Exhibit 99.1
CONTACT AT FINOVA: CONTACT AT LEUCADIA:
Stuart A. Tashlik Laura Ulbrandt
480/636-5355 212/460-1900
THE FINOVA GROUP INC. AND LEUCADIA NATIONAL CORPORATION ANNOUNCE SIGNING OF
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SECURITIES PURCHASE AGREEMENT
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LEUCADIA TO INVEST UP TO $350 MILLION SUBJECT TO REACHING AGREEMENT
WITH FINOVA'S BANK GROUP AND PUBLIC DEBT HOLDERS
SCOTTSDALE, ARIZ. AND NEW YORK, N.Y., DEC. 21, 2000 -- The FINOVA Group Inc.
(NYSE: FNV) and Leucadia National Corporation (NYSE and PCX: LUK) announced that
they signed a Securities Purchase Agreement under which Leucadia National will
invest up to $350 million in FINOVA. Leucadia will pay $250 million to acquire
newly issued 14% cumulative convertible preferred stock with an initial
aggregate liquidation preference of $250 million, as well as a 10-year warrant
to acquire 20% of FINOVA's common stock, subject to anti-dilution adjustments,
for an aggregate exercise price of $125 million. The preferred stock will be
convertible into common stock from June 30, 2006 to the tenth anniversary of
issuance, based on the liquidation preference of the preferred stock (which will
accrete as dividends accrue), at a rate of one share per $2.50 of liquidation
preference, subject to anti-dilution adjustments. The preferred stock will vote
with common stock on a converted basis, receiving two votes per share of common
stock.
After closing the Leucadia transaction, FINOVA will conduct a rights offering to
its current shareholders for convertible preferred stock with an initial
aggregate liquidation preference of up to $150 million. The convertible
preferred stock to be issued in the rights offering will have identical terms as
the Leucadia shares. Leucadia has agreed to act as standby purchaser of the
first $100 million of the rights offering.
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The agreement supercedes the letter agreement dated November 10, 2000 and is
subject to reaching mutually satisfactory arrangements with FINOVA's bank group
and public debt holders, as well as certain other customary conditions,
including regulatory approvals.
The Securities Purchase Agreement and other transaction documents are being
filed as exhibits to a Form 8-K that will be filed by FINOVA with the Securities
and Exchange Commission on December 22, 2000.
FINOVA and Leucadia intend to propose a comprehensive restructuring to FINOVA's
bank group and public debt holders. This restructuring will likely entail a
principal reduction in the form of debt forgiveness, an extension of some
maturities and the granting by FINOVA, of security. It is expected that
substantially all of the company's lenders will have to agree to this
restructuring in order for it to be effective and to avoid the possibility of
reorganization under protection of the courts. The company is already meeting
with a steering committee of its bank lenders and expects that its public debt
holders will want to form a similar committee.
FINOVA President and Chief Executive Officer Matt Breyne said, "We are pleased
to move our association with Leucadia forward. We, together with Leucadia and
Jay Alix & Associates, are working to develop comprehensive plans for
restructuring our debt."
The FINOVA Group Inc., through its principal operating subsidiary, FINOVA
Capital Corporation, is one of the nation's leading financial services companies
focused on providing a broad range of capital solutions primarily to midsize
business. FINOVA is headquartered in Scottsdale, Ariz., with business
development offices throughout the U.S. and London, U.K., and Toronto, Canada.
For more information, visit the company's website at www.finova.com.
Leucadia National Corporation is a holding company for its consolidated
subsidiaries engaged in property and casualty insurance (through Empire
Insurance Company and Allcity Insurance Company), manufacturing (through its
Plastics Division), banking and lending (principally through American Investment
Bank, N.A.) and mining (through MK Gold Company). Leucadia also currently has
equity interests of more than 5% in the following domestic public companies:
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Carmike Cinemas, Inc. (6% of Class A Shares), GFSI Holdings, Inc. (6%), Jordan
Industries, Inc. (10%) and PhoneTel Technologies, Inc. (7%).
This news release contains forward-looking statements such as estimates,
predictions or forecasts. FINOVA and Leucadia assume no obligation to update
those statements to reflect actual results, changes in assumptions or other
factors. The forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those projected. Those factors include FINOVA's ability to
address its financing requirements in light of its existing debt obligations and
market conditions; pending and potential litigation related to charges to
earnings; the results of efforts to implement FINOVA's business strategy,
including the ability to complete this transaction; the ability to attract and
retain key personnel and customers; conditions that adversely impact FINOVA's
borrowers and their ability to meet their obligations to FINOVA; actual results
in connection with continuing or discontinued operations; the adequacy of
FINOVA's loan loss reserves and other risks detailed in FINOVA's SEC reports,
including page 15 of FINOVA's 10-K for 1999.
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