SUPPLEMENT NO. 1
TO
PROSPECTUS DATED JULY 7, 1997
AFG INVESTMENT TRUST B
/ / 1,000,961 Rights to acquire 1,000,961 Class B Subordinated
Interests
/ / Minimum of 459,191 Class B Subordinated Interests ($2,295,955)
and
Maximum of 1,000,961 Class B Subordinated Interests ($5,004,805)
/ / $5 Per Interest
The following information supplements the information in the prospectus of
AFG Investment Trust B, a Delaware business trust (the "Trust"), dated June 10,
1997 (the "Prospectus"), relating to the offering of a maximum of 1,000,961
Class B Subordinated Interests in the Trust (the "Offering"). This Supplement is
part of and should be read in conjunction with the Prospectus. Unless otherwise
indicated, capitalized terms used in this Supplement have the same meanings
ascribed to them in the Prospectus.
The following information is provided to: (i) report information with
respect to the current status of the Offering and set forth certain investment
considerations; (ii) describe a lawsuit recently filed relating, among other
things, to the Trust and the Offering; and (iii) revise the subscription
procedures.
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AN INVESTMENT IN THE CLASS B SUBORDINATED INTERESTS INVOLVES CERTAIN MATERIAL
RISK FACTORS. SEE "RISK FACTORS" IN THE PROSPECTUS.
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.
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The date of this Supplement is July 7, 1997.
CURRENT STATUS OF THE OFFERING;
INVESTMENT CONSIDERATIONS
As of the date of this Supplement, Class A Beneficiaries have subscribed for
2,484 Class B Subordinated Interests. The Special Beneficiary and its Affiliates
have confirmed their intention to purchase the maximum number of Class B
Subordinated Interests available to them. Such purchases will be undertaken
without regard to the number of Class B Subordinated Interests subscribed for by
Class A Beneficiaries unrelated to the Special Beneficiary. Therefore, it is
expected that the Maximum Offering will be attained.
The Offering is now scheduled to expire on July 15, 1997 (the "Expiration
Date"). Beneficiaries may call the Subscription Agent at (800) 387-7391 at any
time on or prior to the Expiration Date to obtain an updated status as to the
number of Class B Subordinated Interests subscribed for by Class A Beneficiaries
not affiliated with the Special Beneficiary.
In making a decision as to whether to purchase Class B Subordinated
Interests, Class A Beneficiaries should consider that (i) in making their
investment decision the Special Beneficiary and its Affiliates estimated, based
on various assumptions discussed in the Prospectus, that investment in the Class
B Subordinated Interests may provide a return of 15% per annum, plus all capital
invested, (ii) there are no brokerage commissions being paid in connection with
the Offering and (iii) the Special Beneficiary and its Affiliates intend to
purchase all unsold Class B Subordinated Interests. See "SUMMARY OF THE
OFFERING--Introduction" in the Prospectus.
PENDING LAWSUIT
On June 24, 1997, Leonard Rosenblum, J/B Investment Partners, Small and
Rebecca Barmack, Partners, and Barbara Hall (collectively, the "Plaintiffs")
commenced a derivative action in the Suffolk Superior Court of the Commonwealth
of Massachusetts against Equis Financial Group Limited Partnership ("Equis") and
a number of its Affiliates, including the Managing Trustee of the Trust, Gary D.
Engle and Geoffrey A MacDonald as defendants (the "Defendants") and a number of
investment programs, including the Trust, sponsored by Equis as nominal
defendants (the "Nominal Defendants").
The Plaintiffs asserted claims on behalf of the Nominal Defendants for
common law fraud, breach of contract, breach of fiduciary duty and/or aiding or
abetting the breach of fiduciary duty owed to the Nominal Defendants against the
various managing general partners and the managing trustee of the investments
programs, including the Trust, and other entities and individuals (collectively,
the "Managing Defendants") that allegedly exercise control over the Nominal
Defendants.
The Plaintiffs allege, among other things, that the Defendants have
exploited and are continuing to exploit the fiduciary positions through which
they control the Nominal Defendants for improper purposes by causing them to
enter into numerous transactions that are ULTRA VIRES and/or lack valid business
purposes which have resulted in the misappropriation and waste of the Nominal
Defendants' assets in order to further the Defendants' financial interests and
to entrench them in their positions of control over the Nominal Defendants. The
Plaintiffs assert as an example of this conduct the causing of the Trust to
issue the Class B Subordinated Interests and the efforts of the Managing
Defendants to sell the Class B Subordinated Interests upon one-sided terms and
conditions that are designed to ensure that certain Defendants are able to
acquire voting control over the Trust. Among other things, the Plaintiffs
requested that the Offering be enjoined and that Defendants be required to make
restitution to the Trust and the other Nominal Defendants.
The Defendants believe that the lawsuit is without merit and intend to
vigorously defend against the lawsuit.
REVISED PROCEDURES FOR SUBSCRIPTION
The Trust is giving Rights Holders who exercise their rights to acquire
Class B Subordinated Interests the right to revoke such exercise in the event
that the Special Beneficiary and its Affiliates obtain voting control of the
Trust through their purchases of Class B Subordinated Interests. In addition,
the Trust has
modified the payment terms with respect to payment for Class B Subordinated
Interests subscribed for pursuant to the Over-Subscription Privilege.
REVOCATION
Rights Holders may contact the Subscription Agent at any time on or prior to
the Expiration Date at (800) 387-7391 to obtain current information as to the
number of Class B Subordinated Interests subscribed for by Beneficiaries not
related to the Special Beneficiary. In the event that the Special Beneficiary
and its Affiliates obtain voting control of the Trust through their purchase of
Class B Subordinated Interests, the Subscription Agent will notify Beneficiaries
who have subscribed for Class B Subordinated Interests and such Beneficiaries
may elect to revoke their subscriptions in whole or in part as described below
under "Payment for Securities." In addition, Rights Holders who have delivered a
completed Subscription Certificate to the Subscription Agent prior to receipt of
this Supplement may also revoke their subscriptions in their entirety by so
notifying the Subscription Agent in writing prior to the Expiration Date or they
may modify their subscriptions by delivering an amended Subscription Certificate
to the Subscription Agent.
PAYMENT FOR SECURITIES
The Trust has modified the payment terms with respect to payment for Class B
Subordinated Interests subscribed for pursuant to the Over-Subscription
Privilege. Now, payment for Class B Subordinated Interests subscribed for
pursuant to the exercise of the Over-Subscription Privilege does not have to be
tendered to the Subscription Agent with the Subscription Certificate. Only
payment for Class B Subordinated Interests subscribed for pursuant to the
exercise of Basic Subscription Rights must be tendered to the Subscription Agent
with the Subscription Certificate. An amended Subscription Certificate is
enclosed with this Supplement.
Rights may be exercised by filling in and signing the amended Subscription
Certificate which accompanies this Supplement and mailing it or otherwise
delivering the completed and signed Subscription Certificate to the Subscription
Agent. Payment for Class B Subordinated Interests subscribed for pursuant to the
exercise of Basic Subscription Rights must be tendered to the Subscription Agent
with the Subscription Certificate, but payment for Class B Subordinated
Interests subscribed for pursuant to the exercise of the Over-Subscription
Privilege does not have to be tendered to the Subscription Agent with the
Subscription Certificate. Rights Holders who have delivered a completed
Subscription Certificate to the Subscription Agent prior to receipt of this
Supplement do not have to deliver an amended Subscription Certificate unless
they wish to use the new modified payment terms. Rights Holders who have
delivered a completed Subscription Certificate to the Subscription Agent prior
to receipt of this Supplement who wish to use the new modified payment terms may
contact the Subscription Agent at (800) 387-7391 to request the return of their
previously-delivered payment for Class B Interests subscribed for pursuant to
the Over-Subscription Privilege, which will be mailed to them upon receipt by
the Subscription Agent of an amended Subscription Certificate. Rights Holders
who have delivered a completed Subscription Certificate to the Subscription
Agent prior to receipt of this Supplement may also revoke their subscriptions in
their entirety by so notifying the Subscription Agent in writing or they may
modify their subscriptions by delivering an amended Subscription Certificate to
the Subscription Agent.
Immediately following the Expiration Date, the Subscription Agent will
notify each Exercising Rights Holder (or if the Trust's Class A Interests are
held by a nominee, such nominee) as to the number of Class B Subordinated
Interests purchased pursuant to his or her Basic Subscription Rights and, if
applicable, pursuant to the Over-Subscription Privilege, explaining the
allocation of Class B Subordinated Interests pursuant to the Over-Subscription
Privilege. The Subscription Agent will also indicate whether or not the Special
Beneficiary and its Affiliates have obtained voting control of the Trust through
their purchases of Class B Subordinated Interests, and, if such control has been
obtained, the Exercising Rights Holder will have the opportunity to revoke his
or her subscription in whole or in part. Exercising Rights Holders may also call
the Subscription Agent at (800) 387-7391 at any time on or prior to the
Expiration Date to obtain current information as to the number of Class B
Subordinated Interests subscribed for by Beneficiaries not related to the
Special Beneficiary.
No later than 3 business days following such notice from the Subscription
Agent, the Exercising Rights Holder (unless such Rights Holder has elected to
revoke his or her subscription) must remit to the Subscription Agent a money
order or check drawn on a bank located in the United States and payable to Trust
Company of America in the amount of the Subscription Price for the number of
Class B Subordinated Interests purchased by him or her pursuant to the
Over-Subscription Privilege. Payments should be sent to the Subscription Agent
at Gemisys Corporation, 7103 South Revere Parkway, Dept. 250, Englewood CO
80112. ALL PAYMENTS MUST BE IN U.S. DOLLARS BY MONEY ORDER OR CHECK DRAWN ON A
BANK LOCATED IN THE UNITED STATES AND MUST BE PAYABLE TO TRUST COMPANY OF
AMERICA, AS AGENT FOR AFG INVESTMENT TRUST B. The Closing will occur as promptly
as possible after the Expiration Date. All payments tendered in connection with
the exercise of Basic Subscription Rights by Exercising Rights Holders who elect
to revoke their subscriptions will be refunded by mail as promptly as
practicable after the Expiration Date. Issuance of Class B Subordinated
Interests purchased is subject to collection of checks and actual payment.