Filed Pursuant to Rule 424(b)(5)
Registration File No.: 33-?????
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 31, 2001)
$140,000,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
THE CITY OF NEW YORK
GENERAL OBLIGATION TAXABLE ADJUSTABLE RATE BONDS
FISCAL 2002 SUBSERIES A-9 AND A-11
Date of the Bonds: Date of Delivery Subseries A-9 Due: November 1, 2023
Subseries A-11 Due: November 1, 2020
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LIQUIDITY FACILITY: We are providing a liquidity facility in the form
of a standby bond purchase agreement for the bonds described in this prospectus
supplement. 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.
TERMS OF THE BONDS: The bonds will be general obligations of The City
of New York, a municipality organized and existing under the laws of the State
of New York. The City will pledge its faith and credit for the payment of the
bonds. All real property subject to taxation by the City will be subject to the
levy of ad valorem taxes, without limitation as to rate or amount, to pay the
principal of, applicable redemption premium, if any, and interest on the 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 standby bond purchase agreement are not being
sold separately from the bonds. The bonds are being sold under a separate
disclosure document. Our obligations may not be traded from the bonds. 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 the "company," "we,"
"us," or "our" mean FGIC Securities Purchase, Inc. You should read the
information below under the heading "THE COMPANY," located in the prospectus
accompanying this prospectus supplement.
UBS PAINEWEBBER INC. MERRILL LYNCH & CO.
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The date of this Prospectus Supplement is October 24, 2001
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
$140,000,000 aggregate principal amount of The City of New York General
Obligation Taxable Adjustable Rate Bonds Fiscal 2002 Subseries A-9 and A-11,
which will be issued on or about November 1, 2001 by The City of New York, a
municipality organized and existing under the laws of the State of New York and
will be governed by the terms of the Constitution and laws of the State of New
York and the New York City Charter and bond resolutions of the Mayor of The
City of New York and a certificate of the Deputy Comptroller for Public Finance
dated November 1, 2001. The Bank of New York will act as fiscal agent and
tender agent for the taxable adjustable rate bonds. We will enter into a
standby bond purchase agreement with the tender agent, which will obligate us
under certain circumstances to purchase unremarketed taxable adjustable rate
bonds from the holders optionally or mandatorily tendering their taxable
adjustable rate bonds for purchase. In order to obtain funds to purchase the
taxable adjustable rate bonds, we will enter into a standby loan agreement with
General Electric Capital Corporation, which will obligate GE Capital to loan
funds to us as needed to purchase taxable adjustable rate bonds. Our
obligations under the standby bond purchase agreement will expire five years
from the date of delivery of the taxable adjustable rate bonds unless the
standby bond purchase agreement is extended or terminated sooner in accordance
with its terms.
DESCRIPTION OF THE BONDS
PAYMENT MECHANISM
Pursuant to the New York State Financial Emergency Act For The City of New
York, a general debt service fund has been established for City bonds and
certain City notes. Pursuant to the Act, payments of the City real estate tax
must be deposited upon receipt in the general debt service fund, and retained
under a statutory formula, for the payment of debt service (with exceptions for
debt service, such as principal of seasonal borrowings, that is set aside under
other procedures). The statutory formula has in recent years resulted in
retention of sufficient real estate taxes to comply with the City covenants
(set forth below). If the statutory formula does not result in retention of
sufficient real estate taxes to comply with the City covenants, the City will
comply with the City covenants either by providing for early retention of real
estate taxes or by making cash payments into the general debt service fund. The
principal of and interest on the taxable adjustable rate bonds will be paid
from the general debt service fund until the Act expires on July 1, 2008, and
thereafter from a separate fund maintained in accordance with the City
covenants. Since its inception in 1978, the general debt service fund has been
fully funded at the beginning of each payment period.
If the Control Board determines that retentions in the general debt
service fund are likely to be insufficient to provide for the debt service
payable from the retentions, it must require that additional real estate tax
revenues be retained or other cash resources of the City be paid into the Fund.
In addition, the Control Board is required to take such action as it determines
to be necessary so that the money in the general debt service fund is adequate
to meet debt service requirements.
SECURITY
As required by the State Constitution and applicable law, the City will
pledge its faith and credit for the payment of the principal of and interest on
all City indebtedness. Holders of City debt obligations have a contractual
right to full payment of principal and interest of those debt obligations at
maturity. If the City fails to pay principal or interest of those debt
obligations, the holder has the right to sue and is entitled to the full amount
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due, including interest to maturity at the stated rate and at the rate
authorized by law thereafter until payment. Under the General Municipal Law, if
the City fails to pay any money judgment, it is the duty of the City to assess,
levy and cause to be collected amounts sufficient to pay the judgment.
Decisions indicate that judicial enforcement of statutes such as this provision
in the General Municipal Law is within the discretion of a court. Other
judicial decisions also indicate that a money judgement against a municipality
may not be enforceable against municipal property devoted to public use.
The rights of the owners of taxable adjustable rate bonds to receive
interest, principal and redemption premium, if any, from the City could be
adversely affected by a restructuring of the City's debt under Chapter 9 of the
Federal Bankruptcy Code. No assurance can be given that any priority of holders
of City securities (including the taxable adjustable rate bonds) to payment
from money retained in the general debt service fund or from other sources
would be recognized if a petition were filed by or on behalf of the City under
the Federal Bankruptcy Code or pursuant to other subsequently enacted laws
relating to creditors' rights; such money might then be available for the
payment of all City creditors generally. Judicial enforcement of the City's
obligation to make payments into the general debt service fund, of the
obligations of the City under the City covenants and of the State set forth
below may be within the discretion of a court.
CERTAIN COVENANTS AND AGREEMENTS
The City will covenant that:
o a separate fund or funds for the purpose of paying principal of and
interest on bonds and interest on notes of the City (including required
payments into, but not from, City sinking funds) will be maintained by an
officer or agency of the State or by a bank or trust company; and
o not later than the last day of each month, there will be on deposit in a
separate fund or funds an amount sufficient to pay principal of and interest on
bonds and interest on notes of the City due and payable in the next succeeding
month. The City currently uses the debt service payment mechanism described
above to perform these covenants. The City will further covenant in the taxable
adjustable rate bonds to comply with the financial reporting requirements of
the Act, as in effect from time to time, and to limit its issuance of bond
anticipation notes as required by the Act, as in effect from time to time.
The State pledges and agrees in the Financial Emergency Act that the State
will not take any action that will impair the power of the City to comply with
the covenants described in the preceding paragraph or any right or remedy of
any owner of the taxable adjustable rate bonds to enforce the City covenants.
The City will include in the taxable adjustable rate bonds the covenant of the
State to the effect, among other things, that the State will not substantially
impair the authority of the Control Board in specified respects.
USE OF PROCEEDS
The proceeds of the taxable adjustable rate bonds will be used for
municipal capital purposes, including expenses of the City in connection with
the issuance and sale of the taxable adjustable rate bonds.
GENERAL
$140,000,000 aggregate principal amount of the City's General Obligation
Bonds, Fiscal 2002 Series A-9 and A-11 are to be issued as taxable adjustable
rate bonds, and will be in the daily rate mode or the weekly rate mode until
converted to a different rate mode.
$120,000,000 of the taxable adjustable rate bonds will be dated their date
of delivery, will be issued in fully registered form, will bear interest at the
initial rate until November 6, 2001 and thereafter will bear interest at a
weekly rate until converted to a different rate mode. $20,000,000 of the
taxable
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adjustable rate bonds will be dated their date of delivery, will be issued in
fully registered form and will bear interest at the initial rate until November
7, 2001 and thereafter will bear interest at a weekly rate until converted to a
different rate mode. The taxable adjustable rate bonds are subject to optional
redemption prior to maturity and to mandatory tender for purchase. In addition,
the taxable adjustable rate bonds, so long as such bonds are in a daily rate
mode or weekly rate mode, are subject to optional tender for purchase. The
taxable adjustable rate bonds will continue in a rate mode until converted to
another rate mode and will bear interest at a rate determined in accordance
with the procedures for determining the interest rate during such rate mode.
Principal and purchase price of, and redemption premium, if any, and
interest on, the taxable adjustable rate bonds will be payable in lawful money
of the United States of America. The taxable adjustable rate bonds will be
issued only as fully registered bonds without coupons in authorized
denominations of $100,000 or any integral multiples of $5,000 in excess of
$100,000. During the initial rate period for the taxable adjustable rate bonds,
a daily rate period, a commercial paper rate period or a weekly rate period,
interest will be computed on the basis of a 365-day or 366-day year for the
actual number of days elapsed and during a term rate period and the fixed rate
period, interest will be computed on the basis of a 360-day year of twelve
30-day months.
Interest on the taxable adjustable rate bonds will be payable on each
interest payment date to the registered owner of those bonds shown on the
registration books kept by the fiscal agent at the close of business on the
record date.
Interest payable on the taxable adjustable rate bonds will be the interest
accruing and unpaid through and including the day preceding the interest
payment date.
CONVERSION TO AN ALTERNATE RATE MODE
Subject to the conditions in the certificate of the Deputy Comptroller for
Public Finance, the City may convert all or a portion of the taxable adjustable
rate bonds in one rate mode to a different rate mode by delivering a notice to
the remarketing agent for the taxable adjustable rate bonds being converted and
the standby purchaser, DTC, the broker-dealers and the tender agent specifying
the taxable adjustable rate bonds to be converted, the conversion date and the
rate mode or rate modes that will be effective on the conversion date. The
conversion date for taxable adjustable rate bonds is a business day that is
either an interest payment date or the first day of a rate period. The City
must deliver such conversion notice not less than 15 days prior to the
conversion date or a shorter period if acceptable to DTC. The tender agent has
agreed to give written notice to the registered owner of each taxable
adjustable rate bonds of the City's election to convert to another rate mode
and the conversion date. The transfer agent has agreed to give such notice, by
first-class mail, not later than three calendar days after receipt by the
tender agent of the conversion notice.
The tender agent, no later than three days after receipt of the conversion
notice, has agreed to give notice by first-class mail to the holders of the
taxable adjustable rate bonds to be converted, which notice will state:
o the conversion date;
o the rate mode or rate modes that will be effective on the conversion
date;
o the ratings expected to be effective on the taxable adjustable rate
bonds to be converted after the conversion date;
o that the rate mode or rate modes will not be converted unless the City
receives on the conversion date a favorable opinion of bond counsel;
o the name and address of the principal corporate trust offices of the
fiscal agent and tender agent;
o that the taxable adjustable rate bonds to be converted will be subject
to mandatory tender for purchase on the conversion date at the purchase price;
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o that upon the conversion, if there is on deposit with the tender agent
on the conversion date an amount sufficient to pay the purchase price of the
taxable adjustable rate bonds converted, the bonds not delivered to the tender
agent will be deemed to have been properly tendered for purchase and will cease
to represent a right on behalf of the holder of those bonds to the payment of
principal of or interest on those bonds and will represent only the right to
payment of the purchase price on deposit with the tender agent, without
interest accruing on those bonds from and after the conversion date; and
o that upon the conversion to the commercial paper rate mode, term rate
mode or the fixed rate mode, from and after the conversion date the taxable
adjustable rate bonds converted will no longer be subject to optional tender
for purchase.
If less than all of the taxable adjustable rate bonds subject to a
particular rate mode or modes are to be converted to a new rate mode or modes,
the particular taxable adjustable rate bonds which are to be converted to a new
rate mode or modes will be selected by the fiscal agent in the manner as the
fiscal agent deems appropriate subject to the provisions of the certificate of
the Deputy Comptroller for Public Finance regarding authorized denominations of
the taxable adjustable rate bonds subject to the rate mode.
If a favorable opinion of bond counsel cannot be obtained, or if the
election to convert was withdrawn by the City, or if the remarketing agent has
notified the fiscal agent, the City and the standby purchaser that it has been
unable to remarket the taxable adjustable rate bonds on the conversion date,
the adjustable rate bonds will bear interest in the previous rate mode or, at
the option of the City and in compliance with the provisions of the certificate
of the Deputy Comptroller for Public Finance regarding conversion of rate
modes, any other rate mode selected by the City.
INTEREST RATES AND RESET DATES
General. The rate at which the taxable adjustable rate bonds will bear
interest during any rate period will be the rate of interest that, if borne by
the taxable adjustable rate bonds for such rate period, in the judgment of the
remarketing agent taking into account prevailing market conditions for
comparable bonds or other securities, would be the lowest interest rate that
would enable the taxable adjustable rate bonds to be sold at a price equal to
the principal amount of those bonds, plus accrued interest on those bonds, if
any. No rate period will extend beyond the scheduled expiration date of any
standby bond purchase agreement then in effect.
Maximum Rate. The taxable adjustable rate bonds may not bear interest at a
rate greater than 14%.
Daily Rate. The taxable adjustable rate bonds in a daily rate mode will
bear interest at the daily rate. The daily rate for any business day will be
determined by the remarketing agent and announced by 10:00 a.m., New York City
time, on that business day. For any day which is not a business day, the daily
rate will be the daily rate for the immediately preceding business day.
If: a daily rate for a daily rate period has not been determined by the
remarketing agent; no remarketing agent is serving under the certificate; the
rate so established is held to be invalid or unenforceable with respect to a
daily rate period; or pursuant to the remarketing agreement the remarketing
agent is not then required to establish a daily rate, the daily rate for such
daily rate period will be the TBMA Municipal Index on the date the daily rate
was to have been determined by the remarketing agent.
Weekly Rate. The taxable adjustable rate bonds in a weekly rate mode will
bear interest at the weekly rate. The weekly rate is to be determined by the
remarketing agent and announced by 4:00 p.m., New York City time, on each
Tuesday, and if such Tuesday is not a business day, then the next preceding
business day with respect to $120,000,000 of the taxable adjustable rate bonds,
and on each Wednesday, and if such Wednesday is not a business day, then the
next preceding business day with respect to $20,000,000 of the taxable
adjustable rate bonds. The weekly rate period means, with respect to
$120,000,000 of the taxable adjustable rate bonds, a period commencing on a
Wednesday and extending to and including the next succeeding Tuesday. The
weekly rate period means, with respect to $20,000,000 of the taxable adjustable
rate bonds, a period commencing on a Thursday and extending to and including
the next succeeding Wednesday.
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If: a weekly rate has not been determined by the remarketing agent; no
remarketing agent is serving under the certificate; the weekly rate determined
by the remarketing agent is held to be invalid or unenforceable with respect to
a weekly rate period; or pursuant to the remarketing agreement, the remarketing
agent is not then required to establish a weekly rate, the weekly rate will be
the TMBA Municipal Index on the date the weekly rate was to be determined by
the remarketing agent.
Commercial Paper Rate. Except as described below, the commercial paper
rate period for each taxable adjustable rate bond in a commercial paper rate
mode is to be determined by the remarketing agent and announced by 12:30 p.m.,
New York City time, on the first day of each commercial paper rate period.
Commercial paper rate periods may be from 1 to 365 days. If the remarketing
agent fails to specify the next succeeding commercial paper rate period, the
commercial paper rate period will be the shorter of seven days or the period
remaining to and including the final maturity date of the taxable adjustable
rate bonds. The taxable adjustable rate bonds in a commercial paper rate mode
(other than bonds held pursuant to the standby bond purchase agreement) will
bear interest during a particular commercial paper rate period at a rate per
annum equal to the interest rate determined above corresponding to the
commercial paper rate period. A taxable adjustable rate bond can have a
commercial paper rate period and bear interest at a commercial paper rate that
differs from other taxable adjustable rate bonds in the commercial paper rate
mode.
If: a commercial paper rate for a commercial paper rate period has not
been determined by the remarketing agent; no remarketing agent is serving under
the certificate; the commercial paper rate determined by the remarketing agent
is held to be invalid or unenforceable with respect to a commercial paper rate
period; or pursuant to the remarketing agreement, the remarketing agent is not
then required to establish a commercial paper rate, the commercial paper rate
will be the TBMA Municipal Index on the date the commercial paper rate period
was to have been determined by the remarketing agent.
Term Rate. The taxable adjustable rate bonds in a term rate mode will bear
interest at the term rate. Except as described below, the term rate for any
term rate period will be determined by the remarketing agent not later than a
date two business days prior to the conversion date or the first day of the
next term rate period. If the remarketing agent is unable to remarket all of
the taxable adjustable rate bonds at the interest rate determined by the
remarketing agent as described in the previous sentence, the remarketing agent
may at any time prior to the first day of a term rate period increase the
interest rate to that rate of interest which would be the lowest rate that
would enable the taxable adjustable rate bonds to be sold on such first day at
a price of par, plus accrued interest, if any. No less than 20 business days
prior to the end of each term rate period, the City has agreed to deliver to
the fiscal agent, the tender agent and the remarketing agent written notice of
the City's determination of the next succeeding term rate period, which term
rate period is to end on a business day. However, if the City fails to specify
the next succeeding term rate period, the term rate period will be the same
period as the immediately preceding term rate period but not beyond the final
maturity date of the bonds. Once the taxable adjustable rate bonds in the term
rate mode are subject to optional redemption, the City may on any interest
payment date convert the interest rate on all or part of the taxable adjustable
rate bonds to a daily rate, a commercial paper rate or a fixed rate.
If for any reason, the interest rate for the taxable adjustable rate bonds
in the term rate mode is not or cannot be determined by the remarketing agent
in the manner specified above, the interest rate will be equal to Municipal
Market Data General Obligation Yield on bonds with the then long-term ratings
as the taxable adjustable rate bonds that mature on a date that is as nearly as
practical the same date as the date on which the new term rate period for the
taxable adjustable rate bonds will end. Such interest rate will be based upon
the Municipal Market Data General Obligation Yield for the most recent period
for which information is available on the date the interest rate is to be
determined. If such index or its equivalent is no longer published, the
interest rate on the taxable adjustable rate bonds will be the interest rate
then in effect on the taxable adjustable rate bonds.
Fixed Rate. The taxable adjustable rate bonds in the fixed rate mode will
bear interest at the fixed rate. The fixed rate for any fixed rate period will
be determined by the remarketing agent or other investment banking firm or
firms with which the City has entered into an agreement for the purchase, as
underwriters, of the taxable adjustable rate bonds on the conversion date to
the fixed mode as agreed to by the City. The fixed rate period means the period
from and including the conversion date and extending to and including the date
of maturity of the taxable adjustable rate bonds in the fixed rate mode or to,
but not including, the conversion date on which the taxable adjustable rate
bonds in the fixed rate mode are converted to another rate mode. If a fixed
rate has not been determined as
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described above for any reason, then the former rate period will continue in
effect unless the City selects another interest rate mode.
Once the taxable adjustable rate bonds are converted to bear interest at
the fixed rate, the taxable adjustable rate bonds will not be converted to bear
interest at any other rate until such time as the taxable adjustable rate bonds
are subject to optional redemption. Once the taxable adjustable rate bonds in
the fixed rate mode are subject to optional redemption, the City may on any
interest payment date convert the interest rate on all or part of the taxable
adjustable rate bonds to a daily rate, a weekly rate, a commercial paper rate
or a term rate, provided a liquidity facility is in effect to the extent
required by the LFL. If for any reason a new interest rate is not determined,
then the former rate period will continue in effect unless the City selects
another interest rate mode.
OPTIONAL TENDER FOR PURCHASE
General. The taxable adjustable rate bonds or any portion of those bonds
equal to an authorized denomination may be tendered for purchase, at the
purchase price, at the option of its registered owner on any business day
during a daily rate mode or a weekly rate mode upon giving notice of the
registered owner's election to tender in the manner and at the times described
below. Notice of an election to tender a taxable adjustable bond registered in
the name of DTC is to be given by the DTC participant on behalf of the
beneficial owner of the taxable adjustable rate bond and will not be given by
DTC. Notice of the election to tender for purchase of the taxable adjustable
rate bond registered in any other name must be given by the registered owner of
the taxable adjustable rate bond or its attorney-in-fact.
The notice must state the name of the registered owner of the beneficial
owner and the principal amount of the taxable adjustable rate bond, the
aggregate principal amount of the taxable adjustable rate bond to be tendered
for purchase and the business day on which the taxable adjustable rate bond or
portion of that bond to be tendered for purchase will be purchased.
A DTC participant or the registered owner of the taxable adjustable rate
bond must give written notice of its irrevocable election to tender the taxable
adjustable rate bond or a portion of that bond for purchase at its option to
the tender agent and the remarketing agent at their respective principal
offices, in the case of the taxable adjustable rate bonds bearing interest in a
daily rate mode, by no later than 10:00 a.m. on any business day which the
taxable adjustable rate bonds or portion of that bond is to be purchased and in
the case of the taxable adjustable rate bonds bearing interest in a weekly rate
mode by no later than 12:00 noon, New York City time, on the business day prior
to the commencement date of the next weekly period for such bonds. In addition,
the registered owner of the taxable adjustable rate bond is required to deliver
the bond to the tender agent at its principal corporate trust office at or
prior to 1:00 p.m., New York City time, on the optional tender date in the case
of the taxable adjustable rate bonds bearing interest in a daily rate mode or a
weekly rate mode.
The taxable adjustable rate bonds in a commercial paper rate mode, term
rate mode or a fixed rate mode are not subject to optional tender for purchase.
MANDATORY TENDER FOR PURCHASE
The taxable adjustable rate bonds which are affected by the following
actions are subject to mandatory tender and purchase at the purchase price on
the following dates:
o on each conversion date for the taxable adjustable rate bonds being
converted to a different rate mode;
o on the date following each rate period for the taxable adjustable
rate bonds in the commercial paper rate mode or the term rate mode;
o on a date that is not less than three business days prior to the
expiration date of any liquidity facility then in effect with respect
to the taxable adjustable rate bonds, which will be drawn upon to pay
the purchase price of tendered taxable adjustable rate bonds (or if
such day is not a business day, on the
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immediately preceding business day), unless such liquidity facility
has been extended, or a substitute delivered with rating
confirmation or mandatory tender, at least 20 days prior to such
expiration date;
o unless a rating confirmation is provided two business days before the
effective date of a substitute liquidity facility delivered pursuant
to the certificate of the Deputy Comptroller for Public Finance with
respect to the taxable adjustable rate bonds (or if such day is not a
business day, on the immediately preceding business day), on which
date the liquidity facility in effect prior to the substitute
liquidity facility will be drawn upon to pay the purchase price of
tendered taxable adjustable rate bonds that are not remarketed; and
o on a date that is not less than one business day prior to the
termination date of a liquidity facility relating to the taxable
adjustable rate bonds specified in the default notice delivered by
the standby purchaser or its agent in accordance with the provisions
of the liquidity facility (or if such date is not a business day, the
immediately preceding business day).
Whenever the taxable adjustable rate bonds are to be tendered for purchase
in accordance with the first bullet-point above, the tender agent will give
notice to the holders of the taxable adjustable rate bonds indicating that the
taxable adjustable rate bonds are subject to mandatory tender for purchase on
the date specified in the notice. The tender agent is to give notice by
first-class mail and not later than three calendar days after receipt by the
tender agent of the conversion notice from the City. The failure of any holder
of any portion of the taxable adjustable rate bonds to receive such notice will
not affect the validity of the conversion to a new rate mode.
Whenever the taxable adjustable rate bonds are to be tendered for purchase
in accordance with the third, fourth or fifth bullet point above, the tender
agent will give notice to the holders of the taxable adjustable rate bonds
indicating that the taxable adjustable rate bonds are subject to mandatory
tender for purchase on the date specified in the notice. The tender agent is to
give the notice by first-class mail and not less than five calendar days prior
to the effective date of the expiration or earlier termination of the affected
liquidity facility then in effect or of the effective date of a substitute
liquidity facility or prior to the date specified in the no remarketing notice
or the default notice. The failure of any holder of any portion of the taxable
adjustable rate bonds to receive the notice will not affect the validity of the
proceedings in connection with the effectiveness of the affected liquidity
facility.
BONDS DEEMED PURCHASED
The taxable adjustable rate bonds or portions of those bonds required to
be purchased upon a tender at the option of the registered owner of those bonds
or upon a mandatory tender will be deemed to have been tendered and purchased
for all purposes of the certificate, irrespective of whether the taxable
adjustable rate bonds have been presented and surrendered to the tender agent,
if on the tender date moneys sufficient to pay the purchase price of those
bonds are held by the tender agent. The former registered owner of a tendered
bond or a taxable adjustable rate bond deemed to have been tendered and
purchased will have no claim under that bond or under the certificate or
otherwise for payment of any amount other than the purchase price, and the
taxable adjustable rate bonds or portion of those bonds will no longer be
outstanding for purposes of the certificate.
The Bank of New York has been appointed as tender agent for the taxable
adjustable rate bonds.
PURCHASE PRICE AND PAYMENT
On each tender date, a tendered bond will be purchased at the applicable
purchase price. The purchase price of a tendered bond is the principal amount
of the taxable adjustable rate bonds to be tendered or the amount payable to
the registered owner of a purchased bond following receipt by such owner of a
purchase notice from the remarketing agent, plus accrued and unpaid interest
from the immediately preceding interest payment date. If the date of purchase
is an interest payment date, then the purchase price will not include accrued
and unpaid interest, which will be paid to the holder of record on the
applicable record date.
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The purchase price of a tendered bond held in a book-entry-only system
will be paid, in same-day funds, to DTC in accordance with DTC's standard
procedures for effecting same-day payments. Payment will be made without
presentation and surrender of the tendered bonds to the tender agent and DTC
will be responsible for effecting payment of the purchase price to the DTC
participants.
The Company will pay the purchase price of any other adjustable rate bond,
in same-day funds, only after presentation and surrender of the adjustable rate
bond to the tender agent at its delivery office. The Company will pay the
purchase price by 2:30 p.m., New York City time, on the optional tender date or
the mandatory tender date on which the taxable adjustable rate bonds are
presented and surrendered to the tender agent.
The purchase price is payable solely from, and in the following order of
priority, the proceeds of the remarketing of the taxable adjustable rate bonds
tendered for purchase, money made available by the standby purchaser under any
liquidity facility then in effect and money furnished by or on behalf of the
City (which has no obligation to do so).
REMARKETING OF BONDS UPON TENDER
Pursuant to the remarketing agreements, each remarketing agent is required
to use its best efforts to remarket a tendered bond on its tender date at a
price equal to the purchase price or, if the taxable adjustable rate bonds are
being remarketed upon their conversion from the term rate mode or the fixed
rate mode, the bonds will be remarketed at a price equal to par. The
remarketing agreements set forth, among other things, certain conditions to the
remarketing agents' obligations to remarket tendered bonds.
By 10:30 a.m., New York City time, on each tender date, the remarketing
agent will give notice by telephone to the fiscal agent, the tender agent, the
standby purchaser and the City specifying the principal amount of bonds which
have been tendered for purchase and remarketed, along with the principal amount
of tendered bonds, if any, for which it has not arranged a remarketing. The
tender agent will, on such tender date, obtain funds under the applicable
liquidity facility in accordance with its terms in an amount equal to the
difference between the purchase price of the tendered bonds subject to purchase
and the remarketing proceeds available to the tender agent.
PURCHASED BONDS
Purchased bonds will bear interest at the rates and be payable on the
dates described in the taxable adjustable rate bonds. Bonds purchased under the
standby bond purchase agreement may be sold when and as provided in the
liquidity facility for the taxable adjustable rate bonds, and if remarketed at
a daily, weekly, commercial paper term or fixed will no longer bear interest as
purchased bonds. In no event will the rate of interest on the taxable
adjustable rate bonds exceed 25% per annum.
REDEMPTION OF BONDS
The taxable adjustable rate bonds are subject to redemption prior to
maturity at the option of the City, in whole or in part:
o if bearing interest at a daily, commercial paper or weekly, on any
potential conversion date after defeasance of the taxable adjustable rate
bonds; or
o if bearing interest as purchased bonds or at the highest rate provided
by law for interest on accrued claims against municipalities on any date, in
each case on 30 days' notice to bondholders at the principal amount of the
bonds plus any interest accrued and unpaid on the bonds.
The City may select amounts, rate modes and maturities of the taxable
adjustable rate bonds to be redeemed in its sole discretion. In the event that
less than all taxable adjustable rate bonds of a maturity subject to redemption
are to be redeemed, the City will select taxable adjustable rate bonds for
redemption in the following manner:
S-8
o first, from taxable adjustable rate bonds, if any, of any rate mode and
maturity subject to such redemption which are held by or for the liquidity
provider;
o second, from other taxable adjustable rate bonds bearing interest as
purchased bonds or at the highest rate provided by law for interest on accrued
claims against municipalities; and
o third, by lot.
The taxable adjustable rate bonds will be subject to redemption at the
option of the City:
o if bearing interest at a fixed rate, beginning on the tenth anniversary
of the fixed rate conversion date, in whole or in part, by lot within each
maturity, on any date upon 30 days' notice to bondholders, at a redemption
price of 101%, which price will decline annually by 1/2% per annum, until
reaching a price of 100% on the twelfth anniversary, to remain in effect after
the twelfth anniversary plus accrued interest to the date of redemption; or
o if bearing interest at a term rate, in whole or in part, by lot within
each maturity, on the date following any term rate period upon 30 days' notice
to bondholders, at a redemption price of 100%, plus accrued interest to the
date of redemption.
Prior to conversion to a fixed rate, the optional redemption provisions of
the taxable adjustable rate bonds may be amended if the City receives an
opinion of bond counsel to the effect that such amendment is authorized by law
and will not adversely affect the exclusion of interest on the taxable
adjustable rate bonds from gross income for Federal income tax purposes.
As term bonds, the taxable adjustable rate bonds are subject to mandatory
redemption upon 30 days' notice to bondholders, at a redemption price equal to
the principal amount of the bonds, plus accrued interest, without premium, in
the amounts sets forth below:
Principal Amount to be Redeemed
------------------------------------------------
November 1, Subseries A-9 Subseries A-11
----------- -------------- --------------
2019 $10,000,000
2020 10,000,000*
2021 $39,270,000
2022 52,575,000
2023 28,155,000*
--------------
* Stated Maturity
At the option of the City, there will be applied to or credited against
any of the required amounts the principal amount of any such term bonds that
have been defeased, purchased or redeemed and not previously so applied or
credited.
Defeased term bonds will at the option of the City no longer be entitled,
but may be subject, to the provisions of the bonds for mandatory redemption.
DEFEASANCE
For the purpose of determining whether the taxable adjustable rate bonds
will be deemed to have been defeased, the interest to come due on the taxable
adjustable rate bonds will be calculated at the maximum applicable
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rate; and if, as a result of the taxable adjustable rate bonds having borne
interest at less than the maximum rate for any period, the total amount on
deposit for the payment of interest on the taxable adjustable rate bonds
exceeds the total amount required, the balance will be paid to the City. In
addition, the taxable adjustable rate bonds will be deemed defeased only if
there has been deposited money in an amount sufficient for the timely payment
of the maximum amount of principal of and interest on the taxable adjustable
rate bonds that could become payable to the bondholders upon the exercise of
any applicable optional or mandatory tender for purchase.
BOOK-ENTRY SYSTEM
DTC will act as securities depository for the taxable adjustable rate
bonds. The taxable adjustable rate bonds will be issued as fully-registered
bonds 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 will be issued in the aggregate principal amount of the
taxable adjustable rate 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 rules applicable to DTC and its direct and
indirect participants are on file with the Securities and Exchange Commission.
Purchases of the taxable adjustable rate bonds under the DTC system must
be made by or through direct participants, which will receive a credit for the
bonds on DTC's records. The ownership interest of each actual purchaser, or
"beneficial owner," of each bond is in turn to be recorded on the direct and
indirect participants' records. Beneficial owners will not receive written
confirmation from DTC of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the direct or indirect participants
through which beneficial owners entered into the transaction. Transfers of
ownership interests in the taxable adjustable rate bonds are to be accomplished
by entries made on the books of DTC's participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interests in the taxable adjustable rate bonds, unless the use
of the book-entry system for the bonds is discontinued.
To facilitate subsequent transfers, all bonds deposited by direct
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other nominee as may be requested by an authorized
representative of DTC. The deposit of bonds with DTC and their registration in
the name of Cede & Co. or such other nominee effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the bonds.
DTC's records reflect only the identity of its direct participants to whose
accounts the securities are credited, which may or may not be the beneficial
owners. DTC's direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to its direct
participants, by its direct participants to its indirect participants, and by
its direct participants and its indirect participants to beneficial owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements which may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
taxable adjustable rate 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
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participants in that issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other nominee) will consent or vote
with respect to the taxable adjustable rate bonds. Under its usual procedures,
DTC mails an omnibus proxy to the City 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 taxable adjustable rate 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 taxable adjustable rate 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 issuer or the trustee on payment
dates in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the date
payable. Payments by DTC's participants to beneficial owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of the DTC participant and not of
DTC, the trustee or the City 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 City or the trustee, disbursement
of those payments to direct participants will be the responsibility of DTC, and
disbursement of those payments to the beneficial owners will be the
responsibility of direct and indirect participants.
Regardless of the statements above, if any taxable adjustable rate bond is
tendered but not remarketed, with the result that the taxable adjustable rate
bond becomes owned by us, the trustee and the City will, if requested by us,
take all action necessary to remove the taxable adjustable rate bonds from the
book-entry system of DTC and to register that tendered but not remarketed bond
in our name. Taxable adjustable rate bonds owned by us not in the book-entry
system of DTC will be held by us, or at our option, by the trustee on our
behalf, and for our benefit. When all taxable adjustable rate bonds owned by us
have been remarketed, we no longer own any taxable adjustable rate bonds and we
have been reinstated in full, the trustee and the City will take all actions
necessary to return the taxable adjustable rate bonds to the full book-entry
system of DTC.
The City 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 taxable adjustable rate bonds paid to
DTC or its nominee as the owner, or will distribute any prepayment notices or
other notices, to the beneficial owners, or that they will do so on a timely
basis or will serve and act in the manner described in this prospectus
supplement. The City and the underwriter 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 taxable adjustable rate bonds or an error
or delay relating thereto.
The description above of the procedures and record-keeping with respect to
beneficial ownership interests in the taxable adjustable rate bonds, payment of
principal, interest and other payments on the bonds to DTC's participants or
beneficial owners of the taxable adjustable rate bonds, confirmation and
transfer of beneficial ownership interests in such taxable adjustable rate
bonds and other related transactions by and between DTC, DTC's participants and
the beneficial owners of the taxable adjustable rate bonds is based solely on
information provided by DTC. Accordingly, no representations can be made
concerning these matters and neither the DTC participants nor the beneficial
owners should rely on the foregoing information with respect to such matters,
but should instead confirm the same with DTC or DTC's participants, as the case
may be.
DTC may discontinue providing its services with respect to the taxable
adjustable rate bonds at any time by giving notice to the trustee and
discharging its responsibilities with respect thereto under applicable law or
the City 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
TAXABLE ADJUSTABLE RATE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER
NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT,
OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICES AND ITS
CONTEXT OR
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EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING
TO THE REDEMPTION OF THE TAXABLE ADJUSTABLE RATE BONDS CALLED FOR REDEMPTION OR
OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
THE STANDBY BOND PURCHASE AGREEMENT
Our obligations under the standby bond purchase agreement will rank
equally with all of our other general unsecured and unsubordinated obligations.
Our obligations are not issued under an authorizing document. As of the date of
this prospectus supplement, we have approximately $3.4 billion of obligations
currently outstanding, not including the obligations described in this
prospectus supplement.
Owners of the taxable adjustable rate bonds 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 taxable adjustable rate bonds. Our
obligations under the standby bond purchase agreement will be sufficient to pay
a purchase price equal to the principal of the taxable adjustable rate bonds
and up to 35 days' interest on the taxable adjustable rate bonds at an assumed
rate of 13% per year.
TERMINATION EVENTS
The scheduled expiration date of the standby bond purchase agreement is
five years from the date of delivery of the taxable adjustable rate bonds,
unless it is extended or terminated sooner in accordance with its terms.
Under certain circumstances, we may terminate our obligation to purchase
taxable adjustable rate bonds. The following events would permit such
termination:
o any portion of the commitment fee for the standby bond
purchase agreement has not been paid when due by the City on the
quarterly payment date and the failure will continue for seven days;
o failure by the City to observe or perform any covenant or
agreement contained in the authorizing document and the failure will
continue for 20 days;
o any default by the City will have occurred and be continuing
in the payment of principal of or premium, if any, or interest on any
bond, note or other evidence of indebtedness issued, assumed or
guaranteed by the City, or in the payment of any amounts payable
under any lease, mortgage or conditional sale arrangement securing,
with the consent of the City, as the case may be, the payment of any
indebtedness of a public benefit corporation or other governmental
agency, instrumentality or body for borrowed money (except to the
extent that the obligation to make such payment is being disputed in
good faith and, if appropriate, contested in proceedings diligently
conducted and there is no default in the payment of the principal of
or interest on the secured indebtedness);
o the City 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 now or in effect then or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of its or
any substantial part of its property, or consents to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or
makes a general assignment for the benefit of creditors, or fails
generally to pay its debts as they become due, or declares a
moratorium, or takes any action to authorize any of the foregoing;
o an involuntary case or other proceeding commences against the
City seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy,
S-12
insolvency or other similar law now or in effect then or seeking
the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property,
and such involuntary case remains undismissed and unstayed for a
period of 60 days; or an order for relief will be entered against the
City under the federal bankruptcy laws as now or in effect then;
o any material provision of the standby bond purchase agreement,
the purchase agreement or any related document will cease for any
reason whatsoever to be a valid and binding agreement or the City
contest the validity or enforceability of those agreements; or;
o the City fails to pay when due any amount payable under any
bonds (regardless of any waiver of that failure by the holders of the
bonds).
If a termination event occurs, we may deliver notice to the City, the
tender agent, the fiscal agent and the remarketing agent regarding our
intention to terminate the standby bond purchase agreement. In that case, the
standby bond purchase agreement would terminate, effective at the close of
business on the 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 taxable adjustable rate 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 taxable
adjustable rate bonds.
The obligations of the City are described in a separate disclosure
document relating to the taxable adjustable rate bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill our 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 taxable adjustable rate bonds. The amount of each loan
under the standby loan agreement will be no greater than the purchase price for
tendered taxable adjustable rate bonds. The purchase price represents the
outstanding principal amount of the tendered taxable adjustable rate 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 a date specified in
the standby loan agreement, which will be set forth in the applicable
prospectus supplement. 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 taxable adjustable rate bonds or of our
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 taxable adjustable rate
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, Six Months
---------------------------------------- Ended
1996 1997 1998 1999 2000 June 30, 2001
------- ------ ----- ----- ------ -------------
1.53 1.48 1.50 1.60 1.52 1.60
For purposes of computing the consolidated ratio of earnings to fixed charges,
earnings consist of net earnings adjusted for the provision for income taxes,
minority interest, 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 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."
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 Reports on Form 10-Q................ Quarters ended March 31, 2001 and June 30, 2001
LEGAL MATTERS
The legality of the obligations has been passed upon by in-house counsel
to Financial Guaranty Insurance Company, an affiliate of ours.
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 this prospectus
supplement in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference in this 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.
A-1
[THIS PAGE INTENTIONALLY LEFT BLANK.]
$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
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.
2
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 period ended March 31, 2001, 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.
3
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 agreement or similar
contractual agreement, the securities will be subject to a mandatory tender.
Prior to such time,
4
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 authorizing document.
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-10
THE STANDBY BOND PURCHASE AGREEMENT................S-12
THE STANDBY LOAN AGREEMENT; GE CAPITAL.............S-13
LEGAL MATTERS......................................S-14
EXPERTS ...........................................S-14
PROSPECTUS
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
$140,000,000
principal amount, plus interest
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
THE CITY OF NEW YORK
General Obligation Taxable Adjustable Rate Bonds
Fiscal 2002 Subseries A-9 and A-11
PROSPECTUS SUPPLEMENT
October 24, 2001