PROSPECTUS SUPPLEMENT
(To Prospectus dated May 31, 2001)
$48,000,000
principal amount plus interest
Liquidity Facility
of
FGIC Securities Purchase, Inc.
in support of
BOARD OF TRUSTEES OF OAKLAND UNIVERSITY
General Revenue Bonds (Variable Rate Demand), Series 2001
Date of the Bonds: Date of Delivery Due: March 1, 2031
-------------------------
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 are limited obligations of the Board of
Trustees of Oakland University, established under Article VIII, Section 6 of the
Michigan Constitution of 1963. The bonds are payable from and secured solely by
an irrevocable pledge of General Revenues as provided in the General Trust
Indenture on a parity basis with the pledge of General Revenues securing certain
outstanding debt of the Board. The bonds are subject to optional redemption,
mandatory redemption and optional and mandatory tender for purchase before
maturity, 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. The obligations may not be separately traded. This
prospectus supplement and the accompanying prospectus, appropriately
supplemented, may also be delivered in connection with any remarketing of bonds
purchased by us.
Unless the context otherwise requires, the terms "Company," "we," "us,"
or "our" mean FGIC Securities Purchase, Inc. You should read the information
below under the heading "THE COMPANY."
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LEHMAN BROTHERS
---------------------------
The date of this prospectus supplement is August 7, 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 Lehman Brothers, the underwriter of the bonds, 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 obligations under a liquidity facility in the form of
a standby purchase agreement in support of $48,000,000 aggregate principal
amount of Board of Trustees of Oakland University General Revenue Bonds
(Variable Rate Demand), Series 2001 which will be issued on or about August 16,
2001 by the Board of Trustees of Oakland University, established under Article
VIII, Section 6 of the Michigan Constitution of 1963 and will be governed by the
terms of a resolution adopted by the Board on April 5, 2001 and a trust
indenture dated as of August 1, 2001 between the Board and the Trustees, for the
purpose of (a) paying costs of certain capital projects of the Board and (b)
paying costs incidental to the issuance of the 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 with General Electric Capital Corporation which will obligate GE
Capital to loan funds to us as needed to purchase bonds. Our 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.
DESCRIPTION OF THE BONDS
General
The bonds will be issued in the principal amount of Forty Eight Million
Dollars ($48,000,000) and will bear an original issue date of August 16, 2001.
The bonds may bear interest in the daily mode, weekly mode, commercial
paper mode, SAVRS mode, term rate mode or fixed mode. This prospectus describes
only bonds that (i) bear interest in the weekly mode, the daily mode and the
commercial paper mode, (ii) are secured by the standby bond purchase agreement
and (iii) are registered in the name of a nominee of DTC. The standby bond
purchase agreement, unless amended, will secure the purchase price of bonds in
the daily and weekly rate modes only.
Depending upon at which rate the bonds bear interest, the dates
interest rates are effective, the dates on which notices of tender are required
to be given, the dates on which the bonds are to be tendered, the dates for
notices of conversion to another rate and provisions for mandatory purchase
applicable to the bonds will vary.
The bonds will initially bear interest in the weekly mode. The bonds
will be dated as of the date of original delivery thereof, will mature on March
1, 2031 and will be subject to redemption and optional and mandatory tender for
purchase before maturity as set forth below.
The bonds will be issued in fully registered form in the denomination
of $100,000, or integral multiples of $5,000 in excess of $100,000. So long as
the bonds are registered in the name of Cede & Co., as nominee of DTC, principal
of, premium, if any, and interest on the bonds will paid as described in this
prospectus supplement under "BOOK ENTRY SYSTEM."
Remarketing Agent
Lehman Brothers has been appointed remarketing agent under the
indenture. The remarketing agent will determine the interest rates on the bonds
in accordance with the provisions contained in the indenture, will remarket the
bonds and will effect purchase of the bonds. The remarketing agent may be
removed or replaced by the Board, as provided in the remarketing agreement and
the indenture, and may resign, subject to certain conditions.
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Mode and Tender Summary - Short-Term Modes
For General Information - Assumes Normal Circumstances
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Daily rate mode Weekly rate mode Commercial paper rate mode
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o Once at beginning of applicable
commercial paper rate period.
o Maximum single commercial paper
rate period limited to 360 days.
Frequency of rate Daily Weekly o Successive commercial rate
determination periods permitted.
o Periods begin and end on
business days.
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Authorized denominations $100,000 and multiples of Same as daily rate mode Same as daily rate mode
$100,000
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Day count convention Actual number of days elapsed Same as daily rate mode Same as daily rate mode
in the current calendar year
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Interest payment dates First business day of each Same as daily rate mode First business day immediately
calendar month following the last day of
applicable commercial
paper rate period
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Record dates Business day preceding Same as daily rate mode Same as daily rate mode
interest payment date
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Rate determination date Each business day Tuesday or next business First day of the applicable
day period
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Interest adjustment date Rate determination date Wednesday of each week Rate determination date
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o No mode change during a
Minimum mode change notice At least 15 days' notice Same as daily rate mode commercial paper rate period.
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Optional tender On any business day, same On any business day on at No
day notice permitted least 7 days' notice
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Mandatory tender on mode Yes, no provision for Yes, no provision for Yes, no provision for
change electing to retain electing to retain electing to retain
---------------------------------------------------------------------------------------------------------------------------------
o Mandatory tender on each
Mandatory tender at end Not applicable Not applicable interest payment date.
of period o No provision for electing to
retain.
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Other Mandatory Tender Events
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Event Purchase Date Minimum Tender Notice Period
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Last Put Termination Established by Provider, but at least 5 As much as is practicable in the
Event Business Days before Termination Date exercise of reasonable diligence
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Expiration of Financial Facility 5 Business Days before Expiry Date 15 days before Purchase Date
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New Provider of Financial Facility Based on substitution date 15 days before Purchase Date
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S-2
Modes
General
-------
The bonds may operate in one or more of six modes of operation,
provided that the requirements of the indenture, certain of which are described
below, for entering into that mode or modes are satisfied. The modes of
operation are the weekly mode, the daily mode, the commercial paper mode, the
term rate mode, the SAVRS mode, and the fixed rate mode. Generally, the modes
have different operating features, including different demand features, purchase
features, redemption provisions and interest payment dates.
The bonds will be initially issued in a weekly mode. Then, except in
the instances where a bond is in the fixed rate mode, a different mode may be
designated, provided the requirements of the indenture for changing modes are
satisfied. However, once a bond is converted to the fixed rate mode, it will
remain in the fixed rate mode until maturity or redemption thereof before
maturity. In connection with any change to another mode, the trustee will give
written notice to the owner of each affected bond that the bond will be subject
to mandatory tender for purchase on the conversion date. Bonds in that mode are
required to be tendered for purchase on that conversion date at 100% of the
principal amount of the bonds, plus accrued interest to the date of purchase.
Interest Rate Determinations
Weekly and Daily Modes
----------------------
The interest rate for all bonds in the weekly mode and daily mode will
be determined by the remarketing agent on the rate determination date for that
mode as the interest rate that in the judgment of the remarketing agent would
allow the bonds to be sold at par plus accrued interest, under prevailing market
conditions on the rate determination date.
During the daily mode, the remarketing agent will establish the daily
rate by 10:00 a.m. on each rate determination date. The daily rate for any day
during the daily mode which is not a business day will be the daily rate
established on the immediately preceding rate determination date.
During the weekly mode, the remarketing agent will establish the weekly
rate by 4:00 p.m. on each rate determination date.
Upon making each interest rate determination, the remarketing agent
will give immediate notice by telephone to the financial officer, the trustee
and the tender agent of the interest rate determination and will confirm the
same in writing no later than 12:00 (noon) the following business day.
Commercial Paper Mode
---------------------
Commercial paper bonds will bear interest at rates derived by
determining the mode or combination of modes that, in the judgment of the
remarketing agent, would result in the lowest average interest cost for the
commercial paper bonds.
On each rate determination date on which commercial paper bonds are to
be marketed or remarketed, the remarketing agent will determine the mode or
combination of modes that result in selling the commercial paper bonds at par in
the secondary market at the rate or rates for the mode or modes that in the
judgment of the remarketing agent would result in the lowest average interest
cost for the Board under prevailing market conditions on that rate determination
date, subject to the following conditions and limitations.
o If the remarketing agent determines that current or
anticipated future market conditions or anticipated future
events are such that a different mode or a different
combination of modes would result in a lower average interest
cost on the commercial paper bonds, then the remarketing agent
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will select the mode or the combination of modes that in the
judgment of the remarketing agent would result in the lowest
average interest cost for the Board.
o The commercial paper bonds comprising each period must be in
authorized denominations.
o The remarketing agent is subject to the limitations regarding
the length of commercial paper rate periods as set forth in
the indenture in establishing any commercial paper rate
period.
On or after 4:00 p.m. on the business day immediately before each rate
determination date for a commercial paper bond, any holder of the bond may
telephone the remarketing agent and receive notice of the anticipated next mode
or modes and the anticipated commercial paper rate for each such period.
By 12:30 p.m. on each rate determination date for each commercial paper
bond, the remarketing agent will determine the commercial paper rate for the
period then selected for the bond and will give notice by electronic means to
the tender agent of the name of the new holder, the period, the purchase date
and the commercial paper rate.
Failure of Interest Rate Determinations
Each of the following constitutes a rate suspension event:
o the remarketing agent fails or is unable to determine the
interest rate or period for any bond; or
o a court of law of competent jurisdiction holds either of the
following to be unenforceable or stays either: the method by
which the remarketing agent determines the interest rate or
period with respect to a bond; or the selection by the
financial officer of the term rate periods.
The remarketing agent will notify the financial officer, the trustee,
the tender agent and any provider of a standby purchase agreement of the
occurrence of any rate suspension event.
In the case of the first bullet above, a rate suspension event will
continue until the remarketing agent (or the financial officer if applicable)
again makes the determinations. In the case of the second bullet above, the
remarketing agent (or the financial officer, if applicable) will again make the
determination at the time as there is delivered to the remarketing agent and the
financial officer an opinion of bond counsel to the effect that there are no
longer any legal prohibitions against the determinations.
The following are applicable upon the occurrence and during the
continuance of a rate suspension event.
o for a commercial paper bond, the Lehman Brothers tax
exempt commercial paper index in effect on the business day that begins
each commercial paper rate period. Each commercial paper rate period
will be a single business day, and the periods will continue seriatim
until the rate suspension event is no longer continuing;
o for a daily rate bond the last daily rate determined by
the remarketing agent will be the rate as of each daily rate
determination date; and
o for a weekly rate bond, as of each weekly rate
determination date, the BMA municipal swap index; and if the BMA
municipal swap index ceases to be published, then a new third-party
index will be selected in good faith by the Board that has the
described composition and methodology of the BMA municipal swap index
to the extent there is an index that is readily available to the
remarketing agent.
Change in Modes
The Board may elect at any time and from time to time to change any
mode to any other mode (other than a mode change from the fixed rate).
S-4
A change in mode will become effective only on a business day, as
follows:
o The mode of a daily rate bond or a weekly rate bond
may be changed on any business day.
o The mode of a commercial paper bond may be only
changed on the business day that is the last day of
the commercial paper rate period.
o Any mode may become effective for all or some modal
bonds so long as the denominations of modal bonds for
which the mode is effective are authorized
denominations for the mode.
It is a condition precedent to a mode change for any modal bond that
there will be delivered to the tender agent, and the tender agent will hold on
the mode change date:
o a favorable bond counsel's opinion, addressed to the
notice parties;
o either moneys sufficient to pay the purchase price of
all affected modal bonds plus interest accrued to the
mode change date, so as to be available for the
payment or a standby bond purchase agreement with
sufficient capacity to permit the amount to be drawn
thereunder and under which no condition exists that
would prohibit the draw; and
o a rating confirmation for all modal bonds not
affected by the mode change if: the mode change
involves less than all outstanding modal bonds; and
the modal bonds affected by the mode change will
become bonds not required to be covered by a
liquidity facility.
It is a condition precedent to a mode change for any modal bond
required by the indenture to be the subject of either credit enhancement or a
standby bond purchase agreement, or both credit enhancement and a standby bond
purchase agreement, that there will be delivered to the tender agent, and the
tender agent will hold on the mode change date:
o every required conforming financial facility for the
modal bonds determined as if the mode change to be
made had become effective; and
o a rating confirmation if the amount of interest
coverage required by the indenture to be provided by
any required financial facility increases from the
amount required for the mode from which the change is
to be made.
Whenever the tender agent receives a mode change notice from the Board,
the tender agent will give the notice of mandatory tender to the holders of the
modal bonds to be affected by the mode change.
Tender and Purchase
Optional Tender
---------------
Daily rate bonds and weekly rate bonds are subject to tender at the
option of the holder at the purchase price of 100% of the principal amount of
the bonds, plus interest accrued to the purchase date, upon notice given by the
holder as provided below.
In order to exercise its option to tender daily rate bonds, the holder
must give an irrevocable tender notice to the remarketing agent and the tender
agent by electronic means no later than 9:30 a.m. on the purchase date specified
in the notice, which may be the same business day on which the notice is given.
S-5
In order to exercise its option to tender weekly rate bonds, the holder
must give an irrevocable tender notice to the remarketing agent and the tender
agent by electronic means no later than 4:00 p.m. not less than seven days
before the purchase date specified in the notice.
Tender notices must specify the CUSIP number of the bond (or portion of
the bond) to be tendered and otherwise identify the bond to the satisfaction of
the tender agent and must also specify the principal amount of the bond being
tendered (which will be an authorized denomination) and must state in effect
that the bond (or portion of the bond) will be purchased on the purchase date
specified therein at 100% of the principal amount of the bonds, plus interest
accrued to purchase date, and that the notice is irrevocable.
Mandatory Tender
----------------
o Each modal bond affected by any of the following enumerated
events will be subject to mandatory tender on the purchase date set opposite the
respective event upon such as notice as is required to be given, all as set
forth in the following table, at the purchase price of 100% of the principal
amount of the bonds, plus interest accrued to the purchase date.
=================================================================================================================
Event Purchase date Tender notice required
- -----------------------------------------------------------------------------------------------------------------
End of commercial paper rate Day on which the period ends No
period
End of a term rate period Day on which the period ends Yes, at least 15 days' notice
Mode change Mode change date Yes, at least 15 days' notice
except that no notice is required
in connection with the change from
the commercial paper mode
Occurrence of last put termination As provided below. As provided below.
event
Occurrence of expiry date, if Business day at least 5 days before Yes, at least 15 days' notice
required as described under the expiry date
Mandatory Tender on Expiry Date
below
New provider of a financial facility As provided below Yes, at least 15 days' notice
=================================================================================================================
o As set forth in the table, no notice is required for the mandatory
tender of commercial paper bonds, but if any commercial paper bond is also
subject to a mode change on the purchase date, then the notice will be given as
required for a mode change.
o As soon as practicable, the tender agent will give notice to the
holders of bonds affected by a last put termination notice of the purchase date.
In the case of a last put termination and in order to give the holders
of affected bonds as much advance notice of the purchase date to be
established in respect thereof as possible under the circumstances, the
tender agent will establish the purchase date as long after the date on
which the tender agent gives notice to the holders of bonds affected by
the last put termination as it can subject to the following:
o No advance notice of the purchase date is required if the
tender agent cannot give the advance notice in the exercise of
reasonable diligence.
S-6
o In all events the purchase date will be a business day at
least five days before the last put termination date unless the
tender agent cannot so provide in the exercise of reasonable
diligence provided that the purchase date will be the date set by
the provider if the standby bond purchase agreement provides in
effect that the obligation of the provider to purchase tender
bonds will terminate upon the purchase by the provider of all
tender bonds tendered or deemed tendered pursuant to the last put
termination notice.
For the purposes of this notice, "as soon as practicable" means, with
reference to any act to be performed by the tender agent the business
day on which the tender agent can perform the act in the exercise of
reasonable diligence, and "reasonable diligence" means, with respect to
the tender agent performing any act, performing the act within three
business days, after the tender agent receives a termination notice
from the provider or another notice party.
o The purchase date in connection with a new provider of a financial
facility will be a business day at least 5 days before the sooner to occur of
(i) the effective date of the financial facility and (ii) the expiry date of the
predecessor financial facility.
Mandatory Tender on Expiry Date
o Except as otherwise provided in this subsection, if the tender
agent has not accepted a conforming financial facility in accordance with the
indenture to replace an expiring financial facility on or before the 20th day
before the expiry date of the financial facility, then the tender agent will
give notice to the holders of all modal bonds subject to the financial facility
that their modal bonds are subject to mandatory tender on the purchase date
specified in the notice.
o The situation described above is not applicable with respect to an
expiring financial facility if the Board has given the tender agent the
commitment of the provider of the financial facility as provided in the
paragraphs below.
The commitment is to provide for a conforming
financial facility which is effective on or before the expiry date of
the expiring financial facility.
The commitment is given to the tender agent at least
20 days before the expiry date of the financial facility.
o The situation described above, is not applicable with respect to
an expiring financial facility if notice is given in accordance with the
indenture on or before the last day that notice would be otherwise required to
be given by the indenture with respect to the expiring financial facility, and
the notice states that all the modal bonds subject to the financial facility are
intended to become bonds not required to be covered by a liquidity facility.
Remarketing By Remarketing Agent
The remarketing agent will offer for sale and use its best efforts to
sell on each purchase date all tender bonds and all provider bonds. The
remarketing agent will remarket all provider bonds before remarketing any tender
bonds. The remarketing agent will not sell any tender bonds or provider bonds at
a discount from the principal amount of the bonds.
Draws on Liquidity Facility
As used in this description, "sufficient time" means reasonably
sufficient time in which to make the amounts drawn under a financial facility
available to the securities depository, in accordance with its procedures, for
payment on the dates in respect of which the amounts are being drawn.
On each purchase date, the remarketing agent will inform the tender
agent on or before the time specified by the tender agent as the time necessary
to permit a timely draw under the standby bond purchase agreement of the
S-7
amount received by the remarketing agent as the purchase price of remarketed
bonds, less the purchase price of any bonds owned by the provider of a credit
facility or standby bond purchase agreement which are being remarketed, and will
transfer the amount to the tender agent.
On each purchase date the tender agent will draw on the standby bond
purchase agreement, in accordance with its terms and to the extent of the
availability of amounts under the standby bond purchase agreement, in sufficient
time to have amounts available to the credit of the remarketing fund on the day
of the draw. The terms of the standby bond purchase agreement will control the
time at which the draw is to be made.
The amount of the draw, to the extent of the availability under the
standby bond purchase agreement, will equal the purchase price of all tender
bonds less the amount received by the tender agent as the purchase price of
remarketed tender bonds before the drawing. All tender bonds for which the
tender agent has not received the purchase price in respect of the remarketing
by the time the tender agent reasonably believes it must draw to comply with the
first paragraph, above, will be deemed to have not been remarketed for the
purposes of drawing under the standby bond purchase agreement.
The tender agent will not draw to pay the purchase price of any
provider bonds or any bonds owned by or held for the benefit of the Board.
General Revenues as a Source of Payment of Purchase Price
To the extent that on any purchase date moneys on deposit in the
remarketing fund are not sufficient to pay the purchase price of all tender
bonds due on tender bonds due on the purchase date (other than provider bonds),
the Board will pay to the tender agent before 3:00 p.m. on the purchase date,
general revenues in amount equal to the insufficiency in immediately available
funds at the principal office of the tender agent.
If general revenues are not sufficient to make in full the payment
required above, then the Board will pay to the tender agent all general revenues
then received until the full amount of the payment has been paid to the tender
agent subject to the apportionment rights as may exist under the indenture and
the prior indentures and may hereafter exist under any indenture or agreement
securing parity obligations hereafter issued or incurred to the extent that the
apportionment rights grant no greater rights than are now existing.
Payment of Purchase Price.
Upon the transfer of a tender bond to the tender agent with all
necessary endorsements, the tender agent will pay the purchase price first from
amounts credited to the remarketing fund and second from amounts, if any,
credited to the remarketing special account, to the holder of the tender bond:
o no later than the close of business on the business day of
transfer (but not before the purchase date) if the tender bond
is transferred at or before 3:00 p.m. and
o no later than the close of business on the business day
following the business day of transfer (but not before the
purchase date) if the tender bond is transferred after 3:00
p.m.
Tender of Less than all of Bond.
If less than all of a holder's bond is subject to mandatory tender or
is tendered to the tender agent as an optional tender permitted hereunder, then
upon the transfer of the bond in whole to the tender agent, the Board will
execute (if not already executed) and the tender agent will authenticate and
deliver to the holder, on the day of transfer, a bond or bonds, registered in
the name of the holder, of the same tenor and in the authorized denominations as
specified by the holder as will equal, in the aggregate, the balance of the
holder's bond.
S-8
Redemption of the Bonds
The bonds are subject to optional and mandatory redemption, as
described below.
Optional Redemption of Bonds
----------------------------
Bonds bearing interest in the weekly mode, daily mode or commercial
paper mode, are subject to redemption upon notice given as required in the
indenture in whole on any business day and in part on any interest payment date
at the option of the Board at a redemption price of 100% of the principal amount
of the bonds to be redeemed plus interest accrued to the redemption date.
Mandatory Redemption of Bonds - Sinking Fund Installments
---------------------------------------------------------
The bonds will be subject to redemption in part on each principal
installment date shown below in the amount of the sinking fund installment shown
below for the principal installment date after giving effect to any amounts
credited to the sinking fund installment as a result of the redemption or
purchase of bonds of the maturity at a redemption price of 100% of the principal
amount of the bonds to be redeemed plus interest accrued to the redemption date.
Principal Installment Date Sinking Fund Principal Installment Date Sinking Fund
(March 1,) Installment (March 1,) Installment
-------------------------- ----------------- -------------------------- -----------------
2012 1,035,000 2022 1,635,000
2013 1,095,000 2023 1,710,000
2014 1,135,000 2024 1,790,000
2015 1,190,000 2025 1,875,000
2016 1,245,000 2026 1,960,000
2017 1,305,000 2027 4,760,000
2018 1,365,000 2028 4,985,000
2019 1,425,000 2029 5,225,000
2020 1,490,000 2030 5,475,000
2021 1,565,000 2031 5,735,000
The Board may satisfy any sinking fund installment in whole or in part
by purchasing bonds and delivering the bonds to the trustee for cancellation not
less than 45 days before the principal installment date on which a sinking fund
installment is due, and the principal amount of the bonds will be credited
against a corresponding amount of the sinking fund installment as directed by
the Board.
Notice of Redemption. When bonds, or portions of the bonds, are to be redeemed,
the trustee will give notice to the holders of the bonds in the name of the
Board, of the redemption of the bonds, or portions of the bonds at least 30 days
and not more than 60 days (except as otherwise provided in the indenture with
respect to the defeasance of bonds) before the redemption date.
The notice will specify the bonds to be redeemed, the redemption and
the place or places where amounts due on the redemption will be payable and, if
less than all of the bonds are to be redeemed, the numbers of the bonds to be
redeemed.
The notice of redemption of any bond being redeemed in part will (i)
specify the respective portions of the principal amount of the bonds to be
redeemed and (ii) state that the holder of the bond, upon surrender of the bonds
for redemption, will receive, without cost, in any authorized denomination
specified by the holder not in excess of the aggregate principal amount of the
unredeemed portion of the bond of the same tenor bearing interest at the same
rate and maturing on the same date in the amount of the unredeemed portion of
the bond so surrendered.
S-9
The trustee will give notice of redemption by mailing a copy of the
redemption notice by first class mail to the holder of each bond to be redeemed,
at its address shown in the registry. The trustee's failure to give the notice
by mail, or any defect in the notice mailed to the holder of any bond, will not
affect the validity of the proceedings for the redemption of any other bond.
The Trustee will also try to give notice of any redemption of bonds to
any person who has, on or before the fifteenth day before the date notice of
redemption is mailed to the bondholders, filed a written notice with the trustee
certifying that the person is the beneficial owner of any bonds, requesting the
notice, and stating the address to which the notice is to be sent. Failure to
give notice as provided in this paragraph will not, however, affect the validity
of any proceedings for redemption, or give rise to liability on the part of the
trustee to any person.
Effect of Redemption. If notice has been given in the manner provided in the
indenture, the bonds called for redemption will become due and payable on the
date fixed for the redemption at the applicable redemption price, plus interest
accrued to the date of redemption.
If on the redemption date for any bonds, moneys for the payment of the
redemption price of the bonds, plus interest to accrue to the redemption date,
are held by the trustee so as to be available on the payment date, and if notice
of redemption will be given as stated above, then from and after the redemption
date the bonds called for redemption will cease to bear interest. Otherwise, the
bonds will continue to bear interest until paid at the same rate as they would
have borne if they had not been called for redemption.
If less than all of a bond is called for redemption in a denomination
greater than minimum denomination of the bond, the Board will execute (if not
otherwise executed) is called for redemption and, the trustee will authenticate
and deliver, a bond or bonds in any authorized denomination specified by the
holder not excess of the aggregate principal of the unredeemed portion of the
bond of the same tenor bearing interest at the same rate and maturing on the
same date in the amount of the unredeemed portion a the bond surrendered.
Selection of Bonds to Be Redeemed. Unless required to satisfy maturing sinking
fund installments, maturities of bonds to be selected for redemption will be
selected for redemption in the manner as the Board deems appropriate, and bonds
to be selected for redemption within a maturity when less than the maturity is
to be called for redemption will be selected by the trustee in the manner it
deems fair. Of the bonds to be selected for redemption, the bonds will be
selected in multiples of the minimum authorized denomination of those bonds, and
bonds of denominations of more than the minimum authorized denomination will be
treated as representing the number of bonds obtained by dividing the
denomination of the bond by the minimum authorized denomination, and the bonds
may be selected for redemption in part. If less than all of a term bond, or a
maturity of a term bond, is selected for redemption other than by application of
sinking fund installments, then the principal amount of the portions that are
selected for redemption will be credited to the unsatisfied portions of sinking
fund installments for the maturity of term bonds in the order and in the
amounts, not less than authorized denominations for the term bonds, as directed
by the financial officer directs.
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 the 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
S-10
Exchange, Inc., the American Stock Exchange LLC and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a direct participant of DTC,
either directly or indirectly. The rules applicable to DTC and its direct and
indirect participants are on file with the Securities and Exchange Commission.
Purchases of the bonds under the DTC system must be made by or through
direct participants, which will receive a credit for the bonds on DTC's records.
The ownership interest of each actual purchaser, or "beneficial owner," of each
bond is in turn to be recorded on the direct and indirect participants' records.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the direct or indirect participants through which beneficial
owners entered into the transaction. Transfers of ownership interests in the
bonds are to be accomplished by entries made on the books of DTC's participants
acting on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in the bonds, unless the use
of the book-entry system for the bonds is discontinued.
To facilitate subsequent transfers, all bonds deposited by direct
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other nominee as may be requested by an authorized
representative of DTC. The deposit of bonds with DTC and their registration in
the name of Cede & Co. or such other nominee effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the bonds.
DTC's records reflect only the identity of its direct participants to whose
accounts the securities are credited, which may or may not be the beneficial
owners. DTC's direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to its direct
participants, by its direct participants to its indirect participants, and by
its direct participants and its indirect participants to beneficial owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements which may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
bonds within an issue are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each of its direct participants in that issue to
be redeemed.
Neither DTC nor Cede & Co. (nor such other nominee) will consent or
vote with respect to the bonds. Under its usual procedures, DTC mails an omnibus
proxy to an issuer as soon as possible after the record date. The omnibus proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants to
whose accounts the bonds are credited on the record date (identified in a
listing attached to the omnibus proxy).
Principal and interest payments and payments of purchase price with
respect to the 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 Board
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 Board 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 bond is tendered but not
remarketed, with the result that the bond becomes owned by us, the trustee and
the Board 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 trustee on our behalf, and for
our benefit. When all bonds owned by us have been remarketed, we no longer own
any bonds and
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we have been reinstated in full, the trustee and the bond issuer will take all
actions necessary to return the bonds to the full book-entry system of DTC.
The bond issuer 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 beneficial owners, or that they will do so on a timely basis or
will serve and act in the manner described in this prospectus supplement. The
bond issuer and the 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 bonds or an error or delay relating thereto.
The foregoing description of the procedures and record-keeping with
respect to beneficial ownership interests in the bonds, payment of principal,
interest and other payments on the bonds to DTC's participants or beneficial
owners of the bonds, confirmation and transfer of beneficial ownership interests
in the bonds and other related transactions by and between DTC, DTC's
participants and the beneficial owners of the bonds is based solely on
information provided by DTC. Accordingly, no representations can be made
concerning these matters and neither the DTC participants nor the beneficial
owners should rely on the foregoing information with respect to these 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 trustee and discharging its responsibilities
with respect thereto under applicable law or the Board may terminate
participation in the system of book-entry transfers through DTC or any other
securities depository at any time. If the book-entry system is discontinued,
replacement certificates will be printed and delivered.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS,
WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO 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 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 are limited obligations of the Board, payable solely from
amounts in the bond fund established by the indenture and secured solely by an
irrevocable pledge of certain revenues of the Board, described below. The bonds
are secured on a parity basis with the Board's previously issued $37,700,000
General Revenue Bonds, Series 1995 and the previously issued $11,650,000 General
Revenue Bonds, Series 1997. The 1995 bonds and the 1997 bonds are called the
"prior bonds" in this prospectus supplement and are outstanding as of the date
of this prospectus supplement in the principal amount of $45,230,000. In
addition, the Board has entered into an interest rate swap agreement, dated as
of February 5, 2001 with Lehman Brothers Special Financing Inc. in the notional
amount of $34,370,000 (declining over time), under which the Board is to pay a
fixed rate of 4.62% and receive a variable interest rate on the bonds (subject
to adjustment under certain circumstances.) The obligations of the Board under
the swap agreement are payable from and secured by a lien on General Revenues on
a parity basis with the bonds and the prior bonds.
The bonds are not a general obligation of the Board, the State of
Michigan or any political subdivision of the State and are not secured by faith
and credit of the Board, and neither the credit nor the taxing power of the
State nor any political subdivision of the State will be pledged for the payment
of the bonds.
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Revenues of the Board Pledged to Secure the Bonds
The revenues of the Board pledged to secure the bonds constitute:
o all fees, deposits, charges, receipts and income
from all or any part of the students of Oakland
University, whether activity fees, tuition,
instructional fees, tuition surcharges, general fees,
health fees or other special purpose fees;
o all gross income, revenues and receipts from the
ownership, operation, and control of the Board's
housing, dining and auxiliary facilities system;
o all unrestricted receipts from departmental or
educational activities;
o all grants, gifts, donations and pledges and
receipts from them;
o unrestricted recoveries of indirect costs; and
o unrestricted investment income;
but exclude all of the following:
o student activity fees approved by student
referendum and not recorded as part of current
revenues;
o any deposits required by law or contracts to be
held in escrow;
o any gifts, grants, donations, or pledges
restricted as to use in a manner inconsistent with
payment on the bonds, any obligations issued on a
parity with the bonds;
o appropriations from the State Legislature; and
o up to 5% of general revenues collected annually
from the levy of a special fee or fees established at
some date following delivery of the bonds and
designated by the Board to be excluded from general
revenues.
The pledge of the revenues of the Board used to secure the bonds is
valid against all parties (other than the holders of the prior bonds, which are
secured on a parity basis with the bonds) having claims of any kind, regardless
of notice, and is valid and binding without physical delivery or further act by
the Board.
On or before the first business day before a bond payment date, the
Board will transfer to the bond fund established under the indenture, from the
revenues of the Board pledged to secure the bonds, amounts sufficient to pay the
principal of, premium, if any, and interest due on the bonds. The Board has
covenanted and agreed in the indenture that to the extent that the monies on
deposit in the bond fund are not sufficient to meet the interest or principal
and interest payments coming due, the Board will pay to the trustee for deposit
in the bond fund all revenues of the Board pledged to secure the bonds received
until the amount on deposit in the bond fund is sufficient to pay the principal
of and interest due on the bonds. However, in making the payment over to the
trustee, the revenues of the Board pledged to secure the bonds will be divided
in each fiscal year pro rata between the bond fund and any similar fund for the
payment of any other parity bonds without regard to the existence of any debt
service reserve fund established for any parity bonds, based on the amount of
debt service due in each fiscal year. The revenues of the Board pledged to
secure the bonds, before their deposit with the trustee, may be used as general
operating funds of the Board.
S-13
The Board has irrevocably pledged the revenues of the Board described
above to the payment of the principal of and interest on the bonds. This pledge
of the revenues of the Board, together with the pledge of the revenues of the
Board as security for the payment of the prior bonds and any obligations
subsequently issued on a parity with the bonds, will constitute and be a first
charge or lien against all of the revenues of the Board pledged to secure bonds.
The rights and remedies of the holders of the bonds may be affected by
bankruptcy, insolvency, fraudulent conveyance or other laws affecting creditors'
rights existing now or enacted in the future and by the application of general
principles of equity, including those related to equitable subordination.
THE STANDBY BOND PURCHASE AGREEMENT
The obligations will rank equally with all of our other general
unsecured and unsubordinated obligations. The obligations are not issued under
an indenture. As of the date of this prospectus supplement, we have
approximately $3 billion of obligations currently outstanding, including the
obligations we are issuing under this prospectus supplement.
Owners of the 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
the purchase price for the bonds when we receive an appropriate demand for
payment. Our obligations under the standby bond purchase agreement will be
sufficient to pay a purchase price equal to the principal of the bonds and up to
35 days' interest on the bonds at the maximum rate of 18% 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, unless it is extended or
terminated sooner in accordance with its terms.
The indenture specifies certain circumstances where we must purchase
bonds which a holder tenders for purchase pursuant to an optional or mandatory
tender, which have not been remarketed. These circumstances are summarized under
the headings "Optional Tender of Bonds" and "Mandatory Purchase of Bonds." Under
certain circumstances, we may terminate our obligation to purchase bonds. The
following events would permit termination:
o any portion of the commitment fee for the
standby bond purchase agreement has not been paid when due on
the quarterly payment date or any other amount payable under
the standby bond purchase agreement has not been paid when
due, and in either case, the failure continues for three
business days after notice thereof to the Board;
o the State of Michigan takes any action which
would have a materially adverse effect on the ability of the
Board to comply with the payment and security interest and
lien covenants and obligations under the bonds, the indenture,
the standby bond purchase agreement, the payment agreement,
and all other documents relating to the issuance of the bonds,
or any right or remedy of the company or any owners of the
bonds from time to time to enforce the covenants and
obligations;
o the Board fails to observe or perform any
covenant or agreement contained in the bonds, the indenture,
the standby bond purchase agreement or the payment agreement
(and any amendments, substitutions or modifications thereof),
and, if the failure is the result of a covenant breach which
is capable of being remedied, the failure continues for 90
days following written notice thereof to the Board from us.
However, if the failure (other than a payment default) cannot
be cured or corrected within the 90 day period, it will not
constitute an event of default if the Board institutes
curative or corrective action within the period and diligently
pursues the curative or corrective action until the failure of
performance is cured or corrected, or there has not been at
all times a remarketing agent performing its duties;
S-14
o an event of default has occurred and is
continuing under any of the indenture, the standby bond
purchase agreement, the payment agreement or the remarketing
agreement (and any amendments, substitutions or modifications
of these agreements), as "event of default" is defined in the
applicable document;
o any representation, warranty, certification or
statement made by the Board in the indenture, the standby bond
purchase agreement, the payment agreement or the remarketing
agreement (and any amendments, substitutions or modifications
of these agreements) or in any certificate, financial
statement or other document delivered under those agreements
proves to be incorrect in any material respect when made;
o any default by the Board has occurred and
continues in the payment of principal of or premium, if any,
or interest on any bond, note or other evidence of
indebtedness of the bond issuer, under any "Related
Documents," as defined in the standby bond purchase agreement,
which is senior to, or on parity with, the bonds;
o the Board files a petition in voluntary
bankruptcy for the composition of its affairs or for its
corporate reorganization under any state or federal bankruptcy
or insolvency law, or makes an assignment for the benefit of
creditors, or admits in writing to its insolvency or inability
to pay debts as they mature, or consents in writing to the
appointment of a trustee or receiver for itself;
o a court of competent jurisdiction enters an
order, judgment or decree declaring the Board insolvent, or
adjudging it bankrupt, or appointing a trustee or receiver of
the Board, or approving a petition filed against the Board
seeking reorganization of the Board under any applicable law
or statute of the United States of America or any state, and
the order, judgment or decree is not vacated or set aside or
stayed within 60 days from the date of the entry of the order;
o under the provisions of any other law for the
relief or aid of debtors, any court of competent jurisdiction
assumes custody or control of the Board and the custody or
control is not terminated within 60 days from the date of
assumption of the custody or control;
o any material provision of the indenture, the
standby bond purchase agreement, the payment agreement, the
remarketing agreement and all other documents relating to the
issuance of the bonds, or the bonds (including bonds owned by
us) ceases for any reason whatsoever to be a valid and binding
agreement of the Board, or the Board contests the validity or
enforceability of those agreements; or
o the Board fails to pay when due any amount
payable under any bond (regardless of any waiver of that
failure by the holders of the bonds).
If a termination event happens, we may deliver notice to the Board, the
trustee, 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 30th day following the date of the notice, or if that
date is not a business day, on the next business day. Before the time at which
termination takes effect, the bonds will be subject to mandatory tender for
purchase from the proceeds of a drawing under the 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 Board are described in a separate disclosure
document relating to the bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill our obligations under the 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
S-15
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 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 the borrowing date).
The standby loan agreement will expressly provide that it is not a
guarantee by GE Capital of the bonds or of our obligations under the 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.
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 the rentals.
Where You Can Find More Information Regarding GE Capital
GE Capital files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information which GE Capital files at the SEC's
public reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. GE Capital's SEC filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the SEC at "http://www.sec.gov."
Incorporation of Information Regarding GE Capital
The SEC allows us to "incorporate by reference" information into this
prospectus supplement, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus
supplement, except for any information superseded by information in this
prospectus supplement. This prospectus supplement incorporates by reference the
documents set forth below that GE Capital has previously filed with the SEC.
These documents contain important information about GE Capital, its business and
its finances.
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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 of Financial Guaranty Insurance Company, an affiliate of the company.
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.
S-17
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
$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 on 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 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. The securities
typically include a tender feature that permits broker-dealers to establish
interest rates on a periodic basis which would enable the securities to be
remarketed at par and that provides a secondary market liquidity mechanism 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. If 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 when
certain other events happen. 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, if 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 standby bond purchase agreement.
If an Owner of INFLOs desires a fixed rate of interest not subject to
fluctuation based on the inverse floating rate equation described above, the
Owner may elect to purchase from VRDN holders an amount of VRDNs equal to the
principal amount of INFLOs for which the INFLO Owner desires a fixed rate of
interest. The net effect of the 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 the 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 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 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 the 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 on the occurrence of
certain events of non-payment, default or insolvency on the part of the issuer
or other specified entity. If the obligations of the Company under the standby
purchase agreement or similar contractual agreement terminate, the
4
securities will be subject to a mandatory tender. Before that time, security
holders will have the option to tender their securities, all as set forth in the
applicable Prospectus Supplement.
The above structure is intended to receive the highest ratings from the
rating agencies and to provide public issuers with the lowest cost of financing.
There can be no assurances, however, that the ratings will be maintained.
THE COMPANY
The Company was incorporated in 1990 in the State of Delaware. All
outstanding capital stock of the Company is owned by FGIC Holdings, Inc., a
Delaware corporation.
Unless otherwise specified in a Prospectus Supplement, the business of
the Company consists and will consist of providing liquidity for certain
adjustable and floating rate Securities, issued by municipal authorities or
other issuers, through Liquidity Facilities. The securities are typically
remarketed by registered broker-dealers at par on a periodic basis to establish
the applicable interest rate for the next interest period and to provide a
secondary market liquidity mechanism for security holders desiring to sell their
securities. Pursuant to standby purchase agreements or similar contractual
agreements with issuers of the securities, the Company will be obligated to
purchase unremarketed securities from the holders thereof who voluntarily or
mandatorily tender their Securities for purchase. In order to obtain funds to
purchase the Securities, the Company will enter into one or more standby loan
agreements with Standby Lenders under which the Standby Lenders will be
irrevocably obligated to lend funds as needed to the Company to purchase
Securities as required.
The Company's principal executive offices are located at 115 Broadway,
New York, New York 10006, Telephone No. (212) 312-3000.
THE LIQUIDITY FACILITIES
The Obligations will rank equally with all other general unsecured and
unsubordinated obligations of the Company. The Obligations are not issued
pursuant to an indenture.
Owners of the Securities will be entitled to the benefits and subject
to the terms of the applicable Liquidity Facility as specified in the applicable
Prospectus Supplement. Pursuant to the Liquidity Facilities, the Company will
agree to make available to a specified intermediary the purchase price for the
Securities to which that Liquidity Facility relates when the Company receives an
appropriate demand for payment. 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 that 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 the 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
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Prospectus Supplement
INTRODUCTION S-1
DESCRIPTION OF THE BONDS S-1
BOOK-ENTRY SYSTEM S-10
SECURITY FOR THE BONDS S-12
THE STANDBY BOND PURCHASE AGREEMENT S-14
THE STANDBY LOAN AGREEMENT; GE CAPITAL S-15
LEGAL MATTERS S-17
EXPERTS S-17
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
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$48,000,000
principal amount, plus interest
LIQUIDITY FACILITY OBLIGATIONS
issued by
FGIC Securities
Purchase, Inc.
in support of
Board of Trustees of Oakland University
General Revenue Bonds (Variable Rate Demand),
Series 2001
PROSPECTUS SUPPLEMENT
August 7, 2001
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