Filed Pursuant to Rule 424b (5)
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Registration No. 333-71950
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 5, 2001)
$141,000,000(*)
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY OBLIGATIONS
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
CHARTER COUNTY OF WAYNE, MICHIGAN
AIRPORT REVENUE BONDS
(DETROIT METROPOLITAN WAYNE COUNTY AIRPORT),
SERIES 2002A
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Date of the Bonds: Date of Delivery Due: December 1, 2032
Price:
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We are offering, in connection with the issuance by the Charter County
of Wayne, Michigan of its Airport Revenue Bonds (Detroit Metropolitan Wayne
County Airport), Series 2002A, 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 revenue obligations of the Charter County of Wayne,
Michigan, payable solely from net revenues derived from the operation of the
Detroit Metropolitan Wayne County Airport. 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
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING 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 prospectus supplement and the accompanying 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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SALOMON SMITH BARNEY
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The date of this prospectus supplement is April 25, 2002.
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(*) Preliminary, subject to change.
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 underwriter has 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
underwriter is 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 liquidity facility obligations under a standby bond
purchase agreement in support of $141,000,000(*) aggregate principal amount of
Airport Revenue Bonds (Detroit Metropolitan Wayne County Airport), Series 2002A
which the Charter County of Wayne, Michigan will issue on or about May 1, 2002.
Owners of the bonds will have the right to tender, or in certain cases be
required to tender, the bonds. U.S. Bank National Association will act as
trustee and is the entity responsible for accepting tender notices and tendered
bonds. Salomon Smith Barney 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 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
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.
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
The bonds will be issued in the aggregate principal amount set forth on
the cover page and initially will bear interest at a weekly rate. The weekly
rate period for the bonds may be converted to a different rate period or
periods. The bonds will mature on December 1, 2032, and are subject to
redemption, optional tender and mandatory tender for purchase prior to maturity.
U.S. Bank National Association is trustee under the bond ordinance. The
principal corporate trust office for its duties as trustee is located at 535
Griswold, Buhl Building, Suite 550, Detroit, Michigan 48226. Salomon Smith
Barney Inc. has been appointed to serve as remarketing agent for the bonds. The
remarketing agent may be removed and a successor remarketing agent may be
appointed in accordance with the bond ordinance.
Before an optional conversion of the interest rate on the bonds to a
term rate (including a rate fixed to maturity), the bonds may bear interest at a
variable rate or at flexible rates effective for periods selected from time to
time by the County or, in the case of flexible rate periods, by the remarketing
agent. The rate of interest to be borne by the bonds during any particular
variable rate period or flexible rate period will be determined by the
remarketing agent as described below under "Determination of Interest Rates."
Book-Entry System. The bonds will be initially registered through a
book-entry only system operated by The Depository Trust Company, New York, New
York. The Depository Trust Company will act as securities
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(*) Preliminary, subject to change.
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depository for the bonds. Details of payments of the bonds and the book-entry
only system are described below in Book-Entry System."
The bonds will be executed and delivered in fully registered form and,
when issued, will be registered in the name of Cede & Co., as nominee of The
Depository Trust Company. Individual purchases may be made in book-entry only
form. Purchasers will not receive certificates representing their interest in
the purchased bonds. So long as Cede & Co. is the registered owner of the bonds,
as nominee of The Depository Trust Company, references herein to bond holders or
registered owners of the bonds mean Cede & Co. and do not mean the actual
purchasers of the bonds.
Effect of Discontinuance of Book-Entry System. The following paragraph
applies to the bonds only when not in the book-entry only system.
All payments of interest on the bonds will be paid to the registered
owners entitled thereto by check or draft mailed to each registered owner at the
address recorded on the registration books maintained by the trustee as of the
15th day of the month prior to the bond payment date. The principal of, and
premium if any, on the bonds are payable to the registered owners of the bonds,
as shown on the registration books of the County maintained by the trustee, upon
maturity or prior redemption of the bonds and upon presentation and surrender
the bonds to the trustee. Holders of at least $1,000,000 principal amount of the
bonds may request wire transfer of interest payments to a bank within the
continental United States as directed by the holder in writing to the trustee.
INTEREST RATE PERIODS
Weekly Rate Period. Weekly rate periods will begin on a Wednesday and
end on Tuesday of the following week and each weekly rate period will be
followed by another weekly rate period until the rate period of the bonds is
converted to another rate period; provided that in the case of a conversion to a
weekly rate period from a different rate period, the weekly rate period will
begin on the weekly rate conversion date and will end on Tuesday of the
following week; and in the case of a conversion from a weekly rate period to a
different rate period, the last weekly rate period prior to conversion will end
on the last day immediately preceding the conversion date to the new rate
period. The weekly rate for each weekly rate period will be effective from and
including the commencement date of such period and will remain in effect through
and including the last day of such period. Each such weekly rate will be
determined by the remarketing agent no later than 10:00 a.m., New York City
time, on the commencement date of the weekly rate period to which it relates
(or, if such day is not a business day, on the next following business day) and
provided to the trustee by the remarketing agent by written, telephonic or
electronic notice by the close of business, New York City time, on such business
day.
Daily Rate Period. Daily rate periods will commence on a daily rate
conversion date which will be a business day and after that day, before to the
next conversion date, on each business day thereafter until the rate period for
the bonds is converted to another rate period and will extend to, but not
include, the next succeeding business day. The daily rate for each daily rate
period will be effective from and including the commencement date of such bonds
and will remain in effect to, but not including, the next succeeding business
day. Each such daily rate will be determined not later than 10:00 a.m., New York
City time, on the first business day of the daily rate period to which it
relates and provided to the trustee by the remarketing agent by telephonic or
electronic notice at least weekly.
Term Rate Period. Term rate periods will begin on a term rate
conversion date and subsequently on the first day of a calendar month which is
an integral multiple of twelve (12) calendar months after that and end on the
day preceding either the beginning date of the following term rate period or the
conversion date on which a different rate period will become effective or the
maturity date of the bonds; provided that if a liquidity facility is then in
effect, no term rate period will extend beyond the expiration date of such
liquidity facility minus five (5) days. Each term rate period will be followed
by another term rate period of the same duration until the rate period of the
bonds is converted to another rate period or a term rate period of a different
duration or until maturity. The term rate for each term rate period will be
effective from and including the beginning date of such period and remain in
effect through and including the last day of such period. Each such term rate
will be determined not later than 12:00 noon, New York City time, on the
business day immediately preceding the beginning date of such period and
provided to
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the trustee and the liquidity provider by the remarketing agent by written,
telephonic or electronic notice by the close of business on such business day.
Flexible Rate Period. The flexible rate period for each bond will be of
such duration, not exceeding 270 days, as may be offered by the remarketing
agent and specified by the purchaser; provided that if a liquidity facility is
then in effect such liquidity facility will provide a sufficient number of days'
interest coverage so as to maintain the existing rating on such bonds or the
trustee will not authenticate any bond for such flexible rate period. Any bond
may accrue interest at a flexible rate for a flexible rate period different from
any other bond. Each flexible rate period will begin on a business day and end
on a day immediately preceding a business day. The remarketing agent will offer
and accept purchase commitments for the bonds for such flexible rate periods and
at such flexible rates as it deems to be advisable in order to minimize the net
interest cost on the bonds taking into account current market conditions;
provided, however, that the preceding clause will not prohibit the remarketing
agent from accepting purchase commitments for longer flexible rate periods (and
at higher flexible rates) than are otherwise available at the time of any
remarketing if the remarketing agent determines that, taking into account
current market conditions, a lower net interest cost on the bonds can be
achieved over the longer flexible rate period. Notwithstanding the preceding
sentence, no flexible rate period may be established which exceeds 270 days (or
such lower number as is permitted above) or, if the remarketing agent has given
or received notice of any conversion to a daily, weekly or term rate period, the
remaining number of days prior to the conversion date, and if a liquidity
facility is then in effect, no flexible rate period may be established which
extends beyond the remaining term of such liquidity facility minus 2 days.
Each flexible rate and flexible rate period will be determined not
later than 12:00 p.m., New York City time, on the first business day of the
flexible rate period to which it relates and provided to the trustee by the
remarketing agent by telephonic or electronic notice by 12:00 p.m., New York
City time, on that same day. The trustee will deliver certificates for such
bonds, when not in book-entry form only, to the remarketing agent not later than
2:15 p.m., New York City time, on such business day against receipt for the
bonds.
CALCULATION AND PAYMENT OF INTEREST
Interest on the bonds will be payable on June 1 and December 1 of each
year beginning December 1, 2002. The interest due on any bond on any interest
payment date will be computed on the basis of a 365- or 366-day year for the
number of days actually elapsed during daily rate periods; on the basis of a
365- or 366-day year for the number of days actually elapsed based on the
calendar year in which the flexible or weekly rate period begins, during weekly
or flexible rate periods; on the basis of a 360-day year of twelve 30-day months
during term rate periods.
All payments of interest on the bonds will be paid to the registered
owners entitled to such payments in immediately available funds by wire transfer
to a bank within the continental United States or deposited to a designated
account if such account is maintained with the trustee as directed by the
registered owner in writing or as otherwise directed in writing by the
registered owner prior to the time of payment with respect to bonds accruing
interest at a flexible rate or five business days before the interest payment
date with respect to bonds accruing interest at the daily or weekly rates.
If then permitted by applicable law, interest accrued during any
flexible rate period or due at the maturity or redemption of the bonds will be
paid only upon presentation and surrender of bonds.
DETERMINATION OF INTEREST RATES
All bonds will accrue interest initially at a weekly rate for a weekly
rate period as specified in the sale order. After that, the interest rate for
any rate period will be determined by the remarketing agent as the minimum rate
of interest which, in the judgment of the remarketing agent, would cause the
bonds to have a market value as of the date of determination equal to the
principal amount of such bonds, taking into account current market conditions;
provided, however that the interest rate borne by the bonds will not exceed the
maximum rate permitted by law, and provided further that while a liquidity
facility remains in place the interest rate, except the bank rate, will not
exceed
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the maximum rate of interest available under the liquidity facility. With
respect to flexible rates, the remarketing agent will determine the flexible
rate and the flexible rate period for each bond at such rate and for such period
as it deems advisable in order to minimize the net interest cost on the bonds,
taking into account prevailing market conditions.
In the event the remarketing agent fails for any reason to determine or
notify the trustee of the interest rate for any rate period:
The interest rate then in effect for bonds that accrue
interest at daily rates will remain in effect from day to day until the
trustee is notified of a new daily rate determined by the remarketing
agent.
The interest rate then in effect for bonds that accrue
interest at weekly rates will remain in effect from week to week until
the trustee is notified of a new weekly rate determined by the
remarketing agent.
The interest rate for any bond that accrues interest at
flexible rates and for which a flexible rate and flexible rate period
is not determined will be equal to the BMA Municipal Swap Index and the
Interest rate period for such bond will extend through the day
preceding the next business day, until the trustee either is notified
of a new flexible rate and flexible rate period determined for such
bond by the remarketing agent or is notified of the County's election
to convert to a different rate period.
The interest rate then in effect for bonds that accrue
interest at the term rate will be automatically converted to flexible
rates with flexible rate periods beginning on each business day and
extending through the day preceding the next business day until the
trustee is notified of a new flexible rate and flexible rate period
determined for such bond by the remarketing agent.
All determinations of interest rates will be conclusive and binding
upon the County, the trustee and the owners of the bonds to which such rates are
applicable.
OPTIONAL TENDERS FOR PURCHASE
Owners or registered owners of bonds accruing interest at daily, weekly
or term rates may elect to have their bonds (or portions of such bonds in
amounts equal to the lowest denomination then authorized or whole multiples of
such lowest denomination) purchased at the purchase price, plus accrued
interest, on the following purchase dates:
Weekly Rates. Prior to conversion from a weekly rate period to a
different rate period, bonds accruing interest at a weekly rate may be tendered
for purchase at a purchase price payable in immediately available funds on any
business day upon written or electronic notice of tender to the trustee,
directly or through the owner's DTC Participant, not later than 5:00 p.m., New
York City time, on a business day not fewer than seven (7) days prior to the
purchase date.
Daily Rates. Prior to conversion from a daily rate period to a
different rate period bonds accruing interest at a daily rate may be tendered
for purchase at a purchase price payable in immediately available funds on any
business day upon personal, electronic or telephonic notice of tender given to
the trustee, directly or through the owner's DTC Participant, not later than
11:00 a.m., New York City time, on the purchase date.
Term Rates. bonds accruing interest at a term rate may be tendered for
purchase on the beginning date of the succeeding term rate period of the same
duration, at a purchase price payable in check or draft upon written or
electronic notice of tender to the trustee, directly or through the owner's DTC
Participant, not later than 5:00 p.m., New York City time, on a business day
which is not fewer than seven (7) days prior to the purchase date.
Each notice of tender will, in the case of a written notice, be
delivered to the trustee at its principal corporate trust office and be in form
satisfactory to the trustee, and will state, whether delivered personally, in
writing, electronically or by telephone: the principal amount of the bond to
which the notice relates, that the owner or registered owner irrevocably demands
purchase of such bond or a specified portion of such bonds in an amount
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equal to the lowest denomination then authorized or a whole multiple of such
lowest denomination, the date on which such bond or portion is to be purchased,
and payment instructions with respect to the purchase price.
In addition, each notice of tender will automatically constitute,
whether delivered personally, in writing, electronically or by telephone: an
irrevocable offer to sell the bond (or portion of such bonds) to which the
notice relates on the purchase date at a purchase price equal to the principal
amount of such bond (or portion of such bonds) plus, with respect to bonds
accruing interest at a daily rate or a weekly rate, any interest thereon accrued
and unpaid as of the purchase date, an irrevocable authorization and instruction
to the trustee to effect transfer of such bond (or portion of such bonds) upon
payment of the purchase price to the trustee on the purchase date, an
irrevocable authorization and instruction to the trustee to effect the exchange
of the bond to be purchased in whole or in part for other bonds in an equal
aggregate principal amount so as to facilitate the sale of such bond (or portion
of such bonds to be purchased), and an acknowledgment that such owner or
registered owner will have no further rights with respect to such bond (or
portion of such bonds) upon payment of the purchase price of such bonds to the
trustee on the purchase date, except for the right of such owner or registered
owner to receive such purchase price upon delivery of such bond to the trustee
and that after the purchase date such owner or registered owner will hold any
undelivered certificate as agent for the trustee.
The determination of the trustee as to whether a notice of tender has
been properly delivered pursuant to the preceding two paragraphs will be
conclusive and binding upon the owner or registered owner.
MANDATORY TENDERS FOR PURCHASE
The bonds will be subject to mandatory tender for purchase as follows:
Conversions between Rate Periods. Bonds to be converted from one rate
period to a different rate period or from a term rate period to a term rate
period of different duration, are subject to mandatory tender for purchase on
the conversion date at a purchase price equal to the principal amount of such
bonds plus accrued interest.
Prior to Expiration of Liquidity Facility. The bonds are subject to
mandatory tender for purchase on the fifth (5th) day preceding the expiration
date or voluntary termination by the County of the liquidity facility unless at
least 45 days prior to the expiration date or termination date the trustee has
received notice that the liquidity facility has been or will be extended or an
alternate liquidity facility will be provided at a purchase price equal to the
principal amount of such bonds plus accrued interest. The trustee will give
notice of such mandatory tender for purchase to the registered owners of bonds
by first class mail, not less than 15 days before the mandatory tender date. If
the bonds are in certificated form, such notice will include information with
respect to required delivery of bond certificates and payment of the purchase
price.
Mandatory Tender Upon Change Respecting Liquidity Facility or Alternate
Liquidity Facility. Pursuant to the bond ordinance, the County may elect to
terminate or permit the expiration of the liquidity facility or an alternate
liquidity facility and in such event may at its option provide a substitute
alternate liquidity facility. If such election to provide for an alternate
liquidity facility occurs during a variable period and will cause the rating on
the bonds to be reduced, suspended or withdrawn by the Rating Service, there
will be a mandatory tender for purchase of the bonds bearing interest at
variable rates. Any mandatory tender described in the preceding sentence will be
made on the fifth day preceding the effective date of such expiration,
termination or substitution for a purchase price equal to the principal amount
of such bonds plus any accrued interest thereon to the purchase date. The
trustee will give notice of such mandatory tender for purchase to the registered
owners of bonds by first class mail, not less than 15 days before the mandatory
tender date. The trustee also will give notice of any substitution of an
alternate liquidity facility that does not cause a change in the rating to the
registered owners of bonds by first class mail, not less than 20 days before the
date of substitution. If the bonds are in certificated form, such notice will
include information with respect to required delivery of bond certificates and
payment of the purchase price.
Mandatory Tender Upon Default Under Standby Bond Purchase Agreement.
The bonds that bear interest at a variable rate will be subject to mandatory
tender for purchase at a purchase price equal to the principal amount of such
bonds plus any accrued interest thereon to the purchase date, on a date not
later than the tenth day (if a business day, otherwise the previous business
day) following receipt by the trustee of a notice from the liquidity
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provider that an Event of Default, as defined in the standby bond purchase
agreement, has occurred and is continuing and that the liquidity provider has
elected to terminate its obligations under the standby bond purchase agreement.
Flexible Rate Bonds. Each bond accruing interest at a flexible rate
will be subject to mandatory tender for purchase on the day after the last day
of each flexible rate period applicable to such bond, at a purchase price equal
to 100% of the principal amount of such bonds, plus interest accrued during such
flexible rate period. The registered owner of any bond accruing interest at a
flexible rate and tendered for purchase will provide the trustee with payment
instructions for the purchase price of its bond on or before tender of such
bonds to the trustee.
CONVERSIONS BETWEEN RATE PERIODS
Under the bond ordinance, the County may elect to convert all or
portions of the bonds from one rate period to another. If the conversion is from
a daily or weekly rate period, the conversion date must be an interest payment
date on which interest is payable for the daily or weekly rate period from which
the conversion is made. If the conversion is from a term rate period, the
conversion date may be any date on which the bonds are also subject to optional
tender or optional redemption. If the conversion is from a flexible rate period,
the conversion date must be a date on which interest is payable on all bonds
accruing interest at flexible rates.
The trustee will give notice by first class mail of proposed conversion
to the registered owners of bonds accruing interest at flexible, daily or weekly
rates not less than 15 days before the proposed conversion date and to
registered owners of bonds accruing interest at a term rate not less than 30
days before the proposed conversion date. Such notice will state the proposed
conversion date; that the bonds will be subject to mandatory tender for purchase
on the conversion date; the conditions, if any, to the conversion (described
below); and if the bonds are in certificated form, information with respect to
required delivery of bond certificates and payment of the purchase price.
No conversion of rate periods will become effective unless:
if the conversion is from a flexible, daily or weekly rate
period to a term rate period, or from a term rate period to a flexible,
daily or weekly rate period, the trustee has been provided, no later
than one day before the conversion date, with a favorable opinion of
bond counsel with respect to the conversion;
if the conversion is from a flexible rate period, the trustee
has received, prior to the date on which notice of conversion is
required to be given to registered owners, confirmation from the
remarketing agent that it has not established and will not establish
any flexible rate periods extending beyond the day before the
conversion date; and
if a liquidity facility will be in effect after the conversion
date, such liquidity facility will cover the principal of and interest
(computed on the basis of a 365-day year, in the case of conversion to
a flexible, daily or weekly rate period, and on the basis of a 360-day
year consisting of twelve 30-day months, in the case of conversion to a
term rate period) which will accrue on the outstanding bonds for the
maximum permitted period between interest payment dates for the
proposed interest rate period plus 20 days, and in the case of
conversion to a term rate period, extends for a period which will not
end on a date that is earlier than five (5) days after the first date
on which the bonds can be called for optional redemption, and covers
the premium, if any, which would be included in the purchase price upon
mandatory purchase of the bonds if such liquidity facility were not
extended beyond the expiration date set forth in the liquidity
facility.
REMARKETING AND PURCHASE
Unless otherwise instructed by the County, the remarketing agent will
offer for sale and use its best efforts to find purchasers for all bonds or
portions of such bonds for which notice of tender has been received or which are
subject to mandatory tender. While the bonds are in book-entry only form, the
remarketing agent will make payment of the purchase price for tendered bonds in
accordance with the procedures established by DTC. If the
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book-entry only system is not in effect, the terms of any sale by the
remarketing agent will provide for the payment of the purchase price for
tendered bonds by the remarketing agent to the trustee in immediately available
funds at or before 1:00 p.m., New York City time, on the purchase date, in the
case of bonds accruing interest at flexible rates, in immediately available
funds at or before 1:00 p.m., New York City time, on the purchase date, in the
case of bonds accruing interest at daily rates or weekly rates and in check or
draft at or before 5:00 p.m., New York City time, on the purchase date, in the
case of bonds accruing interest at term rates. The remarketing agent will not
sell any bond as to which a notice of conversion from one type of rate period to
another has been given by the trustee unless the remarketing agent has advised
the Person to whom the sale is made of the proposed conversion.
The remarketing agent will cause to be paid to the trustee, on the date
fixed for purchase of tendered bonds, all amounts representing proceeds of the
remarketing of such bonds, such payments to be made in the manner and at the
time specified in the bond ordinance. If such amounts will not be sufficient to
pay the principal amount of such bonds plus the accrued and unpaid interest
thereon (if any) to the purchase date, the trustee will by 12:30 p.m., New York
City time, on the purchase date make a purchase request in accordance with the
standby bond purchase agreement, and the liquidity provider will transfer to the
trustee immediately available funds by 3:00 p.m., New York City time, on such
purchase date, in an amount sufficient, together with the remarketing proceeds
available for such purchase, to enable the trustee to pay the purchase price of
bonds to be purchased on such purchase date. If no liquidity facility is then
held by the trustee, the County will deliver or cause to be delivered to the
trustee immediately available funds in an amount equal to such deficiency prior
to 2:00 p.m., New York City time, on the date set for purchase of tendered bonds
accruing interest at daily rates and weekly rates (2:00 p.m. New York City time,
in the case of flexible rate bonds), and a check or draft in an amount equal to
such deficiency prior to 12:15 p.m., New York City time, on the date set for
purchase of tendered bonds accruing interest at term rates (the obligation of
the County to deliver such moneys not being conditioned on receipt by the County
of the foregoing notice from the trustee). All monies received by the trustee as
remarketing proceeds or as payment under the liquidity facility and additional
amounts, if any, received from the County will be deposited by the trustee in
the appropriate account of the bond Purchase Fund to be used solely for the
payment of the purchase price of tendered bonds and will not be commingled with
other funds held by the trustee.
At or before 3:30 p.m., New York City time, on the date set for
purchase of tendered bonds and upon receipt by the trustee of 100% of the
aggregate purchase price of the tendered bonds, the trustee will pay the
purchase price of such bonds to the registered owners of such bonds. Such
payments will be made in immediately available funds (or by wire transfer),
unless the bonds to be purchased accrue interest at term rates, in which event
such payments will be made by check or draft. The trustee will apply in order
moneys paid to it by the remarketing agent as proceeds of the remarketing of
such bonds by the remarketing agent, funds received from the liquidity provider
under the liquidity facility, and other monies made available by the County. If
sufficient funds are not available for the purchase of all tendered bonds, no
purchases will be consummated.
All certificated bonds to be purchased on any date will be required to
be delivered to the principal corporate trust office of the trustee at or before
1:00 p.m., New York City time, on the purchase date in the case of bonds
accruing interest at flexible or daily rates; 12:00 noon, New York City time, on
the purchase date in the case of bonds accruing interest at weekly rates; or
5:00 p.m., New York City time, on the business day prior to the purchase date in
the case of bonds accruing interest at term rates, except for bonds delivered by
or on behalf of an investment company in accordance with the bond ordinance
which may be delivered by 3:00 p.m., New York City time, on the purchase date.
If the owner of any bond (or portion of such bonds) in certificated form that is
subject to optional or mandatory purchase fails to deliver such bond to the
trustee for purchase on the purchase date, and if the trustee is in receipt of
the purchase price therefor, such bond (or portion of such bonds) will
nevertheless be deemed purchased on the day fixed for purchase of such bonds and
ownership of such bond (or portion of such bonds) will be transferred to the
purchaser of such bonds. Any owner who fails to deliver such bond for purchase
will have no further rights thereunder except the right to receive the purchase
price of such bonds upon presentation and surrender of said bond to the trustee.
The trustee will, as to any tendered certificated bonds which have not been
delivered to it promptly notify the remarketing agent of such non delivery and
place a stop transfer against an appropriate amount of bonds registered in the
name of such registered owner(s) on the bond registration books. The trustee
will place such stop(s) commencing with the lowest serial number bond registered
in the name of such registered owner(s) until stop transfers have been placed
against an appropriate amount of bonds until the appropriate tendered bonds are
delivered to the trustee. Upon such delivery, the trustee will make any
necessary adjustments to the bond registration books.
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If the funds available for purchases of bonds are inadequate for the
purchase of all bonds tendered on any purchase date, the trustee will, after any
applicable grace period: return all tendered bonds to the registered owners of
such bonds; return all moneys received for the purchase of such bonds to the
Persons providing such monies; and notify the County and the remarketing agent
of the return of such bonds and moneys and the failure to make payment for
tendered bonds.
The owner of any bond issued that is an investment company, or is
holding bonds on behalf of an investment company, may, at its option, notify the
remarketing agent and the trustee of such fact in writing and in such notice
irrevocably elect to have its bond(s) purchased on the next date on which such
bond(s) may be purchased.
REDEMPTION OF THE BONDS
Optional Redemption. The bonds are subject to redemption at the option
of the County prior to maturity during any flexible, daily or weekly rate
period, on any interest payment date at an optional redemption price equal to
100% of the principal amount of such bonds, together with accrued interest to
the redemption date. While the bonds accrue interest at a term rate, the bonds
are subject to redemption at the option of the County on the day after the end
of each term rate period at the redemption price of 100% of the principal amount
of such bonds, together with accrued interest, if any, to the redemption date.
Mandatory Sinking Fund Redemption. The bonds are subject to mandatory
sinking fund redemption prior to maturity, by lot in such manner as the trustee
may determine, at a redemption price of 100% of the principal amount of such
bonds plus interest accrued to the date fixed for redemption, on December 1 in
the years and in the principal amounts as follows:
Year Amount Year Amount
---- ------ ---- ------
2008 2021
2009 2022
2010 2023
2011 2024
2012 2025
2013 2026
2014 2027
2015 2028
2016 2029
2017 2030
2018 2031
2019 2032
2020
The amounts to be so redeemed may be reduced by the principal amounts
of the related bonds redeemed beforehand (otherwise than through operation of
the mandatory sinking fund redemption described above), or otherwise acquired
and delivered to the trustee, at least 45 days prior to the payment date for
credit against the mandatory sinking fund redemption described above and will be
applied in direct order of date of redemption.
Extraordinary Redemption. The bonds are subject to redemption at the
option of the County, at any time, in whole or in part (by lot in such manner as
the trustee may determine), in the event of destruction or taking of or damage
to the airport; but only if the airport has been restored to substantially the
same condition as prior to such damage, destruction or taking and excess net
proceeds remain; or the County has determined that the portion of the
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airport damaged, destroyed or taken is not necessary to the operation of the
airport and that the failure of the County to repair and restore the same will
not impair or otherwise adversely affect the revenue-producing capability of the
airport; or the airport Consultant cannot provide a statement that net proceeds,
together with other funds made available or to be made available by the County,
are projected to be sufficient to pay the costs of the replacement, repair,
rebuilding or restoration of the airport. Such redemption will be at a price
equal to 100% of the principal amount of the bonds to be redeemed plus interest
accrued to the date fixed for redemption.
Special Mandatory Redemption of Liquidity Provider Bonds. Liquidity
provider bonds are subject to special mandatory redemption, at a price equal to
the principal amount of such liquidity provider bonds, plus accrued interest
thereon to the date of redemption, as provided in the standby bond purchase
agreement with FGIC-SPI.
Surplus Bond Proceeds Redemption for Bonds. The bonds are subject to
mandatory redemption at any time from surplus bond proceeds in the event the
County determines not to use such proceeds to pay the costs of making capital
improvements to the airport. In such event, the bonds will be redeemed on the
first date for which the requisite notice of redemption can be given at a price
equal to the principal amount of the bonds to be redeemed plus interest accrued
to the date of redemption.
Order of Redemption. In the event of a redemption in each case as
described above, if less than all of the outstanding bonds are to be redeemed,
the trustee will give notice, in the name of the County, of the bonds to be
redeemed, specifying the maturity of such bonds, selected by lot in such manner
as the trustee may determine, and, if such bonds are term bonds, the years in
which sinking fund requirements are to be reduced as a result of such redemption
and the amounts of such reductions. The trustee will redeem the outstanding
bonds in such order of maturity as the County will specify.
Notice of Redemption. Notice of redemption will be mailed by the
trustee to each owner of bonds whose bonds are to be redeemed. Notice of
redemption will be given not less than 30 days prior to the date set for
redemption. Failure to give notice in the manner described with respect to any
bond, or any defect in such notice, will not affect the validity of the
redemption proceedings for any bond with respect to which notice was properly
given. To the extent that Cede & Co. is the registered owner for DTC, the County
or the trustee will send such notice to DTC as registered owner. DTC will be
responsible for notifying the participants who in turn will forward such notice
to the beneficial owners. See "Book-Entry System."
In cases when less than the full amount of an outstanding bond is
called for redemption, the trustee upon presentation of the bond called in part
for redemption will register, authenticate and deliver to the registered owner a
new bond in the principal amount of the portion of the original bond not called
for redemption.
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 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
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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.
Purchasers of bonds will not receive written confirmation from DTC of their
purchase, but purchasers of bonds 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 purchasers of
bonds 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 purchasers of bonds. Purchasers of bonds 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 purchasers of 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 purchasers of bonds. 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 purchasers of bonds
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 County or the 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 purchasers of bonds 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 paying agent or the
County, subject to any statutory or regulatory requirements which may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the County or the paying agent, disbursement of those payments
to direct participants will be the responsibility of DTC, and disbursement of
those payments to the purchasers of bonds 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 paying agent
and the 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 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 paying agent and the
County will take all actions necessary to return the bonds to the full
book-entry system of DTC.
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The County and the underwriter 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
purchasers of bonds, or that they will do so on a timely basis or will serve and
act in the manner described in this prospectus supplement. The County and the
underwriter is not responsible or liable for the failure of DTC or any
participant to make any payment or give any notice to a purchaser of a bond or
an error or delay relating to such bonds.
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 purchasers of
bonds, confirmation and transfer of beneficial ownership interests in such bonds
and other related transactions by and between DTC, DTC's participants and the
purchasers of 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 purchasers of bonds 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 paying agent and discharging its
responsibilities with respect to such bonds under applicable law or the 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 PURCHASER OF BONDS, 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.
SECURITY FOR THE BONDS
The bonds will be secured by a lien on the net revenues of the airport
and will be secured equally and on parity with all outstanding bonds and any
additional bonds. Currently, approximately $1.4 billion aggregate principal
amount of bonds is outstanding. The bonds are being issued pursuant to the
provisions of the Act and the bond ordinance.
Pursuant to the bond ordinance, the County has irrevocably pledged net
revenues for the payment of bonds. Net revenues for any period means the excess
of revenues of the airport remaining after deducting the operation and
maintenance expenses of the airport for such period. The land and facilities
comprising the airport have not been pledged or mortgaged pursuant to the bond
ordinance nor have they been pledged to secure payment of the bonds, any other
bonds, any junior lien bonds or other County obligations.
The principal of, and interest and premium, if any, on, the bonds are
not payable from the general funds of the County, nor shall the bonds constitute
an indebtedness of the County within any constitutional, statutory or charter
provision or limitation. Neither the credit nor the taxing power of the County
is pledged for the payment of the principal of, or interest or premium, if any,
on, the bonds, and no owner of any bond has the right to compel the exercise of
the taxing power of the County or the forfeiture of any of its property in
connection with any default under the bond ordinance.
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 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
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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 paying agent of the nonpayment of the amount
by the 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 prospectus supplement, we have
approximately $4.8 billion amount of liquidity facility obligations currently
outstanding under various standby bond purchase agreements, including the
liquidity facility obligations we are issuing under this prospectus 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 and up to 187 days' interest on the
bonds at an assumed maximum rate of 12% per year.
TERMINATION EVENTS
The scheduled expiration date of the standby bond purchase agreement is
five years from the date of delivery of the bonds. The bond ordinance 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 bonds. The following events would permit such
termination:
- if the 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 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;
- if the County fails to observe or perform any agreement contained in
the standby bond purchase agreement, the bond ordinance or a related municipal
financing agreement (or the State of Michigan takes any action which would
impair the power of the County to so comply) and, if that failure is a result of
a covenant breach that the County can remedy, that failure continues for a
specified number of days following written notice of that failure from us to the
County;
- if any representation, warranty, certification or statement made by
the County in the standby bond purchase agreement or any related document, as
defined in the standby bond purchase agreement, or in any certificate, financial
statement or other document the County delivers under those documents proves to
have been incorrect in any material respect when made;
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- if the County defaults in the payment of principal of or premium, if
any, or interest on any bond, note or other evidence of indebtedness that the
County has issued, assumed or guaranteed, and that default is continuing;
- if the 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;
- if an involuntary case or other proceeding is commenced against the
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 County under the federal bankruptcy laws;
- if any material provision of the standby bond purchase agreement or
any related document, as defined in the standby bond purchase agreement, for any
reason whatsoever ceases to be a valid and binding agreement of the County or
the County contests the validity or enforceability of any of these documents; or
- if the 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 failure).
If a termination event occurs, we may deliver notice to the trustee,
the County, the 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. 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 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 will enter 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 terminated 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.
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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:
Year Ended December 31,
--------------------------------------------------------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
1.48 1.50 1.60 1.52 1.72
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 prospectus supplement.
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, 2001
EXPERTS
The financial statements and schedule of GE Capital and consolidated
affiliates as of December 31, 2001 and 2000, and for each of the years in the
three year period ended December 31, 2001 appearing in GE Capital's annual
report on Form 10-K for the year ended December 31, 2001, have been incorporated
by reference in this prospectus supplement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference in this
prospectus 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 115 Broadway, New York, New York 10006 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 underwriter[s] 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 underwriter[s] 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:
- our annual report on Form 10-K for the year ended December 31,
2000;
- our quarterly reports on Form 10-Q for the quarterly periods
ended March 31, 2001 and June 30, 2001; and
- our current reports on Form 8-K filed with the Commission on
September 20, 2001 and October 15, 2001.
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.
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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., 115 Broadway, New York, New York
10006, 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 115 Broadway, New York,
New York 10006, 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:
- $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;
- $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;
- $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;
- $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; and
- $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.
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
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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 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:
- 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;
- 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;
- 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;
- 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;
- 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
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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;
- 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;
- 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
- if the issuer or other specified entity does not pay when due any
amount payable under the securities 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
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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
shall 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 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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PROSPECTUS SUPPLEMENT
INTRODUCTION ............................................................... S-1
DESCRIPTION OF THE BONDS ................................................... S-1
THE STANDBY BOND PURCHASE AGREEMENT ........................................ S-12
THE STANDBY LOAN AGREEMENT; GE CAPITAL; RIGHT OF ASSIGNMENT ................ S-13
EXPERTS .................................................................... S-14
PROSPECTUS
WHERE YOU CAN FIND MORE INFORMATION ........................................ 1
INCORPORATION BY REFERENCE ................................................. 1
THE COMPANY ................................................................ 2
RECENT DEVELOPMENTS ........................................................ 2
SUMMARY .................................................................... 2
THE STANDBY BOND PURCHASE AGREEMENTS ....................................... 4
THE STANDBY LOAN AGREEMENTS ................................................ 5
PLAN OF DISTRIBUTION ....................................................... 5
LEGAL MATTERS .............................................................. 5
EXPERTS .................................................................... 5
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ............. 5
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$141,000,000(*)
principal amount
plus interest
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
Charter County of
Wayne, Michigan
Airport Revenue Bonds
(Detroit Metropolitan Airport),
Series 2002A
PROSPECTUS SUPPLEMENT
April 23, 2002
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(*) Preliminary, subject to change.