PRICING SUPPLEMENT
(To Prospectus dated November 5, 2001, and Prospectus Supplement dated November
20, 2001)
$250,000,000
principal amount plus interest
liquidity facility obligations
of
FGIC Securities Purchase, Inc.
in support of
City and County of Honolulu
General Obligation Bonds, Series 2001C
Date of the bonds: Date of Delivery Due: December 1 of each of 2006 - 2020
Price: 100%
We are offering, in connection with the issuance by the City and County
of Honolulu of its General Obligation Bonds, Series 2001C, our liquidity
facility obligations under a standby bond purchase agreement. The standby bond
purchase agreement will expire five years from the date of delivery of the
bonds, unless it is extended or terminated sooner in accordance with its terms.
The bonds are the absolute and unconditional obligation of the City and
County of Honolulu, Hawaii. The principal and interest payments on the bonds are
a first charge on the general fund of the City and County, and the full faith
and credit of the City and County are pledged to the punctual payment of that
principal and interest. For the payment of the principal of and interest on the
bonds the City and County has the power and is obligated to levy ad valorem
taxes, without limitation as to rate or amount. The bonds are subject to
redemption and tender prior to their stated maturity as described in this
pricing supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
pricing supplement, the prospectus supplement or the prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Our liquidity facility obligations under the standby bond purchase
agreement are not being sold separately from the bonds. The bonds are being
marketed under a separate disclosure document. The liquidity facility
obligations will not be severable from the bonds and may not be separately
traded. This pricing supplement, the prospectus supplement and the prospectus,
appropriately supplemented, may also be delivered in connection with any
remarketing of bonds purchased by us or by our affiliates.
Unless the context otherwise requires, the terms "the company," "we,"
"us" or "our" mean FGIC Securities Purchase, Inc.
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UBS PaineWebber Inc.
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The date of this pricing supplement is November 28, 2001.
You should rely only on the information contained or incorporated by
reference in this pricing supplement, the prospectus supplement and the
prospectus. We have not, and the underwriters have not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not,
and the underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
INTRODUCTION
We are providing you with this pricing supplement to furnish
information regarding our liquidity facility obligations under a standby bond
purchase agreement in support of $250,000,000 aggregate principal amount of
General Obligation Bonds, Series 2001C which the City and County of Honolulu
will issue on or about December 5, 2001. Bondholders will have the right to
tender, or in certain cases be required to tender, the bonds. First Union
National Bank will act as tender and paying agent and is the entity responsible
for accepting tender notices and tendered bonds. UBS PaineWebber Inc., or any
substitute entity, will act as the remarketing agent of any tendered bonds and
will be obligated to use its best efforts to remarket the tendered bonds. We
will enter into a standby bond purchase agreement with the tender and paying
agent, pursuant to which we will be obligated under certain circumstances to
purchase unremarketed bonds from the holders optionally or mandatorily tendering
their bonds for purchase. In order to obtain funds to purchase the bonds, we
will enter into a standby loan agreement initially with General Electric Capital
Corporation under which GE Capital will be irrevocably obligated to lend funds
to us as needed to purchase bonds. Our liquidity facility obligations under the
standby bond purchase agreement will expire five years from the date of delivery
of the bonds unless the standby bond purchase agreement is extended or
terminated sooner in accordance with its terms. The bonds may accrue interest at
an initial rate, a weekly rate or a fixed rate. The bonds will not be entitled
to the benefit of the liquidity facility while in the fixed rate mode.
GE Capital has the unilateral right to assign its rights and
obligations pursuant to the terms of the standby loan agreement, subject only to
confirmation from the applicable rating agency that the assignment will not
result in a lower credit rating of the bonds. This means that GE Capital will be
released of all liabilities and obligations under any standby loan agreement
which it has assigned.
DESCRIPTION OF THE BONDS
General provisions
The bonds will be dated as of their date of issuance and will mature
serially on December 1 of each year in the principal amounts shown below:
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Year (December 1) Principal Amount
- ---------------------------------------- ----------------------------------
2006 $16,600,000
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2007 $16,700,000
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2008 $16,700,000
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2009 $16,700,000
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2010 $16,700,000
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2011 $16,700,000
- ---------------------------------------- ----------------------------------
2012 $16,700,000
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2013 $16,700,000
- ---------------------------------------- ----------------------------------
2014 $16,700,000
- ---------------------------------------- ----------------------------------
2015 $16,700,000
- ---------------------------------------- ----------------------------------
2016 $16,700,000
- ---------------------------------------- ----------------------------------
2017 $16,600,000
- ---------------------------------------- ----------------------------------
2018 $16,600,000
- ---------------------------------------- ----------------------------------
2019 $16,600,000
- ---------------------------------------- ----------------------------------
2020 $16,600,000
- ---------------------------------------- ----------------------------------
The bonds will bear interest at the initial rate of 2.85%, computed on
the basis of a year of 365 days for the actual number of day elapsed, until
December 3, 2002, payable on December 4, 2002, and after that at the rates
determined as described below.
The bonds will be registered in the name of Cede & Co., as nominee of
The Depository Trust Company, New York, New York, which will act as securities
depository for the bonds. So long as DTC or its nominee is the registered owner
of the bonds, individual purchases of the bonds will be made in book-entry form
only, in authorized denominations. Authorized denominations means until December
3, 2002, and during any weekly rate mode, $100,000 or any integral multiple of
$5,000 in excess of $100,000; and during any fixed rate mode, $5,000 or any
integral multiple of $5,000. Purchasers of the bonds will not receive
certificates representing their interest in the bonds. Principal of and interest
on the bonds will be paid to DTC, which will in turn remit such principal and
interest payments to its participants, for distribution to the bondholders.
Payment of Bonds
The principal of, premium, if any, on, interest on, and purchase price
of the bonds will be payable in lawful money of the United States of America.
The principal of and premium, if any, on all bonds will be payable only at the
principal office of the tender and paying agent, and the payment of the interest
on each bond will be made by the tender and paying agent on each interest
payment date to the person appearing on the bond register of the City and County
as the registered owner of the bond on the applicable record date, by check or
draft mailed or otherwise delivered to the registered owner of the bond at its
address as it appears on the bond register. The transfer and paying agent will
make payment of the principal of and premium, if any, on all bonds upon the
presentation and surrender of the bonds as they become due and payable. The
transfer and paying agent will make payment of the purchase price on any bond
upon the presentation and surrender of the bond on the purchase date. The person
in whose name any bond is registered at the close of business on any record date
with respect to any interest payment date will be entitled to receive the
interest payable on that interest payment date notwithstanding the cancellation
of the bond upon any registration of transfer or exchange after the record date
and prior to the interest payment date.
The bonds will bear interest from and including the interest accrual
date immediately preceding their date of authentication, or, if the date of
authentication is an interest accrual date to which interest on the bonds has
been paid in full or duly provided for or the date of initial authentication of
the bonds, from the date of authentication. However, if, as shown by the records
of the transfer and paying agent, interest on the
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bonds is in default, bonds issued in exchange for bonds surrendered for
registration of transfer or exchange will bear interest from the date to which
interest has been paid in full on the bonds or, if no interest has been paid on
the bonds, from the date of the first authentication of bonds. The bonds will
bear interest at the initial rate until December 3, 2002, at a weekly rate when
the bonds are in the weekly rate mode and at a fixed rate when the bonds are in
a fixed rate mode, all as selected by the City and County. No bond (other than a
bond owned by us) may bear interest at a rate higher than the maximum rate of
12%. When the initial rate is in effect, interest will be calculated on the
basis of a year of 365 days for the actual number of days elapsed. When a weekly
rate mode is in effect, interest will be calculated on the basis of a year of
365 or 366 days for the actual number of days elapsed. When a fixed rate mode is
in effect, on the basis of a year of 360 days comprised of twelve 30-day months.
The interest on the bonds will be due and payable on each interest
payment date and on each redemption date. The principal of the bonds will be due
and payable on any date on upon which the principal amount of the bonds is due,
including the maturity dates and redemption dates. The interest payment dates
are:
o with respect to bonds bearing interest at the initial rate,
December 4, 2002;
o with respect to bonds bearing interest at the weekly rate, the
first Wednesday of each month;
o with respect to a bond in the fixed rate mode, each January 1
and July 1, beginning with the first January 1 or July 1 that occurs no earlier
than three (3) months after the commencement of the fixed rate mode for that
bond;
o any date on which the bonds convert from a weekly rate mode to
a fixed rate mode; and
o each maturity date.
Determination of Interest Rates
Weekly rate
The weekly rate will be in effect from and including December 4, 2002,
to and including the following Tuesday. After that, the weekly rate will be in
effect from and including each Wednesday to and including the following Tuesday,
until and unless the City and County converts the bonds to the fixed rate mode.
The weekly rate will be the rate of interest per annum determined by
the remarketing agent (based on then-existing market conditions) to be the
minimum interest rate which, if borne by the bonds, would enable the remarketing
agent to sell the bonds on that rate determination date at a price equal to the
principal amount of the bonds plus any accrued interest.
The remarketing agent will establish the weekly rate by 4:00 P.M., New
York time, on each Tuesday or, if a Tuesday is not a business day, the next
succeeding day or, if that day is not a business day, then the business day
preceding that Tuesday. Business day means any day other than a Saturday or
Sunday, a legal holiday in the City of New York, New York or any city in which
the principal office of the tender and paying agent or any office of ours at
which drawings are required to be presented under the liquidity facility, on
which banking institutions are authorized by law or executive order to close, or
a day on which the New York Stock Exchange is closed.
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The remarketing agent will make the weekly rate available:
o after 4:00 P.M., New York time, on the rate determination date
by telecopy, telegraph, telex, facsimile transmission, e-mail
transmission or other similar electronic means of
communication, including a telephonic communication confirmed
by writing or written transmission to any beneficial holder of
the bonds and any of the City and County, the tender and
paying agent, us and DTC who requests the rate;
o by telecopy, telegraph, telex, facsimile transmission, e-mail
transmission or other similar electronic means of
communication, including a telephonic communication confirmed
by writing or written transmission to the tender and paying
agent not later than the second business day immediately
following the rate determination date; and
o to the registered holders of the bonds in the same manner in
which the remarketing agent must give notice to DTC, subject
to any arrangement among DTC, the remarketing agent, the
tender and paying agent and the City and County.
Regardless of the above, if we purchase bonds under the liquidity
facility during the weekly rate mode, the interest rate for our bonds will be
the prime rate plus 1% (or if an event of default has occurred, 3%) per annum,
but not in excess of the maximum interest rate allowed by law.
Alternate Rate
If the remarketing agent fails or is unable to determine the interest
rate for any bond in the weekly rate mode, or the method by which the
remarketing agent determines the interest rate in the weekly rate mode with
respect to a bond is held to be unenforceable by a court of law of competent
jurisdiction, then that bond will bear interest during each subsequent interest
period at the applicable alternate rate in effect on the first day of that
interest period.
The alternate rate will be the rate per annum specified in the index
published by Kenny Information Systems or its successors or assigns, as indexing
agent, and in effect on the first day of that interest period. The index will be
based upon yield evaluations at par of bonds, the interest on which is excluded
from gross income for purposes of Federal income taxation, of not less than five
(5) "high grade" component issuers selected by the indexing agent which will
include, without limitation, issuers of general obligation bonds. The specific
issuers included among the component issuers may be changed from time to time by
the indexing agent in its discretion. The bonds on which the index is based will
not include any bonds the interest on which is subject to a "minimum tax" or
similar tax under the United States Internal Revenue Code, unless all tax-exempt
bonds are subject to such tax. When the bonds are in the weekly rate mode, the
yield evaluation period for the index will be thirty (30) day yield evaluations.
If the indexing agent no longer publishes the index satisfying the requirements
of the this paragraph, the alternate rate for an interest period will be the
rate per annum specified in the most recently published index for a comparable
interest period.
If the method by which the remarketing agent determines the interest
rate in the weekly rate mode with respect to a bond is held to be unenforceable
by a court of law of competent jurisdiction, the remarketing agent will again
make the determination when the remarketing agent and the City and County
receive an opinion of bond counsel stating that the remarketing agent's
determinations are no longer subject to any legal prohibitions. If the
remarketing agent is prevented from determining a weekly rate as a result of any
date which would have been a business day not being a business day due to
unforeseen circumstances, then that bond will continue to bear interest at the
rate previously in effect until the next business day.
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Fixed rate
Conversion to fixed rate mode and notice of conversion. At the option
of the City and County, all or any portion of the bonds in authorized
denominations may be changed to the fixed rate mode on any business day. The
City and County will give written notice to each of the remarketing agent, the
tender and paying agent, us and DTC stating that the mode will be changed to the
fixed rate mode and setting forth the proposed mode change date, which must be
at least ten (10) days (or such shorter time as may be agreed to by the City and
County and the remarketing agent) after the date the notice is given. Any such
change in mode will be made as follows:
o the mode change date will be any business day; and
o not later than the eighth day next preceding the mode change
date, the tender and paying agent will mail, in the name of
the City and County, a notice of the proposed change to the
holders of the bonds being converted stating that the mode
will be changed to the fixed rate mode, the proposed mode
change date, and that the holder is required to tender the
holder's bonds for purchase on the proposed mode change date.
The change to the fixed rate mode will not occur unless the City and
County receives an opinion of bond counsel to the effect that the change will
not adversely affect the exclusion of interest on the bonds from gross income
for federal income tax purposes or the exemption of interest on the bonds from
all taxation by the State of Hawaii or any county or any political subdivision
of the State of Hawaii (subject to the inclusion of any exceptions contained in
the opinion delivered upon original issuance of the bonds).
If the conditions described above have not been satisfied by the
applicable mode change date, then the fixed rate mode will not take effect. If
the change in mode fails, the applicable bond will remain in the weekly rate
mode, with interest rates established in accordance with the provisions relating
to the weekly rate mode on and as of the failed mode change date. The tender and
paying agent will immediately mail, in the name of the City and County, a notice
of the failed mode change date to the bondholders having previously received
notice of the proposed mode change, and the notice will state that the fixed
rate mode will not take effect and indicating any condition not satisfied by the
mode change date.
Determination of fixed rate. The fixed rate will be the rate of
interest per annum determined by the remarketing agent (based on then-existing
market conditions) to be the minimum interest rate which, if borne by the bonds,
would enable the remarketing agent to sell the bonds on that rate determination
date at a price equal to the principal amount of the bonds plus any accrued
interest.
The remarketing agent will determine the fixed rate for a bond being
converted to the fixed rate mode not later than 4:00 P.M., New York time, on the
date determined by the remarketing agent, which will be at least one (1)
business day prior to the date on which the bond is converted to the fixed rate
mode. The remarketing agent will make the fixed rate available by telecopy,
telegraph, telex, facsimile transmission, e-mail transmission or other similar
electronic means of communication, including a telephonic communication
confirmed by writing or written transmission to any of the City and County, the
tender and paying agent, us and DTC who requests that fixed rate, and to the
registered holders of the bonds in the same manner in which the remarketing
agent must give notice to DTC, subject to any arrangement among DTC, the
remarketing agent, the tender and paying agent and the City and County.
In the absence of manifest error, the determination of interest rates
and interest periods by the remarketing agent and the interest rates contained
in the records of the tender and paying agent will be conclusive and binding
upon the remarketing agent, the tender and paying agent, the City and County and
the registered and beneficial holders of the bonds.
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Tender for purchase of the bonds
Tender for optional purchase
Any beneficial holder of a bond may elect to tender the bond (or
portions of the bond in amounts equal to authorized denominations) for purchase
on December 4, 2002, or on any business day during the weekly mode at a purchase
price equal to the principal amount plus accrued interest, if any, on the bond
to the proposed purchase date. The holder may elect to tender the bond by
delivering an irrevocable written notice of tender or irrevocable telephonic
notice of tender to the tender and paying agent, directly or through the
beneficial owner's participant, not later than 4:00 P.M., New York time, on a
business day not less than seven (7) days before the purchase date specified by
the beneficial owner in the notice. The notice of tender must state the
principal amount of the bond tendered, the name of the DTC participant of record
with respect to the bond, and the proposed purchase date. The remarketing agent
will use its best efforts, as described in more detail below, to offer for sale
all of the bond or the portion of the bond as to which the bondholder has given
notice of tender. Under certain circumstances, as described in more detail
below, if the remarketing agent is unable to remarket the tendered bond, we will
purchase the bond under the liquidity facility.
The tender and paying agent will make payment of the purchase price to
the holder of the tendered bond by wire transfer in immediately available funds
not later than 3:00 P.M., New York time, on the purchase date. A bondholder who
gives proper notice of tender may repurchase the bonds on the purchase date if
the remarketing agent agrees to sell the bonds to the bondholder, in which event
the remarketing agent will waive the delivery requirements set forth above.
So long as the bonds are registered in the name of DTC or any nominee
of DTC, to exercise an optional tender, a bondholder must notify the tender and
paying agent and its participant of its decision to demand the purchase of its
bonds.
Mandatory tender for purchase
Mandatory tender on interest rate conversions. Bonds to be converted to
the fixed rate mode must be tendered by the bondholders for purchase on the mode
change date at a purchase price equal to the principal amount of plus accrued
interest, if any, on the bonds to the proposed purchase date. The City and
County, the tender and paying agent and the remarketing agent will deem bonds
purchased pursuant to a mandatory purchase to have been tendered on the purchase
date. The bondholders will not need to deliver the bonds to the tender and
paying agent's office. The tender and paying agent will draw on the liquidity
facility in accordance with its terms in an amount sufficient to provide for the
purchase price of all bonds deemed tendered, and will make payment of the
purchase price by 3:00 P.M., New York time, on the purchase date. DTC will make
transfers of beneficial ownership of the bonds on its registration books
pursuant to its rules and procedures. The tender and paying agent will give, in
the name of the City and County, notice of the mandatory tender for purchase as
part of the notice to be sent to the bondholders as described above under
"Conversion to fixed rate mode and notice of conversion."
Mandatory tender on substitution of liquidity facility. The bonds are
subject to mandatory purchase on the date seven (7) days prior to the date upon
which the City and County determines to substitute an alternate liquidity
facility for the liquidity facility then in effect or, if that date is not a
business day, the next succeeding business day. An alternate liquidity facility
means any letter of credit, line of credit, standby bond purchase agreement or
other form of liquidity support for the bonds, provided that any alternate
liquidity facility provides a source of funds for the full and timely payment of
the purchase price of any bonds tendered for purchase and not remarketed, and
complying with Section 47-11, Hawaii Revised Statutes, as amended.
The City and County, the tender and paying agent and the remarketing
agent will deem bonds
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purchased pursuant to a mandatory tender for purchase to have been tendered on
the purchase date. The bondholders will not need to deliver the bonds to the
tender and paying agent's office. The tender and paying agent will draw on the
liquidity facility in accordance with its terms in an amount sufficient to
provide for the purchase price of all bonds deemed tendered, and will make
payment of the purchase price by 3:00 P.M., New York time, on the purchase date.
Transfers of beneficial ownership of the bonds will be made by DTC on the
registration books of DTC pursuant to its rules and procedures. Upon written
request, the tender and paying agent or the City and County will promptly
furnish each bondholder with a copy of each alternate liquidity facility
received by the tender and paying agent or the City and County. To be
acceptable, each alternate liquidity facility must be satisfactory to the City
and County, and no alternate liquidity facility will be satisfactory to the City
and County unless, in addition to all other requirements to be met for the
alternative liquidity facility:
o a draft of that alternate liquidity facility, and appropriate
information concerning the liquidity provider which will issue
that alternate liquidity facility, together with notice of
substitution of the alternate liquidity facility, have been
submitted to each rating agency and each rating agency has
provided written notice that the ratings then in effect with
respect to the bonds will not be reduced or withdrawn because
of the acceptance of the alternate liquidity facility;
o the City and County has given written notice to the tender and
paying agent at least forty-five (45) days prior to the date
the alternate liquidity facility is to become effective that,
upon the issuance of the alternate liquidity facility, the
bonds are expected to bear the rating specified in the notice;
and
o with respect to any date upon which the alternate liquidity
facility is to be substituted for the liquidity facility then
in effect, the alternate liquidity facility agreement provides
that the provider of the alternate liquidity facility will
purchase from the liquidity provider any bonds tendered to the
liquidity provider under the liquidity facility on that
substitution date. In connection with a substitution, the
tender and paying agent will also receive an opinion of
counsel for the provider of the alternate liquidity facility
in substantially the form delivered to the tender and paying
agent upon issuance of the liquidity facility. Not later than
fifteen (15) days before the substitution tender date, the
tender and paying agent will mail, in the name of the City and
County, a notice of tender for mandatory purchase to the
bondholders stating the substitution of the liquidity facility
and the purchase date for such bonds.
Mandatory tender upon expiration of liquidity facility. The bonds are
subject to mandatory purchase at a purchase price equal to the principal of plus
accrued interest, if any, on the bonds to the proposed purchase date on the date
seven (7) days prior to the date upon which the liquidity facility expires by
its terms or is terminated following an event of default and is not replaced by
an alternate liquidity facility or, if that date is not a business day, the next
succeeding business day. The City and County, the tender and paying agent and
the remarketing agent will deem bonds purchased pursuant to a mandatory purchase
to have been tendered on the purchase date. The bondholders will not need to
deliver the bonds to the tender and paying agent's office. The tender and paying
agent will draw on the liquidity facility in accordance with its terms in an
amount sufficient to provide for the purchase price of all bonds deemed tendered
and will pay the purchase price by 3:00 P.M., New York time, on the purchase
date. DTC will make transfers of beneficial ownership of the bonds on its
registration books pursuant to its rules and procedures. Not later than fifteen
(15) days next preceding the purchase date, the tender and paying agent will
mail, in the name of the City and County, a notice of tender for mandatory
purchase to the bondholders stating the expiration of the liquidity facility and
the purchase date for the bonds.
Our bonds. Regardless of the above, bonds we purchase under the
liquidity facility are not subject to optional or mandatory tender for purchase.
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Remarketing of the bonds
The remarketing agent will use its best efforts to offer for sale all
bonds or portions of the bonds as to which a bondholder has given proper notice
of tender and all bonds required to be tendered by the bondholders for mandatory
purchase, will notify any purchaser of the bonds offered for sale whether the
City and County has given a notice of optional redemption of the bonds (as
explained in more detail below), and will not remarket the bonds or any portions
of the bonds to the City and County or any insider of the City and County.
On each date on which a bond is to be purchased, the remarketing agent
will notify the DTC participant of each purchaser by telecopy, telegraph, telex,
facsimile transmission, e-mail transmission or other similar electronic means of
communication, including a telephonic communication confirmed by writing or
written transmission not later than 12:30 P.M., New York time, of the
registration instructions (i.e., the names, addresses and taxpayer
identification numbers of the purchasers and the principal amount of bonds
purchased by each such purchaser). On each date on which a bond is to be
purchased, the remarketing agent will give written notice to the tender and
paying agent and the City and County no later than 10:45 A.M., New York time, of
the aggregate amount of remarketing proceeds on deposit with it and the purchase
price of all bonds tendered or deemed tendered. The tender and paying agent will
draw on the liquidity facility in accordance with the terms of the liquidity
facility and to the extent necessary to provide by 2:30 P.M., New York time, on
such date funds an amount equal to the purchase price of all bonds tendered or
deemed tendered less the aggregate amount of remarketing proceeds received by
the remarketing agent. If the tender and paying agent does not receive the
remarketing agent's notice, the tender and paying agent will draw on the
liquidity facility in an amount equal to the purchase price on all bonds
tendered or deemed tendered. The tender and paying agent will deposit those
funds into a purchase account created by the tender and paying agent and the
tender and paying agent will not commingle those funds with other funds held by
the tender and paying agent.
By 3:00 P.M., New York time, on the date on which a bond is to be
purchased, the tender and paying agent will pay for tendered bonds at the
applicable purchase price by wire transfer to the applicable bondholder in
immediately available funds. Funds for the payment of the purchase price will be
derived solely from the following sources in the order of priority indicated:
first from immediately available funds on deposit in a remarketing proceeds
account in the tender and paying agent's purchase fund, and second from
immediately available funds on deposit in the account in the tender and paying
agent's purchase fund. Neither the tender and paying agent nor the remarketing
agent will be obligated to provide funds from any other source.
On each date on which a bond is to be purchased, the remarketing agent
will confirm the purchase of the bonds to the DTC participant of the applicable
purchaser and the DTC participant will confirm the purchase of the bond to the
applicable purchaser by 3:30 P.M., New York time.
Bonds purchased with amounts derived from draws under the liquidity
facility will be owned by us and will be registered immediately in the name of
our DTC participant. Our DTC participant will not release our bonds to the
tender and paying agent prior to receiving notice from us of the reinstatement
of the liquidity facility in an amount equal to the principal of and accrued
interest on our bonds and a direction to release our bonds. Our bonds will bear
interest at the prime rate plus 1% (or upon certain events of default at the
prime rate plus 3%, but in no event at a rate in excess of the maximum interest
rate allowed by law) and will be subject to remarketing by the remarketing
agent. The remarketing agent will continue to use its best efforts to arrange
for the sale of any of our bonds, subject to full reinstatement of the liquidity
facility with respect to the drawings with which our bonds were purchased, at a
price equal to the principal amount of our bonds plus accrued interest on our
bonds.
If the City and County fails and continues to fail to pay interest or
principal to pay or provide for payment of the purchase price (upon optional or
mandatory tender for purchase) of the bonds, the
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remarketing agent will not remarket any bonds.
Redemption prior to maturity
The bonds will not be subject to redemption before December 4, 2002,
and then and thereafter that will be subject to redemption prior to maturity as
follows:
o Optional redemption - weekly rate mode. Any bonds in the weekly rate
mode will be subject to redemption, at the option of the City and County, in
whole or in part, in authorized denominations, on any interest payment date, at
a redemption price equal to the principal amount of those bonds.
o Optional redemption - fixed rate mode. Any bonds in the fixed rate
mode will be subject to redemption, at the option of the City and County, in
whole or in part on any date (and if in part, in the order of maturity as the
City and County may specify and within a maturity by lot or by any other method
that the tender and paying agent determines to be fair and reasonable and in
authorized denominations) at the redemption prices that the City and County
determines at the time of the conversion to the fixed rate mode.
The tender and paying agent, in the name of the City and County, will
mail notice of redemption of any bond, at least once not less than ten (10) days
prior to the date fixed for redemption, in the case of redemption of a bond in
the weekly bode, or thirty (30) days prior to the date fixed for redemption, in
the case of redemption of a bond in the fixed rate mode, to each bondholder in
whose name a bond is registered upon the tender and paying agent's bond register
as of the close of business on the fifth (5th) day (whether or not a business
day) next preceding the date of mailing the notice. The failure of a bondholder
to receive the notice or any defect in the notice will not affect the
sufficiency of the proceedings for the redemption of any bond. The City and
County, at its option, in addition to giving notice of redemption by mailing as
stated above, may give notice of the redemption by publication. If a bond is of
a denomination in excess of a minimum authorized denomination, portions of the
principal sum of the bond in amounts equal to authorized denominations may be
redeemed. If less than all of the principal sum of the bond is to be redeemed,
in that case, upon the surrender of the bond to the tender and paying agent the
tender and paying agent will issue to the registered holder of the bond, without
charge, for the then unredeemed balance of the principal sum of the bond, a bond
of like series, maturity and interest rate in any of the authorized
denominations. If notice of redemption of any bond (or any portion of the
principal sum of any bond) has been duly given, and if on or before the date
fixed for the redemption the City and County has duly made or provided for the
payment of the principal sum to be redeemed to the date fixed for the
redemption, then the bond (or the portion of the principal sum of the bond to be
redeemed) will become due and payable upon the date fixed for redemption and
interest on the bond will cease to accrue and become payable from and after the
date fixed for the redemption on the principal sum of the bond to be redeemed.
Book-Entry System
DTC will act as securities depository for the bonds. The bonds will be
issued as fully-registered bonds in the name of Cede & Co. (DTC's partnership
nominee) or any other name as may be requested by an authorized representative
of DTC. One fully-registered bond will be issued in the aggregate principal
amount of the bonds and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its direct participants deposit with it.
DTC also facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic
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computerized book-entry changes in its direct participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange LLC and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as securities
brokers and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a direct participant of DTC, either directly or
indirectly. The rules applicable to DTC and its direct and indirect participants
are on file with the Securities and Exchange Commission.
Purchases of the bonds under the DTC system must be made by or through
direct participants, which will receive a credit for the bonds on DTC's records.
The ownership interest of each actual purchaser, or "beneficial owner," of each
bond is in turn to be recorded on the direct and indirect participants' records.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the direct or indirect participants through which beneficial
owners entered into the transaction. Transfers of ownership interests in the
bonds are to be accomplished by entries made on the books of DTC's participants
acting on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in the bonds, unless the use
of the book-entry system for the bonds is discontinued.
To facilitate subsequent transfers, all bonds deposited by direct
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other nominee as may be requested by an authorized
representative of DTC. The deposit of bonds with DTC and their registration in
the name of Cede & Co. or such other nominee effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the bonds.
DTC's records reflect only the identity of its direct participants to whose
accounts the securities are credited, which may or may not be the beneficial
owners. DTC's direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to its direct
participants, by its direct participants to its indirect participants, and by
its direct participants and its indirect participants to beneficial owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements which may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
bonds within an issue are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each of its direct participants in that issue to
be redeemed.
Neither DTC nor Cede & Co. (nor such other nominee) will consent or
vote with respect to the bonds. Under its usual procedures, DTC mails an omnibus
proxy to an issuer as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants to
whose accounts the bonds are credited on the record date (identified in a
listing attached to the omnibus proxy).
Principal and interest payments and payments of the purchase price of
tendered bonds will be made to DTC. DTC's practice is to credit its direct
participants' accounts, upon receipt of funds and corresponding detail
information from the City and County or the tender and paying agent on payment
dates in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the date payable.
Payments by DTC's participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the DTC participant and not of DTC, the tender and
paying agent or the City and County, subject to any statutory or
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regulatory requirements which may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the City and County or
the tender and paying agent, disbursement of those payments to direct
participants will be the responsibility of DTC, and disbursement of those
payments to the beneficial owners will be the responsibility of direct and
indirect participants.
Regardless of the statements above, if any bond is tendered but not
remarketed, with the result that the bond becomes owned by us, the tender and
paying agent and the City and County will, if requested by us, take all action
necessary to remove the bonds from the book-entry system of DTC and to register
that tendered but not remarketed bond in our name. Bonds owned by us not in the
book-entry system of DTC will be held by us, or at our option, by the tender and
paying agent on our behalf, and for our benefit. When all bonds owned by us have
been remarketed, we no longer own any bonds and we have been reinstated in full,
the tender and paying agent and the City and County will take all actions
necessary to return the bonds to the full book-entry system of DTC.
The City and County and the underwriters cannot and do not give any
assurances that DTC, DTC's participants or others will distribute payments of
principal, interest or premium with respect to the bonds paid to DTC or its
nominee as the owner, or will distribute any prepayment notices or other
notices, to the beneficial owners, or that they will do so on a timely basis or
will serve and act in the manner described in this pricing supplement. The City
and County and the underwriters are not responsible or liable for the failure of
DTC or any participant to make any payment or give any notice to a beneficial
owner with respect to the bonds or an error or delay relating thereto.
The foregoing description of the procedures and record-keeping with
respect to beneficial ownership interests in the bonds, payment of principal,
interest and other payments on the bonds to DTC's participants or beneficial
owners of the bonds, confirmation and transfer of beneficial ownership interests
in such bonds and other related transactions by and between DTC, DTC's
participants and the beneficial owners of the bonds is based solely on
information provided by DTC. Accordingly, no representations can be made
concerning these matters and neither the DTC participants nor the beneficial
owners should rely on the foregoing information with respect to such matters,
but should instead confirm the same with DTC or DTC's participants, as the case
may be.
DTC may discontinue providing its services with respect to the bonds at
any time by giving notice to the tender and paying agent and discharging its
responsibilities with respect thereto under applicable law or the City and
County may terminate participation in the system of book-entry transfers through
DTC or any other securities depository at any time. In the event that the
book-entry system is discontinued, replacement certificates will be printed and
delivered.
THE PAYING AGENT, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO BONDHOLDERS ONLY
TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC
PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICES AND ITS CONTENT OR
EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING
TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION
PREMISED ON THE NOTICE.
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Security For The Bonds
The Constitution and other laws of the State of Hawaii provide that the
interest and principal payments on the bonds are a first charge on the general
fund of the City and County. Under those laws, the full faith and credit of the
City and County are pledged to the payment of the principal and interest, and
for that payment the City Council has the power and is obligated to levy ad
valorem taxes without limitation as to rate or amount on all the real property
subject to taxation by the City and County.
Bond Insurance
Concurrently with the issuance of the bonds, Financial Guaranty
Insurance Company, as bond insurer, will issue its municipal bond insurance
policy for the bonds. The bond insurer is affiliated with us. The bond insurer
is a wholly -owned subsidiary of FGIC Corporation, which is a subsidiary of
General Electric Capital Corporation. The policy unconditionally guarantees the
payment of that portion of the principal of and interest on the bonds which has
become due for payment, but remains unpaid by the City and County. The bond
insurer will make the payments to State Street Bank and Trust Company, N.A., as
fiscal agent, or its successor as its agent, on the later of the date on which
the principal and interest is due or on the business day next following the day
on which the bond insurer receives telephonic or telegraphic notice,
subsequently confirmed in writing, or written notice by registered or certified
mail, from an owner of bonds or the tender and paying agent of the nonpayment of
the amount by the City and County. The fiscal agent will disburse the amount due
on any bond to its owner upon receipt by the fiscal agent of evidence
satisfactory to the fiscal agent of the owner's right to receive payment of the
principal and interest due for payment and evidence, including any appropriate
instruments of assignment, that all of the owner's rights to payment of the
principal and interest are vested in the bond insurer. The term "nonpayment"
with respect to a bond includes any payment of principal or interest made to an
owner of a bond that has been recovered from the owner pursuant to the United
States Bankruptcy Code by a trustee in bankruptcy in accordance with a final,
nonappealable order of a court having competent jurisdiction.
The policy is non-cancellable and the premium will be fully paid at the
time of delivery of the bonds. The policy covers failure to pay principal of the
bonds on their stated maturity date, or dates on which the bonds are called for
mandatory sinking fund redemption, but not on any other date on which the bonds
may be called for redemption, accelerated or advanced in maturity, and covers
the failure to pay an installment of interest on the stated date for its
payment.
THE STANDBY BOND PURCHASE AGREEMENT
Our liquidity facility obligations under the standby bond purchase
agreement will rank equally with all of our other general unsecured and
unsubordinated obligations. The liquidity facility obligations are not issued
under an indenture. As of the date of this pricing supplement, we have
approximately $4.0 billion of liquidity facility obligations currently
outstanding under various standby bond purchase agreements, including the
liquidity facility obligations we are issuing under this pricing supplement.
Owners of the bonds to which the liquidity facility obligations relate
will be entitled to the benefits and will be subject to the terms of the standby
bond purchase agreement. Under the standby bond purchase agreement, we agree to
make available to a specified intermediary, upon receipt of an appropriate
demand for payment, the purchase price for the bonds. Our liquidity facility
obligations under the standby bond purchase agreement will be sufficient to pay
a purchase price equal to the principal of the bonds and, for the period from
the date of issuance of the bonds through and including December 3, 2002, the
full amount of interest on the bonds at the initial rate of 2.85%, and for the
period after December 3, 2002, up to 35 days' interest on the bonds at an
assumed maximum rate of 12% per year.
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Termination Events
The scheduled expiration date of the standby bond purchase agreement is
December 4, 2006. The certificate of the director of budget and fiscal services
of the City and County relating to the bonds will specify certain circumstances
where we must purchase bonds that a holder tenders for purchase pursuant to an
optional or mandatory tender, which have not been remarketed. Under certain
circumstances, we may terminate our obligation to purchase the bonds. The
following events would permit termination of our obligation to purchase the
bonds:
o if the City and County fails to pay any portion of the commitment fee
when due as set forth in the standby bond purchase agreement and the related
payment reimbursement agreement, or if the City and County fails to pay when due
any other amount it must pay under those documents and that failure continues
for a specified number of business days;
o if the City and County fails to observe or perform any agreement
contained in the standby bond purchase agreement, the certificate under which
the bonds are issued or a related municipal financing agreement (or the State of
Hawaii takes any action which would impair the power of the City and County to
so comply) and, if that failure is a result of a covenant breach that the City
and County can remedy, that failure continues for a specified number of days
following written notice of that failure from us to the City and County;
o if any representation, warranty, certification or statement made by
the City and County in the standby bond purchase agreement or any related
document or in any certificate, financial statement or other document the City
and County delivers under those documents proves to have been incorrect in any
material respect when made;
o if the City and County defaults in the payment of principal of or
premium, if any, or interest on any other general obligation bond of the City
and County, and that default is continuing;
o if the City and County commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of its or any substantial part of its property, or consents to any such
relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or makes a general
assignment for the benefit of creditors, or fails generally to pay its debts as
they become due, or declares a moratorium, or takes any action to authorize any
of the foregoing;
o if an involuntary case or other proceeding is commenced against the
City and County seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or other similar law or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and the
involuntary case remains undismissed and unstayed for a period of 60 days; or if
an order for relief is entered against the City and County under the federal
bankruptcy laws;
o if any material provision of the standby bond purchase agreement or
any related document for any reason whatsoever ceases to be a valid and binding
agreement of the City and County or the City and County contests the validity or
enforceability of any of these documents; or
o if the City and County does not pay when due any amount payable under
the bonds or under a related municipal financing agreement (regardless of
whether the holders of the bonds waive that
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failure).
If a termination event occurs, we may deliver notice to the City and
County, the tender and paying agent, and the remarketing agent regarding our
intention to terminate the standby bond purchase agreement. In that case, the
standby bond purchase agreement would terminate, effective at the close of
business on the day following the date of the notice, or if that date is not a
business day, on the next business day. Before the time at which termination
takes effect, the bonds will be subject to mandatory tender for purchase from
the proceeds of a drawing under the standby bond purchase agreement. The
termination of the standby bond purchase agreement, however, does not result in
an automatic acceleration of the bonds.
The obligations of the City and County under the bonds are as described
in a separate disclosure document relating to the bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL; RIGHT OF ASSIGNMENT
In order to obtain funds to fulfill our liquidity facility obligations
under the standby bond purchase agreement, we have entered into a standby loan
agreement with GE Capital under which GE Capital will be irrevocably obligated
to lend funds to us as needed to purchase bonds. The amount of each loan under
the standby loan agreement will be no greater than the purchase price for
tendered bonds. The purchase price represents the outstanding principal amount
of the tendered bonds and interest accrued on the principal to but excluding the
date we borrow funds under the standby loan agreement. Each loan will mature on
the date on which the standby bond purchase agreement terminates by its terms
and may be paid by delivering tendered bonds owned by us to GE Capital. The
proceeds of each loan will be used only for the purpose of paying the purchase
price for tendered bonds. When we wish to borrow funds under the standby loan
agreement, we must give GE Capital prior written notice by a specified time on
the proposed borrowing date. GE Capital will make available the amount of the
borrowing requested no later than a specified time on each borrowing date (if GE
Capital has received the related notice of borrowing by the necessary time on
such date).
The standby loan agreement will expressly provide that it is not a
guarantee by GE Capital of the bonds or of our liquidity facility obligations
under the standby bond purchase agreement. GE Capital will not have any
responsibility or incur any liability for any act, or any failure to act, by us
which results in our failure to purchase tendered bonds with the funds provided
under the standby loan agreement.
GE Capital will have the unilateral right at any time to assign its
rights and obligations under the standby loan agreement to another standby
lender unrelated to GE Capital, provided that the assignment does not result in
a reduction in the credit rating of the liquidity facility obligations. This
means that GE Capital will be released of all obligations and liabilities under
any standby loan agreement which it has assigned. In the event of any
assignment, you will not receive prior notice of the assignment nor will you
have any additional rights with respect to the obligations on the bonds.
Ratio of Earnings to Fixed Charges
The following table sets forth the consolidated ratio of earnings to
fixed charges of GE Capital for the periods indicated:
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Year Ended December 31,
- --------------------------------------------------------------------------------------------- Nine Months Ended
1996 1997 1998 1999 2000 September 29, 2001
- ---------------- ---------------- ---------------- ---------------- ---------------- ------------------
1.53 1.48 1.50 1.60 1.52 1.60
For purposes of computing the consolidated ratio of earnings to fixed
charges, earnings consist of net earnings adjusted for the provision for income
taxes, minority interest and fixed charges. Fixed charges consist of interest
and discount on all indebtedness and one-third of rentals, which GE Capital
believe reasonably approximates the interest factor of such rentals.
Where You Can Find More Information Regarding GE Capital
GE Capital files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information GE Capital files at the SEC's public
reference room located at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. GE Capital's SEC filings are also available to the public
from commercial document retrieval services and at the web site maintained by
the SEC at http://www.sec.gov. GE Capital maintains a web site at
http://www.gecapital.com. Information on GE Capital's web site is not intended
to be a part of this pricing supplement.
Incorporation of Information Regarding GE Capital
The SEC allows us to "incorporate by reference" information into this
pricing supplement, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this pricing
supplement, except for any information superseded by information in this pricing
supplement. This pricing supplement incorporates by reference the documents set
forth below that GE Capital has previously filed with the SEC. These documents
contain important information about GE Capital, its business and its finances.
Document Period
- -------- ------
Annual report on Form 10-K.................. Year Ended December 31, 2000
Quarterly reports on Form 10-Q.............. Quarters Ended March 31, 2001,
June 30, 2001 and
September 29, 2001
EXPERTS
The financial statements and schedule of GE Capital and consolidated
affiliates as of December 31, 2000 and 1999, and for each of the years in the
three year period ended December 31, 2000, appearing in GE Capital's annual
report on Form 10-K for the year ended December 31, 2000, have been incorporated
by reference in this pricing supplement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference in this
pricing supplement upon the authority of said firm as experts in accounting and
auditing.
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Filed pursuant to Rule 424(b)(4)
File No. 333-71950
$2,000,000,000
principal amount plus interest
liquidity facility obligations
of
FGIC Securities Purchase, Inc.
We intend to offer from time to time, in connection with the issuance
by municipal authorities of adjustable or floating rate debt securities, our
liquidity facility obligations under one or more standby bond purchase
agreements. The liquidity facility obligations will not be sold separately from
the securities, which will be offered pursuant to a separate prospectus or
offering statement. The liquidity facility obligations will not be severable
from the securities and may not be separately traded. This prospectus,
appropriately supplemented, may also be delivered in connection with any
remarketing of securities purchased by us or by our affiliates.
We will issue the liquidity facility obligations from time to time to
provide liquidity for certain adjustable or floating rate securities issued by
municipal authorities. The specific terms of the liquidity facility obligations
and the securities to which they relate will be set forth in a prospectus
supplement to this prospectus. Each issue of liquidity facility obligations may
vary, where applicable, depending upon the terms of the securities to which the
liquidity facility obligations relate.
We are a Delaware corporation that was incorporated in 1990. Our
principal executive office is at Financial Guaranty Insurance Company, 125 Park
Avenue, 5th Floor, New York, New York 10017 and our telephone number is (212)
312-3000. Unless the context otherwise indicates, the terms "the company," "we,"
"us" or "our" mean FGIC Securities Purchase, Inc.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus or the accompanying prospectus supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
------------------------
The date of this prospectus is November 5, 2001.
We have provided the information contained in this prospectus. We are submitting
this prospectus in connection with the future sale of the liquidity facility
obligations. You may not reproduce or use this prospectus, in whole or in part,
for any other purposes.
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not, and the underwriters have not, authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are
not, and the underwriters are not, making an offer to sell the liquidity
facility obligations in any jurisdiction where the offer or sale is not
permitted.
This prospectus and the applicable prospectus supplement constitute a prospectus
with respect to our liquidity facility obligations under the standby bond
purchase agreements to be entered into from time to time by us in support of the
securities. We do not anticipate that registration statements with respect to
the securities issued by municipal authorities will be filed under the
Securities Act of 1933, as amended.
You should not assume that the information in this prospectus and the
accompanying prospectus supplement is accurate as of any date other than the
date on the front of those documents regardless of the time of delivery of this
prospectus and the accompanying prospectus supplement or any sale of the
liquidity facility obligations. We may provide additional updating information
with respect to the matters discussed in this prospectus and the accompanying
prospectus supplement in the future by means of appendices or supplements to
this prospectus and the accompanying prospectus supplement or other documents
including those incorporated by reference.
WHERE YOU CAN FIND MORE INFORMATION
We file annual and other reports and information with the Securities and
Exchange Commission. You may read and copy any of these documents at the
Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the Commission at 1-800-SEC-0330 for further information on
the public reference room. The Commission also maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants, such as ourselves, that file electronically with the
Commission. The address of that web site is http://www.sec.gov. We do not intend
to deliver to holders of the liquidity facility obligations an annual report or
other report containing financial information. We do not have a web site;
however, Financial Guaranty Insurance Company, one of our affiliate companies,
has a web site that contains information about us. Financial Guaranty Insurance
Company's web site is http://www.fgic.com. Information on Financial Guaranty
Insurance Company's web site is not intended to be a part of this prospectus.
INCORPORATION BY REFERENCE
The Commission allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and later information that we will file
with the Commission will automatically update or supersede this information. We
incorporate by reference:
o our annual report on Form 10-K for the year ended December 31,
2000;
o our quarterly reports on Form 10-Q for the quarterly periods
ended March 31, 2001 and June 30, 2001; and
o our current reports on Form 8-K filed with the Commission on
September 20, 2001, October 15, 2001, October 16, 2001,
October 25, 2001, October 26, 2001 and October 31, 2001.
2
We also incorporate by reference any future filings made with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, until such time as we have sold all of the liquidity facility
obligations covered by this prospectus.
We will provide without charge to any person (including any beneficial owner) to
whom this prospectus is delivered, upon the oral or written request of such
person, a copy of any or all of the information that has been incorporated by
reference in this prospectus but not delivered with this prospectus. You should
direct such requests to: Carolanne Gardner, Corporate Communications Department,
FGIC Securities Purchase, Inc., Financial Guaranty Insurance Company, 125 Park
Avenue, 5th Floor, New York, New York 10017, Telephone: (212) 312-3000.
THE COMPANY
The company was incorporated in 1990 in the State of Delaware. All outstanding
capital stock of the company is owned by FGIC Holdings, Inc., a Delaware
corporation.
Our business consists and will consist of providing liquidity for certain
adjustable and floating rate securities issued by municipal authorities through
liquidity facilities in the form of standby bond purchase agreements. The
securities are typically remarketed by registered broker-dealers at par on a
periodic basis to establish the applicable interest rate for the next interest
period and to provide a secondary market liquidity facility for holders of
securities desiring to sell their securities. Pursuant to standby bond purchase
agreements with issuers, remarketing agents, tender agents or trustees of the
securities, we will be obligated to purchase unremarketed securities from the
holders of those securities who voluntarily or mandatorily tender their
securities for purchase. In order to obtain funds to purchase the securities, we
will enter into one or more standby loan agreements with General Electric
Capital Corporation or its permitted assignees under which GE Capital or its
permitted assignees will be irrevocably obligated to lend funds as needed to us
to purchase securities as required.
Our principal executive offices are located at Financial Guaranty Insurance
Company, 125 Park Avenue, 5th Floor, New York, New York 10017, telephone (212)
312-3000.
RECENT DEVELOPMENTS
We have issued the following liquidity facility obligations since the
date of our quarterly report on Form 10-Q for the period ending June 30, 2001:
o $21,275,000 principal amount plus interest in support of Board of
Trustees of Grand Valley State University, General Revenue Variable Rate Demand
Bonds, Series 2001B, issued on or about August 7, 2001, described in the
prospectus supplement dated July 20, 2001;
o $48,000,000 principal amount plus interest in support of Board of
Trustees of Oakland University, General Revenue Bonds (Variable Rate Demand),
Series 2001, issued on or about August 16, 2001, described in the prospectus
supplement dated August 7, 2001;
o $41,395,000 principal amount plus interest in support of Board of
Regents of Eastern Michigan University, General Revenue Variable Rate Demand
Refunding Bonds, Series 2001, issued on or about August 29, 2001, described in
the prospectus supplement dated August 13, 2001;
o $30,000,000 principal amount plus interest in support of Board of
Control of Northern Michigan University, General Revenue Variable Rate Demand
Bonds, Series 2001, issued on or about September 5, 2001, described in the
prospectus supplement dated August 27, 2001;
3
o $180,000,000 principal amount plus interest in support of
Massachusetts Water Resources Authority, Multi-Modal Subordinated $95,000,000
General Revenue Bonds, 2001 Series A and $85,000,000 General Revenue Bonds, 2001
Series B, issued on or about September 26, 2001, described in the prospectus
supplement dated September 19, 2001;
o $139,080,000 principal amount plus interest in support of City of
Detroit, Michigan, Sewage Disposal System Second Lien Revenue Bonds (Variable
Rate Demand), Series 2001(E), issued on or about October 23, 2001, described in
the prospectus supplement dated October 11, 2001 and the pricing supplement
dated October 18, 2001;
o $127,165,000 principal amount plus interest in support of City of
Detroit, Michigan, Sewage Disposal System Senior Lien Revenue Refunding Bonds
(Variable Rate Demand), Series 2001(C-2), issued on or about October 23, 2001,
described in the prospectus supplement dated October 12, 2001;
o $140,000,000 principal amount plus interest in support of The City of
New York, General Obligation Taxable Adjustable Rate Bonds, Fiscal 2002
Subseries A-9 and A-11, issued on or about November 1, 2001, described in the
prospectus supplement dated October 24, 2001; and
o $66,280,000 principal amount plus interest in support of Rancho
California Water District Financing Authority, Adjustable Rate Revenue Bonds,
Series of 2001B, issued on or about November 1, 2001, described in the
prospectus supplement dated October 25, 2001 and the pricing supplement dated
October 31, 2001.
SUMMARY
The proposed structure will be utilized to provide liquidity through a "put"
mechanism for floating or adjustable rate securities issued by municipal
authorities. The securities typically include a tender feature that permits
broker-dealers to establish interest rates on a periodic basis which would
enable the securities to be remarketed at par and that provides a secondary
market liquidity facility for holders desiring to sell their securities. The
securities will be remarketed pursuant to an agreement under which the
broker-dealers will be obligated to use "best efforts" to remarket the
securities. In the event that they cannot be remarketed, we will be obligated,
pursuant to a standby purchase agreement with the issuer, remarketing agent,
tender agent or trustee of the securities, to purchase unremarketed securities
from the holders desiring to tender their securities. This facility will assure
holders of securities of liquidity for their securities even when market
conditions preclude successful remarketing.
The proposed structure may also be used in connection with concurrent offerings
of variable rate demand securities. Variable rate demand securities are
municipal securities pursuant to which the interest rate is a variable interest
rate which is re-set by the remarketing agent or pursuant to a stated formula
from time to time (not to exceed a stated maximum rate). The owners of variable
rate demand securities have the optional right to tender their variable rate
demand securities to the issuer for purchase and, in the event the remarketing
agent does not successfully remarket the tendered variable rate demand
securities, we are obligated to pay the purchase price for those securities to
those owners pursuant to the terms of our liquidity facility.
The fees for providing the liquidity facility will be paid by the issuer or
other entity specified in the applicable prospectus supplement, typically over
the life of the liquidity facility or, in the case of variable rate demand
securities, until such time as a variable rate demand security is permanently
linked with a convertible inverse floating rate security. Except as otherwise
provided in a prospectus supplement, in order to obtain funds to purchase
unremarketed securities, we will enter into one or more standby loan agreements
with GE Capital or its permitted assignees under which GE Capital or its
permitted assignees will be irrevocably be obligated to lend funds to us as
needed to purchase securities for which the put option has been exercised.
Except as
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otherwise provided in a prospectus supplement, the standby bond purchase
agreement between us and the trustee, issuer or other specified entity will
provide that without the consent of the issuer and the trustee for the holders
of the securities, we will not agree or consent to any amendment, supplement or
modification of the related standby loan agreement, nor waive any provision of
the related standby loan agreement, if that amendment, supplement, modification
or waiver would materially adversely affect the issuer or other specified
entity, or the holders of the securities.
Except as otherwise provided in a prospectus supplement, our liquidity facility
obligations under the standby bond purchase agreement may only be terminated
upon the occurrence of certain events including the following:
o if the issuer or other specified entity fails to pay any portion of the
commitment fee when due as set forth in the standby bond purchase agreement and
the related payment reimbursement agreement, or if the issuer fails to pay when
due any other amount it must pay under those documents and that failure
continues for a specified number of business days;
o if the issuer or other specified entity fails to observe or perform any
agreement contained in the standby bond purchase agreement, the indenture or a
related municipal financing agreement (or the applicable state takes any action
which would impair the power of the issuer or other specified entity to so
comply) and, if that failure is a result of a covenant breach that the issuer
can remedy, that failure continues for a specified number of days following
written notice of that failure from us to the issuer;
o if any representation, warranty, certification or statement made by the issuer
in the standby bond purchase agreement or any related document or in any
certificate, financial statement or other document the issuer or other specified
entity delivers under those documents proves to have been incorrect in any
material respect when made;
o if the issuer or other specified entity defaults in the payment of principal
of or premium, if any, or interest on any bond, note or other evidence of
indebtedness that the issuer or other specified entity has issued, assumed or
guaranteed, and that default is continuing;
o if the issuer or other specified entity commences a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of its or any substantial part of its property, or consents to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
makes a general assignment for the benefit of creditors, or fails generally to
pay its debts as they become due, or declares a moratorium, or takes any action
to authorize any of the foregoing;
o if an involuntary case or other proceeding is commenced against the issuer or
other specified entity seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and the
involuntary case remains undismissed and unstayed for a period of 60 days; or if
an order for relief is entered against the issuer or other specified entity
under the federal bankruptcy laws;
o if any material provision of the standby bond purchase agreement or any
related document defined in the standby bond purchase agreement for any reason
whatsoever ceases to be a valid and binding agreement of the issuer or other
party to the standby bond purchase agreement or the issuer or other party
thereto contests the validity or enforceability of any of these documents; or
o if the issuer or other specified entity does not pay when due any amount
payable under the securities
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or under a related municipal financing agreement (regardless of whether the
holders of the securities waive that failure).
You should be aware that the specific termination events applicable to a standby
bond purchase agreement will be subject to negotiation in each case. For this
reason, other or different termination events than those listed above may apply
to the specific standby bond purchase agreement. The final termination events
under each standby bond purchase agreement will be specified in the applicable
prospectus supplement.
Upon the occurrence of a termination event, we may deliver notice to the issuer,
any specified entity, the related trustee, remarketing agent and any applicable
paying agent or tender agent regarding our intention to terminate the standby
bond purchase agreement. In that case, the standby bond purchase agreement would
terminate, effective at the close of business on the day following the date of
the notice, or if that date is not a business day, on the next business day.
However, before the time at which termination takes effect, the related
securities will be subject to mandatory tender for purchase from the proceeds of
a drawing under the standby bond purchase agreement. The termination of the
standby bond purchase agreement, however, does not result in an automatic
acceleration of the related securities.
The above structure is intended to receive the highest short term rating from
the rating agencies and to municipal authorities with the lowest cost of
financing. There can be no assurances, however, that those ratings will be
maintained.
THE STANDBY BOND PURCHASE AGREEMENTS
Our liquidity facility obligations under the standby bond purchase agreements
will rank equally with all of our other general unsecured and unsubordinated
obligations. The liquidity facility obligations are not issued pursuant to an
indenture; they will arise under one or more standby bond purchase agreements.
Holders of the securities will be entitled to the benefits and will be subject
to the terms of the applicable standby bond purchase agreement as specified in
the prospectus supplement. Pursuant to the applicable standby bond purchase
agreement, we will agree to make available to a specified intermediary, upon
receipt of an appropriate demand for payment, the purchase price for the
securities to which that standby bond purchase agreement relates. Our liquidity
facility obligation under each standby bond purchase agreement will be
sufficient to pay a purchase price equal to the principal of the security to
which that standby bond purchase agreement relates and up to a specified amount
of interest at a specified rate set forth in the applicable prospectus
supplement. We expect that the standby bond purchase agreements will have a
shorter term than that of the securities to which they relate, but the standby
bond purchase agreements are subject to extension or renewal. The term of the
applicable standby bond purchase agreement and the term of the related
securities will be set forth in the applicable prospectus supplement.
THE STANDBY LOAN AGREEMENTS
In order to obtain funds to fulfill our liquidity facility obligations under the
standby bond purchase agreements, we will enter into one or more standby loan
agreements with GE Capital or its permitted assignee under which GE Capital or
its permitted assignee will be irrevocably obligated to loan funds to us as
needed to purchase the securities to which the applicable standby bond purchase
agreement relates. Each standby loan agreement will have the terms set forth in
the applicable prospectus supplement. We anticipate that each loan under a
standby loan agreement will be in an amount not exceeding the purchase price for
the securities tendered by the holders. The purchase price will represent the
outstanding principal amount of those securities, and any accrued interest on
the principal for a specified period. The proceeds of each loan will be used
only for the purpose of paying the purchase price for tendered securities. If
stated in the applicable prospectus supplement, GE Capital may have the
unilateral right to assign its rights and obligations pursuant to the terms of
each standby loan agreement subject only to confirmation from the applicable
rating
6
agency or rating agencies that the assignment will not result in a lower credit
rating on the securities. We do not anticipate that GE Capital will guarantee
the securities to which its standby loan agreement relates or our obligation
under any standby purchase agreement.
PLAN OF DISTRIBUTION
The liquidity facility obligations will not be sold separately from the
securities, which will be offered pursuant to a separate prospectus, official
statement or offering circular.
In connection with the offering of the liquidity facility obligations pursuant
to this prospectus, any underwriter or agent participating in the offering may
overallot or effect transactions which stabilize or maintain the market price of
the securities at a level above that which might otherwise prevail in the open
market. That stabilizing, if commenced, may be discontinued at any time.
LEGAL MATTERS
The legality of our liquidity facility obligations has been passed upon for the
company by Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New
York 10103.
EXPERTS
Our financial statements as of December 31, 2000 and 1999, and for each of the
years in the three-year period ended December 31, 2000, appearing in our annual
report on Form 10-K for the year ended December 31, 2000, have been incorporated
by reference in this prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference in this
prospectus upon the authority of said firm as experts in accounting and
auditing.
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by one of
our directors, officers or controlling persons in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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TABLE OF CONTENTS
Page
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Pricing Supplement
INTRODUCTION ............................................................. S-1
DESCRIPTION OF THE BONDS ................................................. S-1
STANDBY BOND PURCHASE AGREEMENT .......................................... S-12
THE STANDBY LOAN AGREEMENT; GE CAPITAL; RIGHT OF ASSIGNMENT .............. S-14
EXPERTS .................................................................. S-15
Prospectus
WHERE YOU CAN FIND MORE INFORMATION ...................................... 2
INCORPORATION BY REFERENCE ............................................... 2
THE COMPANY .............................................................. 3
RECENT DEVELOPMENTS ...................................................... 3
SUMMARY .................................................................. 4
THE STANDBY BOND PURCHASE AGREEMENT ...................................... 6
THE STANDBY LOAN AGREEMENTS .............................................. 6
PLAN OF DISTRIBUTION ..................................................... 7
LEGAL MATTERS ............................................................ 7
EXPERTS .................................................................. 7
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ........... 7
$250,000,000
principal amount plus interest
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
City and County of Honolulu
General Obligation Bonds, Series 2001C
PRICING SUPPLEMENT
November 28, 2001
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