-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vc3GEqfltjvSa7wHv39oM0JPcTzQ/U352Vust6AsWEihi5hJqhHwyLqrNdwi9hOP 1FMkrPXcw5zg/tjoYTkaGA== 0000950147-98-000414.txt : 19980525 0000950147-98-000414.hdr.sgml : 19980525 ACCESSION NUMBER: 0000950147-98-000414 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19980522 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINOVA CAPITAL CORP CENTRAL INDEX KEY: 0000043960 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 941278569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: SEC FILE NUMBER: 333-38171 FILM NUMBER: 98630147 BUSINESS ADDRESS: STREET 1: 1850 N CENTRAL AVE STREET 2: PO BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85004-2209 BUSINESS PHONE: 6022074900 MAIL ADDRESS: STREET 1: 1850 N. CENTRAL AVENUE STREET 2: P.O. BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85002-2209 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND FINANCIAL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND LEASING & FINANCIAL CORP DATE OF NAME CHANGE: 19870330 424B2 1 FORM 424B2 Prospectus Supplement FINOVA(R) (To Prospectus dated March 17, 1998) $100,000,000 FINOVA Capital Corporation 1850 N. Central Avenue 6 3/8% Notes Due May 15, 2005 P.O. Box 2209 Phoenix, Arizona 85002-2209 - -------------------------------------------------------------------------------- TERMS OF NOTES * Interest paid on May 15 and * Global security held by The November 15, accruing from the date Depository Trust Company, we issue the Notes. generally. * First interest payment date on * No redemption before maturity. No November 15, 1998. sinking fund. For more details, see "Note Terms" and "Description of the Securities." TERMS OF SALE Underwriting Price to Discounts and Proceeds to Public Commissions FINOVA --------------- --------------- --------------- Per Note 99.897% 0.600% 99.297% Total $99,897,000 $600,000 $99,297,000 - ------------ Accrued interest from the issuance date will be added to the price to the public. The Notes have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that the Prospectus or this Supplement is accurate or complete. Any representation to the contrary is Book entry delivery of Notes expected a criminal offense. on May 26, 1998, subject to conditions. Chase Securities Inc. First Union Capital Markets The date of this Prospectus Supplement is May 20, 1998 FINOVA CAPITAL CORPORATION FINOVA Capital Corporation FINOVA's principal lines of ("FINOVA" or "us") is a financial business are detailed more fully in services company that provides a broad the Prospectus. Those lines include: range of financing and capital market products to mid-size business, Commercial Finance principally in the U.S. We concentrate on lending to midsize businesses and * Business Credit have been in operation for over 43 * Corporate Finance years. * Inventory Finance * Factoring Services * Rediscount Finance FINOVA extends revolving credit facilities, term loans, and equipment Specialty Finance and real estate financing primarily to "middle-market" businesses with * Commercial Equipment Finance financing needs falling generally * Communications Finance between $500,000 and $35 million. * Franchise Finance * Healthcare Finance * Public Finance We operate in 16 specific * Portfolio Services industry or market niches under three * Resort Finance market groups. We selected those * Specialty Real Estate Finance groups because our expertise in * Transportation Finance evaluating the credit-worthiness of prospective customers and our ability Capital Markets to provide value-added services enable us to differentiate ourselves from our * FINOVA Realty Capital competitors. That expertise and * FINOVA Investment Alliance ability also enable us to command product pricing that provides a satisfactory spread over our borrowing costs. NOTE TERMS The following description separate series of securities under supplements the "Description of the the Indenture dated as of March 20, Securities" section in the Prospectus. 1998, between us and The First The Notes are to be issued as a National Bank of Chicago, as Trustee. Maximum Amount: $100,000,000 principal amount Maturity: May 15, 2005 Interest Rate: 6 3/8% per year Interest Payment Dates: May 15 and November 15, accruing from the date we issue the Notes. First interest payment date is November 15, 1998. Interest Calculations: Based on a 360-day year of twelve 30-day months Redemption or Sinking Fund: None Form of Note: One global security, held in the name of The Depository Trust Company, generally Settlement and Payment: Same-day -- immediately available funds Secondary Trading Payments: Same-day -- immediately available funds S-2 UNDERWRITING We have entered into an ing price set forth on the cover page Underwriting Agreement dated May 20, of this Supplement. They may offer the 1998 with Chase Securities Inc. and Notes to certain dealers at that price First Union Capital Markets, a less a concession of 0.350%. The division of Wheat First Securities Underwriters or those dealers may Inc., as Underwriters. The agreement allow a discount of 0.250% on sales to provides that Chase Securities Inc. certain other dealers. After the will purchase from us $60 million initial public offering of the Notes, principal amount of the Notes and the Underwriters may change the public First Union Capital Markets, a offering price, concession to dealers division of Wheat First Securities and discount. Inc., will purchase $40 million of the Notes. The Underwriters will purchase The Notes are a new issue of all of the Notes if any of the Notes securities with no established trading are purchased. They need not purchase market. The Underwriters have advised any Notes unless certain conditions us that they intend to act as market are satisfied. We have agreed to makers for the Notes. They are not indemnify the Underwriters against obligated to do so, however, and they certain liabilities, including civil may discontinue any market making at liabilities under the Securities Act any time without notice. Neither we of 1933, or to contribute to payments nor the Underwriters can assure the which the Underwriters may be required liquidity of any trading market for to make for those liabilities. the Notes. We must also pay the expenses of The Underwriters and their this offering, which are expected to affiliates engage in transactions with be $150,000. Those expenses will or perform services for us in the reduce the proceeds of this offering ordinary course of business. Those received by us. services include investment and commercial banking transactions and The Underwriters advise us that services, including serving as an they propose to offer the Notes to the agent and/or lender on some of our public initially at the offer- credit agreements. S-3 Prospectus FINOVA(R) - ---------- 1850 North Central Avenue P.O. Box 2209 Phoenix, Arizona 85002-2209 THE FINOVA(R) GROUP INC. THE FINOVA(R) CAPITAL CORPORATION By this prospectus, we may offer up to $2,000,000,000 of our: DEBT SECURITIES We will provide the specific terms of COMMON STOCK (including, for The these securities in supplements to FINOVA Group Inc., Rights to Purchase this prospectus. You should read this Junior Participating Preferred Stock) prospectus and the supplements PREFERRED STOCK carefully before you invest. DEPOSITARY SHARES WARRANTS FINOVA Capital Corporation is a wholly We may offer the securities directly owned subsidiary of The FINOVA Group or through underwriters, agents or Inc. dealers. The supplement will describe the terms of that plan of distribution. "Plan of Distribution" below also provides more information on this topic. These securities have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is March 17, 1998 Certain persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities offered under this prospectus. Those transactions include over-allotment, stabilizing transactions, short covering transactions and penalty bids. For a description of those activities, see "Plan of Distribution" in the prospectus. If begun, they may discontinue those activities at any time. WHERE YOU CAN FIND MORE INFORMATION The FINOVA Group Inc. ("FINOVA Group") and FINOVA Capital Corporation ("FINOVA Capital") file annual, quarterly and current reports, proxy and information statements and other * Portions of the Proxy Statements information with the SEC. You may read on Schedule 14A for FINOVA and copy any document we file at the Group's Annual Meeting of SEC's public reference rooms in Shareholders held on May 8, 1997 Washington, D.C., New York, New York and May 14, 1998 (expected to be and Chicago, Illinois. Please call the filed on March 19, 1998) that SEC at 1-800- SEC-0330 for more have been incorporated by information on the public reference reference into our 10-K. rooms and their copy charges. Our SEC filings are also available to the * Quarterly Reports on Form 10-Q public from the SEC's web site at of FINOVA Group and FINOVA http://www.sec.gov. You may also Capital for the quarters ended inspect our SEC reports and other March 31, June 30 and September information at the New York Stock 30, 1997. Exchange, 20 Broad Street, New York, New York 10005. * Current Reports on Form 8-K of FINOVA Group dated January 21, The SEC allows us to "incorporate April 15, July 15, August 14, by reference" the information we file and October 1, 1997 and January with them, which means we can disclose 19, 1998. information to you by referring you to those documents. Information * Current Reports on Form 8-K of incorporated by reference is part of FINOVA Capital dated January 23, this prospectus. Later information April 17, July 16, and October filed with the SEC updates and 15, 1997 and January 20, 1998. supersedes this prospectus. You may request a copy of those We incorporate by reference the filings, other than exhibits, at no documents listed below and any future cost, by contacting us at: filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of Treasurer the Securities Exchange Act of 1934 The FINOVA Group Inc. until this offering is completed: 1850 North Central Avenue P.O. Box 2209 * Annual Reports on Form 10-K of Phoenix, Arizona 85002-2209 FINOVA Group and FINOVA Capital. (602) 207-6900 THE COMPANIES FINOVA Group is a financial We operate in 16 specific services holding company. Through our industry or market niches under three principal subsidiary, FINOVA Capital, market groups. We selected those we provide a broad range of financing groups because our expertise in and capital market products to evaluating the credit-worthiness of mid-size business. We concentrate on prospective customers and our ability lending to midsize businesses. FINOVA to provide value-added services enable Capital has been in operation for over us to differentiate ourselves from our 43 years. competitors. That expertise and ability also enable us to command We extend revolving credit pricing that provides a satisfactory facilities, term loans, and equipment spread over our borrowing costs. and real estate financing primarily to "middle-market" businesses with We seek to maintain a high financing needs falling generally quality portfolio and to minimize between $500,000 and $35 million. non-earning assets and write-offs. We use clearly defined underwriting criteria and 2 stringent portfolio management these companies is generally techniques. We diversify our lending between $5 million and $25 activities geographically and among a million. This line provides range of industries, customers and accounts receivable and loan products. inventory financing and loans secured by equipment and real Due to the diversity of our estate. portfolio, we believe we are better able to manage competitive changes in * Rediscount Finance offers our markets and to withstand the revolving credit facilities to impact of deteriorating economic the independent consumer finance conditions on a regional or national industry including sales, basis. There can be no assurance, automobile, mortgage and premium however, that competitive changes, finance companies. Typical borrowers' performance, economic transaction sizes range from $1 conditions or other factors will not million to $35 million. result in an adverse impact on our results of operations or financial Specialty Finance condition. * Commercial Equipment Finance We generate interest, leasing, offers equipment leases, loans fee and other income through charges and "turnkey" financing to a assessed on outstanding loans, loan broad range of midsize servicing, leasing, brokerage and companies. Specialty markets other activities. Our primary expenses include the corporate aircraft are the costs of funding our loan and and emerging growth technology lease business, including interest industries, primarily paid on debt, provisions for possible biotechnology and electronics. credit losses, marketing expenses, Typical transaction sizes range salaries and employee benefits, from $500,000 to $15 million. servicing and other operating expenses and income taxes. * Communications Finance specializes in term financing to Business Groups advertising and We operate the following subscriber-supported businesses principal lines of business under including radio and television three market groups: stations, cable operators, outdoor advertising firms and Commercial Finance publishers. Typical transaction sizes range from $1 million to * Business Credit offers $40 million. collateral-oriented revolving credit facilities and term loans * Franchise Finance offers for manufacturers, distributors, equipment, real estate and wholesalers and service acquisition financing for companies. Typical transaction operators of established sizes range from $500,000 to $3 franchise concepts. Transaction million. sizes generally range from $500,000 to $15 million. * Corporate Finance provides a full range of cash flow-oriented * Healthcare Finance offers a full and asset-based term and range of working capital, revolving loan products for equipment and real estate manufacturers, wholesalers, financing products for the U.S. distributors, specialty health care industry. retailers and commercial and Transaction sizes typically consumer service businesses. range from $500,000 to $25 Typical transaction sizes range million. from $2 million to $35 million. * Public Finance provides * Inventory Finance provides tax-exempt term financing to inbound and outbound inventory state and local governments, financing, combined non-profit corporations and inventory/accounts receivable entities using industrial lines of credit and purchase revenue or development bonds. order financing for equipment Typical transaction sizes range distributors, value-added from $100,000 to $5 million. resellers and dealers nationwide. Transaction sizes * Portfolio Services provides generally range from $500,000 to customized receivable servicing $30 million. and collections for time-share developers and other generators * Factoring Services offers full of consumer receivables. service factoring and accounts receivable management services * Resort Finance focuses on for entrepreneurial and larger construction, acquisition and firms, primarily in the textile receivables financing of and apparel industries. The annual factored volume of 3 timeshare resorts worldwide as * FINOVA Investment Alliance well as term financing for provides equity and debt established golf resort hotels financing for midsize businesses and receivables funding for in partnership with developers of second home institutional investors and communities. Typical transaction selected fund sponsors. Typical sizes range from $5 million to transaction sizes range from $2 $35 million. million to $15 million. * Specialty Real Estate Finance Both FINOVA Group and FINOVA provides term financing for Capital are Delaware corporations. hotel, anchored retail, office FINOVA Group was incorporated in 1991 and owner-occupied properties. to serve as the successor to The Dial Typical transaction sizes range Corp's financial services businesses. from $5 million to $25 million. Dial transferred those businesses to FINOVA Group in March 1992 in a * Transportation Finance spin-off. Since that time, FINOVA structures equipment loans, Group has increased its total assets leases, acquisition financing from about $2.6 billion at December and leveraged lease equity 31, 1992 to $8.7 billion at December investments for commercial and 31, 1997. Income from continuing cargo airlines worldwide, operations increased from $37 million railroads and operators of other in 1992 to $139 million in 1997. We transportation related believe FINOVA Group ranks among the equipment. Typical transaction largest independent commercial finance sizes range from $5 million to companies in the U.S., based on total $30 million. Through FINOVA assets. The common stock of FINOVA Aircraft Investors LLC, FINOVA Group is traded on the New York Stock also seeks to use its market Exchange. expertise and industry presence to purchase, upgrade and resell FINOVA Capital was incorporated used commercial aircraft. in 1965 and is the successor to a California corporation that was formed Capital Markets in 1954. All of FINOVA Capital's capital stock is owned by FINOVA * FINOVA Realty Capital Group. specializes in providing capital markets-funded commercial real Our principal executive offices estate financing products and are located at 1850 North Central commercial mortgage banking Avenue, P.O. Box 2209, Phoenix, services. Typical transaction Arizona 85002-2209. Our telephone sizes range from $1 million to number is (602) 207-6900. $5 million. 4 SELECTED FINANCIAL INFORMATION The following information was Annual Reports on Form 10-K. The derived from FINOVA Group's financial information is only a summary and You statements. does not provide all of should read our financial statements the information contained in our and other information that we have financial statements, including the filed with the SEC. related notes, and Management's Discussion and Analysis. Those items are part of our
As of and for the Year Ended December 31, -------------------------------------------------------------------- 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- (Dollars in thousands, except per share data) OPERATIONS: Interest earned from financing transactions $ 944,724 $ 797,934 $ 702,116 $ 474,200 $ 255,216 Interest margins earned 455,642 369,105 309,084 227,463 124,847 Provision for credit losses 69,200 41,751 37,568 10,439 5,706 Gains on sale of assets 30,261 12,949 10,889 3,877 5,439 Income from continuing operations 139,098 116,493 93,798 73,770 37,846 Basic earnings from continuing operations per share $ 2.56 $ 2.14 $ 1.72 $ 1.48 $ 0.96 Basic earnings per share $ 2.56 $ 2.15 $ 1.79 $ 1.49 $ 0.95 Basic adjusted weighted average outstanding shares 54,405,000 54,508,000 54,633,000 49,765,000 39,277,000 Diluted earnings from continuing operations per share $ 2.42 $ 2.08 $ 1.69 $ 1.46 $ 0.90 Diluted earnings per share $ 2.42 $ 2.09 $ 1.76 $ 1.47 $ 0.89 Diluted adjusted weighted average shares 59,161,000 56,051,000 55,469,000 50,436,000 40,552,000 Dividend declared per common share $ 0.52 $ 0.46 $ 0.42 $ 0.37 $ 0.34 FINANCIAL POSITION: Investment in financing transactions 8,399,456 7,298,759 6,348,079 5,342,979 2,846,571 Nonaccruing assets 187,356 155,505 143,127 149,046 102,607 Reserve for credit losses 177,088 148,693 129,077 110,903 64,280 Total assets 8,719,840 7,526,734 7,036,514 5,821,343 2,834,322 Total debt 6,764,581 5,850,223 5,649,368 4,573,354 2,079,286 Company-obligated mandatory redeemable convertible preferred securities of subsidiary trust solely holding convertible debentures of FINOVA Group ("TOPrS") 111,550 111,550 -- -- -- Shareowners' equity 1,090,454 929,591 825,184 770,252 503,300
RATIO OF INCOME TO TOTAL FIXED CHARGES
Year Ended December 31, ------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- FINOVA Group 1.54x 1.50x 1.44x 1.58x 1.53x FINOVA Capital 1.54x 1.50x 1.44x 1.58x 1.50x
RATIO OF INCOME TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Year Ended December 31, ------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- FINOVA Group 1.52x 1.50x 1.44x 1.58x 1.50x FINOVA Capital 1.54x 1.50x 1.44x 1.58x 1.46x
5 Variations in interest rates generally continuing operations before income do not have a substantial impact on taxes plus fixed charges. Fixed the ratio because fixed-rate and charges consist of interest and floating-rate assets are generally related debt expense, and a portion of matched with liabilities of similar rental expense determined to be rate and term. Income available for representative of interest. fixed charges, for purposes of computing the above ratios, consists of income from SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this * Actions of our competitors and prospectus and any supplements are our ability to respond to those "forward-looking," in that they do not actions. FINOVA seeks to remain discuss historical fact but instead competitive without sacrificing note future expectations, projections, prudent lending standards. Doing intentions or other items relating to business under those standards the future. These forward-looking becomes more difficult, however, statements include those made in when competitors offer financing documents incorporated in this with less stringent criteria. We prospectus by reference. seek to maintain credit quality at the risk of growth in assets, Forward-looking statements are if necessary. subject to known and unknown risks, uncertainties and other factors that * The cost of our capital. That may cause FINOVA's actual results or cost depends on many factors, performance to differ materially from some of which are beyond our those contemplated by the control, such as our portfolio forward-looking statements. Many of quality, ratings, prospects and those factors are noted in conjunction outlook. with the forward-looking statements in the text. Other important factors that * Changes in government could cause actual results to differ regulations, tax rates and include: similar matters. For example, government regulations could * The results of our efforts to significantly increase the cost implement FINOVA's business of doing business or could strategy. Failure to fully eliminate certain tax advantages implement our business strategy of some of FINOVA's financing might result in decreased market products. penetration, adverse effects on results of operations and other * Other risks detailed in our adverse results. other SEC reports or filings. * The effect of economic We do not promise to update conditions and the performance forward-looking information to reflect of our borrowers. Economic actual results or changes in conditions in general or in assumptions or other factors that particular market segments could could affect those statements. impact the ability of FINOVA's borrowers to operate or expand their businesses, which might result in decreased performance for repayment of their obligations or reduce demand for additional financing needs. USE OF PROCEEDS We intend to use the net proceeds financing transactions and capital from the sale of the securities for expenditures. We will describe in the general corporate purposes. Those supplement any proposed use of purposes include the repayment or proceeds other than for general refinancing of debt, acquisitions in corporate purposes. the ordinary course of business, working capital, investment in 6 DESCRIPTION OF DEBT SECURITIES Debt Securities * FINOVA Capital may discharge the debt issued in any series at any The following summary applies time by depositing sufficient only to the debt securities of FINOVA funds with the Trustee to pay Capital. If we issue debt securities the obligations when due. All of FINOVA Group, we will describe amounts due to you on the debt those securities and the indenture would be paid by the Trustee under which they are issued in the from the deposited funds. applicable supplement. * If FINOVA Capital fails to meet The debt securities of FINOVA these obligations on the debt, Capital will be issued under an it will be in default. indenture (the "Indenture") between FINOVA Capital and one or more U.S. Events of Default banking institutions (a "Trustee"). * Principal not paid when due The Indenture may but need not have separate Trustees for senior and * Sinking fund payment not made subordinated debt. when due The following summary of certain * Failure to pay interest for provisions of the Indenture is not 30 days after due complete. You should look at the Indenture that is filed as an exhibit * Covenants not performed for to the Registration Statement. To 90 days after notice obtain a copy of the Indenture, see "Where You Can Find More Information" * Acceleration of at least on page 2. $15.0 million in principal amount of other debt not All capitalized terms have the rescinded in 10 days after meanings specified in the Indenture. notice General Indenture Provisions that * Bankruptcy, insolvency or Apply to Senior and Subordinated Debt other similar event * The Indenture does not limit the * Any other event of default in amount of debt that FINOVA the Indenture Capital may issue nor provide holders any protection should * The Indenture gives you the there be a highly leveraged following remedy if an Event of transaction involving our Default occurs. company. Remedy * If FINOVA Capital redeems debt * The Trustee or holders of 25% which is convertible into its of the principal amount capital stock or other outstanding in a series may securities, your right to declare principal immediately convert that debt into capital payable. However, a majority stock or other securities will in principal amount may expire on the redemption date. rescind this action. * The Indenture allows FINOVA General Capital to merge or to The debt securities of FINOVA consolidate with another Group and FINOVA Capital offered by company, or sell all or this prospectus will be limited to substantially all of its assets $2.0 billion principal amount. The to another company. If these Indenture does not limit the amount of events occur, the other company debt securities FINOVA Capital could will be required to assume offer under it. FINOVA Capital can FINOVA Capital's issue debt securities in one or more responsibilities on the debt, series, in each case as authorized by and FINOVA Capital will be us from time to time. Each series may released from all liabilities differ as to its terms. The debt and obligations. securities will be FINOVA Capital's unsecured general obligations and may * The Indenture provides that or may not be subordinated to FINOVA holders of a majority of the Capital's other general total principal amount of the debt outstanding in any series may vote to change our obligations or your rights concerning that series of debt. But to change the payment of principal or interest, every holder in that series must consent. 7 indebtedness. Those that are not issue debt securities only in subordinated are called "senior debt denominations of $1,000 or integral securities." The others are multiples of that amount, unless the "subordinated debt securities." supplement states otherwise. The supplement will address the Global Securities following terms of the debt In General. Debt securities in securities: global form will be deposited with or on behalf of a depositary. Global * Their title. securities are represented by one or more global certificates for the * Any limits on the principal series registered in the name of the amounts to be issued. depositary or its nominee. Debt securities in global form may not be * The dates on which the principal transferred except as a whole among is payable. the depositary, a nominee of or a successor to the depositary and any * The rates (which may be fixed or nominee of that successor. Unless variable) at which they shall otherwise identified in the bear interest, or the method for supplement, the depositary will be The determining rates. Depository Trust Company ("DTC"). * The dates from which the No Depositary or Global interest will accrue and will be Securities. If a depositary for a payable, or the method of series is unwilling or unable to determining those dates, and any continue as depositary, and a record dates for the payments successor is not appointed by us due. within 90 days, we will issue debt securities of that series in * Any provisions for redemption, definitive form in exchange for the conversion or exchange, at our global security or securities of that option or otherwise, including series. We also may determine at any the periods, prices and terms of time in our discretion not to use redemption or conversion. global securities for any series. In that event, we will issue debt * Any sinking fund or similar securities in definitive form. provisions, whether mandatory or at the holder's option, along Ownership of the Global with the periods, prices and Securities; Beneficial Ownership. So terms of redemption, purchase or long as the depositary or its nominee repayment. is the registered owner of a global security, that entity will be the sole * The amount or percentage payable holder of the debt securities if we accelerate their maturity, represented by that instrument. The if other than the principal Trustee and we are only required to amount. treat the depositary or its nominee as the legal owner of those securities * Any changes to the events of for all purposes under the Indenture. default or covenants set forth in the Indenture. Each actual purchaser of debt securities represented by a global * The terms of subordination, if security (a "beneficial owner") will any. not be entitled to receive physical delivery of certificated securities, * Whether the series can be will not be considered the holder of reopened. those securities for any purpose under the Indenture, and will not be able to * Any other terms consistent with transfer or exchange the global the Indenture. securities, unless this prospectus or the supplement provide to the We may authorize and determine contrary. As a result, each beneficial the terms of a series of debt owner must rely on the procedures of securities by resolution of our board the depositary to exercise any rights of directors or one of its committees of a holder under the Indenture. In or through a supplemental Indenture. addition, if the beneficial owner is not a direct or indirect participant Form of Debt Securities in the depositary (each a The debt securities will be "participant") the beneficial owner issued in registered form. Unless the must rely on the procedures of the supplement otherwise provides, debt participant through which it owns its securities will be issued as one or beneficial interest in the global more global securities. This means security. that we will not issue certificates to each holder. We generally will issue The laws of some jurisdictions global securities in the total require that certain purchasers of principal amount of the debt securities take physical delivery of securities distributed in that series. the securities in certificated form. We will Those 8 laws and the above conditions may purchases of the debt securities must impair the ability to transfer be made by or through direct beneficial interests in the global participants, which will receive a securities. credit for the securities on the depositary's records. The beneficial The Depository Trust Company owner's ownership interest is in turn The following is based on to be recorded on the direct and information furnished by DTC and indirect participants' records. applies to the extent it is the Beneficial owners will not receive depositary, unless otherwise stated in written confirmations from the a supplement: depositary of their purchase, but they are expected to receive them, along Registered Owner. The debt with periodic statements of their securities will be issued as fully holdings, from the direct or indirect registered securities in the name of participants through whom they entered Cede & Co. (DTC's partnership into the transaction. nominee). One fully registered global security generally will be issued for Transfers of interests in the each $200 million principal amount of global securities will be made on the debt securities. The Trustee will books of the participants on behalf of deposit the global securities with the the beneficial owners. Certificates depositary. The deposit of the global representing the interest of the securities with DTC and its beneficial owners in the securities registration in the name of Cede & Co. will not be issued unless the use of will not change the beneficial global securities is suspended, as ownership of the securities. provided above. DTC Organization. DTC is a The depositary has no knowledge limited-purpose trust company of the actual beneficial owners of the organized under the New York Banking global securities. Its records only Law, a "banking organization" within reflect the identity of the direct the meaning of that law, a member of participants as owners of the the Federal Reserve System, a securities. Those participants may or "clearing corporation" within the may not be the beneficial owners. meaning of the New York Uniform Participants are responsible for Commercial Code and a "clearing keeping account of their holdings on agency" registered under the behalf of their customers. provisions of Section 17A of the Securities Exchange Act of 1934, as Notices Among the Depositary, amended. Participants and Beneficial Owners. Notices and other communications by DTC is owned by a number of its the depositary, its participants and direct participants and by the New the beneficial owners will be governed York Stock Exchange, Inc., the by arrangements among them, subject to American Stock Exchange, Inc. and the any legal requirements in effect. National Association of Securities Dealers, Inc. Direct participants Voting Procedures. Neither DTC include securities brokers and nor Cede & Co. will give consents for dealers, banks, trust companies, or vote the global securities. The clearing corporations and certain depositary generally mails an omnibus other organizations who directly proxy to us just after the applicable participate in DTC (each a "direct record date. That proxy assigns Cede & participant"). Other entities Co.'s consenting or voting rights to ("indirect participants") may access the direct participants to whose DTC's system by clearing transactions accounts the securities are credited through or maintaining a custodial at that time. relationship with direct participants, either directly or indirectly. The Payments. Principal and interest rules applicable to DTC and its payments made by us will be delivered participants are on file with the SEC. to the depositary. DTC's practice is to credit direct participants' DTC Activities. DTC holds accounts on the applicable payment securities that its participants date unless it has reason to believe deposit with it. DTC also facilitates it will not receive payment on that the settlement among participants of date. Payments by participants to securities transactions, such as beneficial owners will be governed by transfers and pledges, in deposited standing instructions and customary securities through electronic practices, as is the case with computerized book-entry changes in securities held for customers in participant's accounts. Doing so bearer form or registered in "street eliminates the need for physical name." Those payments will be the movement of securities certificates. responsibility of that participant, not the depositary, the Trustee or us, Participants' Records. Except as subject to any legal requirements in otherwise provided in this prospectus effect at that time. or a supplement, We are responsible for payment of principal, interest and premium, if any, to the Trustee, who is 9 responsible to pay it to the applicable only to senior debt depositary. The depositary is securities. Those terms are determined responsible for disbursing those in accordance with generally accepted payments to direct participants. The accounting principles, unless participants are responsible for specifically stated otherwise. disbursing payments to the beneficial owners. "Consolidated Net Tangible Assets" means the total of all assets Transfer or Exchange of Securities reflected on the most recent quarterly You may transfer or exchange the or annual consolidated balance sheet debt securities (other than a global of FINOVA Capital and its consolidated security) without service charge at subsidiaries, at their net book values our office designated for that purpose (after deducting related depreciation, or at the office of any transfer agent depletion, amortization and all other or security registrar identified under valuation reserves), less the the Indenture. You must execute a aggregate of its current liabilities proper form of transfer and pay any and those of its consolidated taxes and other governmental charges Subsidiaries reflected on that balance resulting from that action. You may sheet. We exclude from assets transfer or exchange the debt goodwill, unamortized debt discount securities (other than a global and all other like intangible assets. security) initially at our offices at For purposes of this definition, 1850 North Central Avenue, P.O. Box "current liabilities" include all 2209, Phoenix, Arizona 85002-2209 or indebtedness for money borrowed, at our office or agency established incurred, issued, assumed or for that purpose in New York, New guaranteed by FINOVA Capital and its York. consolidated subsidiaries, and other payables and accruals, in each case Debt securities in the several payable on demand or due within one denominations will be interchangeable year of the date of determination, but without service charge, but we may exclude any portion of long-term debt require payment to cover taxes and maturing within one year of that date other governmental charges. The of determination, all as reflected on Trustee initially will act as the consolidated balance sheet of authenticating agent under the FINOVA Capital and its consolidated Indenture. subsidiaries. Same-Day Settlement and Payment "Lien" means any lien, charge, Unless the supplement otherwise claim, security interest, pledge, provides, the debt securities will be hypothecation, right of another under settled in immediately available any conditional sale or other title funds. We will make payments of retention agreement or any other principal and interest in immediately encumbrance affecting title to available funds. property. Lien includes any lease under a sale and leaseback Payment and Paying Agent arrangement. If the debt securities are not held in global form, we will make "Subsidiary" means any payment of principal and premium, if corporation a majority of the Voting any, against surrender of the debt Stock of which is owned, directly or securities at the principal office of indirectly, by FINOVA Capital or by the Trustee in New York, New York. We one or more Subsidiaries or by FINOVA will pay any installment of interest Capital and one or more Subsidiaries. on debt securities to the record holder on the record date for that "Restricted Subsidiary" is any interest. We can make those payments Subsidiary a majority of the Voting through the Trustee, as noted above, Stock of which is owned directly by by check mailed by first class mail to FINOVA Capital or by one or more the registered holders at their Restricted Subsidiaries, or by FINOVA registered address or by wire transfer Capital and one or more Restricted to an eligible account of the Subsidiaries and which is designated registered holder. as a Restricted Subsidiary by resolution of FINOVA Capital's board If any payments of principal, of directors. premium or interest are not claimed within three years of the date the "Unrestricted Subsidiary" means payment became due, those funds are to any Subsidiary other than a Restricted be repaid to us. The beneficial owners Subsidiary. of those interests thereafter will look only to us for payment for those "Voting Stock" means stock of any amounts. class or classes (however designated) having ordinary voting power for the Certain Indenture Provisions election of a majority of the members Certain Definitions. The of the board of directors (or any following is a summary of certain governing body) of that corporation, terms defined in the Indenture and other than stock having that power only by reason of the happening of a contingency. 10 Limitation on Liens. The * Liens on property or securities Indenture provides that FINOVA Capital existing when an entity becomes will not create, assume, incur or a Restricted Subsidiary or allow to be created, assumed or merges with FINOVA Capital or a incurred or to exist any Lien on any Restricted Subsidiary, provided of its properties unless FINOVA they are not incurred in Capital secures the senior debt anticipation of those events. securities equally and ratably with any other obligation secured in that * Liens on property or securities manner. The Indenture contains the existing at the time of following exceptions to that acquisition. prohibition: * Liens in a total amount less * Leases of property in the than $25 million, excluding ordinary course of business or Liens covered by the exceptions if the property is not needed in noted above. the operation of our business. * Liens securing indebtedness of * Purchase money security FINOVA Capital or a Restricted interests that are non-recourse Subsidiary provided those and to FINOVA Capital or its similar Liens on indebtedness do Restricted Subsidiaries except not exceed 10% of Consolidated to the extent of the property so Net Tangible Assets, excluding acquired or any proceeds from certain preexisting indebtedness that property, or both. and those Liens permitted above. * Governmental deposits or Merger, Consolidation and Sale of security as a condition to the Assets. FINOVA Capital cannot merge transaction of business or the with or into, consolidate with, sell exercise of a privilege, or to or lease all or substantially all of maintain self-insurance, or to its assets to or purchase all or participate in any fund in substantially all the assets of connection with worker's another corporation unless it will be compensation, unemployment the surviving corporation or the insurance, pensions, social successor is incorporated in the U.S. security or for appeal bonds. and assumes all of FINOVA Capital's obligations under the debt securities * Liens for taxes or assessments and the Indenture, provided, and if not yet due or which are payable immediately after that transaction, no without a penalty or are being default will exist. A purchase by a contested in good faith and with Subsidiary of all or substantially all adequate reserves, so long as of the assets of another corporation foreclosure or similar will not be a purchase of those assets proceedings are not commenced. by FINOVA Capital. If, however, any of the transactions noted in this * Judgment Liens that have not paragraph occurs and results in a Lien remained undischarged or on any of FINOVA Capital's properties unstayed for more than six (except as permitted above), FINOVA months. Capital must simultaneously secure the senior debt securities equally and * Incidental or undetermined ratably with the debt secured by that construction, mechanics or Lien. similar Liens arising in the ordinary course of business Modification of the Indenture. relating to obligations not The Trustee and FINOVA Capital may overdue or which are being amend the Indenture without consent of contested by FINOVA Capital or a the holders of debt securities to do Restricted Subsidiary in good certain things, such as establishing faith and deposits for releases the form and terms of any series of of such Liens. debt securities. FINOVA Capital must obtain consent of holders of at least * Zoning restrictions, licenses, two-thirds of the outstanding debt easements and similar securities affected by a change to encumbrances or defects if amend the terms of the Indenture or immaterial. any supplemental indenture or the rights of the holders of those debt * Other Liens immaterial in the securities. aggregate incidental to FINOVA Capital's or the Restricted Unanimous consent is required for Subsidiary's business or changes to extend the fixed maturity property, other than for of any debt securities, reduce the indebtedness. principal, redemption premium or rate of interest, extend the time of * Banker's liens and set off payment of interest, change the form rights in the ordinary course of of currency, limit the right to sue business. * Leasehold or purchase rights, exercisable for fair consideration, arising in the ordinary course of business. 11 for payment on or after maturity of compensation and expenses incurred out the debt securities, adversely affect of any sums held or received by it the right, if any, to convert or before making any payments to the exchange the debt securities or holders of the debt securities of the adversely affect the subordination defaulted series. provisions, if any. Unanimous consent is also required to reduce the level The right of any holders of debt of consents needed to approve any such securities of a series to commence an change. The Trustee must consent to action for any remedy is subject to changes modifying its rights, duties certain conditions, including the or immunities. requirement that the holders of at least 25% of that series request that Defaults. Events of default under the Trustee take such action, and the Indenture for any series are: offer reasonable indemnity to the Trustee against its liabilities * Failure for 30 days to pay incurred in doing so. interest on any debt securities of that series. Defeasance FINOVA Capital may defease the * Failure to pay principal (other debt securities of a series, meaning than sinking fund redemptions) it would satisfy its duties under that or premium, if any, on debt series before maturity. It may do so securities of that series. by depositing with the Trustee, in trust for the benefit of the holders, * Failure for 30 days to pay any either enough funds to pay, or direct sinking fund installment on that U.S. government obligations that, series. together with the income of those obligations (without considering any * Violation of a covenant under reinvestment), will be sufficient to the Indenture pertaining to that pay, the obligation of that series, series that persists for at including principal, premium, if any, least 90 days after FINOVA and interest. Certain other conditions Capital is notified by the must be met before it may do so. Trustee or the holders of 25% of FINOVA Capital must deliver an opinion the series. of counsel that the holders of that series will have no Federal income tax * Default in other instruments or consequences as a result of that under any other series of debt deposit. securities resulting in acceleration of indebtedness Subordination over $15 million, unless that The terms and conditions of any default is rescinded or subordination of subordinated debt discharged within 10 days after securities to other indebtedness of written notice by the Trustee or FINOVA Capital will be described in the holders of 10% of that the supplement relating to the series. subordinated debt securities. The terms will include a description of * Bankruptcy, insolvency or the indebtedness ranking senior to the similar event. subordinated debt securities, the restrictions on payments to the * Any other event of default with holders of the subordinated debt respect to the debt securities securities while a default exists with of that series. respect to senior indebtedness, any restrictions on payments to the If an event of default occurs and holders of the subordinated debt continues, the Trustee or the holders securities following an event of of at least 25% of the series may default and provisions requiring declare those debt securities due and holders of the subordinated debt payable. FINOVA Capital is required to securities to remit certain payments certify to the Trustee annually as to to holders of senior indebtedness. its compliance with the Indenture. Because of the subordination, if Holders of a majority of the FINOVA Capital becomes insolvent, principal of a series may control holders of the subordinated debt certain actions of the Trustee and may securities may recover less, ratably, waive past defaults for that series. than other creditors of FINOVA Except as provided in the Indenture, Capital, including holders of senior the Trustee will not be under any indebtedness. obligation to exercise any of the rights or powers vested in it by the Conversion Indenture at the request, order or Debt securities may be direction of any holder unless one or convertible into or exchangeable for more of them shall have offered common stock, preferred stock, reasonable indemnity to the Trustee. If an event of default occurs and is continuing, the Trustee may reimburse itself for its reasonable 12 other debt securities, warrants or Concerning the Trustee other of securities of FINOVA Capital, The Trustee may, but need not be, or securities of any other issuer or one of the banks in one of FINOVA obligor. Capital's credit agreements and from time to time may perform other banking, trust or related services on behalf of FINOVA Capital or our customers. DESCRIPTION OF CAPITAL STOCK The following summary of certain our preferred stock, if any. The provisions of the common stock, the holders of common stock do not have preferred stock, the junior preemptive rights to subscribe for or participating preferred stock (the purchase any shares of capital stock "Junior Preferred Stock") and the or other securities of FINOVA Group. rights to purchase the Junior Preferred Stock (the "Rights") of Preferred Stock FINOVA Group is not complete. You Under FINOVA Group's certificate should refer to the certificate of of incorporation, the board is incorporation and bylaws of FINOVA authorized, without stockholder Group, as amended, FINOVA Group's action, to issue preferred stock in certificate of designations for the one or more series, with the Junior Preferred Stock and the Rights designations, powers, preferences, Agreement dated as of February 15, rights, qualifications, limitations 1992, as amended and restated as of and restrictions as the board September 14, 1995 (the "Rights determines. Thus, the board, without Agreement"), between FINOVA Group and stockholder approval, could authorize Harris Trust & Savings Bank, as the issuance of preferred stock with successor Rights Agent. To obtain voting, conversion and other rights copies of those documents, see "Where that could adversely affect the voting You Can Find More Information" on page power and other rights of the holders 2. If we issue capital stock of FINOVA of the common stock or that could make Capital, we will describe those it more difficult for another company securities in the applicable to enter into certain business supplement. combinations with FINOVA Group. See "-- Certain Other Provisions of the FINOVA Group is authorized by its Certificate of Incorporation, the certificate of incorporation to issue Bylaws and Delaware Law -- Preferred 105,000,000 shares of capital stock, Stock" below. consisting of 5,000,000 shares of preferred stock, par value $.01 per Shareholder Rights Plan share, and 100,000,000 shares of In 1992, FINOVA Group issued one common stock, par value $.01 per Right for each outstanding share of share. As of October 3, 1997, there common stock. FINOVA Group has and were 54,441,678 shares of common stock will continue to issue one Right with outstanding (excluding 2,401,728 each newly issued share of its common treasury shares held by FINOVA Group) stock (including stock issued on and no shares of preferred stock conversion of preferred securities). outstanding. However, FINOVA Group has The obligation to continue to issue authorized 600,000 shares of Junior the Rights, however, will terminate on Preferred Stock which have been the expiration, exchange or redemption reserved for issuance on the exercise of the Rights. of the Rights. Each Right entitles the registered holder to purchase from Common Stock FINOVA Group 1/200th of a share of the The holders of the common stock Junior Preferred Stock. The purchase are entitled to one vote per share. price is $67.50 per 1/200th of a FINOVA Group's certificate of share, subject to adjustment under incorporation does not provide for certain circumstances. cumulative voting in the election of directors. The board may declare The Rights will trade only with dividends on the common stock in its the common stock and FINOVA Group will discretion, if funds are legally not issue separate certificates for available for those purposes. On the Rights until the "Rights liquidation, common stockholders are Distribution Date." That date occurs entitled to receive pro rata any on the first to occur of the following remaining assets of FINOVA Group, events: after we satisfy or provide for the satisfaction of all liabilities as well as obligations on 13 * 10 days after a public the tender or exchange offer, and the announcement (the "Share consideration is in the same form as Acquisition Date") that a person that paid in the tender or exchange or group of persons acting offer. If the requirements of this together has become the exception are met, then the Rights beneficial owner of at least 20% will expire. or more of FINOVA Group's common stock, directly or indirectly Exchange of Rights. After a (becoming an "Acquiring person or group becomes an Acquiring Person"), or Person but before the Acquiring Person acquires at least half of the * 10 business days after the start outstanding common stock, our board or announcement of an intention may exchange all or some of the Rights to make a tender offer or at an exchange ratio of one share of exchange offer that would result common stock for 1/200th of a share of in a person or group acting Junior Preferred Stock per Right, together beneficially owning 20% subject to adjustment. or more of FINOVA Group's common stock, directly or indirectly. Redemption of Rights. We may The board, however, may extend redeem all the Rights, but not some of that 10 business day deadline them, for $.005 per Right at any time prior to the time the person or before the earlier of 15 days after group becomes an Acquiring the Share Acquisition Date or the Person. expiration date noted above. The board may determine the conditions, terms The Rights may not be exercised and effective date for the redemption. until the Rights Distribution Date. We may pay the redemption price in The Rights will expire on February 28, cash, common stock or any other method 2002 unless we extend that date or, selected by the board. Upon unless we redeem or exchange the redemption, the right to exercise the Rights before then. Rights will terminate and the holders will only have the right to receive The value of each 1/200th the redemption price. interest in a share of Junior Preferred Stock is intended to No Rights as a Stockholder. approximate the value of one share of Rights holders, as Rights holders, FINOVA Group common stock, due to the have no independent rights as dividend, liquidation and voting stockholders of FINOVA Group, rights of the Junior Preferred Stock, including the right to vote or to although there can be no assurance the receive dividends, until the Rights value will be the same. are exercised. How the Rights Work. If a person Antitakeover Effects. The Rights or group becomes an Acquiring Person, have certain antitakeover effects. The their Rights become void. The other Rights will substantially dilute the Rights holders will have the right to ownership interest in our shares of exercise their Rights, at the then any Acquiring Person. That dilution current exercise price, for FINOVA would impair the ability of the Group common stock having a market Acquiring Person to change the value of two times the exercise price composition of our board. It also of the Right. That right to purchase, would impact its ability to acquire however, will not exist if the Rights FINOVA Group on terms not approved by Distribution Date is due to a tender our board, including through a tender or exchange offer for all of FINOVA offer at a premium to the market Group's common stock and the price, other than through an offer independent members of our board conditioned on a substantial number of determine that the offer is at a fair Rights being acquired. The Rights price, on fair terms and is otherwise should not interfere with any merger in the best interests of FINOVA Group or business combination approved by and its stockholders. the board, since we may redeem the Rights before they become exercisable. The other Rights holders also will have the same exercise rights Junior Preferred Stock Not described above if, after a person or Registered. The Junior Preferred Stock group becomes an Acquiring Person, is not registered with the SEC or any FINOVA Group is acquired in a merger other securities administrator. If the or business combination or at least Rights become exercisable, we intend half of our total assets and earning to register with the SEC the Junior power are sold. The exception is the Preferred Stock exchangeable for the same as the one noted in the above Rights. paragraph, provided that the price offered to the shareholders for each share of common stock is not less than that paid in 14 Certain Other Provisions of the The classification provisions Certificate of Incorporation, the also could discourage a third party Bylaws and Delaware Law from initiating a proxy contest, tender offer or other attempt to FINOVA Group's certificate of obtain control of FINOVA Group, even incorporation and bylaws contain though an attempt might be beneficial certain provisions that could make to FINOVA Group and its stockholders. more difficult our acquisition by The classification of the board thus means of a tender offer, a proxy increases the likelihood that contest or otherwise. This description incumbent directors will retain their is only a summary and does not provide positions. In addition, because the all the information contained in classification provisions may FINOVA Group's certificate of discourage accumulations of large incorporation and bylaws. To obtain blocks of FINOVA Group's stock by copies of these documents, see "Where purchasers whose objective is to take You Can Find More Information" on page control of FINOVA Group and remove a 2. majority of the board, the classification of the board could Delaware law permits a reduce the likelihood of fluctuations corporation to eliminate or limit the in the market price of the common personal liability of its directors to stock that might result from the corporation or to any of its accumulations of large blocks. stockholders for monetary damages for Accordingly, stockholders could be a breach of fiduciary duty as a deprived of certain opportunities to director, except (i) for breach of the sell their shares of common stock at a director's duty of loyalty, (ii) for higher market price than otherwise acts or omissions not in good faith or might be the case. which involve intentional misconduct or a knowing violation of law, (iii) Number of Directors; Removal; for certain unlawful dividends and Filling Vacancies. FINOVA Group's stock purchases and redemptions or certificate of incorporation provides (iv) for any transaction from which that, subject to any rights of the director derived an improper preferred stockholders to elect personal benefit. FINOVA Group's additional directors under specified certificate of incorporation provides circumstances, the number of directors that no director will be personally will be fixed in the manner provided liable to FINOVA Group or its in the bylaws. FINOVA Group's bylaws stockholders for monetary damages for provide that, subject to any rights of any breach of his or her fiduciary holders of preferred stock to elect duty as a director, except as provided directors under specified by Delaware law. circumstances, the number of directors will be fixed from time to time Board of Directors. FINOVA exclusively by directors constituting Group's certificate of incorporation a majority of the total number of and bylaws divide the board into three directors that FINOVA Group would have classes of directors, with the classes if there were no vacancies on the to be as nearly equal in number as board, but must consist of between 3 possible. The stockholders elect one and 17 directors. class of directors each year for a three-year term. In addition, FINOVA Group's bylaws provide that, subject to any The classification of directors rights of preferred stockholders, and makes it more difficult for unless the board otherwise determines, stockholders to change the composition any vacancies will be filled only by of the board. At least two annual the affirmative vote of a majority of meetings of stockholders, instead of the remaining directors, though less one, generally will be required to than a quorum. Accordingly, absent an change a majority of the board. That amendment to the bylaws, the board delay may help ensure that FINOVA could prevent any stockholder from Group's directors, if confronted by a enlarging the board and filling the proxy contest, tender or exchange new directorships with that offer or extraordinary corporate stockholder's own nominees. transaction, would have sufficient time to review the proposal as well as Under Delaware law, unless any available alternatives to the otherwise provided in the certificate proposal and to act in what they of incorporation, directors serving on believe to be the best interest of the a classified board may only be removed stockholders. The classification by the stockholders for cause. In provisions apply to every election of addition, FINOVA Group's certificate directors, regardless of whether a of incorporation and bylaws provide change in the composition of the board that directors may be removed only for would be beneficial to FINOVA Group cause and only upon the affirmative and its stockholders and whether or vote of holders of at least 80% of the not a majority of the stockholders voting power of all the then believe that such a change is desirable. 15 outstanding shares of stock entitled than 20 days or delayed by more than to vote generally in the election of 70 days from that anniversary date, directors, voting together as a single then we must receive the notice class. between 90 days before the meeting and the later of the 70th day before the Stockholder Action by Written meeting or 10 days after the meeting Consent; Special Meetings. date is first publicly announced. Stockholders of FINOVA Group must act only through an annual or special If the board increases the number meeting. Stockholders cannot act by of directors and if we have not written consent in lieu of a meeting. publicly announced nominees for each Only the Chairman or a majority of the open position within 80 days before whole board of FINOVA Group may call a the first anniversary of the prior special meeting. Stockholders of year's annual meeting, stockholders FINOVA Group are not able to call a may nominate directors for the new special meeting to require that the position, but only those newly created board do so. At a special meeting, positions, if FINOVA Group's Secretary stockholders may consider only the receives the notice no later than 10 business specified in the notice of days following public announcement of meeting given by FINOVA Group. that change. Preferred stockholders may be given different rights from those noted Stockholders may nominate above. directors only at a special meeting by sending appropriate notice for receipt The provisions of FINOVA Group's by our Secretary between the 90th day certificate of incorporation and before the meeting and the later of bylaws prohibiting stockholder action the 70th day before the meeting or the by written consent may have the effect 10th day after the first public of delaying consideration of a announcement of the meeting date. stockholder proposal until the next annual meeting, unless a special A stockholder's notice proposing meeting is called by the Chairman or to nominate a person for election as a at the request of a majority of the director must contain certain whole board. These provisions also information, including, without would prevent the holders of a limitation, the identity and address majority of stock from unilaterally of the nominating stockholder, the using the written consent procedure to class and number of shares of stock of take stockholder action. Moreover, a FINOVA Group beneficially owned by the stockholder could not force stockholder and all information stockholder consideration of a regarding the proposed nominee that proposal over the opposition of the would be required to be included in a Chairman and the board by calling a proxy statement soliciting proxies for special meeting of stockholders prior the proposed nominee. A stockholder's to the time the Chairman or a majority notice relating to the conduct of of the whole board believes such business other than the nomination of consideration to be appropriate. directors must contain certain information about that business and Advance Notice Provisions for about the proposing stockholder, Stockholder Nominations and including, without limitation, a brief Stockholder Proposals. The bylaws description of the business the establish an advance notice procedure stockholder proposes to bring before for stockholders to nominate the meeting, the reasons for directors, or bring other business conducting that business at such before an annual meeting of meeting, the name and address of such stockholders of FINOVA Group. stockholder, the class and number of shares of stock of FINOVA Group A person may not be nominated for beneficially owned by that stockholder a director position unless that person and any material interest of the is nominated by or at the direction of stockholder in the business so the board or by a stockholder who has proposed. If the Chairman or other given appropriate notice to FINOVA officer presiding at a meeting Group's Secretary during the periods determines that a person was not noted below prior to the meeting. nominated, or other business was not Similarly, stockholders may not bring brought before the meeting, in business before an annual meeting accordance with these procedures, the unless the stockholder has given person will not be eligible for FINOVA Group's Secretary appropriate election as a director, or the notice of their or its intention to business will not be conducted at the bring that business before the meeting, as appropriate. meeting. FINOVA Group's Secretary must receive the nomination or proposal Advance notice of nominations or between 70 and 90 days before the proposed business by stockholders first anniversary of the prior year's gives the board time to annual meeting. If FINOVA Group's annual meeting date is advanced by more 16 consider the qualifications of the or of any other class or series and proposed nominees, the merits of the (x) the voting rights, if any, of the proposals and, to the extent deemed holders of shares of the series. necessary or desirable by the board, to inform stockholders about those FINOVA Group believes that the matters. The board also may recommend ability of the board to issue one or positions regarding those nominees or more series of preferred stock will proposals, so that stockholders can provide FINOVA Group with flexibility better decide whether to attend the in structuring possible future meeting or to grant a proxy regarding financings and acquisitions, and in the nominee or that business. meeting other corporate needs which might arise. The authorized shares of Although the bylaws do not give preferred stock, as well as shares of the board any power to approve or common stock, will be available for disapprove stockholder nominations for issuance without further action by the election of directors or proposals FINOVA Group's stockholders, unless for action, these procedures may approval is required by applicable law preclude a contest for the election of or the rules of any stock exchange or directors or the consideration of automated quotation system on which stockholder proposals if the proper FINOVA Group's securities are listed procedures are not followed, and of or traded. The NYSE currently requires discouraging or deterring a third stockholder approval in several party from conducting a solicitation instances, including where the present of proxies to elect its own slate of or potential issuance of shares could directors or to approve its own result in an increase in the number of proposal, without regard to whether shares of common stock, or in the consideration of such nominees or amount of voting securities, proposals might be harmful or outstanding of at least 20%, subject beneficial to FINOVA Group and its to certain exceptions. If the approval stockholders. of FINOVA Group's stockholders is not required for the issuance of shares of Preferred Stock. FINOVA Group's preferred stock or common stock, the certificate of incorporation board may determine not to seek authorizes the board to establish one stockholder approval. or more series of preferred stock and to determine, with respect to any Although the board has no series of preferred stock, the terms intention at the present time of doing and rights of such series, including so, it could issue a series of (i) the designation of the series, preferred stock that could, depending (ii) the number of shares of the on its terms, impede a merger, tender series, which the board may (except offer or other takeover attempt. The where otherwise provided by the terms board will make any determination to of such series) increase or decrease issue shares with those terms based on (but not below the number of shares its judgment as to the best interests thereof then outstanding), (iii) of FINOVA Group and its stockholders. whether dividends, if any, will be The board, in so acting, could issue cumulative or noncumulative and the preferred stock having terms that dividend rate of the series, if any, could discourage an acquisition (iv) the dates at which dividends, if attempt in which an acquiror would any, will be payable, (v) the change the composition of the board, redemption rights and price or prices, including a tender offer or other if any, for shares of the series, (vi) transaction. An acquisition attempt the terms and amounts of any sinking could be discouraged in this manner fund provided for the purchase or even if some, or a majority, of FINOVA redemption of shares of the series, Group's stockholders might believe it (vii) the amounts payable on shares of to be in their best interests or in the series in the event of any which stockholders might receive a voluntary or involuntary liquidation, premium for their stock over the then dissolution or winding up of the current market price of the stock. FINOVA Group's affairs, (viii) whether the shares of the series will be Merger/Sale of Assets. FINOVA convertible into shares of any other Group's certificate of incorporation class or series, or any other provides that certain "business security, of FINOVA Group or any other combinations" must be approved by the corporation, and, if so, the holders of at least 66 2/3% of the specification of another class or voting power of the shares not owned series or another security, the by an "interested shareholder", unless conversion price or prices or rate or the business combinations are approved rates, any adjustments to the prices by or rates, the date or dates as of which the shares shall be convertible and all other terms and conditions upon which the conversion may be made, (ix) restrictions on the issuance of shares of the same series 17 the "Continuing Directors" or meet with any "interested stockholder" for certain requirements regarding price a three-year period following the date and procedure. The terms quoted in that the stockholder becomes an this paragraph are defined in the interested stockholder, unless (i) certificate of incorporation. prior to that date, the board approved either the business combination or the Amendment of Certain Provisions transaction which resulted in the of the Certificate of Incorporation stockholder becoming an interested and Bylaws. Under Delaware law, stockholder, (ii) on that date, the stockholders may adopt, amend or interested stockholder owned at least repeal the bylaws and, with approval 85% of the voting stock of the of the board, the certificate of corporation outstanding at the time incorporation of a corporation. In the transaction commenced (excluding addition, a corporation's board may certain shares) or (iii) on or adopt, amend or repeal the bylaws if subsequent to that date, the board and allowed by the certificate of 66 2/3% of the outstanding voting incorporation. FINOVA Group's stock not owned by the interested certificate of incorporation requires stockholder approved the business a vote of (i) at least 80% of the combination. Except as specified by outstanding shares of voting stock, Delaware law, an interested voting together as a single class, to stockholder includes (x) any person amend provisions of the certificate of that is the owner of 15% or more of incorporation relating to the the outstanding voting stock of the prohibition of stockholder action corporation, or is an affiliate or without a meeting; the number, associate of the corporation and was election and term of FINOVA Group's the owner of 15% or more of the directors; and the removal of outstanding voting stock of the directors; (ii) at least 66 2/3% of corporation, at any time within three the outstanding shares of voting years immediately prior to the stock, voting together as a single relevant date, and (y) the affiliates class, to amend the provisions of the and associates of that person. certificate of incorporation relating to approval of certain business Under certain circumstances, combinations; and (iii) at least a Delaware law makes it more difficult majority of the outstanding shares of for an "interested stockholder" to voting stock, voting together as a enter into various business single class, to amend all other combinations with a corporation for a provisions of the certificate of three-year period, although incorporation. FINOVA Group's stockholders may adopt an amendment to certificate of incorporation further a corporation's certificate of provides that the bylaws may be incorporation or bylaws excluding the amended by the board or by the corporation from those restrictions. affirmative vote of the holders of at However, FINOVA Group's certificate of least 80% of the voting power of the incorporation and bylaws do not outstanding shares of voting stock, exclude FINOVA Group from the voting together as a single class. restrictions imposed under Delaware These supermajority voting law. These provisions of Delaware law requirements make the amendment by may encourage companies interested in stockholders of the bylaws or of any acquiring FINOVA Group to negotiate in of the provisions of the certificate advance with the board, since the of incorporation described above more stockholder approval requirement would difficult, even if a majority of be avoided if a majority of the board FINOVA Group's stockholders believe approves either the business that amendment would be in their best combination or the transaction which interests. results in the stockholder becoming an interested stockholder. Antitakeover Legislation. Subject to certain exceptions, Delaware law does not allow a corporation to engage in a business combination DESCRIPTION OF DEPOSITARY SHARES The following summary of certain General provisions of the Deposit Agreement, the depositary shares and depositary We may offer fractional interests receipts is not complete. You should in shares of preferred stock, instead refer to the forms of Deposit of shares of preferred stock. If we Agreement and depositary receipts do, we will have a depositary issue to relating to each series of preferred the public receipts for depositary stock that will be filed with the SEC. shares, each of which will represent To obtain copies of these documents, fractional interests of a particular see "Where You Can Find More series of preferred stock. Information" on page 2. 18 We will deposit shares of any Conversion and Exchange series of preferred stock underlying the depositary shares under a separate If any series of preferred stock Deposit Agreement (the "Deposit underlying the depositary shares is Agreement") between us and a bank or subject to conversion or exchange, trust company selected by us having each record holder of depositary its principal office in the U.S. and receipts may convert or exchange the having a combined capital and surplus depositary shares represented by those of at least $50 million. Subject to depositary receipts. the terms of the Deposit Agreement, each owner of depositary shares will Redemption of Depositary Shares be entitled, in proportion to the applicable fractional interests in If a series of the preferred shares of preferred stock underlying stock underlying the depositary shares the depositary shares to all the is subject to redemption, the rights and preferences of the depositary will redeem the depositary preferred stock underlying the shares from the proceeds received by depositary shares. Those rights the depositary in the redemption, in include dividend, voting, redemption, whole or in part, of the series of the conversion and liquidation rights. preferred stock held by the depositary. The depositary will mail The depositary shares will be notice of redemption within 30 to 60 evidenced by depositary receipts days prior to the date fixed for issued under the Deposit Agreement. redemption to the record holders of Individuals purchasing the fractional the depositary shares to be redeemed interests in shares of the related at their addresses appearing in the series of preferred stock will receive depositary's books. The redemption depositary receipts according to the price per depositary share will equal terms of the offering described in the the applicable fraction of the supplement. redemption price per share payable on such series of the preferred stock. Dividends and Other Distributions Whenever we redeem shares of preferred stock held by the depositary, the The depositary will distribute depositary will redeem as of the same all cash dividends or other cash redemption date, the number of distributions received for the depositary shares representing the preferred stock to the record holders preferred stock. The depositary shares of depositary shares representing the to be redeemed will be selected by lot preferred stock in proportion to the or pro rata as determined by the number of depositary shares owned by depositary when less than all those holders on the relevant record outstanding depositary shares will be date. The depositary will distribute redeemed. only the amount that can be distributed without attributing to any After the redemption date, the holder of depositary shares a fraction depositary shares redeemed will no of one cent. The undistributed balance longer be outstanding. When this will be added to and treated as part occurs, all rights of the holders will of the next amount received by the cease, except the right to receive depositary for distribution to record money, securities or other property holders of depositary shares. payable upon such redemption and any money, securities or other property If there is a distribution other that the holders of depositary shares than in cash, the depositary will were entitled to on the redemption distribute property received by it to upon surrender to the depositary of the record holders of depositary the depositary receipts evidencing the shares, in proportion, if possible, to depositary shares redeemed. the number of depositary shares owned by those holders, unless the Voting the Preferred Stock depositary determines (after consulting with us) that it cannot Upon receipt of notice of any make the distribution. If this occurs, meeting at which the holders of the the depositary may, with our approval, preferred stock are entitled to vote, sell the property and distribute the the depositary will mail all relevant net proceeds from the sale to the information to the record holders of holders of depositary shares. the depositary shares representing the preferred stock. The record holders The Deposit Agreement also will may instruct the depositary how to state how any subscription or similar vote the shares of preferred stock rights offered by us to holders of the underlying their depositary shares. preferred stock will be made available The depositary will try, if practical, to holders of depositary shares. to 19 vote the number of shares of preferred Resignation and Removal stock underlying the depositary shares of Depositary according to the instructions, and we The depositary may resign by will agree to take all reasonable delivering notice to us, and we may action requested by the depositary so remove the depositary. Resignations or the depositary may follow the removals will take effect upon the instructions. appointment and acceptance of a successor depositary. We must appoint Amendment and Termination of a successor depositary within 60 days Depositary Agreement after delivery of the notice of The form of depositary receipt resignation or removal. The successor and any provision of the Deposit depositary must be a bank or trust Agreement may be amended by agreement company having its principal office in between us and the depositary. the U.S. and having a combined capital However, any amendment that materially and surplus of at least $50 million. and adversely alters the rights of the existing holders of depositary shares Miscellaneous will not be effective unless approved The depositary will send to the by the record holders of at least a holders of depositary shares all majority of the depositary shares then reports and communications from us outstanding. We or the depositary may that we must furnish to the holders of only terminate the Deposit Agreement preferred stock. if (a) all related outstanding depositary shares have been redeemed We and the depositary will not be or (b) there has been a final liable if we are prevented or delayed distribution of the preferred stock of by law or any circumstance beyond our the relevant series in connection with control in performing our obligations our liquidation, dissolution or under the Deposit Agreement. Those winding up and that distribution has obligations will be limited to been distributed to the holders of the performance in good faith of duties related depositary shares. set forth in the Deposit Agreement. We and the depositary will not be Charges of Depositary obligated to prosecute or defend any We will pay all transfer and legal proceeding connected with any other taxes and governmental charges depositary shares or preferred stock arising solely from the existence of unless satisfactory indemnity is the depositary arrangements. We will furnished. We and the depositary may pay associated charges of the rely upon written advice of counsel or depositary for the initial deposit of accountants, or information provided the preferred stock and any redemption by persons presenting preferred stock of the preferred stock. Holders of for deposit, holders of depositary depositary shares will pay transfer shares, or other persons believed to and other taxes and governmental be competent and on documents believed charges and any other charges stated to be genuine. in the Deposit Agreement to be for their accounts. DESCRIPTION OF WARRANTS We may issue warrants for the solely as our agent for the warrants purchase of debt securities, preferred and will not act for or on behalf of stock or common stock. We may issue the holders or beneficial owners of warrants independently or together warrants. This summary of certain with debt securities, common stock or provisions of the warrants is not preferred stock or attached to or complete. You should refer to the separate from the offered securities. provisions of the Warrant Agreement We will issue each series of warrants that will be filed with the SEC as under a separate warrant agreement (a part of the offering of any warrants. "Warrant Agreement") between us and a To obtain a copy of this document, see bank or trust company, as warrant "Where You Can Find More Information" agent. The warrant agent will act on page 2. 20 PLAN OF DISTRIBUTION FINOVA Group and FINOVA Capital FINOVA Group and FINOVA Capital may offer securities directly or or the underwriters or agents may through underwriters, dealers or solicit offers by institutions agents. The supplement will identify approved by us to purchase securities those underwriters, dealers or agents under contracts providing for future and will describe the plan of payment. Permitted institutions distribution. If we do not name a firm include commercial and savings banks, in the supplement, that firm may not insurance companies, pension funds, directly or indirectly participate in investment companies, educational and any underwriting of those securities, charitable institutions and others. although it may participate in the Certain conditions apply to those distribution of securities under purchases. circumstances entitling it to a dealer's allowance or agent's Any underwriter may engage in commission. over-allotment, stabilizing transactions, short covering Any underwriting agreement transactions and penalty bids in probably will entitle the underwriters accordance with Regulation M under the to indemnity against certain civil Securities Exchange Act of 1934. liabilities under the Federal Over-allotment involves sales in securities laws and other laws. The excess of the offering size, which underwriters' obligations to purchase creates a short position. Stabilizing securities will be subject to certain transactions permit bids to purchase conditions and generally will require the underlying security so long as the them to purchase all of the securities stabilizing bids do not exceed a if any are purchased. specified maximum. Short covering transactions involve purchases of the Unless otherwise noted in the securities in the open market after supplement, the securities will be the distribution is completed to cover offered by the underwriters, if any, short positions. Penalty bids permit when, as and if issued by us, the underwriters to reclaim a selling delivered to and accepted by the concession from a dealer when the underwriters and subject to their securities originally sold by the right to reject orders in whole or in dealer are purchased in a covering part. transaction to cover short positions. Those activities may cause the price FINOVA Group and FINOVA Capital of the securities to be higher than it may sell securities to dealers, as would otherwise be. If commenced, the principals. Those dealers then may underwriters may discontinue those resell the securities to the public at activities at any time. varying prices set by those dealers from time to time. The supplement will set forth the anticipated delivery date of the FINOVA Group and FINOVA Capital securities being sold at that time. also may offer securities through agents. Agents generally act on a "best efforts" basis during their appointment, meaning they are not obligated to purchase securities. Dealers and agents may be entitled to indemnification as underwriters by us against certain liabilities under the Federal securities laws and other laws. LEGAL MATTERS Unless otherwise noted in a Capital, will pass on the legality of supplement, William J. Hallinan, Esq., the securities offered through this Senior Vice President-General Counsel prospectus and any supplement. Brown & of FINOVA Group and FINOVA Capital, or Wood LLP will act as counsel for any Richard Lieberman, Esq., Vice underwriters or agents, unless President-Assistant General Counsel of otherwise noted in a supplement. FINOVA Group and Assistant General Counsel of FINOVA 21 EXPERTS Deloitte & Touche LLP, The financial statements are independent auditors, have audited the incorporated into this prospectus by financial statements for FINOVA Group reference in reliance upon their and FINOVA Capital incorporated in report given upon their authority as this prospectus by reference from our experts in accounting and auditing. Annual Reports on Form 10-K. 22 You should rely only on the information contained Prospectus Supplement in or incorporated by reference in this prospectus. We have authorized no one to provide FINOVA you with different information. CAPITAL We are not making an offer of these securities in any location where the offer is not permitted. CORPORATION You should not assume that the information in this prospectus, including information incorporated by $100,000,000 reference, is accurate as of any date other than the date on the front of the prospectus. 6 3/8% Notes Due May 15, 2005 ================================================== Table of Contents Page ---- Prospectus Supplement FINOVA Capital Corporation ................. S-2 Note Terms ................................. S-2 Underwriting ............................... S-3 FINOVA(R) Prospectus Where You Can Find More Information ........ 2 The Companies .............................. 2 Selected Financial Information ............. 5 Ratio Of Income To Total Fixed Charges ..... 5 Ratio Of Income To Combined Fixed Charges And Preferred Stock Dividends ... 5 Special Note Regarding Forward-Looking Statements .............................. 6 Use Of Proceeds ............................ 6 Description Of Debt Securities ............. 7 Description Of Capital Stock ............... 13 Chase Securities Inc. Description Of Depositary Shares ........... 18 Description Of Warrants .................... 20 First Union Capital Markets Plan Of Distribution ....................... 21 Legal Matters .............................. 21 Experts .................................... 22 Dated May 20, 1998
-----END PRIVACY-ENHANCED MESSAGE-----