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PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 31, 2001)
$192,290,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
CITY OF DETROIT WATER SUPPLY SYSTEM REVENUE REFUNDING SECOND LIEN BONDS
(VARIABLE RATE DEMAND), SERIES 2001-C
Date of the Bonds: Date of Delivery Due: July 1, 2029
Price: 100%
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LIQUIDITY FACILITY: We are providing a Liquidity Facility for the Bonds
described in this Prospectus Supplement. The Liquidity Facility will expire five
years from the Date of Delivery, unless it is extended or terminated sooner in
accordance with its terms.
TERMS OF THE BONDS: The Bonds are self-liquidating (and not general)
obligations of the City of Detroit, Michigan, a municipality organized and
existing under the laws of the State of Michigan (the "Bond Issuer"). The Bonds
are payable solely from Net Revenues of the City's Water Supply System (the
"System"). "Net Revenues" are defined to be the amounts remaining from the
income derived from the operation of the System (which includes income derived
from rates, charges, fees and rentals charges for service as well as earnings
derived from the investment of monies in certain of the funds and accounts
established by the ordinances authorizing bonds for the System), after deducting
the reasonable expenses of administration, operation and maintenance of the
System. The rights of the owners of the Bonds are subordinate with respect to
the Net Revenues and any other pledged funds or security to the rights of the
owners of certain senior lien bonds, on a parity with the rights of the owners
of other outstanding second lien bonds and second lien bonds issued in the
future, and senior to the rights of the owners of any junior lien bonds issued
as other than second lien bonds. The Bonds are subject to mandatory and optional
redemption prior to maturity and to optional and mandatory tender for purchase,
as described in this Prospectus Supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Our obligations under the Liquidity Facility (the "Obligations") are
not being sold separately from the Bonds. The Bonds are being sold under a
separate disclosure document. The Obligations may not be separately traded. This
Prospectus Supplement and the accompanying Prospectus, appropriately
supplemented, may also be delivered in connection with any remarketing of Bonds
purchased by us.
Unless the context otherwise requires, the terms "Company," "we," "us,"
or "our" mean FGIC Securities Purchase, Inc. You should read the information
below under the heading "THE COMPANY."
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SIEBERT BRANDFORD SHANK & CO., LLC GOLDMAN, SACHS & CO.
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The date of this Prospectus Supplement is May 31, 2001
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You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement and the accompanying 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 Prospectus Supplement to furnish
information regarding our obligations under a Liquidity Facility in support of
$192,290,000 aggregate principal amount of Water Supply System Revenue Refunding
Second Lien Bonds (Variable Rate Demand), Series 2001-C which will be issued on
or about June 7, 2001 by the City of Detroit, a municipality organized and
existing under the laws of the State of Michigan (the "Bond Issuer"). The Bonds
are authorized to be issued pursuant to the Revenue Bond Act of 1933, Act No.
94, Public Acts of Michigan, 1933, as amended (the "Act"). The Bonds are issued
under Ordinance No. 30-95, adopted October 12, 1995, as amended and supplemented
by Ordinance No. 34-95, adopted October 26, 1995, Ordinance No. 23-97, adopted
July 9, 1997, and Ordinance No. 34-99, adopted November 4, 1999 (collectively,
the "1995 Ordinance"). In addition to being issued pursuant to the 1995
Ordinance, the Bonds are being issued pursuant to a resolution adopted by the
City Council of the City of Detroit on January 31, 2001 captioned in relevant
part "A Resolution Authorizing the Issuance and Sale of Water Supply System
Revenue Bonds of the City of Detroit of Equal Standing with the City's Water
Supply System Revenue Bonds and Water Supply System Revenue Refunding Bonds Now
Outstanding and Which May Remain Outstanding" which was amended on April 25,
2001, and a Sale Order of Finance Director of the City of Detroit with respect
to $192,290,000 City of Detroit Water Supply System Revenue Refunding Second
Lien Bonds (Variable Rate Demand), Series 2001-C dated May 31, 2001, including
the Variable Rate Demand Bonds Supplement and Agreement attached thereto
(collectively with the 1995 Ordinance, the "Indenture").
U.S. Bank Trust National Association, Detroit, Michigan, has been
appointed to act as trustee (the "Trustee") and U.S. Bank Trust National
Association, New York, New York, has been appointed to act as tender agent (the
"Tender Agent") for the Bonds. We will enter into a Standby Bond Purchase
Agreement (the "Liquidity Facility") with the Trustee, 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 with General Electric Capital Corporation ("GE Capital") under which
GE Capital will be irrevocably obligated to loan funds to us as needed to
purchase Bonds. Our obligations under the Liquidity Facility will expire on the
date which is five years from the Date of Delivery of the Bonds, unless the
Liquidity Facility is extended or terminated sooner in accordance with its
terms.
HEREINAFTER, ALL CAPITALIZED TERMS WHICH ARE NOT OTHERWISE DEFINED,
WILL HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE INDENTURE.
DESCRIPTION OF THE BONDS
GENERAL
The Bonds will be issued and delivered as fully registered bonds
without coupons and, when executed and delivered, will be registered in the name
of Cede & Co., as nominee for The Depository Trust Company, New York, New York
("DTC"). Principal of and premium, if any, and interest on the Bonds will be
payable through the Tender Agent. Purchases of beneficial interests from DTC in
the Bonds will be made in book-entry only form (without certificates) in
Authorized Denominations. For so long as Cede & Co., as nominee of DTC, is
Holder of the Bonds, payments of the principal of and premium, if any, and
interest on the Bonds will be made directly to DTC. Disbursement of such
payments to the beneficial owners is the responsibility of the Direct
Participants and the Indirect Participants, as each such term is defined below
under the heading "BOOK-ENTRY SYSTEM".
The Bonds will initially bear interest at a Weekly Rate in the Weekly
Rate Mode. If the initial Mode is changed from the Weekly Rate Mode, the Bonds
may thereafter bear interest from time to time at (i) a Daily Rate during the
Daily Rate Mode and (ii) a Weekly Rate during the Weekly Rate Mode if converted
back from the Daily
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Rate Mode to the Weekly Rate Mode. The Bonds may also be converted to a Fixed
Rate as provided in the Indenture. All Bonds must bear interest in the same
Mode. The Liquidity Facility only covers the purchase of tendered Bonds in the
Daily Rate Mode or the Weekly Rate Mode. Interest will be computed, in the case
of the Weekly Rate or the Daily Rate, on the basis of a 365 or 366-day year, as
appropriate, for the number of days elapsed. While the Bonds are in the Weekly
Rate Mode or the Daily Rate Mode, the Authorized Denominations will be $100,000
and any integral multiple of $5,000 above $100,000.
Subject to applicable law, during the period in which the Liquidity
Facility is effective, at no time will any Bonds (other than Provider Bonds,
defined below) bear interest in excess of (i) eighteen percent (18%) per annum
and (ii) with respect to Provider Bonds, the Provider Rate (as defined in the
Liquidity Facility) (the "Maximum Interest Rate"). Any Bonds purchased with
amounts drawn on the Liquidity Facility ("Provider Bonds") will not bear
interest in excess of the lesser of (i) Provider Rate (as defined in the
Liquidity Facility) or (ii) the maximum interest rate allowed by law.
Interest on the Bonds will be payable by the Tender Agent (during a
Daily Rate Mode or a Weekly Rate Mode) or the Trustee (during the Fixed Rate
Mode) on an "Interest Payment Date" which means, (i) while the Bonds are in the
Weekly Rate Mode and in the Daily Rate Mode, the first business day of each
calendar month and (ii) while the Bonds bear interest at the Fixed Rate, each
January 1 and July 1.
"Mode Change Date" means any date on which the Bonds are converted, or
are proposed to be converted, from a Daily Rate to a Weekly Rate or from a
Weekly Rate to a Daily Rate or to Fixed Rate designated in the manner set forth
in the Indenture.
"Rate Change Date" means (a) for each Rate Period during any Daily Rate
Mode, each Business Day, (b) for each Rate Period during any Weekly Rate Mode,
Wednesday, and (c) each Mode Change Date.
"Rate Determination Date" means (a) for each Rate Period during any
Daily Rate Mode, each Business Day, (b) for each Rate Period during any Weekly
Rate Mode, Tuesday, or if such day is not a Business Day, then the immediately
preceding Business Day, and (c) each Mode Change Date.
"Rate Period" means, with respect to each Bond, each period commencing
on a Rate Change Date for such Bond to and including the day immediately
preceding the immediately succeeding Rate Change Date for such Bond (or the
Maturity Date or date of redemption of such Bonds), during which period such
Bond bears interest at one specific interest rate.
The principal, Redemption Price and purchase price of, premium, if any,
and interest on the Bonds will be payable in any coin or currency of the United
States of America which, at the respective dates of payment of such Bonds, is
legal tender for the payment of public and private debts.
Subject to the last sentence of this paragraph, the principal and
Redemption Price of Bonds bearing interest at a Daily Rate or a Weekly Rate will
otherwise be payable at the principal office of the Tender Agent in New York,
New York, upon presentation and surrender of such Bonds. Any payment of the
purchase price of a tendered Bond (described below under the optional and
mandatory tender provisions) will be payable at the designated corporate trust
office of the Tender Agent (or at such other office as may be designated by the
Tender Agent), upon presentation and surrender of such tendered Bond. The
designated corporate trust office of the Trustee is 535 Griswold, Suite 740,
Detroit, Michigan 48226, Attn: Corporate Trust Services, Telephone:
313-963-9428, Fax: 313-963-9428. The designated corporate trust office for the
Tender Agent is 100 Wall Street, New York, New York 10005, Attn: Corporate Trust
Services, Telephone: 212-361-2505, Fax: 212-509-4529. The Bonds will be issued
initially in book-entry form only and, when delivered, will be registered in the
name of a nominee of The Depository Trust Company, New York, New York ("DTC"),
which will act as securities depository for the Bonds. NOTWITHSTANDING THE FIRST
THREE SENTENCES OF THIS PARAGRAPH, SO LONG AS THE BONDS REMAIN IN BOOK-ENTRY
ONLY FORM, PAYMENTS OF THE PRINCIPAL, REDEMPTION PRICE AND PURCHASE PRICE OF THE
BONDS WILL BE MADE BY THE TRUSTEE OR TENDER AGENT TO DTC FOR SUBSEQUENT CREDIT
TO DIRECT PARTICIPANTS AND DISBURSEMENT TO BENEFICIAL OWNERS. SEE BELOW UNDER
THE HEADING "BOOK-ENTRY SYSTEM."
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Interest will be paid, except as provided under the heading "BOOK-ENTRY
SYSTEM," (i) during the Daily Rate Mode or the Weekly Rate Mode by wire transfer
of immediately available funds to the account specified by each Holder in
writing to the Tender Agent acting as Paying Agent and (ii) during the Fixed
Rate Mode by check mailed on the applicable Interest Payment Date to the persons
appearing on the Registry as the Holders of such Bonds as of the Record Date at
the addresses of such Holders as they appear on the Registry or, at the option
of any Holder of at least $1,000,000 aggregate principal amount of the Bonds by
wire transfer of immediately available funds to the account specified by such
Holder in writing to the Trustee acting as Paying Agent.
INTEREST RATE PROVISIONS
Daily Rate Mode. For each Rate Period during the Daily Rate Mode, the
Bonds will bear interest beginning on the Rate Change Date at the Daily Rate
determined on the Rate Determination Date in the following manner for each such
Rate Period. The Daily Rate will be determined by the Remarketing Agent as the
minimum rate of interest that, under then existing market conditions, would
result in the sale of the Bonds in the Daily Rate Mode at a price equal to 100%
of the principal amount thereof. No later than 10:00 a.m., New York time, on the
Rate Determination Date for each such Rate Period, the Remarketing Agent will
determine, and is required to give notice (by electronic means or by facsimile)
to the Tender Agent of, the Daily Rate. In the event that the Daily Rate is not
determined by the Remarketing Agent, the rate of interest borne by the Bonds
bearing interest at a Daily Rate will be equal to the most recent BMA Municipal
Swap Index (or if such index is no longer published, a new third-party index
selected in good faith by the Bond Issuer) until the Remarketing Agent next
determines the Daily Rate as required under the Indenture.
Weekly Rate Mode. For each Rate Period during any Weekly Rate Mode, the
Bonds will bear interest beginning on the Rate Change Date at the Weekly Rate
determined on the Rate Determination Date in the following manner for each such
Rate Period. The Weekly Rate will be determined by the Remarketing Agent as the
minimum rate of interest that, under then existing market conditions, would
result in the sale of the Bonds in the Weekly Rate Mode at a price equal to 100%
of the principal amount thereof. No later than 4:00 p.m., New York time, on the
Rate Determination Date for each such Rate Period, the Remarketing Agent will
determine the Weekly Rate for the period commencing on the immediately
succeeding Wednesday or the Mode Change Date and ending on the next succeeding
Tuesday. In the event that the Weekly Rate is not determined by the Remarketing
Agent on a Rate Determination Date, the rate of interest borne by the Bonds
bearing interest at a Weekly Rate will be equal to the BMA Municipal Swap Index
(or if such index is no longer published, a new third-party index selected in
good faith by the Bond Issuer) until the Remarketing Agent next determines the
Weekly Rate as required under the Indenture.
CONVERSION OF INTEREST RATE MODE
The Bond Issuer may designate a different Mode for all Bonds during a
Daily Rate Mode or a Weekly Rate Mode, on any Interest Payment Date. All Bonds
must bear interest in the same Mode.
At least 15 days prior to the Mode Change Date from the Daily Rate Mode
to the Weekly Rate Mode or from the Weekly Rate Mode to the Daily Rate Mode and
at least 30 days prior to the Mode Change Date to the Fixed Rate Mode, the
Tender Agent will give written notice of such election by the Bond Issuer to the
Holders of all Bonds, which notice will state (i) the Mode Change Date, (ii) the
Mode to become effective, and (iii) that the Bonds will be subject to mandatory
tender on such Mode Change Date.
If the conditions to a conversion to a different Mode are not satisfied
(including the condition that a Favorable Bond Counsel Opinion be delivered to
the Tender Agent), the Bonds will continue to be subject to mandatory tender and
will continue to bear interest in the Mode in effect prior to the proposed Mode
Change Date.
The Bond Issuer will evidence such designation of a subsequent Mode and
Mode Change Date for the Bonds by giving written notice to the Trustee, the
Tender Agent, the Remarketing Agent, the Company or the issuer of an alternate
liquidity facility (the "Provider"), the Insurer and each Rating Agency then
maintaining a rating on the Bonds, specifying the Mode in which such Bonds will
operate and the Mode Change Date. Upon receipt of such notice from the Bond
Issuer, the Tender Agent, at least 15 days prior to each Mode Change Date, will
give notice to each Holder of Bonds of the mandatory tender for purchase of the
Bonds on the Mode Change Date.
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OTHER MODES. FOR INFORMATION RELATING TO THE DETERMINATION OF INTEREST
RATES DURING THE FIXED RATE MODE, PLEASE CONSULT THE INDENTURE, WHICH MAY BE
OBTAINED FROM THE BOND ISSUER. THE LIQUIDITY FACILITY DOES NOT SUPPORT BONDS
THAT ARE IN THE FIXED RATE MODE.
OPTIONAL TENDER PROVISIONS DURING WEEKLY RATE MODE OR DAILY RATE MODE
Purchase on Demand of Holder While Bonds Bear Interest at the Daily
Rate. While the Bonds are in the Daily Rate Mode, each Bond (or portion of such
Bond in an Authorized Denomination) will be purchased on any Business Date upon
the demand of the Holder of such Bond, at a purchase price equal to 100 percent
of the principal amount of such Bond plus accrued interest, if any, to such
Purchase Date, upon irrevocable telephonic or spoken or written notice (which
telephonic or other spoken notice will be confirmed in writing, and which
written notice may be given by telecopy or other electronic means) to the Tender
Agent. Such notice must be received not later than 11:00 a.m. (or such other
time as may be agreed to by the Provider, the Remarketing Agent and the Tender
Agent), New York time, on a Business Day in order to be effective on that date.
Any notice received after such time will be deemed given on the next succeeding
Business Day. Such notice must specify (i) the principal amount and number of
such Bond being tendered, and (ii) the Purchase Date on which such Bond is to be
purchased.
Purchase on Demand of Holder While Bonds Bear Interest at the Weekly
Rate. While the Bonds are in the Weekly Rate Mode, each Bond (or portion of such
Bond in an Authorized Denomination) will be purchased on any Business Day, which
will be not less than seven calendar days after the date such notice is received
in the manner described in the next sentence, at a purchase price equal to 100
percent of the principal amount of such Bond plus accrued interest, if any, to
such Purchase Date. To effect such purchase during a Weekly Rate Mode, an Holder
must deliver, on any Business Day, to the Tender Agent, irrevocable written
notice (which may be given by telecopy). Such notice must be received by the
Tender Agent, the Trustee and the Remarketing Agent not later than 4:00 p.m.,
New York time, on a Business Day in order to be effective on that day. Any
notice received after such time will be deemed given on the next succeeding
Business Day. Such notice must specify (i) the principal amount and number of
such Bond, and the principal amount of such Bond being tendered, and (ii) the
Purchase Date on which such Bond is to be purchased.
Effect of Tender Notice. Each tender notice will automatically
constitute (A) an irrevocable offer to sell the Bond or portion thereof to which
the notice relates on the date the Bonds are purchased to any purchaser selected
by the Remarketing Agent, at the Purchase Price, (B) an irrevocable
authorization and instruction to the Tender Agent to effect transfer of such
Bond or portion thereof upon payment of such Purchase Price to the Tender Agent
on the date the Bonds are purchased, (C) an irrevocable authorization and
instruction to the Tender Agent to effect the exchange of the Bond to be
purchased in whole or in part for other Bonds evidencing principal in an equal
aggregate amount so as to facilitate the sale of such Bond or portion thereof,
and (D) an acknowledgment that such Holder will have no further rights with
respect to such Bond or portion thereof upon payment of the Purchase Price by
the Tender Agent on the date the Bonds are purchased, except for the right of
such Holder to receive such purchase price upon surrender of such Bond to the
Tender Agent.
MANDATORY TENDER PROVISIONS
Bonds bearing interest in the Daily Rate Mode or the Weekly Rate Mode
(other than Provider Bonds) are subject to mandatory tender by the Holders
thereof to the Tender Agent on each date described below at a purchase price
equal to 100% of the principal amount thereof plus accrued interest, if any, to
the purchase date therefor (unless purchased on an Interest Payment Date):
(i) on each Mode Change Date and any proposed Mode Change Date,
including, without limitation, a proposed Fixed Rate
Conversion Date;
(ii) while a Liquidity Facility is required, at least two Business
Days prior to the last day on which funds will be available
under the Liquidity Facility following notice by the Provider
to the Tender Agent of the occurrence and continuation of a
default under the Liquidity Facility;
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(iii) while a Liquidity Facility is required, on the second Business
Day preceding the expiration date of a Liquidity Facility if
by the 20th day preceding such expiration date, a notice of
extension of the current Liquidity Facility or a commitment to
deliver an alternate liquidity facility has not been
delivered; and
(iv) on the effective date of an alternate liquidity facility if
the provider of such alternate liquidity facility is not the
Company.
AN HOLDER OF A BOND SUBJECT TO MANDATORY TENDER MAY NOT ELECT TO RETAIN
ITS BONDS.
With respect to a mandatory tender described in clause (i) above, the
Tender Agent is required to give notice to the Holders of such Bonds at least 15
days prior to the Mode Change Date from the Daily Rate Mode to the Weekly Rate
Mode or from the Weekly Rate Mode to the Daily Rate Mode and at least 30 days
prior to the Mode Change Date to the Fixed Rate Mode, stating the Mode Change
Date and that such Bonds are required to be purchased on such Mode Change Date.
With respect to a mandatory tender described in clauses (ii), (iii) and
(iv) above, the Tender Agent is required to give notice to the Holders of such
Bonds at least 15 days prior to the date of mandatory tender.
Source of Funds to Purchase Bonds. On each date that Bonds are to be
purchased, the Tender Agent will purchase, but only from the funds listed below,
such Bonds from their Holders at a purchase price equal to the principal amount
of such Bonds, plus accrued interest, if any, to the date of purchase. Funds for
the payment of such purchase price will be derived from the following sources in
the order of priority indicated:
1. proceeds of the sale of such Bonds by the Remarketing Agent to the
extent such funds are then available to the Tender Agent;
2. moneys representing proceeds of a drawing by the Trustee at the
direction of the Tender Agent under the Liquidity Facility.
None of the Bond Issuer, the Trustee, the Tender Agent or the
Remarketing Agent will be obligated to provide funds for the payment of the
Purchase Price from any other source.
The Tender Agent is required to pay the purchase price of each Tendered
Bond to the Holder of such Tendered Bond by 3:00 p.m., New York time, on the
purchase date, provided that such Holder has delivered such Tendered Bond with
any necessary endorsements to the designated office of the Tender Agent no later
than 12:00, New York time, on such date.
Tender Agent to Hold Bonds and Moneys in Trust. The Tender Agent will:
(a) hold all Bonds delivered to it in trust for the benefit of their
respective Holders which will have so delivered such Bonds until moneys
representing the purchase price of such Bonds will have been delivered to or for
the account of or to the order of such Holders; and
(b) hold all moneys delivered to it under the Indenture for the
purchase of Bonds in trust for the benefit of the person or entity which will
have so delivered such moneys, and not invest such funds or commingle such funds
with its general funds, until the Bonds purchased with such moneys will have
been delivered to or for the account of such person or entity.
Delivery of Purchased Bonds. Delivery of Bonds purchased in accordance
with the provisions of the Indenture will be delivered as follows:
Bonds purchased with moneys representing the proceeds of sale of such
Bonds will be delivered to the Remarketing Agent no later than 1:30 p.m., New
York City time on the date of purchase against payment therefor in
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immediately available funds in an amount equal to the purchase price therefor
and will be registered in the name of the respective purchasers of such Bonds;
and
Bonds purchased with moneys drawn under the Liquidity Facility will be
registered in the name of the Provider or its nominee and delivered to the
Tender Agent and held by the Tender Agent in accordance with the terms of the
Indenture.
Delivery of Proceeds of Sale. The proceeds of the sale by the
Remarketing Agent of any Bond will be turned over to the Tender Agent for
redelivery to the person who delivered such Bond to the Tender Agent. The
proceeds of the sale by the Remarketing Agent of any Provider Bonds will be paid
to the Provider in accordance with the terms of the Liquidity Facility.
Provider Bonds.
(a) Registration of Provider Bonds. Bonds purchased by the Provider
constitute Provider Bonds which will, immediately, upon receipt thereof by the
Tender Agent, be registered in the name of the Provider or its nominee and held
by the Tender Agent for the benefit of the Provider.
(b) Deposit of Proceeds of Remarketing of Provider Bonds. To the extent
amounts are due and owing the Provider under the Liquidity Facility, the
proceeds of the remarketing of Provider Bonds will be held by the Tender Agent
for the account of, and in trust solely for, the Provider, will not be
commingled with any other moneys held by the Tender Agent, and will be paid over
immediately to the Provider.
(c) Principal and Interest Payments on Provider Bonds. Prior to the
release of Provider Bonds to the Remarketing Agent, the Trustee will, on the
dates determined in accordance with the Liquidity Facility, apply Net Revenues
to the payment of principal of, and interest on, amounts owed to reimburse the
Provider for paying a drawing for the purchase price of tendered Bonds in the
manner provided in the Indenture, but the Trustee will not draw on the Liquidity
Facility or use moneys provided pursuant to draws on the Liquidity Facility to
purchase Provider Bonds.
REMARKETING AGREEMENT
The Bond Issuer will enter into a Remarketing Agreement, dated June 7,
2001 (the "Remarketing Agreement"), with Goldman, Sachs & Co., as remarketing
agent (the "Remarketing Agent"), pursuant to which the Remarketing Agent
undertakes, among other things, to use its best efforts to remarket all Bonds
tendered for purchase while they accrue interest in the Weekly Rate Mode or the
Daily Rate Mode. The Bond Issuer or the Remarketing Agent may terminate the
Remarketing Agreement under the circumstances and in the manner described in the
Remarketing Agreement. Upon termination of the Remarketing Agreement, the Bond
Issuer will appoint a replacement remarketing agent in accordance with the
Indenture.
REDEMPTION PROVISIONS
Redemption of Bonds. The Bonds will be subject to redemption prior to
their maturity date in the amounts, at the times and in the manner provided in
this Section.
(a) Optional Redemption. Bonds in a Daily Rate Mode or a Weekly Rate
Mode will be subject to redemption prior to their maturity date at the option of
the Bond Issuer, in whole on any Business Day or in part (and, if in part, in an
Authorized Denomination) on any Interest Payment Date during such Daily Rate
Mode or Weekly Rate Mode at a Redemption Price equal to 100 percent of the
principal amount of such Bonds, plus accrued interest, if any, to the redemption
date. Bonds in a Fixed Rate Mode will be subject to redemption prior to their
maturity date at the option of the Bond Issuer as described in the Indenture.
(b) Mandatory Sinking Fund Redemption. The Bonds are subject to
mandatory sinking fund redemption prior to maturity in part, by lot, at a
Redemption Price equal to 100 percent of the principal amount of such Bonds to
be redeemed, without premium, plus accrued interest to the date of redemption,
on July 1 in each of
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the years and in the amounts set forth in the schedule included in the Indenture
for the mandatory sinking fund redemption of the Bonds.
(c) General Provisions Regarding Redemptions of Bonds.
(i) Notice of Redemption. Whenever Bonds are to be redeemed,
the Trustee will give notice of the redemption of the Bonds, which
notice will specify, among other things, the redemption date, the
Redemption Price the place and manner of payment and that from the
redemption date interest will cease to accrue on the Bonds which are
the subject of such notice. Notice of the redemption of Bonds will be
given by first class mail, postage prepaid, not less than 15 days (when
the Bonds are in the Daily Rate Mode or the Weekly Rate Mode) or 30
days (when the Bonds are in the Fixed Rate Mode) or more than 60 days
prior to the redemption date, to the registered owners of the Bonds to
be redeemed. So long as all Bonds are in book-entry only form with DTC,
redemption notices shall be sent to DTC only. Failure to give notice to
a particular Holder or a defect in the notice will not affect the
validity of any proceedings for redemption as to any other Bond.
(ii) Selection of Bonds to be Redeemed. The Bonds to be called
must be in Authorized Denominations. In all cases, Provider Bonds will
be selected for redemption before other Bonds. Subject to the preceding
sentence, if less than all of the Bonds are called for redemption, the
particular Bonds (or portions thereof) to be redeemed will be selected
by lot in such manner as the Trustee may determine among such Bonds. So
long as all Bonds are in book-entry only form with DTC, DTC shall
select the Bonds to be redeemed. If a Bond is redeemed in part, new
Bonds representing the unredeemed balance shall be issued to the Holder
thereof without charge therefor.
(iii) Effect of Redemption. Interest will not accrue after the
redemption date on any Bond called for redemption if notice has been
given and if sufficient moneys have been deposited with the Trustee to
redeem such Bonds.
BOOK-ENTRY SYSTEM
DTC will act as securities depository for the Bonds. The Bonds will be
issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Bond certificate will be
issued for each maturity of the Bonds, each in the aggregate principal amount of
such maturity, 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 participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in 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, either directly or
indirectly ("Indirect Participants"). 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 of each Bond ("Beneficial
Owner") 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
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Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Bonds are to be
accomplished by entries made on the books of Direct and Indirect Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Bonds, except in the
event that 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 name 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 do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Bonds; DTC's records reflect only the identity of the Direct Participants to
whose accounts such Bonds are credited, which may or may not be the Beneficial
Owners. The 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 Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and 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 DTC. If less than all of the Bonds
are being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant in the Bonds to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or
vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus
Proxy to the Bond 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 purchase price with
respect to the Bonds will be made to Cede & Co. or such other nominee as may be
requested by an authorized representative of DTC. DTC's practice is to credit
Direct Participants' accounts upon DTC's receipt of funds and corresponding
detail information from the Bond Issuer or the Trustee or the Tender Agent on
the payable date in accordance with their respective holdings shown on DTC's
records. Payments by 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 such Participant and not of DTC, the
Trustee or the Tender Agent or the Bond Issuer subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to Cede & Co. (or such other nominee as may be requested
by an authorized representative of DTC) is the responsibility of the Bond Issuer
or the Trustee or the Tender Agent, disbursement of such payments to Direct
Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Bonds
purchased or tendered, through its Participant, to the Tender Agent, and shall
effect delivery of such Bonds by causing a Direct Participant to transfer the
Participant's interest in the Bonds, on DTC's records, to the Tender Agent. The
requirement for physical delivery of the Bonds in connection with an optional or
mandatory tender will be deemed satisfied when the ownership rights in the Bonds
are transferred by Direct Participants on DTC's records and followed by a
book-entry credit of tendered Bonds to the Tender Agent's DTC account.
Notwithstanding the foregoing, in the event any Bond is tendered but
not remarketed, with the result that such Bond becomes a Provider Bond, the
Trustee, the Tender Agent and the Bond Issuer will, if requested by the
Provider, take all such actions as shall be necessary to remove such Provider
Bonds from the book-entry system of DTC and to register such Provider Bond in
the name of the Provider. Provider Bonds not in the book-entry system of DTC
will be held by the Provider, or at the option of the Provider, by the Tender
Agent on behalf, and for the benefit, of the Provider. At such time as all
Provider Bonds have been remarketed and the Liquidity Facility has been
reinstated in full, the Trustee, the Tender Agent and the Bond Issuer will take
all such actions as shall be necessary to return the Bonds to the full
book-entry system of DTC.
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The Bond Issuer and the Underwriters cannot and do not give any
assurances that DTC, the Direct or Indirect Participants or others will
distribute payments of principal, interest or premium or the Purchase Price with
respect to the Bonds paid to DTC or its nominee as the Holder, or will
distribute any redemption 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 Prospectus Supplement. The Bond Issuer 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 Participants or Beneficial
Owners, confirmation and transfer of beneficial ownership interests in such
Bonds and other related transactions by and between DTC, the DTC Participants
and the Beneficial Owners 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 the DTC Participants, as the case may be.
DTC may discontinue providing its services as securities depository
with respect to the Bonds at any time by giving notice to the Trustee and the
Tender Agent and discharging its responsibilities with respect thereto under
applicable law or the Bond Issuer 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 TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS,
WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO HOLDERS ONLY TO DTC. ANY
FAILURE OF DTC TO ADVISE ANY DIRECT PARTICIPANT, OR OF ANY DIRECT OR INDIRECT
PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICES AND ITS CONTEXT 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 SUCH NOTICE.
THE LIQUIDITY FACILITY
The Obligations will rank equally with all of our other general
unsecured and unsubordinated obligations. The Obligations are not issued under
an indenture. As of the date of this Prospectus Supplement, we have
approximately $3 billion of obligations currently outstanding, including the
Obligations we are issuing under this Prospectus Supplement.
Holders of the Bonds to which the Obligations relate will be entitled
to the benefits and will be subject to the terms of the Liquidity Facility.
Under the Liquidity Facility, we agree to make available to a specified
intermediary, upon receipt of an appropriate demand for payment, the purchase
price for the Bonds. Our obligation under the Liquidity Facility will be
sufficient to pay a purchase price equal to the principal of and up to 34 days'
interest on the Bonds at an assumed rate of 18% per year.
TERMINATION EVENTS
The scheduled expiration date of the Liquidity Facility is five years
from the Date of Delivery of the Bonds, unless it is extended or terminated
sooner in accordance with its terms.
The Indenture will specify certain circumstances where we must purchase
Bonds which 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 Bonds. The following events would permit
such termination:
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(a) (i) any portion of the commitment fee for the Liquidity Facility
has not been paid when due on the quarterly payment date or (ii) any other
amount payable under the Liquidity Facility has not been paid when due, and in
either case, such failure shall continue for three business days after notice
thereof to the Bond Issuer;
(b) the State of Michigan takes any action which would have a
materially adverse effect on the ability of the Bond Issuer to comply with the
payment and security interest and lien covenants and obligations under the
Bonds, the Indenture, the Liquidity Facility or the Payment Agreement between
the Bond Issuer and the Company dated as of the date of the Liquidity Facility
(the "Payment Agreement"), and all other documents relating to the issuance of
the Bonds, or any right or remedy of the Company or any Holders of the Bonds
from time to time to enforce such covenants and obligations;
(c) (i) the Bond Issuer fails to observe or perform any covenant or
agreement contained in the Bonds, the Indenture, the Liquidity Facility or the
Payment Agreement (and any amendments, substitutions or modifications thereof),
and, if such failure is the result of a covenant breach which is capable of
being remedied, such failure continues for ninety (90) days following written
notice thereof to the Bond Issuer from the Company, provided that if any such
failure (other than a payment default) shall be such that it cannot be cured or
corrected within such ninety day period, it shall not constitute an event of
default if curative or corrective action is instituted within such period and
diligently pursued until the failure of performance is cured or corrected, or
(ii) there has not been, at all times a Remarketing Agent performing the duties
set forth in the Indenture;
(d) an event of default has occurred and is continuing under any of the
Indenture, the Liquidity Facility, the Payment Agreement or the Remarketing
Agreement (and any amendments, substitutions or modifications thereof), as
"event of default" is defined in the applicable document;
(e) any representation, warranty, certification or statement made by
the Bond Issuer in the Indenture, the Liquidity Facility, the Payment Agreement
or the Remarketing Agreement (and any amendments, substitutions or modifications
thereof) or in any certificate, financial statement or other document delivered
pursuant thereto shall prove to have been incorrect in any material respect when
made;
(f) any default by the Bond Issuer has occurred and continues in the
payment of principal of or premium, if any, or interest on any bond, note or
other evidence of indebtedness of the Bond Issuer, under any "Related
Documents," as defined in the Liquidity Facility, which is senior to, or on
parity with, the Bonds;
(g) the Bond Issuer files a petition in voluntary bankruptcy, for the
composition of its affairs or for its corporate reorganization under any state
or federal bankruptcy or insolvency law, or makes an assignment for the benefit
of creditors, or admits in writing to its insolvency or inability to pay debts
as they mature, or consents in writing to the appointment of a trustee or
receiver for itself;
(h) a court of competent jurisdiction shall enter an order, judgment or
decree declaring the Bond Issuer insolvent, or adjudging it bankrupt, or
appointing a trustee or receiver of the Bond Issuer, or approving a petition
filed against the Bond Issuer seeking reorganization of the Bond Issuer under
any applicable law or statute of the United States of America or any state
thereof, and such order, judgment or decree shall not be vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof;
(i) under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction shall assume custody or control of
the Bond Issuer and such custody or control shall not be terminated within (60)
days from the date of assumption of such custody or control;
(j) any material provision of the Indenture, the Liquidity Facility,
the Payment Agreement, the Remarketing Agreement and all other documents
relating to the issuance of the Bonds or the Bonds (including Provider Bonds)
shall cease for any reason whatsoever to be a valid and binding agreement of the
Bond Issuer, or the Bond Issuer shall contest the validity or enforceability
thereof; or
(k) failure to pay when due any amount payable under any Bonds
(regardless of any waiver thereof by the holders of the Bonds).
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Upon the occurrence of a Termination Event, we may deliver notice to
the Bond Issuer, the Trustee, the Tender Agent, and the Remarketing Agent
regarding our intention to terminate the Liquidity Facility. In that case, the
Liquidity Facility would terminate, effective at the close of business on the
30th 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 Liquidity Facility. The termination of the
Liquidity Facility, however, does not result in an automatic acceleration of the
Bonds.
The obligations of the Bond Issuer are as described in a separate
disclosure document relating to the Bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill our obligations under the Liquidity
Facility, we will enter into a standby loan agreement (the "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 that the Liquidity Facility terminates in accordance
with its terms. 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. 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), GE Capital will make available the amount
of the borrowing requested.
The Standby Loan Agreement will expressly provide that it is not a
guarantee by GE Capital of the Bonds or of our obligations under the Liquidity
Facility. 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.
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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:
Year Ended December 31, Three Months
----------------------------------------------------------------------------- Ended
1996 1997 1998 1999 2000 March 31, 2001
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
1.53 1.48 1.50 1.60 1.52 1.55
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, interest capitalized (net of amortization) and fixed charges.
Fixed charges consist of interest on all indebtedness and one-third of annual
rentals, which GE Capital believes 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 which GE Capital files at the SEC's
public reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. 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."
INCORPORATION OF INFORMATION REGARDING GE CAPITAL
The SEC allows us to "incorporate by reference" information into this
Prospectus 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 Prospectus
Supplement, except for any information superseded by information in this
Prospectus Supplement. This Prospectus 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 Report on Form 10-Q................. Quarter ended March 31, 2001
LEGAL MATTERS
The legality of the Obligations has been passed upon by senior counsel
to Financial Guaranty Insurance Company, an affiliate of the Company.
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EXPERTS
The financial statements and schedule of General Electric Capital
Corporation 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 the Prospectus Supplement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference in the Prospectus Supplement, and upon the authority
of said firm as experts in accounting and auditing.
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APPENDIX A
TENDER TIMELINE
TENDERS FOR BONDS
PURCHASE DATE
(New York City time)
------------------------------------ ------------------------------------- ---------------------------------
-------------- ------------ -------------- -------------- ----------- ------------
11:30 a.m. 11:45 a.m. 2:15 p.m. 2:30 p.m.
[1] [2] [3] [4]
1. Tender Agent or the Trustee will give immediate telephonic notice,
in any event not later than 11:30 a.m. on the Purchase Date, to
FGIC-SPI specifying the aggregate principal amount of Bonds to be
purchased by FGIC-SPI on the Purchase Date.
2. FGIC-SPI must give GE Capital prior written notice of a borrowing
under the Standby Loan Agreement by 11:45 a.m. on the date of the
proposed borrowing.
3. No later than 2:15 p.m. on each Purchase Date, GE Capital will
make available the amount of borrowing requested.
4. FGIC-SPI purchases Bonds, for which remarketing proceeds are
unavailable, by 2:30 p.m. on the Purchase Date.
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$1,000,000,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY OBLIGATIONS
OF
FGIC SECURITIES PURCHASE, INC.
FGIC Securities Purchase, Inc. (the "Company") intends to offer from
time to time, in connection with the issuance by municipal authorities or other
issuers of adjustable or floating rate debt securities (the "Securities"), its
obligations (the "Obligations") under one or more liquidity facilities (the
"Liquidity Facilities"). The Obligations will not be sold separately from the
Securities, which will be offered pursuant to a separate prospectus or offering
statement. The 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 FGIC
Securities Purchase, Inc. or its affiliates.
Unless otherwise specified in a prospectus supplement to the Prospectus
(a "Prospectus Supplement"), we will issue the Obligations from time to time to
provide liquidity for certain adjustable or floating rate Securities issued by
municipal or other issuers. We will describe the specific terms of the
Obligations and the Securities to which they relate in a Prospectus Supplement.
Each issue of Obligations may vary, where applicable, depending upon the terms
of the Securities to which the issuance of Obligations relates.
We are a Delaware corporation that was incorporated in 1990. Our
principal executive office is 115 Broadway, New York, New York 10006 and our
telephone number is (212) 312-3000. Unless the context otherwise indicates, the
terms "Company," "we," "us" or "our" mean FGIC Securities Purchase, Inc. You
should read the information below under the heading "THE COMPANY."
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.
The date of this Prospectus is May 31, 2001
17
We have provided the information contained in this Prospectus. We are
submitting this Prospectus in connection with the future sale of securities
summarized below under the heading "SUMMARY," and this Prospectus may not be
reproduced or used, in whole or in part, for any other purposes.
The reader of this Prospectus 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 these securities in any jurisdiction where the offer or sale is
not permitted.
This Prospectus and the applicable Prospectus Supplement constitute a
prospectus with respect to the Obligations of the Company under the Liquidity
Facilities to be issued 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.
WHERE YOU CAN FIND MORE INFORMATION
We file annual and other reports and information with the Securities
and Exchange Commission (the "Commission"). You may read and copy any of these
documents at the Commission's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
Commission filings are also available to the public at the Commission's web site
at http://www.sec.gov. We do not intend to deliver to holders of the Obligations
an annual report or other report containing financial information.
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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 (i) the Company's Annual Report on Form
10-K for the year ended December 31, 2000 and (ii) the Company's Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 2001 all
heretofore filed with the Commission pursuant to Section 13 of the Securities
Act of 1934, as amended. 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 all of the
Obligations covered by this Prospectus have been sold.
You may request a copy of these filings, at no cost, as follows:
Corporate Communications Department, FGIC Securities Purchase, Inc., 115
Broadway, New York, New York 10006, Telephone: (212) 312-3000.
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
Obligations. Additional updating information with respect to the matters
discussed in this Prospectus and the accompanying Prospectus Supplement may be
provided 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.
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SUMMARY
The proposed structure will be utilized to provide liquidity through a
"put" mechanism for floating or adjustable rate securities and other derivative
debt securities issued by municipal authorities or other issuers. Such
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 mechanism
for holders desiring to sell their securities. Such 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
the securities cannot be remarketed, the Company will be obligated, pursuant to
a standby purchase agreement or similar contractual arrangement with the issuer,
remarketing agent, tender agent or trustee of the securities, to purchase
unremarketed securities, from the holders desiring to tender their securities
(the "put option") or upon certain other events. This facility will assure the
holders 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 ("VRDNs") and convertible inverse
floating rate securities ("INFLOs"). VRDNs and INFLOs are municipal derivative
securities pursuant to which (i) the interest rate on the VRDNs is a variable
interest rate which is re-set by the remarketing agent from time to time (not to
exceed a stated maximum rate) (the "VRDN Rate") and (ii) the interest rate on
the INFLOs is concurrently re-set at a rate equal to twice a specified Linked
Rate minus the fee charged by the Company for the Liquidity Facility. The Owners
of VRDNs have the optional right to tender their VRDNs to the issuer for
purchase and, in the event the remarketing agent does not successfully remarket
the tendered VRDNs, the Company is obligated to pay the purchase price therefor
pursuant to the terms of its liquidity facility.
If an Owner of INFLOs desires a fixed rate of interest not subject to
fluctuation based on the inverse floating rate equation described above, such
Owner may elect to purchase from VRDN holders an amount of VRDNs equal to the
principal amount of INFLOs for which such INFLO Owner desires a fixed rate of
interest. The net effect of such purchase is to "link" an equal principal amount
of VRDNs and INFLOs and thereby set a fixed interest rate on the combined
securities. If the Owner of such combined securities so elects, the owner may
"de-link" his or her VRDNs and INFLOs. The remarketing agent will then remarket
the VRDNs at a re-set interest rate and the INFLOs retained by the de-linking
Owner will again continue to vary and to be re-set whenever the interest rate of
the VRDNs are re-set. An INFLOs Owner may also elect to permanently link his or
her INFLOs with an equal principal amount of VRDNs and thereby permanently fix
the interest rate on the combined securities to their stated maturity; once
permanent linkage is effected, no subsequent de-linkage is permitted.
Until such time as VRDNs are permanently linked to INFLOs, the VRDNs
will remain subject to remarketing in the manner noted above and the Company
will remain obligated to purchase unremarketed VRDNs in connection with the
optional right of holders to tender their VRDNs for purchase.
The fees for providing the liquidity mechanism will be paid by the
issuer or other entity specified in the applicable Prospectus Supplement,
typically over the life of the liquidity agreement or, in the case of VRDNs,
until such time as a VRDN is permanently linked with an INFLO. Except as
otherwise provided in a Prospectus Supplement, in order to obtain funds to
purchase unremarketed securities, the Company will enter into standby loan
agreements with one or more financial institutions (the "Standby Lenders") under
which the Standby Lenders will be irrevocably obligated to lend funds to the
Company as needed to purchase Securities for which the put option has been
exercised. Except as otherwise provided in a Prospectus Supplement, the standby
purchase agreement or similar contractual agreement between the Company and the
trustee, issuer or other specified entity will provide that, without the consent
of the issuer and the trustee for the security holders, the Company will not
agree or consent to any amendment, supplement or modification of the related
standby loan agreement, nor waive any provision thereof, if such amendment,
supplement, modification or waiver would materially adversely affect the issuer
or other specified entity, or the security holders. Except as otherwise provided
in a Prospectus Supplement, the obligations of the Company under the standby
purchase agreement or similar contractual agreement may only be terminated upon
the occurrence of certain events of non-payment, default or insolvency on the
part of the issuer or other specified entity. In the event of a termination of
the obligations of the Company under the standby purchase
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agreement or similar contractual agreement, the securities will be subject to a
mandatory tender. Prior to such time, security holders will have the option to
tender their securities, all as set forth in the applicable Prospectus
Supplement.
The above structure is intended to receive the highest ratings from the
rating agencies and to provide public issuers with the lowest cost of financing.
There can be no assurances, however, that such ratings will be maintained.
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.
Unless otherwise specified in a Prospectus Supplement, the business of
the Company consists and will consist of providing liquidity for certain
adjustable and floating rate Securities, issued by municipal authorities or
other issuers, through Liquidity Facilities. 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 mechanism for security holders desiring to sell their
securities. Pursuant to standby purchase agreements or similar contractual
agreements with issuers of the securities, the Company will be obligated to
purchase unremarketed securities from the holders thereof who voluntarily or
mandatorily tender their Securities for purchase. In order to obtain funds to
purchase the Securities, the Company will enter into one or more standby loan
agreements with Standby Lenders under which the Standby Lenders will be
irrevocably obligated to lend funds as needed to the Company to purchase
Securities as required.
The Company's principal executive offices are located at 115 Broadway,
New York, New York 10006, Telephone No. (212) 312-3000.
THE LIQUIDITY FACILITIES
The Obligations will rank equally with all other general unsecured and
unsubordinated obligations of the Company. The Obligations are not issued
pursuant to an indenture.
Owners of the Securities will be entitled to the benefits and subject
to the terms of the applicable Liquidity Facility as specified in the applicable
Prospectus Supplement. Pursuant to the Liquidity Facilities, the Company 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
such Liquidity Facility relates. The obligation of the Company under each
Liquidity Facility will be sufficient to pay a purchase price equal to the
principal of the Security to which such facility relates and up to a specified
amount of interest at a specified rate set forth in the applicable Prospectus
Supplement.
THE STANDBY LOAN AGREEMENT
In order to obtain funds to fulfill its obligations under the Liquidity
Facilities, the Company will enter into one or more Standby Loan Agreements with
one or more Standby Lenders under which the Standby Lenders will be irrevocably
obligated to lend funds to the Company as needed to purchase the Securities to
which the applicable Liquidity Facility relates. Each Standby Loan Agreement
will have the terms set forth in the applicable Prospectus Supplement. It is
anticipated 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
which will represent the outstanding principal amount of such securities,
premium, if any, and accrued interest thereon for a specified period. The
proceeds of each loan will be used only for the purpose of paying the purchase
price for tendered Securities. It is not anticipated that a Standby Lender will
guarantee the Securities to which its Standby Loan Agreement relates or the
Company's obligation under any Standby Purchase Agreement. Standby Lenders will
be identified in the appropriate Prospectus Supplement.
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PLAN OF DISTRIBUTION
The Obligations will not be sold separately from the Securities, which
will be offered pursuant to a separate prospectus, official statement or
offering circular.
EXPERTS
The financial statements of FGIC Securities Purchase, Inc. as of
December 31, 2000 and 1999, and for each of the years in the three-year period
ended December 31, 2000, appearing in FGIC Securities Purchase, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2000, have been incorporated
by reference in the Prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference in the
Prospectus, and upon the authority of said firm as experts in accounting and
auditing.
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TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT
INTRODUCTION.......................................S-1
DESCRIPTION OF THE BONDS...........................S-1
BOOK-ENTRY SYSTEM..................................S-7
THE LIQUIDITY FACILITY.............................S-9
THE STANDBY LOAN AGREEMENT;
GE CAPITAL...................................S-11
LEGAL MATTERS......................................S-12
EXPERTS............................................S-13
WHERE YOU CAN FIND MORE
INFORMATION...................................2
INCORPORATION BY REFERENCE.........................3
SUMMARY............................................4
THE COMPANY........................................5
THE LIQUIDITY FACILITIES...........................5
THE STANDBY LOAN AGREEMENT.........................5
PLAN OF DISTRIBUTION...............................6
EXPERTS............................................6
$192,290,000
principal amount, plus interest
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
City of Detroit Water Supply System Revenue
Refunding Second Lien Bonds
(Variable Rate Demand), Series 2001-C
PROSPECTUS SUPPLEMENT
May 31, 2001