equipment to vendors and
customers. Newcourt Capital, the Merged Company's corporate finance business,
will provide structured corporate finance to a growing list of international
clients, including major corporations, governments and agencies. Finally,
Newcourt Services, the Merged Company's control, growth and support services,
will be responsible for the underwriting, funding, administration and risk
management needs of Newcourt Financial and Newcourt Capital.
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Newcourt Financial offers its lending services through select strategic
relationships with equipment manufacturers, dealers and distributors and certain
professional associations and organizations. Newcourt Financial's strategy
focuses on the creation, maintenance and enhancement of vendor programs ensuring
its position as the premier provider of global asset based financial products.
Newcourt Financial focuses on the following sectors: Transportation and
Industrial Finance, Technology Finance, Telecommunications Finance, Business
Finance, Specialty Finance, Technology Services, International/Joint Ventures,
and Operations.
Newcourt Capital is the corporate finance business which provides asset
based financing for high value assets and related advisory services to equipment
manufacturers, corporate clients, governments and public sector agencies.
Newcourt Capital focuses on the following sectors: Aerospace Finance, Rail
Finance, Public Sector Finance, Project Finance, Structured Finance,
Telecommunication and Media Finance, Business Finance, and Underwriting and
Syndication.
Newcourt Services is the service business unit responsible for providing
cost effective control and support services to Newcourt Financial and Newcourt
Capital. Newcourt Services consists of the following corporate functions:
Treasury, Credit and Risk Management, Financial Reporting and Administration,
Human Resources, Communications & Marketing, Tax Planning and Compliance,
Systems Development, and Quality Assurance.
A successful integration is key to the Merged Company's future performance,
which makes it imperative that the Company be quickly and effectively
integrated. To this end, the Merged Company has established an integration
office to oversee the implementation of the merger. The integration office
consists of 6 full time senior management members and 11 task forces staffed by
90 employees of the Company and Newcourt.
Going forward, the Merged Company will focus a great deal of attention on
the significant cost saving opportunities created by geographic and business
segment synergies. The Merged Company plans to achieve substantial cost
reductions through the consolidation of facilities, systems and functions in
Canada, the U.S. and the U.K.
The Company has provided an irrevocable unconditional guarantee of payment
of certain of Newcourt's outstanding and future debt instruments as well as a
subordinated guarantee of certain affiliate debentures and certain distribution,
redemption and liquidation payments in connection with the issuance and sale by
the Company of certain affiliate preferred securities. Likewise Newcourt will
provide an irrevocable unconditional guarantee of all Securities.
RELATIONSHIP WITH NEWCOURT
Newcourt is an independent financial services company which originates and
manages asset-based financings. Newcourt was formed in 1984 as an investment
bank which originated and structured asset based financings for the corporate
and institutional asset finance market and syndicated such financings to
Canadian financial institutions. In 1988, Newcourt broadened its activities to
include vendor and direct equipment financing.
Newcourt and its subsidiaries originate their asset-based financings by
providing services to specific segments of the vendor asset finance market and
corporate and institutional asset finance market. Newcourt's strategy has been
to sell and manage, rather than own, the majority of the finance assets it and
its subsidiaries originate, thereby reducing its capital requirements.
Consequently, Newcourt's consolidated revenues are generated primarily by gains
and fees earned from the sale of financings it and its subsidiaries originate
and by management fees earned following such sales.
Newcourt's principal executive offices are located at BCE Place, 181 Bay
Street, Suite 3500, P.O. Box 827, Toronto, Ontario, Canada M5J 2T3 and its
telephone number is (416) 594-2400.
As of December 31, 1997, on a Canadian GAAP basis, Newcourt had total
assets of $4.3 billion (C$6.2 billion) compared with $1.6 billion (C$2.2
billion) as of December 31, 1996, total liabilities of $2.2 billion (C$3.1
billion) as of December 31, 1997 compared with $1.2 billion (C$1.7 billion) as
of December 31, 1996, shareholders' equity of $2.1 billion (C$3.1 billion) as of
December 31, 1997 compared with $0.4 billion (C$0.5 billion) as of December 31,
1996 and total revenues and net income
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of $230.1 million (C$318.4 million) and $26.3 million (C$36.4 million),
respectively for the year ended December 31, 1997 compared with $125.8 million
(C$171.6 million) and $37.2 million (C$50.7 million), respectively for the year
ended December 31, 1996.
RELATIONSHIP WITH AT&T/LUCENT/NCR
In connection with the Company's IPO in 1993, the Company entered into a
series of agreements with AT&T to formalize the relationship between the two
companies, including the following three significant agreements, each dated as
of June 25, 1993: (i) an Operating Agreement (the 'AT&T Operating Agreement'),
(ii) an Intercompany Agreement (the 'Intercompany Agreement') and (iii) a
License Agreement (the 'License Agreement'). The Company executed agreements
comparable to the AT&T Operating Agreement with each of Lucent Technologies,
Inc. ('Lucent') and NCR Corporation ('NCR') (the 'Lucent Operating Agreement'
and 'NCR Operating Agreement,' respectively, and, together with the AT&T
Operating Agreement, the 'Operating Agreements'). In addition, the Company also
entered into letter agreements (the 'Agreement Supplements') with Lucent and NCR
pursuant to which Lucent and NCR agreed that various provisions of the
Intercompany Agreement and the License Agreement would apply equally to them.
The initial term of each of the Operating Agreements, the Intercompany
Agreement, the License Agreement and the Agreement Supplements is scheduled to
end on August 4, 2000. In addition, AT&T has the right under the License
Agreement, after two years' prior notice, to require the Company to discontinue
use of the 'AT&T' trade name as part of the Company's corporate or 'doing
business' name.
On March 9, 1998, Newcourt signed the 1998 Lucent Agreement which expands
the global financing program established to serve Lucent's business systems
customers. The 1998 Lucent Agreement replaces the Lucent Operating Agreement and
the letter agreements previously discussed between the Company and Lucent. The
1998 Lucent Agreement covers the period from October 1, 1997 through September
30, 2002. See 'Risk Factors -- Changes in Relationship with AT&T/Lucent/NCR.'
At December 31, 1997, on an owned and securitized basis, the Company's 100
largest customers (including AT&T and Lucent) accounted for approximately 18% of
the Company's owned and securitized portfolio assets, and no customer (with the
exception of AT&T and Lucent, in the aggregate) accounted for more than 1% of
such portfolio assets.
USE OF PROCEEDS
The proceeds from the sale of the Securities will be used primarily to
finance installment sale and lease agreements with respect to direct financing
programs and to repay debt of the Company and its subsidiaries as they become
due. In addition, the proceeds will be used for borrowings by affiliated
entities, all of whom are within the Merged Company's consolidated group, in
connection with the acquisition of equipment, repayment of debt and general
corporate purposes. Ongoing purchases of finance receivables and installment
sale and lease agreements, direct financing programs and any future financing
arrangements will be financed from various sources, including the issuance of
commercial paper and the sale of Securities. The amount and timing of the sales
of the Securities will depend on the timing of asset purchases, market
conditions and the availability of other funds to the Company.
The debt to be repaid with the proceeds from such sales consists generally
of medium-term notes and commercial paper. Such debt has various maturities and
bears interest at various fixed rates. At December 31, 1997, the aggregate
principal amount of the Company's outstanding medium-term notes was
approximately $4.9 billion, and the Company had approximately $1.6 billion in
principal amount of commercial paper outstanding at such date. The weighted
average interest rate of such medium-term notes and commercial paper at
December 31, 1997 was approximately 6.30% and 6.37%, respectively. The net
proceeds of all the outstanding medium-term notes and commercial paper issued or
incurred by the Company within the last year to be repaid with net proceeds from
the sale of Securities have been used by the Company as working capital for
general corporate purposes or to repay previously outstanding commercial paper
or medium-term notes.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges for the Company for the years ended December 31, 1993 through 1997. The
table also includes such ratio calculated on a pro forma basis to give effect to
the Newcourt Acquisition.
<TABLE>
<CAPTION>
PRO FORMA(1)(2) HISTORICAL(1)
----------------------- -------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -------------------------------------
1997 1997 1996 1995 1994 1993
----------------------- ----- ----- ----- ----- -----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ 1.03 1.07 1.60 1.50 1.62 1.57
</TABLE>
- ------------
(1) Earnings before income taxes and cumulative effect on prior years of
accounting change plus fixed charges (the sum of interest on indebtedness
and the portion of rentals representative of the interest factor) divided by
fixed charges. Fixed charges do not include distributions on
Company-obligated preferred securities of the company's subsidiaries. See
'The Company -- General' for a discussion regarding the reduction of the
Company's net income for 1997. Prior to the Merger, a portion of the
Company's indebtedness to AT&T did not bear interest.
(2) The pro forma data represents the Company's ratio of earnings to fixed
charges as if the Newcourt Acquisition had occurred on January 1, 1997. See
'AT&T Capital Corporation and Subsidiaries and Newcourt Credit Group Inc.
Unaudited Pro Forma Consolidated Financial Statements'.
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DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under the Indenture dated as of April
1, 1998, as amended (the 'Indenture'), between the Company and The Chase
Manhattan Bank, as Trustee (the 'Trustee'). A copy of the Indenture is filed as
an exhibit to the Registration Statement. The following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Section
references are to sections of the Indenture, and wherever particular provisions
are referred to, such provisions are incorporated by reference as part of the
statement made, and the statement is qualified in its entirety by such
reference.
The Debt Securities are not guaranteed or supported in any way by AT&T.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that the Debt Securities
may be issued from time to time in one or more series. Reference is made to the
Prospectus Supplement which accompanies this Prospectus for a description of the
Debt Securities being offered thereby including:
(1) the title of the series of the Debt Securities;
(2) the aggregate principal amount of such Debt Securities;
(3) the percentage of their principal amount at which such Debt
Securities will be sold;
(4) the date(s) on which such Debt Securities will mature, or whether
such securities are payable on demand;
(5) the rate(s) per annum at which such Debt Securities will bear
interest, if any, or the method of calculating such rate or rates of
interest;
(6) the times at which such interest, if any, will be payable;
(7) the terms for redemption, early repayment or amortization, if
any;
(8) the denominations in which such Debt Securities are authorized to
be issued;
(9) the coin or currency in which the Debt Securities are
denominated, which may be a Euro;
(10) any provision permitting payments of the principal of or any
premium or interest on the Debt Securities in a coin or currency other than
the currency in which the Debt Securities are denominated, including a
non-U.S. dollar denominated currency;
(11) the manner in which the amount of payments of principal of and
any premium or interest on the Debt Securities is to be determined if such
determination is to be made with reference to one or more indices (which
will be based on one or more U.S. or foreign stocks, bonds or other
securities, one or more U.S. or foreign interest rates, one or more
currencies or currency units, one or more commodities, or one or more
equipment leases, third-party loans, tax receipts, real property values,
SWAP receivables, reinsurance contracts, pooled receivables, or any
combination of the foregoing);
(12) whether such Debt Securities are issuable in registered form
('registered Debt Securities') or bearer form (with or without interest
coupons) ('bearer Debt Securities') or both, and whether such Debt
Securities shall be uncertificated;
(13) whether any series of Debt Securities will be represented by one
or more temporary or permanent global Debt Securities ('global Debt
Securities') and, if so, whether any such global Debt Securities will be in
registered or bearer form, the identity of the depositary for such global
Debt Security or Securities and the method of transferring beneficial
interests in such global Debt Security or Securities;
(14) if a temporary global Debt Security is to be issued with respect
to a series, the terms upon which interests in such temporary global Debt
Security may be exchanged for interests in a permanent global Debt Security
or for definitive Debt Securities of the series and the terms upon
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which interest in a permanent global Debt Security, if any, may be
exchanged for definitive Debt Securities of the series;
(15) information with respect to book-entry procedures, if any;
(16) whether and under what circumstances the Company will pay
additional amounts on any Debt Securities held by a person who is not a
U.S. person in respect of taxes or similar charges withheld and, if so,
whether the Company will have the option to redeem such Debt Securities
rather than pay such additional amounts; and
(17) any other terms, including any terms which may be required by or
advisable under United States laws and regulations or advisable in
connection with the marketing of the Debt Securities of such series, which
will not be inconsistent with the provisions of the Indenture.
Debt Securities of any series may be registered Debt Securities or bearer
Debt Securities or both as specified in the terms of the series. Additionally,
Debt Securities of any series may be represented by one or more global Debt
Securities registered in the name of a depositary's nominee and, if so
represented, beneficial interests in such a global Debt Security will be shown
on, and transfers thereof will be effected only through, records maintained by a
designated depositary and its participants. Debt Securities of any series may
also be uncertificated. Unless otherwise indicated in the Prospectus Supplement,
no bearer Debt Securities (including Debt Securities in permanent global bearer
form) will be offered, sold, resold or delivered to any United States person (as
defined under 'Limitations on Issuance of Bearer Debt Securities' below) in
connection with their original issuance or their exchange for a portion of a
temporary or permanent global Debt Security.
Unless otherwise indicated in the Prospectus Supplement, principal and
interest, if any, will be payable at the office of one or more paying agents as
specified in the Prospectus Supplement; provided that, in the case of registered
Debt Securities, payment of interest may be made at the option of the Company by
check mailed to the address of the person entitled thereto as it appears in the
register of the Debt Securities. To the extent set forth in the Prospectus
Supplement, except in special circumstances set forth in the Indenture,
interest, if any, on bearer Debt Securities will be payable only against
presentation and surrender of the coupons for the interest installments
evidenced thereby as they mature at the office of a paying agent of the Company
located outside of the United States and its possessions. The Company will
maintain one or more such agents for a period of two years after the principal
of such bearer Debt Securities has become due and payable. During any period
thereafter for which it is necessary in order to conform to United States tax
laws or regulations, the Company will maintain a paying agent outside of the
United States and its possessions to which the bearer Debt Securities and
coupons related thereto may be presented for payment and will provide the
necessary funds therefor to such paying agent upon reasonable notice. No payment
with respect to any bearer Debt Security will be made at any office or agency of
the Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States. Notwithstanding the foregoing, payment of principal of (and premium, if
any) and interest on bearer Debt Securities denominated and payable in U.S.
dollars will be made at the office of the Company's Paying Agent in the Borough
of Manhattan, The City of New York if, and only if, payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States is
illegal or effectively precluded by exchange controls or other similar
restrictions.
In connection with any sale during the 'restricted period' as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations
(generally, the first 40 days after the closing date and, with respect to unsold
allotments, until sold), no bearer Debt Security shall be mailed or otherwise
delivered to any location in the United States (as defined under 'Limitations on
Issuance of Bearer Debt Securities' below). A bearer Debt Security in definitive
form (including interests in a permanent global Security) may be delivered only
if the person entitled to receive such bearer Debt Security furnishes written
certification, in the form required by the applicable Indenture, to the effect
that such bearer Debt Security is not owned by or on behalf of a United States
person (as defined under 'Limitations on Issuance of Bearer Debt Securities'
below), or, if a beneficial interest in such bearer Debt Security is owned by or
on behalf of a United States person, that such United States person (i) acquired
and holds the bearer Debt Security through a foreign branch of a United States
financial institution, (ii) is a foreign branch of a United States financial
institution purchasing for its own account
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or resale (and in either case (i) or (ii) such financial institution agrees to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986, as amended (the 'Code'), and the regulations thereunder)
or (iii) is a financial institution purchasing for resale during the restricted
period only to non-United States persons outside the United States. See
'Limitations on Issuance of Bearer Debt Securities' below and 'Global
Securities -- Bearer Debt Securities'.
Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. Unless otherwise indicated in the Prospectus Supplement, registered
Debt Securities will be transferable at the office of one or more registrars as
specified in the Prospectus Supplement.
The Debt Securities will be unsecured obligations of the Company and will
rank pari passu (equal in right of payment) with all other unsecured and
unsubordinated indebtedness of the Company. At December 31, 1997, the Company's
consolidated indebtedness (all of which is unsecured and unsubordinated) was
approximately $7.1 billion. The Debt Securities will, however, be effectively
subordinate (with respect to the assets of the Company's subsidiaries) to the
indebtedness and other liabilities of such subsidiaries. At December 31, 1997,
such indebtedness and other liabilities aggregated approximately $1.1 billion.
The Company has no current intention or plan to increase the amount of such
indebtedness in the future, other than in connection with the growth of the
Company's business.
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in denominations that are integral multiples of
$1,000. No service charge will be made for any transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Debt Securities may be issued as original issue discount Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their stated
principal amount. United States federal income tax consequences and other
special considerations applicable to any such original issue discount Debt
Securities will be described in the Prospectus Supplement relating thereto.
Registered Debt Securities may be exchanged for an equal aggregate
principal amount of registered Debt Securities of the same series, date of
maturity, interest rate and original issue date in such authorized denominations
as may be requested upon surrender of the registered Debt Securities to the
registrar or a paying agent of the Company as specified in the Prospectus
Supplement and upon fulfillment of all other requirements of such agent.
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer Debt Securities of the same series, date of maturity,
interest rate and original issue date in such authorized denominations as may be
requested upon delivery of the bearer Debt Securities with all unpaid coupons
relating thereto to the registrar or a paying agent of the Company as specified
in the Prospectus Supplement and upon fulfillment of all other requirements of
such agent. Registered Debt Securities will not be exchangeable for bearer Debt
Securities.
COVENANTS
Set forth below is a description of the principal covenants of the Company
contained in the Indenture. The Indenture does not restrict the Company, other
than as set forth below, from engaging in any highly leveraged transaction,
reorganization, restructuring, merger or similar transaction, or from incurring
additional indebtedness or causing its subsidiaries to incur additional
indebtedness, any of which transactions could have a material adverse effect on
the holders of the Debt Securities.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE OF ASSETS OF THE
COMPANY. Pursuant to the Indenture, each of the Company and Newcourt (together
with any successor or assign, the 'Guarantor') covenants that it will not merge
or consolidate with any other corporation or sell or convey all or substantially
all its assets to any person (other than such a sale or conveyance to a
Subsidiary (as defined below) of the Company or the Guarantor or any successor
thereto (such a sale or conveyance being called an 'Asset Drop-Down')), unless
(1) either the Company or the Guarantor is the continuing corporation or the
successor corporation or the person which acquires by sale or conveyance
substantially all the assets of the Company or the Guarantor (if other than the
Company or the Guarantor) is an entity organized
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under the laws of the United States of America or any state thereof or of Canada
or any province or territory thereof and expressly assumes the due and punctual
payment of the principal of, premium, if any, and interest, if any, on all the
Debt Securities or the due and punctual payment of all amounts due under the
Guarantee, as applicable, and the due and punctual performance and observance of
all the covenants and conditions of the Indenture and the Guarantee to be
performed or observed by the Company or the Guarantor, by supplemental indenture
in form satisfactory to the Trustee, executed and delivered to the Trustee by
such corporation, and (2) the Company or the Guarantor or such successor
corporation, as the case may be, is not, immediately after such merger or
consolidation, or such sale or conveyance, in default in the performance of any
such covenant or condition. In the case of any such consolidation, merger, sale
or conveyance, and following such an assumption by the successor corporation,
such successor corporation will succeed to and be substituted for the Company or
the Guarantor, as applicable, with the same effect as if it had been named in
the Indenture or the Guarantee, as applicable, and, in the case of any such sale
or conveyance (other than a conveyance by way of lease), the Company or the
Guarantor, as applicable, will be released and discharged from all obligations
and covenants under the Indenture and the Debt Securities or the Guarantee, as
applicable. In the event of any Asset Drop-Down after the date of the Indenture,
any subsequent sale or conveyance of assets by the Subsidiary of the Company or
the Guarantor, as applicable, to which assets were transferred in such Asset
Drop-Down (the 'Drop-Down Subsidiary') will be deemed to be a sale or conveyance
of assets by the Company or the Guarantor for purposes of the covenant described
in this paragraph. (Sections 5.01 and 5.02)
The term 'all or substantially all', which appears in the foregoing
covenant, is not defined in the Indenture, and it does not have a precise
established definition under applicable law. The application of the covenant may
depend on the facts and circumstances of a particular transaction, including the
qualitative as well as the quantitative aspects of such transaction.
Accordingly, there may be uncertainty in connection with any particular
transaction as to whether a sale or conveyance of all or substantially all of
the assets of the Company or the Guarantor has occurred and thus as to whether
the Company or the Guarantor has complied with this covenant. Because New York
law governs the Indenture, New York law will govern the interpretation of such
term.
LIMITATIONS ON INCURRENCE OF SECURED DEBT. The Company will not, nor will
it permit any Restricted Subsidiary (as defined below) to, incur, issue, assume
or guarantee any indebtedness for money borrowed ('debt') secured by any pledge,
mortgage, security interest or lien ('lien') on any property or assets of the
Company or any Restricted Subsidiary, or on any shares of stock or debt of any
Restricted Subsidiary, without effectively providing that the principal of,
premium, if any, and interest on the Debt Securities of each series (together
with, if the Company so determines, any other debt of the Company or such
Restricted Subsidiary, which is not subordinated to the Debt Securities of each
series) shall be secured equally and ratably with (or prior to) such debt, so
long as any such debt shall be so secured, unless, after giving effect thereto,
the aggregate amount of all such secured debt of the Guarantor would not exceed
10% of the Consolidated Net Tangible Assets (as defined below); provided,
however, that (i) any recourse provided by the Company or any Restricted
Subsidiary in connection with any sale, transfer or other disposition by the
Company or any Restricted Subsidiary of Accounts Receivable (as defined below)
or of any Restricted Subsidiary substantially all the assets of which are
Accounts Receivable which constitutes a 'sale' under generally accepted
accounting principles (as in effect at the time of such sale, transfer or other
disposition) shall not, in any event, constitute debt and (ii) no Asset
Drop-Down shall, in any event, constitute a lien; and provided further that
neither the satisfaction and discharge of any debt pursuant to the Indenture or
pursuant to any similar provision in any other indenture or instrument governing
any debt, nor the defeasance of any debt pursuant to the Indenture or pursuant
to any similar provision in any other indenture or instrument governing any
debt, shall be deemed the incurrence, issue, assumption or guarantee of debt
secured by a lien for purposes of this provision. Notwithstanding the foregoing,
this restriction does not apply to: (1) liens on property of, or on any shares
of stock or debt of, any corporation existing at the time such corporation
becomes a Restricted Subsidiary; (2) liens on property, shares of stock, other
equity interests, or debt existing at the time of acquisition or repossession
thereof by the Company or any Restricted Subsidiary; (3) liens on physical
property (or any Accounts Receivable arising in connection with the lease
thereof), shares of stock, other equity interests, or debt acquired (or, in the
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case of physical property, constructed) after the date of the Indenture by the
Company or any Restricted Subsidiary, which liens are created prior to, at the
time of, or within one year after such acquisition (or, in the case of physical
property, the completion of such construction or commencement of commercial
operation of such property, whichever is later) to secure any debt issued,
incurred, assumed or guaranteed prior to, at the time of, or within one year
after such acquisition (or such completion or commencement, whichever is later)
or to secure any other debt issued, incurred, assumed or guaranteed at any time
thereafter for the purpose of refinancing all or any part of such debt; (4)
liens on Accounts Receivable of the Company or any Restricted Subsidiary arising
from or in connection with transactions entered into by the Company or such
Restricted Subsidiary after the date of the Indenture or on Accounts Receivable
acquired by the Company or such Restricted Subsidiary after such date from
others, which liens are created prior to, at the time of, or within one year
after such Accounts Receivable arise or are acquired or, if later, the
completion of the delivery or installation of the equipment or goods or the
rendering of the services or the advancement or loaning of funds relating
thereto (i) as a result of any guarantee, repurchase or other contingent (direct
or indirect) or recourse obligation of the Company or such Restricted Subsidiary
in connection with the discounting, sale, assignment, transfer or other
disposition of such Accounts Receivable or any interest therein, or (ii) to
secure or provide for the payment of all or any part of the investment of the
Company or such Restricted Subsidiary in any such Accounts Receivable (whether
or not such Accounts Receivable are the Accounts Receivable on which such liens
are created) or the purchase price thereof or to secure any debt (including
without limitation Non-Recourse Debt (as defined below)) issued, incurred,
assumed or guaranteed for the purpose of financing or refinancing all or any
part of such investment or purchase price; (5) liens in favor of the Guarantor
or any of the Guarantor's Subsidiaries; (6) liens in favor of the United States
of America or any State thereof or the District of Columbia, or any agency,
department or other instrumentality thereof, to secure progress, advance or
other payments pursuant to any contract or provision of any statute; (7) liens
securing the performance of letters of credit, bids, tenders, sales contracts,
purchase agreements, leases, surety and performance bonds, and other similar
obligations not incurred in connection with the borrowing of money; (8) liens to
secure Non-Recourse Debt in connection with the Company or any Restricted
Subsidiary engaging in any leveraged or single-investor or other lease
transactions, whether (in the case of liens on or relating to leases or groups
of leases or the particular properties subject thereto) such liens be on the
particular properties subject to any leases involved in any of such transactions
and/or the rental or other payments or rights under such leases or, in the case
of any group of related or unrelated leases, on the properties subject to the
leases comprising such group and/or on the rental or other payments or rights
under such leases, or on any direct or indirect interest therein, and whether
(in any case) (i) such liens be created prior to, at the time of, or at any time
after the entering into of such lease transactions and/or (ii) such leases be in
existence prior to, or be entered into by the Company or such Restricted
Subsidiary at the time of or at any time after, the purchase or other
acquisition by the Company or such Restricted Subsidiary of the properties
subject to such leases; and (9) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any of
the foregoing; provided, however, that any such extension, renewal or
replacement shall be limited to all or a part of the property or assets which
secured the lien so extended, renewed or replaced (plus any improvements on such
property). (Section 4.03)
'Accounts Receivable' means (i) any accounts receivable (whether or not
earned by performance), chattel paper, instruments, documents, general
intangibles, trade acceptances, any other rights to receive installment, rental
or other payments for, or relating to amounts due or to become due on account of
equipment or goods sold or leased or to be sold or leased or services rendered
or to be rendered or funds advanced or loaned or to be advanced or loaned and
other rights to payment of any kind, (ii) any proceeds of any of the foregoing
and (iii) any interest in any property or asset of any kind (whether of the
obligor under such Accounts Receivable or any other person) securing the payment
of any item listed in clause (i) hereof. (Section 1.01)
'Consolidated Net Tangible Assets' means, at the date of any determination,
the total assets appearing on the consolidated balance sheet of the Guarantor as
at the end of the most recent fiscal quarter of the Guarantor for which such
balance sheet is available, prepared in accordance with generally accepted
accounting principles, less (a) all current liabilities (obligations whose
liquidation is
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reasonably expected to occur within twelve months), (b) investments in and
advances to Subsidiaries of the Guarantor other than Restricted Subsidiaries or
other entities accounted for on the equity method of accounting and (c)
Intangible Assets. (Section 1.01)
'Intangible Assets' means the value (net of any applicable reserves), as
shown on or reflected in the Guarantor's consolidated balance sheet, of: (i) all
trade names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organization and development costs; (iii) deferred charges (other than prepaid
items such as insurance, taxes, interest, commissions, rents and similar items
and tangible assets being amortized); and (iv) unamortized debt discount and
expense, less unamortized premium. (Section 1.01)
'Non-Recourse Debt' of the Company or any Restricted Subsidiary means any
indebtedness for borrowed money of the Company or such Restricted Subsidiary, as
the case may be, which is secured by any lien on, or payable solely from the
income and proceeds of, any property (including, without limiting the generality
of such term, any intangible assets), shares of stock, other equity interests or
debt of the Company or such Restricted Subsidiary, as the case may be, and which
is not a general obligation of the Company or such Restricted Subsidiary, as the
case may be. (Section 1.01)
'Restricted Subsidiary' means each Subsidiary of the Company organized
under the laws of any State of the United States or the District of Columbia, no
substantial portion of the business of which is carried on outside the United
States; provided that each Drop-Down Subsidiary will be a Restricted Subsidiary.
(Section 1.01)
'Subsidiary' means any corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by any person. For purposes of
such definition, 'voting stock' means stock ordinarily having voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency. (Section
1.01)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein in
respect of any series of Debt Securities shall have occurred and be continuing,
either the Trustee or the holders of not less than 25% in aggregate principal
amount of the outstanding Debt Securities of such series may declare the
principal of all the securities of such series to be due and payable. (Section
6.01)
Events of Default in respect of the Debt Securities of any series are
defined in the Indenture as being: default for 90 days in payment of any
interest installment when due; unless otherwise specified in the Prospectus
Supplement with respect to the Debt Securities of any series, default in payment
of principal of or premium, if any, on Debt Securities of such series when due;
default for 90 days after written notice to the Company by the Trustee or by the
holders of not less than 25% in aggregate principal amount of the outstanding
Debt Securities of such series in the performance of any other agreement in the
Debt Securities or Indenture in respect of such series; and certain events of
bankruptcy, insolvency and reorganization of the Company or the Guarantor.
(Section 6.01)
The Indenture provides that the Company will, within 120 days after the
close of each fiscal year, commencing with the first fiscal year following the
issuance of any series of Debt Securities, file with the Trustee a certificate
stating whether or not the Company has complied with all conditions and
covenants on its part contained in the Indenture and, if not, specifying each
default (without regard to any grace period or requirement of notice under the
Indenture) and the nature thereof. (Section 4.04)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities, if such
default is known to the Trustee, give to the holders of such series notice of
all defaults known to it; provided that, except in the case of default in
payment on any of the Debt Securities of such series, the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the holders of such series. The
term 'default' for the purpose of this provision means any event which is, or
after notice or passage of time or both would be, an Event of Default. (Section
7.05)
The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during an Event of Default in respect of any series of Debt
Securities to act with the required standard of care, to
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refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it. (Section 7.01)
The Indenture provides that the holders of a majority in aggregate
principal amount of the outstanding securities of any series affected (with each
series voting as a separate class) may direct the time, method and place of
conducting proceedings for remedies available to the Trustee, or exercising any
trust or power conferred on the Trustee, in respect of such series. (Section
6.06)
In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of a series may on behalf of the holders of all Debt
Securities of such series waive any past default or Event of Default, or
compliance with certain provisions of the Indenture, except, among other things,
a default in payment of the principal of, premium, if any, or interest on, any
of the Debt Securities of such series. (Sections 6.01 and 6.06)
DISCHARGE AND DEFEASANCE
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of any series of Debt Securities issued under the
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee as trust funds an amount in cash
sufficient to pay at maturity (or upon redemption) the principal of, premium, if
any, and interest on such Debt Securities. (Section 8.01)
In the case of any series of Debt Securities with respect to which the
exact amounts (including the currency of payment) of principal of and interest
due on such series can be determined at the time of making the deposit referred
to below (which include Debt Securities with a floating or variable rate of
interest that cannot exceed a specified or determinable maximum rate), the
Company at its option may also (i) discharge any and all of its obligations to
holders of such series of Debt Securities ('defeasance') on the 91st day after
the conditions set forth below have been satisfied, but may not thereby avoid
its duty to register the transfer or exchange of such series of Debt Securities,
to replace any temporary, mutilated, destroyed, lost or stolen Debt Securities
of such series or to maintain an office or agency in respect of such series of
Debt Securities, or (ii) be released with respect to such series of Debt
Securities from the obligations imposed by the covenants described under
'Covenants' above ('covenant defeasance'). Defeasance and covenant defeasance
may be effected only if, among other things, (i) the Company irrevocably
deposits with the Trustee as trust funds (a) money in an amount, (b) in the case
of Debt Securities payable only in U.S. Dollars, U.S. Governmental Obligations
(as defined in the Indenture) which through the payment of interest and
principal in respect thereof will provide money in an amount, or (c) a
combination of (a) and (b), certified by a nationally recognized firm of
independent public accountants to be sufficient to pay each installment of
principal of and interest on all outstanding Debt Securities of such series on
the dates such installments of principal and interest are due; and (ii) the
Company delivers to the Trustee an opinion of independent counsel to the effect
that the holders of such series of Debt Securities will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States federal
income tax on the same amount and in the same manner and at the same time as
would have been the case if such defeasance or covenant defeasance had not
occurred (which opinion may include or be based on a ruling to that effect
received from or published by the Internal Revenue Service). (Section 8.02)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of a majority in principal amount of the
outstanding Debt Securities of each series affected thereby (with such series
voting as a separate class), to execute supplemental indentures adding any
provisions to or changing or eliminating any of the provisions of the Indenture
or modifying the rights of the holders of Debt Securities of each such series,
except that no such supplemental indenture may, without the consent of each
holder affected, among other things, change the maturity of any Debt Securities,
or change the principal amount thereof, or any premium thereon, or change the
rate or
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change the time of payment of interest thereon, make any Debt Security payable
in money other than that stated in the Debt Security, or reduce the aforesaid
percentage of outstanding Debt Securities required to approve any such
supplemental indenture. (Section 9.02)
CONCERNING THE TRUSTEE
The Company may from time to time maintain lines of credit, and have other
customary banking relationships, with The Chase Manhattan Bank, the Trustee
under the Indenture. In addition, The Chase Manhattan Bank is the trustee under
the Indentures dated as of April 9, 1990, and as of June 1, 1992, each as
amended, among the Company, AT&T, AT&T Capital Holdings, Inc., a wholly-owned
subsidiary of AT&T, and The Chase Manhattan Bank, pursuant to which, the Company
assumed and AT&T guaranteed certain medium-term notes and long-term debt issued
by AT&T Capital Holdings, Inc. As of December 31, 1997 the aggregate outstanding
principal amount of such medium-term and long-term notes was approximately
$106.8 million. Furthermore, The Chase Manhattan Bank is the trustee under the
Indenture dated as of July 1, 1993 between the Company and The Chase Manhattan
Bank pursuant to which the Company has issued $4.8 billion aggregate principal
amount of medium-term notes.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal tax laws and regulations, bearer
Debt Securities may not be offered or sold during the restricted period (as
defined under 'General' above), or delivered in definitive form in connection
with a sale during the restricted period, in the United States or to United
States persons other than to (a) the United States office of (i) an
international organization (as defined in Section 7701(a)(18) of the Code and
the regulations thereunder), (ii) a foreign central bank (as defined in Section
895 of the Code and the regulations thereunder), or (iii) any underwriter,
agent, or dealer offering or selling bearer Debt Securities during the
restricted period (a 'Distributor') pursuant to a written contract with the
issuer or with another Distributor, that purchases bearer Debt Securities for
resale or for its own account and agrees to comply with the requirements of
Section 165(j)(3)(A), (B), or (C) of the Code, or (b) the foreign branch of a
United States financial institution purchasing for its own account or for
resale, which institution agrees to comply with the requirements of Section 165
(j)(3)(A), (B), or (C) of the Code. In addition, a sale of a bearer Debt
Security may be made during the restricted period to a United States person who
acquired and holds the bearer Debt Security on the Certification Date through a
foreign branch of a United States financial institution that agrees to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the Code. Any
Distributor (including an affiliate of a Distributor) offering or selling bearer
Debt Securities during the restricted period must agree not to offer or sell
bearer Debt Securities in the United States or to United States persons (except
as discussed above) and must employ procedures reasonably designed to ensure
that its employees or agents directly engaged in selling bearer Debt Securities
are aware of these restrictions.
Bearer Debt Securities and their interest coupons will bear the following
legend: 'Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the limitations
provided in Sections 165(j) and 1287(a) of the Internal Revenue Code'.
Purchasers of bearer Debt Securities may be affected by certain limitations
under United States tax laws. See the applicable Prospectus Supplement for a
summary of material U.S. federal income tax consequences to United States
persons investing in bearer Debt Securities.
As used herein, '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 and an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source, and 'United States' means the United States of America (including the
States and the District of Columbia) and its possessions including Puerto Rico,
the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
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DESCRIPTION OF THE WARRANTS
The Debt Warrants, Currency Warrants, Index Warrants and Interest Rate
Warrants are to be issued under separate warrant agreements (each a 'Warrant
Agreement' and respectively a 'Debt Warrant Agreement', a 'Currency Warrant
Agreement', an 'Index Warrant Agreement' and an 'Interest Rate Warrant
Agreement') to be entered into between the Company and one or more banks or
trust companies, as warrant agent (each a 'Warrant Agent' and respectively a
'Debt Warrant Agent', a 'Currency Warrant Agent', an 'Index Warrant Agent' and
an 'Interest Rate Warrant Agent'), all as shall be set forth in the Prospectus
Supplement relating to the Warrants being offered thereby. A form of each type
of Warrant Agreement, including a form of warrant certificate representing each
type of Warrant (each a 'Warrant Certificate' and respectively a 'Debt Warrant
Certificate', a 'Currency Warrant Certificate', an 'Index Warrant Certificate'
and an 'Interest Rate Warrant Certificate'), reflecting the alternative
provisions that may be included in the Warrant Agreements to be entered into
with respect to particular offerings of Warrants, are herein incorporated by
reference to exhibits to the Registration Statement of which this Prospectus is
a part. The descriptions contained herein of the Warrant Agreements and the
Warrant Certificates and summaries of certain provisions of the Warrant
Agreements and the Warrant Certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the applicable Warrant Agreements and the Warrant Certificates,
including the definitions therein of certain terms not otherwise defined in this
Prospectus. Wherever particular sections of, or terms defined in, the Warrant
Agreements are referred to, such sections or defined terms are incorporated
herein by reference.
The particular terms of each issue of Warrants, as well as any
modifications or additions to the general terms of the applicable Warrant
Agreement or Warrant Certificate, will be described in the Prospectus Supplement
relating to such Warrants. Accordingly, for a description of the terms of a
particular issue of Warrants, reference must be made to the Prospectus
Supplement relating thereto and to the descriptions set forth below.
DEBT WARRANTS
The Company may issue, together with Debt Securities, Currency Warrants,
Index Warrants or Interest Rate Warrants, or separately, Debt Warrants for the
purchase of Debt Securities. If any of the Debt Warrants are sold for foreign
currencies or foreign currency units or if any series of Debt Warrants is
exercisable in foreign currencies or foreign currency units, the restrictions,
elections, tax consequences, specific terms and other information with respect
to such issue of Debt Warrants and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
If so specified in the Prospectus Supplement, the Debt Warrants may, in
certain circumstances, be cancelled by the Company prior to their expiration
date and the holders thereof will be entitled to receive only the applicable
Cancellation Amount. The Cancellation Amount may be either a fixed amount or an
amount that varies during the term of the Debt Warrants in accordance with a
schedule or formula.
GENERAL
The Prospectus Supplement will describe the terms of any Debt Warrants
offered thereby, the Debt Warrant Agreement relating to such Debt Warrants and
the Debt Warrant Certificates representing such Debt Warrants, including the
following: (1) the title of such Debt Warrants; (2) the aggregate amount of such
Debt Warrants; (3) the initial offering price of such Debt Warrants; (4) the
exercise price; (5) the currency or currency unit in which the initial offering
price and/or the exercise price of such Debt Warrants is payable; (6) whether
the Debt Warrants are to be issuable in registered or bearer form or both, and
if in bearer form whether such Debt Warrants may be exchanged for Debt Warrants
in registered form and the circumstances and places for such exchange, if
permitted; (7) if applicable, the title and terms of related Debt Securities
with which such Debt Warrants are issued, the number of such Debt Warrants
issued with each such Debt Security and the date, if any, on and after which
such Debt Warrants and such Debt Securities will be separately transferable;
(8) the title, aggregate principal
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amount and terms of the Debt Securities purchasable upon exercise of all such
Debt Warrants; (9) the principal amount of Debt Securities purchasable upon
exercise of each Debt Warrant and the price at which such principal amount of
Debt Securities may be purchased upon such exercise; (10) the date on which the
right to exercise such Debt Warrants shall commence and the date (the 'Debt
Warrant Expiration Date') on which such right shall expire; (11) any minimum
number of Debt Warrants which must be exercised at any one time, other than upon
automatic exercise; (12) the maximum number, if any, of such Debt Warrants that
may, subject to election by the Company, be exercised by all owners (or by any
person or entity) on any day; (13) any provisions for the automatic exercise of
such Debt Warrants; (14) whether and under which circumstances such Debt
Warrants may be cancelled by the Company prior to expiration; (15) any other
procedures and conditions relating to the exercise of such Debt Warrants; (16)
the identity of the Debt Warrant Agent; (17) any national securities exchange on
which such Debt Warrants will be listed; (18) provisions, if any, for issuing
such Debt Warrants in certificated form; (19) if applicable, a discussion of
certain United States federal income tax, accounting or other special
considerations applicable thereto; and (20) any other terms of the Debt
Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and, if in registered form, may be
presented for registration of transfer and Debt Warrants may be exercised at the
corporate trust office of the Debt Warrant Agent or any other office indicated
in the Prospectus Supplement relating thereto (Section 3.1). Prior to the
exercise of Debt Warrants, holders of Debt Warrants will not be entitled to
payments of principal of (or premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise, or to enforce any of the covenants in
the Indenture (Section 4.1).
EXERCISE OF DEBT WARRANTS
Unless otherwise provided in the Prospectus Supplement, each Debt Warrant
will entitle the holder thereof to purchase for cash such principal amount of
Debt Securities at such exercise price as shall in each case be set forth in, or
be determinable as set forth in, the Prospectus Supplement relating to the Debt
Warrants offered thereby (Section 2.1). Debt Warrants may be exercised at any
time up to the close of business on the Debt Warrant Expiration Date specified
in the Prospectus Supplement relating to the Debt Warrants offered thereby.
After the close of business on the Debt Warrant Expiration Date (or such later
date to which such Debt Warrant Expiration Date may be extended by the Company),
unexercised Debt Warrants will become void (Section 2.2).
Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants offered thereby. Upon receipt of payment and the
Debt Warrant Certificate properly completed and duly executed at the corporate
trust office of the Debt Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward to the
person entitled thereto the Debt Securities purchasable upon such exercise. If
fewer than all the Debt Warrants represented by such Debt Warrant Certificate
are exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants (Section 2.3).
OTHER INFORMATION
Other important information concerning Debt Warrants is set forth below
under 'Certain Items Applicable to All Warrants -- Modifications', ' -- Merger,
Consolidation, Sale or Other Disposition' and ' -- Enforceability of Rights by
Beneficial Owner; Governing Law'.
CURRENCY WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants, Index
Warrants or Interest Rate Warrants, or separately, Currency Warrants (a) in the
form of Currency Put Warrants, entitling the owners thereof to receive from the
Company the Currency Warrant Cash Settlement Value (as shall be defined in the
Prospectus Supplement) of the right to sell a specified amount of one currency
(whether U.S. dollars or a foreign currency or foreign currency unit) (a 'Base
Currency') for a specified amount of a different currency (whether U.S. dollars
or a foreign currency or foreign currency unit) (a 'Reference Currency'), (b) in
the form of Currency Call Warrants, entitling the owners thereof to
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receive from the Company the Currency Warrant Cash Settlement Value of the right
to purchase a specified amount of a Base Currency for a specified amount of a
Reference Currency, or (c) in such other form as shall be specified in the
related Prospectus Supplement. The Prospectus Supplement for an issue of
Currency Warrants will set forth the formula pursuant to which the Currency
Warrant Cash Settlement Value will be determined, including any multipliers, if
applicable.
The Prospectus Supplement will describe the terms of any Currency Warrants
offered thereby, the Currency Warrant Agreement relating to such Currency
Warrants and the Currency Warrant Certificates representing such Currency
Warrants, including the following: (1) the title of such Currency Warrants; (2)
the aggregate amount of such Currency Warrants; (3) the initial offering price
of such Currency Warrants; (4) the exercise price, if any; (5) the currency or
currency unit in which the initial offering price, the exercise price, if any,
and the Currency Warrant Cash Settlement Value of such Currency Warrants is
payable; (6) the Base Currency and the Reference Currency for such Currency
Warrants; (7) whether such Currency Warrants shall be Currency Put Warrants,
Currency Call Warrants or otherwise; (8) the formula for determining the
Currency Warrant Cash Settlement Value, if applicable, of each Currency Warrant;
(9) whether and under what circumstances a minimum and/or maximum expiration
value is applicable upon the expiration or exercise of such Currency Warrants;
(10) the effect or effects, if any, of the occurrence of a Market Disruption
Event or Force Majeure Event (each as defined in the Currency Warrant
Agreement); (11) the date on which the right to exercise such Currency Warrants
shall commence and the date (the 'Currency Warrant Expiration Date') on which
such right shall expire; (12) any minimum number (or maximum number) of Currency
Warrants which must be exercised at any one time, other than upon automatic
exercise; (13) the maximum number, if any, of such Currency Warrants that may,
subject to election by the Company, be exercised by all owners (or by any person
or entity) on any day; (14) any provisions for the automatic exercise of such
Currency Warrants other than at expiration; (15) whether and under what
circumstances such Currency Warrants may be cancelled by the Company prior to
their expiration date; (16) any provisions permitting a Holder to condition any
notice of exercise on the absence of certain specified changes in the Spot Rate
(as defined in the Currency Warrant Agreement); (17) any other procedures and
conditions relating to the exercise of such Currency Warrants; (18) the identity
of the Currency Warrant Agent; (19) any national securities exchange on which
such Currency Warrants will be listed; (20) provisions, if any, for issuing such
Currency Warrants in certificated form; (21) if such Currency Warrants are not
issued in book-entry form, the place or places at which payments in respect of
such Currency Warrants are to be made by the Company; (22) if applicable, a
discussion of certain United States federal income tax, accounting or other
special considerations applicable thereto; and (23) any other terms of such
Currency Warrants.
Other important information concerning Currency Warrants is set forth below
under 'Certain Items Applicable to All Warrants -- Modifications', ' -- Merger,
Consolidation, Sale or Other Disposition' and ' -- Enforceability of Rights by
Beneficial Owner; Governing Law' and 'Certain Items Applicable to Currency
Warrants, Index Warrants and Interest Rate Warrants -- Exercise of Warrants',
' -- Market Disruption and Force Majeure Events', ' -- Settlement Currency' and
' -- Listing'.
INDEX WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants,
Currency Warrants or Interest Rate Warrants, or separately, Index Warrants (a)
in the form of Index Put Warrants, entitling the owners thereof to receive from
the Company the Index Cash Settlement Value (as shall be defined in the
Prospectus Supplement) in cash, which amount will be determined by reference to
the amount, if any, by which the Fixed Amount (as shall be defined in the
Prospectus Supplement) at the time of exercise exceeds the Index Value (as shall
be defined in the Prospectus Supplement), (b) in the form of Index Call
Warrants, entitling the owners thereof to receive from the Company the Index
Cash Settlement Value in cash, which amount will be determined by reference to
the amount, if any, by which the Index Value at the time of exercise exceeds the
Fixed Amount, (c) in the form of Index Spread Warrants, entitling the owners
thereof to receive from the Company the Index Cash Settlement Value in cash,
which amount will be determined by reference to the amount, if any, by which the
Reference Index Value (as shall be defined in the Prospectus Supplement) at the
time of exercise exceeds the Base
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Index Value (as shall be defined in the Prospectus Supplement) or (d) in such
other form as shall be specified in the related Prospectus Supplement. The
Prospectus Supplement for an issue of Index Warrants will set forth the formula
pursuant to which the Index Cash Settlement Value will be determined, including
any multipliers, if applicable.
The Prospectus Supplement will describe the terms of Index Warrants offered
thereby, the Index Warrant Agreement relating to such Index Warrants and the
Index Warrant Certificate representing such Index Warrants, including the
following: (1) the title of such Index Warrants; (2) the aggregate amount of
such Index Warrants; (3) the initial offering price of such Index Warrants; (4)
the exercise price, if any; (5) the currency or currency unit in which the
initial offering price, the exercise price, if any, and the Index Cash
Settlement Value of the Index Warrants is payable; (6) the Index or Indices for
such Index Warrants, which may be based on one or more U.S. or foreign stocks,
bonds, or other securities, one or more U.S. or foreign interest rates, one or
more currencies or currency units, or any combination of the foregoing, and may
be a preexisting U.S. or foreign index compiled and published by a third party
or an index based on one or more securities, interest rates or currencies
selected by the Company solely in connection with the issuance of such Index
Warrants, and certain information regarding such Index or Indices and the
underlying securities, interest rates or currencies or currency units
(including, to the extent possible, the policies of the publisher of the Index
with respect to additions, deletions and substitutions of such securities,
interests rates or currencies or currency units); (7) whether such Index
Warrants shall be Index Put Warrants, Index Call Warrants, Index Spread Warrants
or otherwise; (8) the method of providing for a substitute Index or Indices or
otherwise determining the amount payable in connection with the exercise of such
Index Warrants if any Index changes or ceases to be made available by its
publisher, which determination will be made by an independent expert; (9) the
formula for determining the Index Cash Settlement Value, if applicable, of each
Index Warrant; (10) whether and under what circumstances a minimum and/or
maximum expiration value is applicable upon the expiration or exercise of such
Index Warrants; (11) the effect or effects, if any, of the occurrence of a
Market Disruption Event or Force Majeure event (each as defined in the Index
Warrant Agreement); (12) the date on which the right to exercise such Index
Warrants shall commence and the date (the 'Index Warrant Expiration Date') on
which such right shall expire; (13) any minimum number of Index Warrants which
must be exercised at any one time, other than upon automatic exercise; (14) the
maximum number if any, of such Index Warrants that may, subject to election by
the Company, be exercised by all owners (or by any person or entity) on any day;
(15) any provisions for the automatic exercise of such Index Warrants other than
at expiration; (16) whether and under what circumstances such Index Warrants may
be cancelled by the Company prior to their expiration date; (17) any provisions
permitting a Holder to condition any notice of exercise on the absence of
certain specified changes in the Index Value, the Base Index Value or the
Referenced Index Value after the date of exercise; (18) any other procedures and
conditions relating to the exercise of such Index Warrants; (19) the identity of
the Index Warrant Agent; (20) any national securities exchange on which such
Index Warrants will be listed; (21) provisions, if any, for issuing such Index
Warrants in certificated form; (22) if such Index Warrants are not issued in
book-entry form, the place or places at which payments in respect of such Index
Warrants are to be made by the Company; (23) if applicable, a discussion of
certain United States federal income tax, accounting or other special
considerations applicable thereto; and (24) any other terms of such Index
Warrants.
Other important information concerning Index Warrants is set forth below
under 'Certain Items Applicable to All Warrants -- Modifications', ' -- Merger,
Consolidation, Sale or Other Disposition' and ' -- Enforceability of Rights by
Beneficial Owner; Governing Law' and 'Certain Items Applicable to Currency
Warrants, Index Warrants and Interest Rate Warrants -- Exercise of Warrants',
' -- Market Disruption and Force Majeure Events', ' -- Settlement Currency' and
' -- Listing'.
INTEREST RATE WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants,
Currency Warrants or Index Warrants, or separately, Interest Rate Warrants (a)
in the form of Interest Rate Put Warrants, entitling the owners thereof to
receive from the Company the Interest Rate Cash Settlement Value (as shall be
defined in the Prospectus Supplement) in cash, which amount will be determined
by reference
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to the amount, if any, by which the Spot Amount (as shall be defined in the
Prospectus Supplement) is less than the Strike Amount (as shall be defined in
the Prospectus Supplement) on the applicable valuation date following exercise,
(b) in the form of Interest Rate Call Warrants, entitling the owners thereof to
receive from the Company the Interest Rate Cash Settlement Value in cash, which
amount will be determined by reference to the amount, if any, by which the Spot
Amount on the applicable valuation date following exercise exceeds the Strike
Amount or (c) in such other form as shall be specified in the related Prospectus
Supplement. The Prospectus Supplement for an issue of Interest Rate Warrants
will set forth the formula pursuant to which the Interest Rate Cash Settlement
Value will be determined, including any multipliers, if applicable. The Strike
Amount may either be a fixed yield, price or rate of a Sovereign Debt
Instrument, a Rate or any combination of Sovereign Debt Instruments and/or Rates
or a yield, price or rate that varies during the term of the Interest Rate
Warrants in accordance with a schedule or formula. The Sovereign Debt Instrument
will be one or more instruments specified in the applicable Prospectus
Supplement issued either by the United States government or by a foreign
government. The Rate will be one or more interest rates or interest rate swap
rates established from time to time by one or more financial institutions
specified in the applicable Prospectus Supplement.
The Prospectus Supplement will describe the terms of Interest Rate Warrants
offered thereby, the Interest Rate Warrant Agreement relating to such Interest
Rate Warrants and the Interest Rate Warrant Certificate representing such
Interest Rate Warrants, including the following: (1) the title of such Interest
Rate Warrants; (2) the aggregate amount of such Interest Rate Warrants; (3) the
initial offering price of such Interest Rate Warrants; (4) the exercise price,
if any; (5) the currency or currency unit in which the initial offering price,
the exercise price, if any, and the Interest Rate Cash Settlement Value of such
Interest Rate Warrants is payable; (6) the Sovereign Debt Instrument (which may
be one or more debt instruments issued either by the United States government or
by a foreign government), the Rate (which may be one or more interest rates or
interest rate swap rates established from time to time by one or more specified
financial institutions) or the other yield, price or rate utilized for such
Interest Rate Warrants, and certain information regarding such Sovereign Debt
Instrument, Rate or such other yield, price or rate; (7) whether such Interest
Rate Warrants shall be Interest Rate Put Warrants, Interest Rate Call Warrants
or otherwise; (8) the Strike Amount, the method of determining the Spot Amount
and the method of expressing movements in the yield or closing price of the
Sovereign Debt Instrument or in the level of the Rate or such other yield, price
or rate as a cash amount in the currency in which the Interest Rate Cash
Settlement Value of such Warrants is payable; (9) the formula for determining
the Interest Rate Cash Settlement Value, if applicable, of each Interest Rate
Warrant; (10) whether and under what circumstances a minimum and/or maximum
expiration value is applicable upon the expiration or exercise of such Interest
Rate Warrants; (11) the effect or effects, if any, of the occurrence of a Market
Disruption Event or Force Majeure Event (each as defined in the Interest Rate
Warrant Agreement); (12) the date on which the right to exercise such Interest
Rate Warrants shall commence and the date (the 'Interest Rate Warrant Expiration
Date') on which such right shall expire; (13) any minimum number of Interest
Rate Warrants which must be exercised at any one time, other than upon automatic
exercise; (14) the maximum number, if any, of such Interest Rate Warrants that
may, subject to elections by the Company, be exercised by all owners (or by any
person or entity) on any day; (15) any provisions for the automatic exercise of
such Interest Rate Warrants other than at expiration; (16) whether and under
what circumstances such Interest Rate Warrants may be cancelled by the Company
prior to their expiration date; (17) any provisions permitting a Holder to
condition any notice of exercise on the absence of certain specified changes in
the Spot Amount after the date of exercise; (18) any other procedures and
conditions relating to the exercise of such Interest Rate Warrants; (19) the
identity of the Interest Rate Warrant Agent; (20) any national securities
exchange on which such Interest Rate Warrants will be listed; (21) provisions,
if any, for issuing such Interest Rate Warrants in certificated form; (22) if
such Interest Rate Warrants are not issued in book-entry form, the place or
places at which payments in respect of such Interest Rate Warrants are to be
made by the Company; (23) if applicable, a discussion of certain United States
federal income tax, accounting or other special considerations applicable
thereto; and; (24) any other terms of such Interest Rate Warrants.
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Other important information concerning Interest Rate Warrants is set forth
below under 'Certain Items Applicable to All Warrants -- Modifications',
' -- Merger, Consolidation, Sale or Other Disposition' and ' -- Enforceability
of Rights by Beneficial Owner; Governing Law' and 'Certain Items Applicable to
Currency Warrants, Index Warrants and Interest Rate Warrants -- Exercise of
Warrants', ' -- Market Disruption and Force Majeure Events', ' -- Settlement
Currency' and ' -- Listing'.
CERTAIN ITEMS APPLICABLE TO ALL WARRANTS
MODIFICATIONS. Each Warrant Agreement and the terms of each issue of
Warrants may be amended by the Company and the applicable Warrant Agent, without
the consent of the beneficial owners or the registered holders, for the purpose
of curing any ambiguity, or of curing, correcting or supplementing any defective
or inconsistent provision contained therein, or in any other manner which the
Company may deem necessary or desirable and which will not materially adversely
affect the interests of the beneficial owners of the then outstanding
unexercised Warrants (Section 6.1).
The Company and the applicable Warrant Agent may also modify or amend the
applicable Warrant Agreement and the terms of the related Warrants, with the
consent of the beneficial owners of not less than a majority in number of the
then outstanding unexercised Warrants affected, provided that no such
modification or amendment that reduces the amount receivable upon exercise,
shortens the period of time during which the Warrants may be exercised,
increases the minimum or decreases the maximum number of Warrants that may be
exercised by or on behalf of any one beneficial owner at any one time, changes
the formula for determining the Cash Settlement Value or otherwise materially
and adversely affects the exercise rights of the owners or reduces the number of
outstanding Warrants the consent of whose beneficial owners is required for
modification or amendment of the applicable Warrant Agreement or the terms of
the Warrants may be made without the consent of each beneficial owner affected
thereby (Section 6.1).
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION. The Company will
covenant in the Warrant Agreements that it will not merge or consolidate with
any other corporation or sell or convey all or substantially all its assets to
any person (other than an Asset Drop-Down (as defined under 'Description of the
Debt Securities -- Covenants -- Consolidation, Merger, Sale or Conveyance of
Assets of the Company')), unless (i) either the Company is the continuing
corporation or the successor corporation or the person which acquires by sale or
conveyance substantially all the assets of the Company (if other than the
Company) is a corporation organized under the laws of the United States of
America or any state thereof and expressly assumes the due and punctual
performance and observance of all the covenants and conditions of each Warrant
Agreement to be performed or observed by the Company, by amendment to the
Warrant Agreements satisfactory to the respective Warrant Agents, executed and
delivered to the Warrant Agents by such corporation, and (ii) the Company or
such successor corporation, as the case may be, is not, immediately after such
merger or consolidation, or such sale or conveyance, in default in the
performance of any such covenant or condition. In the case of any such
consolidation, merger, sale or conveyance, and following such an assumption by
the successor corporation, such successor corporation will succeed to and be
substituted for the Company, with the same effect as if it had been named in the
Warrant Agreements, and, in the case of any such sale or conveyance, the Company
will be released and discharged from all obligations and covenants under the
Warrant Agreements and the Warrants. In the event of any Asset Drop-Down after
the date of any Warrant Agreement, any subsequent sale or conveyance of assets
by the Drop-Down Subsidiary will be deemed to be a sale or conveyance of assets
by the Company for purposes of the covenant described in this paragraph. The
term 'substantially all', which appears in the foregoing covenant, is not
defined in the Warrant Agreements and a precise explanation of such term is not
feasible. The Company will interpret such term in any particular situation in
light of all then existing facts and circumstances.
ENFORCEABILITY OF RIGHTS BY BENEFICIAL OWNER; GOVERNING LAW. Each Warrant
Agent will act solely as an agent of the Company in connection with the issuance
and exercise of the applicable Warrants and will not assume any obligation or
relationship of agency or trust for or with any owner of a beneficial interest
in any Warrant or with the registered holder thereof (Sections 5.2). A Warrant
Agent shall have no duty or responsibility in the case of any default by the
Company in the performance of its covenants or agreements under the applicable
Warrant Agreement or Warrant Certificate including, without limitation, any duty
or responsibility to initiate any proceedings at law or
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otherwise or except as provided in the applicable Debt Warrant Agreement, to
make any demand upon the Company (Section 5.2). Beneficial owners may, without
the consent of the applicable Warrant Agent, enforce by appropriate legal
action, on their own behalf, their right to exercise their Warrants, to receive
Debt Securities, in the case of Debt Warrants, and to receive payment, if any,
for their Warrants, in the case of Currency Warrants, Index Warrants or Interest
Rate Warrants (Section 3.3 of the Debt Warrant Agreement and Section 3.1 of each
other Warrant Agreement).
Except as may otherwise be provided in the Prospectus Supplement relating
thereto, each issue of Warrants and the applicable Warrant Agreement will be
governed by and construed in accordance with the law of the State of New York
(Section 6.7 of the Debt Warrant Agreement and Section 6.5 of each other Warrant
Agreement).
CERTAIN ITEMS APPLICABLE TO CURRENCY WARRANTS, INDEX WARRANTS AND INTEREST RATE
WARRANTS
EXERCISE OF WARRANTS. Except as may otherwise be provided in the
applicable Prospectus Supplement relating thereto, (a) each Currency Warrant,
Index Warrant and Interest Rate Warrant will entitle the owner, upon payment of
the exercise price, if any, to the applicable Cash Settlement Value of such
Warrant, on the applicable Exercise Date, in each case as such terms will
further be defined in the applicable Prospectus Supplement relating thereto
(Sections 1.1 and 2.2) and (b) if not exercised prior to 1:30 p.m., New York
City time, on the Business Day preceding the applicable Warrant Expiration Date,
the Warrants will be deemed automatically exercised on such Warrant Expiration
Date (Section 2.3). As described below, Currency Warrants, Index Warrants and
Interest Rate Warrants may also be deemed to be automatically exercised if they
are delisted. Procedures for exercise of the Currency Warrants, Index Warrants
and Interest Rate Warrants will be set forth in the applicable Prospectus
Supplement.
MARKET DISRUPTION AND FORCE MAJEURE EVENTS. If so specified in the
applicable Prospectus Supplement, following the occurrence of a Market
Disruption Event or Force Majeure Event (as each term shall be defined therein),
the Cash Settlement Value of a Currency Warrant, an Index Warrant or an Interest
Rate Warrant may be determined on a different basis than under normal exercise
of a Warrant or the determination of the applicable Cash Settlement Value. In
addition, if so specified in the applicable Prospectus Supplement, Currency
Warrants, Index Warrants and Interest Rate Warrants may, in certain
circumstances, be cancelled by the Company prior to the expiration date and the
holders thereof will be entitled to receive only the applicable Cancellation
Amount. The Cancellation Amount may be either a fixed amount or an amount that
varies during the term of the Warrants in accordance with a schedule or formula.
SETTLEMENT CURRENCY. Currency Warrants, Index Warrants and Interest Rate
Warrants will be settled only in U.S. dollars (unless settlement in a foreign
currency is specified in the applicable Prospectus Supplement and is permissible
under securities exchange rules approved by the Commission) and accordingly will
not require or entitle an owner to sell, deliver, purchase, or take delivery of
the currency, security or other instrument underlying such Warrants. If any of
the Currency Warrants, Index Warrants or Interest Rate Warrants are sold for, or
if the exercise price, if any, is payable in, foreign currencies or foreign
currency units or if the amount payable by the Company in respect of any series
of Currency Warrants, Index Warrants or Interest Rate Warrants is payable in
foreign currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue of
Warrants and such currencies or currency units will be set forth in the
Prospectus Supplement relating thereto.
LISTING. Unless otherwise provided in the Prospectus Supplement, each
issue of Currency Warrants, Index Warrants and Interest Warrants will be listed
on a national securities exchange, as specified in the applicable Prospectus
Supplement, subject only to official notice of issuance, as a pre-condition to
the sale of any such Warrants. It may be necessary in certain circumstances for
such national securities exchange to obtain the approval of the Commission in
connection with any such listing. In the event that such Warrants are delisted
from, or permanently suspended from trading on, such exchange, and at or prior
to such delisting or suspension, such Warrants shall not have been listed on
another national securities exchange, any such Warrants not previously exercised
will be deemed automatically exercised on the date such delisting or permanent
trading suspension becomes effective
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(Sections 2.3). The applicable Cash Settlement Value to be paid in such event
will be as set forth in the applicable Prospectus Supplement. The Company will
notify holders of such Warrants as soon as practicable of such delisting or
permanent trading suspension. The applicable Warrant Agreement will contain a
covenant of the Company not to seek delisting of such Warrants from or permanent
suspension of their trading on, such exchange (Section 2.4 of the Currency
Warrant Agreement and the Interest Rate Warrant Agreement and Section 2.5 of the
Index Warrant Agreement).
DESCRIPTION OF THE GUARANTEE
Newcourt will provide an irrevocable unconditional guarantee of payment of
principal, premium, if any, and interest on the Notes. Such guarantee will be an
unsecured obligation of Newcourt and will rank pari passu (equal in right of
payment) with all other unsecured and unsubordinated indebtedness of Newcourt.
At December 31, 1997, Newcourt's consolidated indebtedness was approximately
$2.0 billion (C$2.8 billion). Such guarantee will, however, be effectively
subordinate (with respect to the assets of Newcourt's Subsidiaries) to the
indebtedness and other liabilities of such subsidiaries. At December 31, 1997,
such indebtedness and other liabilities aggregated approximately $0.7 billion
(C$1.0 billion). Newcourt has no current intention or plan to increase the
amount of such indebtedness in the future, other than in connection with the
growth of Newcourt's business.
GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in the form of
one or more global Securities that will be deposited with or on behalf of a
depositary (a 'Depositary') identified in the Prospectus Supplement relating to
such series. Global Securities representing Debt Securities or Debt Warrants may
be issued in either registered or bearer form. Global Securities representing
Currency Warrants, Index Warrants or Interest Rate Warrants will be issued in
registered form only. Global Securities may be issued in either temporary or
permanent form.
The specific terms of the depositary arrangement with respect to any
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
Unless otherwise specified in the Prospectus Supplement, Securities which
are to be represented by a global Security in registered form to be deposited
with or on behalf of a Depositary will be registered in the name of such
Depositary or its nominee. Upon the issuance of a global Security in registered
form, the Depositary for such global Security will credit the respective
principal amounts, in the case of Debt Securities, and the respective number of
warrants, in the case of Warrants represented by such global Security, to the
accounts of institutions that have accounts with such Depositary or its nominee
('participants'). The accounts to be credited shall be designated by the
underwriters or agents of such Securities, or by the Company if such Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in such global Securities will be limited to participants or persons that may
hold interests through participants. Ownership of beneficial interests by
participants in such global Securities will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such global Security. Ownership of beneficial
interests in global Securities by persons that hold through participants will be
shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global Security.
So long as the Depositary for a global Security in registered form, or its
nominee, is the registered owner of such global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Securities represented by such global Security for all purposes under the
Indenture, in the case of Debt Securities, or under the applicable Warrant
Agreement, in the case of Warrants, governing such Securities. Except as set
forth below or as the Company may otherwise agree in its sole discretion, owners
of beneficial interests in such global Security will not be entitled to have
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Securities of the series represented by such global Security registered in their
names, will not receive or be entitled to receive physical delivery of
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture, in the case of Debt Securities,
or under the applicable Warrant Agreement, in the case of Warrants.
Payments in respect of Securities registered in the name of or held by a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner or the holder of the global Security. None
of the Company, the Trustee or applicable Warrant Agent, any Paying Agent or any
Security Registrar (the 'Security Registrar') for such Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that the Depositary for a permanent global Security in
registered form, upon receipt of any payment in respect of a permanent global
Security, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such global
Security held through such participants will be governed by standing
instructions and customary practices, as is now 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 participants.
A global Security in registered form may not be transferred except as a
whole by the Depositary for such global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or nominee or a nominee of such successor. If a Depositary for a
permanent global Security in registered form is at any time unwilling or unable
to continue as Depositary and a successor Depositary is not appointed by the
Company within 90 days, the Company will issue Securities in definitive
registered form in exchange for the global Security representing such
Securities. In addition, the Company may at any time and in its sole discretion
determine not to have any Securities of a series in registered form represented
by one or more global Securities and, in such event, will issue Securities of
such series in definitive form in exchange for all the global Securities
representing such Series. Further, if the Company so specifies with respect to
the Securities of a series or otherwise consents in its sole discretion, an
owner of a beneficial interest in a global Security representing Securities of
such series may, on terms acceptable to the Company and the Depositary for such
global Security, receive Securities of such series in definitive form. In any
such instance, an owner of a beneficial interest in a global Security will be
entitled to physical delivery in definitive form of Securities of the series
represented by such global Security equal in principal amount, in the case of
Debt Securities, or number, in the case of Warrants, to such beneficial interest
and to have such Securities registered in its name (if the Securities of such
series are issuable as registered securities). Unless otherwise specified by the
Company, Securities of such series so issued in definitive form will be issued
either as registered or bearer securities (if the Securities of such series are
issuable in such form) and in authorized denominations, in the case of Debt
Securities, or in authorized numbers, in the case of Warrants, as specified in
the applicable Prospectus Supplement. See, however, 'Description of the Debt
Securities -- Limitations on Issuance of Bearer Debt Securities' for a
description of certain restrictions on the issuance of a bearer Debt Security in
definitive form in exchange for an interest in a global Security.
BEARER DEBT SECURITIES
If so specified in the Prospectus Supplement, pending the availability of a
permanent global Security, all or any portion of the Debt Securities of a series
which may be issuable as bearer Debt Securities will initially be represented by
one or more temporary global Securities, without interest coupons, to be
deposited with a common depositary in London for Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System ('Euroclear')
and Cedel Bank, societe anonyme ('Cedel Bank') for credit to the designated
accounts. The interests of the beneficial owner or owners in such a temporary
global Security in bearer form will be exchangeable for definitive bearer
28
<PAGE>
<PAGE>
Debt Securities (including interests in a permanent global Security in bearer
form), representing Debt Securities having the same interest rate and stated
maturity, but only upon written certification in the form and to the effect
described under 'Description of the Debt Securities -- General' unless such
certification has been provided on an earlier interest payment date. The
beneficial owner of a Debt Security represented by a temporary global Security
in bearer form or a permanent global Security in bearer form may, on or after
the applicable exchange date and upon 30 days' notice to the Trustee given
through Euroclear or Cedel Bank, exchange its interest for definitive bearer
Debt Securities or, if specified in the Prospectus Supplement, definitive
registered Debt Securities of any authorized denomination. No bearer Debt
Security delivered in exchange for a temporary global Security or a permanent
global Security shall be mailed or otherwise delivered to any location in the
United States in connection with such exchange.
Unless otherwise specified in the Prospectus Supplement, interest in
respect of any portion of such a temporary global Security in bearer form
payable in respect of an Interest Payment Date occurring prior to the issuance
of a permanent global Security in bearer form will be paid to each of Euroclear
and Cedel Bank with respect to the portion of the temporary global Security in
bearer form held for its account. Each of Euroclear and Cedel Bank will
undertake in such circumstances to credit such interest received by it in
respect of a temporary global Security in bearer form to the respective accounts
for which it holds such temporary global Security in bearer form as of the
relevant Interest Payment Date, but only upon receipt in each case of written
certification, in the form and to the effect described under 'Description of
Debt Securities -- General'.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
A summary of the material United States federal income tax consequences to
persons investing in Securities will be set forth in the Prospectus Supplement.
This summary in the Prospectus Supplement will be presented for information
purposes only, however, and will not be intended as legal or tax advice to
prospective purchasers. Prospective purchasers of Securities are urged to
consult their own tax advisors prior to any acquisition of Securities.
PLAN OF DISTRIBUTION
The Company may sell any of the Securities in four ways: (i) directly to
purchasers, (ii) through agents, (iii) through dealers or (iv) through
underwriters. Any or all of the foregoing may be customers of, engage in other
transactions with or perform other services for the Company in the ordinary
course of business.
Offers to purchase the Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, who
may be deemed to be an underwriter as that term is defined in the Securities
Act, involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Agents may be entitled under
agreements, which may be entered into with the Company, to indemnification by
the Company against certain civil liabilities, including liabilities under the
Securities Act.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. Dealers
may be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
If the sale is accomplished through an underwriter or underwriters, the
Company will enter into an underwriting agreement with such underwriters at the
time of sale to them, and the names of the underwriters and the terms of the
transaction will be set forth in the Prospectus Supplement, which, together with
this Prospectus, will be used by the underwriters to make resales of the
Securities in respect of which the Prospectus Supplement and this Prospectus are
delivered to the public. The
29
<PAGE>
<PAGE>
underwriters may be entitled, under the relevant underwriting agreement, to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ('Contracts')
providing for payment and delivery on a specified future date. Institutions with
which Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, educational and charitable
institutions, and other institutions, but shall in all cases be subject to the
approval of the Company. Except as otherwise provided in the Prospectus
Supplement, Contracts will not be subject to any conditions except that the
purchase by an institution of the Securities covered by its Contract shall not
at the time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject. A commission indicated in
the Prospectus Supplement will be paid to agents and underwriters soliciting
purchases of the Securities pursuant to Contracts accepted by the Company.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the Prospectus Supplement.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by Glen
J. DuMont, Assistant General Counsel, and for any agent, dealer or underwriter
by Winston & Strawn, New York, New York. The opinions of Glen J. DuMont and
Winston & Strawn will be conditioned upon, and subject to certain assumptions
regarding, future action required to be taken by the Company and the Trustee in
connection with the issuance and sale of any particular Security, the specific
terms of Securities and other matters which may affect the validity of
Securities but which cannot be ascertained on the date of such opinions.
EXPERTS
The consolidated financial statements for the Company as of December 31,
1997 and for the year then ended incorporated by reference in the Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto and is incorporated by reference in reliance upon the authority of said
firm as experts in giving said report.
The Company's consolidated balance sheet as of December 31, 1996 and the
consolidated statements of income, changes in shareowners' equity, and cash
flows for each of the two years in the period ended December 31, 1996,
incorporated by reference in this Prospectus, have been incorporated by
reference in reliance on the report of Coopers & Lybrand L.L.P., independent
auditors, given on the authority of that firm as experts in accounting and
auditing.
The financial statements for Newcourt incorporated by reference in the
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their report, have been audited by Ernst & Young,
Chartered Accountants, and are included herein in reliance on their reports
given on the authority of that firm as experts in accounting and auditing.
30
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet and statement
of income of AT&T Capital Corporation and Subsidiaries ('AT&T Capital' or the
'Company') are based on the historical Consolidated Financial Statements of AT&T
Capital and Newcourt Credit Group Inc. ('Newcourt') at December 31, 1997 and for
the year then ended. The unaudited pro forma consolidated balance sheet has been
prepared assuming the Newcourt Acquisition, as defined herein, had occurred on
December 31, 1997 and the unaudited pro forma consolidated income statement has
been prepared assuming the Newcourt Acquisition had occurred on January 1, 1997.
On January 12, 1998, Newcourt, an Ontario corporation, consummated the purchase
(the 'Newcourt Acquisition') of all of the outstanding shares of common stock of
AT&T Capital, pursuant to a Stock Purchase Agreement dated as of November 17,
1997 (the 'Stock Purchase Agreement') among the Company, Newcourt, Hercules
Holdings (Cayman) Ltd. ('Hercules'), the former direct owner of 97.4% of the
Company's common stock, and by 21 members and one former member of the senior
management of the Company. In connection with the Newcourt Acquisition, all of
the outstanding shares of common stock of the Company were transferred to
Newcourt Holdings USA, Inc., a newly-formed Delaware corporation which is a
wholly-owned subsidiary of Newcourt. As a result of the Newcourt Acquisition,
all of the outstanding shares of common stock of the Company are owned
indirectly by Newcourt.
The aggregate purchase price pursuant to such Stock Purchase Agreement paid
by Newcourt to the stockholders of AT&T Capital was approximately $1.6 billion
comprised of approximately $1.0 billion in cash and the remainder comprising
approximately 17.6 million of Newcourt common shares. Such shares were issued
entirely to Hercules and generally may not be transferred for periods ranging
from 6 to 18 months following the date of the Newcourt Acquisition. The cash
portion of the purchase price paid by Newcourt was raised through the issuance
by Newcourt of 38.5 million shares of Newcourt common stock at approximately
$32.50 per share to employees of Newcourt and the public in Canada and the
United States. See the Company's Current Report on Form 8-K dated February 9,
1998, as amended by the Company's Current Report on Form 8-K/A dated February
18, 1998, both incorporated by reference in this Registration Statement, for the
prospectus filed by Newcourt in connection with its registration of fully paid
subscription rights to receive one common share of Newcourt.
The pro forma consolidated financial statements reflect the historical cost
of the Company's assets and liabilities. Adjustments to the Company's assets and
liabilities to reflect their respective fair values as a result of the Newcourt
Acquisition have not been made. The excess of purchase price over net book value
has been allocated to goodwill.
The following pro forma financial information is unaudited and should be
read in conjunction with the accompanying notes thereto and with the Company's
1997 audited consolidated financial statements, incorporated by reference in
this Registration Statement, and with the consolidated financial statements
included in Newcourt's Form 6-K for the year ended December 31, 1997,
incorporated by reference in this Registration Statement. The pro forma
financial information is not necessarily indicative of either the financial
position or the results of operations that would have been achieved had the
Newcourt Acquisition and the related transactions actually occurred on the dates
referred to above, nor is it necessarily indicative of the results of future
operations, because such unaudited pro forma financial information is based on
estimates of financial effects that may prove to be inaccurate over time.
F-2
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
U.S.
GAAP/$ AT&T PRO FORMA PRO FORMA
NEWCOURT CAPITAL ADJUSTMENTS NOTE CONSOLIDATED
---------- ---------- ----------- ----- ------------
NOTE 2 NOTE 1
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash........................................... $1,245,228 $ 8,317 $(1,101,900) 4a $ 120,545
(31,100) 4b
Investment in finance assets................... 1,061,223 2,564,933 3,626,156
Investment in capital leases................... 559,529 3,288,141 3,847,670
Investment in operating leases................. 192,513 1,593,582 1,786,095
Assets held for securitization and
syndication.................................. 761,724 478,213 1,239,937
Investment in affiliated companies............. 121,383 121,383
Accounts receivable and other.................. 236,956 525,963 45,700 4a 808,619
Goodwill, net.................................. 299,010 85,600 871,121 4a 1,296,631
40,900 4b
Deferred income taxes.......................... 0 231,146 231,146
---------- ---------- ----------- ------------
TOTAL ASSETS......................... $4,477,566 $8,775,895 $ (175,279) $ 13,078,182
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
LIABILITIES, PREFERRED SECURITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued
liabilities............................. $ 202,283 $ 709,997 $ 8,700 4a $ 967,880
46,900 4b
Debt...................................... 2,063,579 7,117,994 9,181,573
Future income tax liability............... 28,980 4,125 33,105
---------- ---------- ----------- ------------
TOTAL LIABILITIES.................... 2,294,842 7,832,116 55,600 10,182,558
---------- ---------- ----------- ------------
PREFERRED SECURITIES........................... 200,000 200,000
SHAREHOLDERS' EQUITY
Share capital............................. 2,048,718 903 549,097 4a 2,561,618
(37,100) 4b
Additional paid-in capital................ 651,552 (651,552) 4a
Recourse loans to senior executives....... (15,471) 15,471 4a
Foreign currency translation
adjustments............................. (4,032) 4,032 4a
Retained earnings......................... 134,006 110,827 (110,827) 4a 134,006
---------- ---------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY........... 2,182,724 743,779 (230,879) 2,695,624
---------- ---------- ----------- ------------
TOTAL LIABILITIES, PREFERRED
SECURITIES AND SHAREHOLDERS'
EQUITY............................. $4,477,566 $8,775,895 $ (175,279) $ 13,078,182
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
</TABLE>
See accompanying explanatory notes to the Unaudited Pro Forma Consolidated
Balance Sheet.
F-3
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
U.S. GAAP/$ AT&T
NEWCOURT CAPITAL PRO FORMA PRO FORMA
----------- -------- ADJUSTMENTS NOTE CONSOLIDATED
NOTE 2 NOTE 1 ----------- ----- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FEE AND AFFILIATE INCOME:
Securitization and syndication fees............ $ 143,570 $ 82,663 $226,233
Net income from affiliated companies........... 6,902 6,902
Management fees................................ 25,794 261,701 287,495
----------- -------- ------------
TOTAL FEE BASED INCOME.................... 176,266 344,364 520,630
Net rental revenue from operating leases....... 279,968 279,968
Net finance income............................. 51,027 25,208 76,235
----------- -------- ------------
TOTAL ASSET FINANCE INCOME................ 227,293 649,540 876,833
Selling, general and other operating
expenses..................................... 130,092 525,383 655,475
Depreciation and amortization.................. 14,760 20,345 $ 45,600 4c 80,705
Distributions on Preferred Securities.......... 18,120 18,120
----------- -------- ----------- ------------
Income before loss on sale of businesses, net,
restructuring charges and taxes................... 82,441 85,692 $ (45,600) 122,533
Loss on sales of businesses, net............... 18,563 18,563
Restructuring charges.......................... 49,377 35,093 84,470
----------- -------- ----------- ------------
Income before taxes................................. 33,064 32,036 $ (45,600) 19,500
Provision for (benefit of) income taxes........ (4,742) 11,029 6,287
----------- -------- ----------- ------------
NET INCOME................................ $ 37,806 $ 21,007 $ (45,600) $ 13,213
----------- -------- ----------- ------------
----------- -------- ----------- ------------
Basic and diluted earnings per common share......... $.10
------------
------------
</TABLE>
See accompanying explanatory notes to the unaudited Pro Forma Consolidated
Statement of Income.
F-4
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
EXPLANATORY NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AND THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The unaudited pro forma consolidated balance sheet and unaudited pro forma
consolidated statement of income have been prepared using the following
information:
(a) Audited consolidated financial statements of Newcourt Credit Group
Inc. ('Newcourt') as of and for the year ended December 31, 1997, which are
incorporated by reference in this Registration Statement (See Note 2);
(b) Audited consolidated financial statements of AT&T Capital
Corporation ('AT&T Capital' or the 'Company') as of and for the year ended
December 31, 1997, which are incorporated by reference in this Registration
Statement. Certain financial statement items have been reclassified from
the audited consolidated financial statements of AT&T Capital in order to
conform to the presentation used by Newcourt. These reclassifications are
as follows:
<TABLE>
<CAPTION>
PER AT&T CAPITAL PRO FORMA NEWCOURT
BALANCE SHEET CATEGORY* PRESENTATION RECLASSIFICATION NOTE PRESENTATION
- ----------------------- ---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Net investment in finance receivables........ 2,343,604 221,329 (1) 2,564,933
Deferred charges and other assets............ 832,892 (221,329) (1) 525,963
(85,600) (2)
Goodwill, net................................ -- 85,600 (2) 85,600
Short-term notes, less unamortized
discounts.................................. 1,868,585 (1,868,585) (3) --
Medium and long-term debt.................... 5,249,409 1,868,585 (3) 7,117,994
Income taxes and other payables.............. 714,122 (4,125) (4) 709,997
Future income tax liability.................. -- 4,125 (4) 4,125
INCOME STATEMENT CATEGORY*
- --------------------------
Finance revenue.............................. 229,855 (229,855) (5) --
Capital lease revenue........................ 361,124 (361,124) (5) --
Rental revenue on operating leases........... 834,027 (834,027) (6) --
Equipment sales.............................. 49,349 (49,349) (7) --
Other revenue, net........................... 257,121 (257,121) (7) --
Interest expense............................. 451,470 (451,470) (5) --
Operating and administrative................. 545,728 (20,345) (8) 525,383
Depreciation on operating leases............. 554,059 (554,059) (6) --
Cost of equipment sales...................... 44,769 (44,769) (7) --
Provision for credit losses.................. 114,301 (114,301) (5) --
Net finance income........................... -- 25,208 sum of (5) 25,208
Net rental revenue from operating leases..... -- 279,968 sum of (6) 279,968
Management fees.............................. -- 261,701 sum of (7) 261,701
Depreciation and amortization................ -- 20,345 (8) 20,345
</TABLE>
- ------------
(1) Net investment in securitized assets have been reclassified from Deferred
charges and other assets to the caption Investment in finance assets.
(2) Goodwill has been reclassified from Deferred charges and other assets to the
caption Goodwill, net.
F-5
<PAGE>
<PAGE>
(3) Short-term notes, less unamortized discounts and Medium and long-term debt
have been reclassified to the caption Debt.
(4) The current liability for operating income taxes has been reclassified from
Income taxes and other payables to Future income tax liability.
(5) Finance revenue, Capital lease revenue, Interest expense and Provision for
credit losses have been reclassified to the caption Net finance income.
(6) Rental revenue on operating leases and Depreciation on operating leases have
been reclassified to the caption Net rental revenue from operating leases.
(7) Other revenue, net, Equipment sales and Cost of equipment sales have been
reclassified to the caption Management fees.
(8) Depreciation on property, plant and equipment and goodwill amortization have
been reclassified from Operating and administrative to the caption
Depreciation and amortization.
* Descriptions may differ slightly in the Newcourt presentation. See AT&T
Capital Corporation and Subsidiaries and Newcourt Credit Group
Inc. -- Unaudited Pro Forma Consolidated Balance Sheet and Income
Statement.
(c) Such other supplementary information as was considered necessary
to reflect the acquisition of the Company by Newcourt (the 'Newcourt
Acquisition') in these unaudited pro forma consolidated financial
statements.
2. NEWCOURT CREDIT GROUP INC.
The financial statements of Newcourt as of and for the year ended December
31, 1997, incorporated by reference in this Registration Statement, were
prepared in accordance with accounting principles generally accepted in Canada
and are expressed in Canadian dollars. For the purposes of these unaudited pro
forma consolidated financial statements, the following adjustments have been
made to the balance sheet and income statement of Newcourt to conform them to
U.S. generally accepted accounting principles in U.S. dollars.
(a) Differences between Generally Accepted Accounting Principles ('GAAP')
in Canada and the United States.
(i) For Canadian GAAP purposes, unrealized translation gains and
losses on long term monetary items are deferred and amortized over the
remaining terms of those items. For U.S. GAAP purposes, such gains and
losses are recorded in income immediately.
(ii) For Canadian GAAP purposes, amounts paid to employees to retire
issued stock options without issuing common stock are recorded as capital
transactions. For U.S. GAAP purposes, such amounts paid are recorded as
compensation expense.
(iii) For Canadian GAAP purposes, finance assets sold to
securitization vehicles are not consolidated. Under U.S. GAAP, certain of
these securitization vehicles are required to be accounted for under the
equity method of accounting while others are required to be consolidated.
Accordingly, for U.S. GAAP purposes, gains relating to these asset sales
have been deferred, and, in the case of consolidated vehicles, the assets
and liabilities have been recorded on the balance sheet. The deferred gains
will be recognized in income as the related finance assets are collected.
(iv) The restructuring charge was reduced for costs that would have
been accrued as an adjustment to the liabilities assumed relating to a
recent acquisition and the rationalization of certain Newcourt businesses
in Canada and the United States under U.S. GAAP, rather than expensed as
permitted by Canadian GAAP.
F-6
<PAGE>
<PAGE>
The following tables summarizes the differences between what was reported
by Newcourt in its financial statements under Canadian GAAP and what has been
reflected herein for U.S. GAAP purposes as of and for the year ended December
31, 1997:
Income Statement:
<TABLE>
<S> <C>
Net income for the year ended December 31, 1997 as reported under Canadian GAAP.... $26,318
Difference in accounting for foreign exchange gains (losses) (net of income tax
recovery of $4,466).............................................................. (5,458)
Difference in accounting for options retired....................................... (796)
Difference in accounting for securitization transactions (net of income taxes of
$3,153).......................................................................... 3,964
Difference in accounting for restructuring charge (net of income taxes of
$11,272)......................................................................... 13,778
-------
Net income for the year ended December 31, 1997 reported under U.S. GAAP........... $37,806
-------
-------
</TABLE>
Balance Sheet:
<TABLE>
<S> <C>
Increase in investment in finance assets........................................... $95,370
Increase in accounts receivable and other.......................................... 53,132
Increase in goodwill, net.......................................................... 13,726
Decrease in accounts payable and accrued liabilities............................... 9,867
Increase in debt................................................................... 94,540
Increase in subordinated debt...................................................... 21,930
Increase in future income tax liability............................................ 9,620
</TABLE>
(b) Currency
The audited consolidated financial statements of Newcourt are expressed in
Canadian dollars. For the purposes of these unaudited pro forma consolidated
financial statements, the consolidated balance sheet of Newcourt has been
translated into U.S. dollars using the December 31, 1997 exchange rate of 1.4328
and the consolidated statement of income of Newcourt has been translated into
U.S. dollars using the weighted average exchange rate for the year ended
December 31, 1997 of 1.3839.
3. PRO FORMA ASSUMPTIONS
(a) The acquisition, pursuant to an agreement dated November 17, 1997,
whereby Newcourt agreed to purchase all of the issued and outstanding common
shares of AT&T Capital, subject to satisfaction of certain closing conditions,
for approximately $1.6 billion payable as follows:
(i) approximately $1.0 billion by means of cash payment at closing;
and
(ii) the remainder by the issuance of approximately 17.6 million of
Newcourt common shares at closing.
(b) The acquisition of AT&T Capital has been accounted for using the
purchase method. The difference between the purchase price and estimated fair
value of the net assets acquired has been allocated to goodwill. Goodwill has
not yet been adjusted to revalue the assets and liabilities of AT&T Capital to
their fair values. The amount assigned to goodwill will be amortized as a
reduction to income over a twenty year period.
(c) The issuance of 38.5 million Newcourt common shares, pursuant to a
prospectus filed with the Securities and Exchange Commission on November 24,
1997, which resulted in Newcourt receiving net proceeds (after the underwriters'
fees and the expenses of issue) of approximately $1.2 billion.
4. PRO FORMA ADJUSTMENTS
The pro forma adjustments contained in these pro forma consolidated
financial statements are based on estimates and assumptions by management of
AT&T Capital and Newcourt based on available information. The adjustments for
the actual acquisition may differ as a result of changes arising from
F-7
<PAGE>
<PAGE>
evaluation of the fair value of AT&T Capital's net assets by Newcourt after the
effective date of acquisition. The following adjustments have been made to
reflect the Newcourt Acquisition:
(a) Issuance of approximately $1.2 billion of Newcourt common shares,
a portion of which, was used to satisfy the cash portion of the purchase
price (See Note 3), the issuance of approximately 17.6 million treasury
shares by Newcourt in the amount of approximately $.6 billion to satisfy
the remaining portion of the purchase price and to reflect the purchase of
all the issued and outstanding common stock of AT&T Capital.
(b) To reflect the costs of issuing Newcourt common shares as well as
other transaction related costs.
(c) Amortization of goodwill over a twenty year period.
5. EARNINGS PER SHARE
Earnings per share reflects the issuance by Newcourt of approximately 56.1
million common shares arising from the acquisition of the Company combined with
the average number of Newcourt common shares outstanding (subsequent to the
subdivision of the common shares) during the period.
F-8
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$500,000,000
AT&T CAPITAL CORPORATION
8.25% SENIOR PUBLIC INCOME
NOTES (PINES'sm') DUE 2028
GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
NEWCOURT CREDIT GROUP INC.
[LOGO] [LOGO]
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PROSPECTUS SUPPLEMENT
NOVEMBER 4, 1998
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SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
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STATEMENT OF DIFFERENCES
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The service mark symbol shall be expressed as.....................'sm'
