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0000950147-99-000746.txt : 19990715
0000950147-99-000746.hdr.sgml : 19990715
ACCESSION NUMBER: 0000950147-99-000746
CONFORMED SUBMISSION TYPE: 424B2
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 19990714
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: 333-74473
FILM NUMBER: 99664534
BUSINESS ADDRESS:
STREET 1: 1850 N CENTRAL AVE
STREET 2: PO BOX 2209
CITY: PHOENIX
STATE: AZ
ZIP: 85004-2209
BUSINESS PHONE: 6022076900
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
PROSPECTUS SUPPLEMENT & PROSPECTUS
Finova-Prospectus Supplement--$500,000,000 Medium Term Series E--dated 7/8/99
Prospectus Supplement
(To Prospectus dated July 7, 1999)
| | [FINOVA LOGO] |
|
$500,000,000
Medium-Term Notes, Series E
| |
FINOVA Capital Corporation 1850
N. Central Avenue P.O. Box 2209 Phoenix, Arizona
85002-2209 |
TERMS OF
NOTES |
Maturity The
notes will mature in 9
months or more.
Interest Fixed or
floating rate interest. Floating rate interest will be based
on: CMT rate Commercial Paper
rate 11th District Cost of Funds rate ("11th District
rate") Federal Funds rate LIBOR Prime
rate Treasury rate Any other rate specified by us in
the pricing supplement Any combination of rates
specified in the pricing supplement |
|
Interest
Payment Dates Fixed rate interest paid on March
15 and September 15, accruing from the date we issue the
notes. Floating rate interest paid as stated in
the pricing
supplement. Form Global
securities held by The Depository TrustCompany, generally.
Additional Information No
sinking fund. For more details, see "Note
Terms," "Description of the Debt Securities" and the pricing or
other supplements. Pricing or other supplements may alter the terms
of the notes. |
|
TERMS OF SALE
|
We will
receive between $499,375,000 and $496,250,000 of the proceeds from the
sale of the notes before expenses, after paying the agents commissions
of between $625,000 and $3,750,000. If the maturity of the notes will
exceed 30 years, the commission rate may be
higher. No established trading market for the
notes.
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, this supplement or any pricing or
other supplement is accurate or complete. Any representation to the
contrary is a criminal offense.
| |
Same day
settlement and payment. Immediately available
funds. We may sell these notes at one or more
times. We may sell the notes directly or through
one or more agents or dealers, including the following agents,
listed in alphabetical order:
ABN AMRO
Incorporated Banc of America Securities LLC Deutsche Banc Alex. Brown Morgan Stanley Dean Witter Salomon Smith
Barney
Best Efforts Offering. The
agents are not required to sell any specific number or dollar amount of
the notes. They will use their reasonable best efforts to sell the
notes offered.
|
July 12, 1999
You should rely only on the information contained in or
incorporated by reference in the prospectus or this supplement. We have authorized no one
to provide you with different information. We are not making an offer of these securities in any
location where the offer is not permitted. You should not assume that the information in the
prospectus or this supplement, including information incorporated by reference, is
accurate as of any date other than the dates on the front of the
prospectus and this supplement.
TABLE OF CONTENTS
| | Page |
PROSPECTUS SUPPLEMENT
|
FINOVA Capital Corporation | | S-3
|
Note
Terms | | S-3
|
Plan of Distribution | | S-10
|
Glossary | | S-11
|
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 | | 6
|
Special Note Regarding Forward-Looking Statements | | 6
|
Use of Proceeds | | 7
|
Description of Debt Securities | | 7
|
Description of Capital Stock | | 12
|
Description of Depositary Shares | | 18
|
Description of Warrants | | 20
|
Plan of Distribution | | 20
|
Legal Matters | | 21
|
Experts | | 21
|
FINOVA CAPITAL CORPORATION
FINOVA Capital Corporation ("FINOVA" or "us") is a
financial services company that provides a broad range of financing and
capital market products to mid-size business, principally in the U.S.
We concentrate on lending to midsize businesses and have been in
operation since 1954.
FINOVA extends revolving credit facilities, term loans, and equipment
and real estate financing primarily to "middle market" businesses
with financing needs falling generally between $100,000 and $35
million.
We operate in 20 specific industry or market niches under three market
groups. We selected those groups because our expertise in evaluating
the credit-worthiness of prospective customers and our ability to
provide value-added services enable us to differentiate ourselves from
our competitors. That expertise and ability enable us to command
product pricing that provides a satisfactory spread over our borrowing
costs.
FINOVA's principal lines of business are detailed more fully in the
prospectus. Those lines include:
Commercial Finance
- Business
Credit
- Commercial Services
- Corporate
Finance
- Distribution & Channel Finance
- Growth
Finance
- Rediscount Finance
Specialty Finance
- Commercial Equipment
Finance
- Communications Finance
- Franchise
Finance
- Healthcare Finance
- Portfolio
Services
- Public Finance
- Resort Finance
- Specialty
Real Estate Finance
- Transportation Finance
Capital Markets
- Realty Capital
- Investment
Alliance
- Loan Administration
- Mezzanine
Capital
- Harris Williams & Co.
NOTE TERMS
We may sell up to $500,000,000 of notes under this prospectus
supplement. We may reduce that amount in our discretion, due to our
sale of other securities covered by the prospectus.
We have filed the forms of fixed rate note and floating rate note with
the SEC as exhibits to our registration statement of which the
prospectus is a part. We refer you to the note forms for a more
complete description of their terms.
In the discussion that follows, whenever we talk about paying principal
on the notes, we mean at maturity, redemption or repurchase. Also, in
discussing the time for notices and how the different interest rates
are calculated, all times are New York City time, unless otherwise
noted.
Pricing and Other Supplements/Addendums
The pricing supplement for each offering of notes will contain the
specific information and terms for that offering. The pricing
supplement will specify the interest rate or interest rate basis or
bases, in addition to other pertinent terms.
The pricing or other supplements or addendums we may issue may add,
update or change information contained in this supplement or the
prospectus. For example, we might issue an addendum or supplement that
explains the terms of indexed or multi-currency notes. The terms
of any supplement or addendum, including the pricing supplement, will
supersede the information in the prospectus or this supplement. It is important that you consider the information contained in the
prospectus, this prospectus supplement, the pricing supplement and any
other supplements or addendums applicable to the notes in making your
investment decision.
References in this supplement to the pricing supplement refer to the
applicable pricing supplement for those notes and not other pricing
supplements, if any. The pricing supplement will also indicate whether
any other supplements or addendums are part of that offering.
Redemptions or Repurchases
If we will have the right to redeem the notes or if you will have the
right to cause us to repurchase the notes, those provisions will be set
forth in the pricing or another supplement. If the supplement does not
provide for those terms, then the notes will not be redeemable or
subject to repurchase, as applicable.
Discounted Notes/Original Issue Discount/
Tax Consequences
We may issue discounted notes or notes that are deemed to be issued
with original issue discount, for U.S. income tax purposes. Notes may
or may not bear or currently pay interest. In any of these events, we
will furnish through a supplement a summary of the U.S. income tax
regulations concerning original issue discount.
Notes Denominated in a Foreign Currency
We may issue notes denominated in one or more foreign currencies. In
that event, we will furnish a summary of additional terms regarding
those notes in a supplement. If the pricing supplement does not
expressly designate that notes will be paid in a foreign currency, the
notes and all payments related to those notes, including interest, will
be paid in U.S. dollars.
INTEREST RATES
General
The interest rate on the notes will in no event be higher than the
maximum rate permitted by New York law, as it may be modified by U.S.
law. The interest rate will automatically be reduced to that maximum
rate if necessary.
The Glossary at the end of this supplement defines some of the
terms used in discussing the interest rates payable on the notes that
are not defined in other sections of this supplement.
Interest is either fixed or floating, or a combination of the two.
Floating rate notes may be "regular floating rate notes,"
"inverse floating rate notes," or "floating rate/fixed rate
notes." Regular floating rate notes are discussed below. If the notes
will be either of the other two types, we will describe those
attributes in a supplement.
Payments on notes will include interest accrued from the date of issue
to but excluding the maturity, repurchase or redemption date. Interest
is generally payable to the person in whose name the note is registered
at the close of business on the record date before the interest payment
date. Interest payable at maturity, redemption or repurchase will be
payable to the person to whom the principal is payable.
If a note is first issued between a record date and an interest payment
date or on an interest payment date, the first interest payment will be
made on the first interest payment date after the next record date.
Record Date
The record dates for fixed rate notes will be March 1 (for interest
paid on March 15) and September 1 (for interest paid on September 15).
The record date for floating rate notes will be 15 calendar days prior
to each day interest is paid, whether or not that day is a business
day.
Transaction Amounts and Terms
We may concurrently offer different interest rates and other terms to
different investors, depending on the amounts purchased. For example,
we might do so for purchases of less than $250,000.
FIXED RATE NOTES
The pricing supplement will designate the interest rate on a note. We
will pay interest on March 15 and September 15 and upon maturity,
redemption or repurchase.
If any payment date falls on a day that is not a business day, we will
make payment on the next business day and no additional interest will
be paid for that delay.
Payments will include interest accrued to but excluding each March 15
and September 15, as appropriate. Interest is computed using a 360-day
year of twelve 30-day months.
FLOATING RATE NOTES
Each floating rate note will have an interest rate formula, which may
be based on the:
- CMT rate
- Commercial Paper
rate
- 11th District rate
- Federal Funds
rate
- LIBOR
- Prime rate
- Treasury
rate
- Another rate noted in the pricing
supplement
- Any combination of rates if noted in a
pricing supplement
The pricing supplement will also indicate any spread or spread
multiplier. In addition, any floating rate note may have a maximum or
minimum interest rate limit, but not less than zero.
Calculation Date
Floating interest rates will be calculated not later than the
calculation date by the calculation agent. The calculation date for any
interest determination date, described below, will be the earlier of
(a) 10 days after that interest determination date (or the next
business day if that 10th day is not a business day) or (b) the
business day before the interest payment date or maturity, as
applicable.
Trustee and Calculation Agent
The First National Bank of Chicago will be the trustee and calculation
agent unless otherwise indicated in a supplement. You can reach it at:
The First National Bank of Chicago
One First National
Plaza
Suite 0126
Chicago, IL 60670
(800) 524-9472
Attention:
Investor Relations
The calculation agent will provide the current, and when known the
next, interest rate effective for that period.
Initial Interest Rate
The initial interest rate or interest rate formula on each note until
the first interest reset date, described below, will be indicated in
the pricing supplement. Thereafter, the interest rate will be the rate
determined as of the next interest determination date, discussed below.
Each time a new interest rate is determined, it will become effective
on the next interest reset date.
Date of Interest Rate Changes
(the Interest Reset Date)
The interest rate on each floating rate note may be reset daily,
weekly, monthly, quarterly, semi-annually, or annually. The interest
reset date will be stated in the pricing supplement.
If any interest reset date is not a business day, then the interest
reset date will be postponed to the next business day. For LIBOR notes,
however, if the next business day is in the next calendar month, the
interest reset date will be the immediately preceding business day.
When Interest is Determined
(the Interest Determination Date)
The interest determination date for CMT, Commercial Paper, Federal
Funds and Prime rate notes is the second business day before the
interest reset date.
The interest determination date for LIBOR notes is the second London
business day before the interest reset date.
The interest determination date for Treasury rate notes will be the day
of the week in which the interest reset date falls on which Treasury
bills would normally be auctioned. Treasury bills are usually sold at
auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is usually held on Tuesday. The auction,
however, may be held on the preceding Friday. If so, that Friday will
be the interest determination date for the interest reset date
occurring in the next week. If an auction date falls on any interest
reset date then the interest reset date will instead be the first
business day following the auction date.
The interest determination date for 11th District rate notes is the
last working day of the month just before the interest reset date in
which the Federal Home Loan Bank of San Francisco publishes the
relevant index noted below under "INTEREST RATE FORMULAS -- 11th
District Rate Notes."
When Interest Is Paid
(the Interest Payment Date)
We will pay interest on the dates stated in the pricing supplement. If
interest is payable on a day which is not a business day, payment will
be postponed to the next business day and will include interest through
that date. For LIBOR notes, however, if the next business day is in the
next calendar month, interest will be paid on the preceding business
day. If the maturity, repayment or redemption date is not a business
day, interest will be paid on the next business day for all types of
notes, and no interest will accrue after the maturity, repayment or
redemption date.
Determining the Interest
The interest payable will be the amount of interest accrued from and
including the date of issue or the most recent date to which interest
has been paid, to, but excluding, the interest payment date or
maturity, as applicable.
If the interest payment date is also a day that principal is due, the
interest payable will include interest accrued to, but will exclude,
the date of maturity, redemption or repurchase.
The accrued interest for any period is calculated by multiplying the
principal amount of a note by an accrued interest factor. The accrued
interest factor is computed by adding the interest factors calculated
for each day in the period to the date for which accrued interest is
being calculated. The interest factor (expressed as a decimal
rounded upwards if necessary, as described below) is computed by
dividing the interest rate (expressed as a decimal rounded upwards if
necessary) applicable to that date by 360, unless the notes are
Treasury rate notes or CMT rate notes, in which case it will be divided
by the actual number of days in the year.
Rounding
All percentages resulting from any calculation on floating rate notes
will be rounded, if necessary, to the nearest one hundred thousandth of
a percentage point, with five one-millionths of a percentage point
rounded upwards (e.g., 9.876545% (or .09876545) being rounded to
9.87655% (or .0987655) and 9.876544% (or .09876544) being rounded to
9.87654% (or .0987654)). All dollar amounts used in or resulting from
that calculation will be rounded to the nearest cent (with one-half
cent being rounded upwards).
INTEREST RATE FORMULAS
CMT Rate Notes
Each CMT rate note will bear interest at the rate (calculated with
reference to the CMT rate and the spread and/or spread multiplier, if
any) specified in the note and pricing supplement.
"CMT rate" means, for an interest determination date, the rate
displayed on the designated CMT Telerate page under the caption . . .
"Treasury Constant Maturities . . . Federal Reserve Board Release
H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the
index maturity for:
(1) if the designated CMT Telerate page is 7051, the rate on that
interest determination date; or
(2) if the designated CMT Telerate page is 7052, the weekly or
monthly average, as specified in the pricing supplement, for the week
or month ended just before the week or month containing the interest
determination date.
If the index maturity is not set forth in the pricing supplement,
the maturity will be 2 years.
If the rate cannot be set as described above, the calculation agent
will use the following methods:
(a) If that rate is no longer displayed on the relevant page, or if it
is not displayed by 3:00 P.M. on the related calculation date, then the
rate for that interest determination date will be the treasury constant
maturity rate for the index maturity as published in the relevant
H.15(519).
(b) If that rate is no longer published in H.15(519), or is not
published by 3:00 P.M. on the calculation date, then the rate for that
interest determination date will be the treasury constant maturity rate
(or other United States Treasury rate) for the index maturity for that
interest determination date then published by either the Board of
Governors of the Federal Reserve System or the U.S. Department
of the Treasury that the calculation agent determines is comparable to
the rate formerly displayed on the designated CMT Telerate page and
published in the relevant H.15(519).
(c) If that information is not provided by 3:00 P.M. on the related
calculation date, then the CMT rate for that interest determination
date will be calculated as a yield to maturity, based on the average of
the secondary market offered rates as of approximately 3:30 P.M. on
that interest determination date reported, according to their written
records, by three leading primary U.S. government securities
dealers (each, a "reference dealer") in New York selected by the
calculation agent. They will be selected from five reference dealers.
The calculation agent will eliminate the highest and lowest quotations
(or, in the event of equality, one of the highest and/or lowest, as
applicable) for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury notes") with an
original maturity approximating the index maturity and a remaining term
to maturity of not less than the index maturity minus one year.
(d) If the calculation agent cannot obtain three qualified Treasury
note quotations, the CMT rate for that interest determination date will
be calculated as a yield to maturity based on the average of the
secondary market offered rates as of approximately 3:30 P.M. on that
interest determination date of three reference dealers in New York
selected by the calculation agent using the same method described above
for Treasury notes with an original maturity of the number of years
that is the next highest to the index maturity with a remaining term to
maturity closest to that index maturity and in an amount of at least
$100 million.
If three or four (and not five) of the reference dealers are quoting as
described above, the CMT rate will be based on the average of the
offered rates obtained and neither the highest nor the lowest of those
quotes will be eliminated.
If two Treasury notes with an original maturity as described in the
last sentence have remaining terms to maturity equally close to the
index maturity, the quotes for the Treasury note with the shorter
remaining term to maturity will be used.
(e) Finally, if fewer than three reference dealers are quoting as
mentioned above, the rate of interest in effect for the period will be
the same as that already in effect on the interest determination date.
Commercial Paper Rate Notes
Each Commercial Paper rate note will bear interest at the rate
(calculated with reference to the Commercial Paper rate and the spread
and/or spread multiplier, if any) specified in the note and pricing
supplement.
"Commercial Paper rate" means, for an interest determination date,
the Money Market Yield (calculated as described below) of the rate on
that date for commercial paper having the index maturity as published
in H.15(519) under the caption "Commercial Paper -- Non-financial."
If the rate cannot be set as described above, the calculation agent
will use the following methods:
(a) If that rate is not published in H.15(519) by 3:00 P.M. on the
calculation date, then the rate will be the Money Market Yield of the
rate on that interest determination date for commercial paper having
the index maturity as published in H.15 Daily Updates under the caption
"Commercial Paper -- Non-financial." Index maturities of one month
will equal a maturity of 30 days and of three months will equal a
maturity of 90 days.
(b) If the rate is not so published by 3:00 P.M. on the calculation
date, the Commercial Paper rate for that interest determination date
will be the Money Market Yield of the average of the offered rates, at
approximately 11:00 A.M., of three leading dealers of commercial paper in New York
selected by the calculation agent. The offered rates will be for
commercial paper having the index maturity placed for industrial
issuers whose bond rating is "Aa," or the equivalent, from a
nationally recognized rating agency.
(c) Finally, if fewer than three dealers are quoting as mentioned, the
rate of interest in effect for the applicable period will be the same
as that already in effect on the interest determination date.
11th District Rate Notes
11th District rate notes will bear interest at the rates (calculated
with reference to the 11th District rate and the spread and/or spread
multiplier, if any) specified in the note and pricing supplement.
The 11th District rate means for an interest determination date the
rate equal to the monthly weighted average cost of funds for the
calendar month before that date set forth under the caption "11th
District" on Telerate page 7058 as of 11:00 A.M. San Francisco time
on the interest determination date.
If the rate cannot be set as described above, the calculation agent
will use the following methods:
(a) If the rate does not appear on Telerate page 7058 on that interest
determination date, the rate will be the monthly weighted average cost
of funds paid by member institutions of the 11th Federal Home Loan Bank
District that was most recently announced by the FHLB of San Francisco
as the cost of funds for the calendar month before that interest determination date.
(b) If the FHLB San Francisco fails to announce that rate as noted
above, the 11th District rate will be that rate already in effect on
the interest determination date.
Federal Funds Rate Notes
Each Federal Funds rate note will bear interest at the rate (calculated
with reference to the Federal Funds rate and the spread and/or spread
multiplier, if any) specified in the note and pricing supplement.
"Federal Funds rate" means for an interest determination date the
rate on that date for U.S. dollar federal funds as published in H.15(519) prior to
3:00 P.M. under the heading "Federal Funds (Effective)," as
displayed on Telerate page 120, or any successor page.
If the rate cannot be set as described above, the calculation agent
will use the following methods:
(a) If that rate is not published in H.15(519) or displayed on Telerate
page 120 prior to 3:00 P.M. on the calculation date, then the Federal
Funds rate will be the rate on the interest determination date for U.S.
dollar federal funds published in H.15 Daily Update under the caption
"Federal Funds (Effective)."
(b) If that rate is not so published by 3:00 P.M. on the calculation
date, the Federal Funds rate for the interest determination date will
be the average of the rates, as of 9:00 A.M. on that date, for the last
transaction in overnight U.S. dollar federal funds arranged by three
leading brokers of federal funds transactions in New York selected by
the calculation agent.
(c) Finally, if fewer than three brokers are quoting as mentioned
above, the rate of interest will be the same as that already in effect
on the interest determination date.
LIBOR Notes
Each LIBOR note will bear interest at the rate (calculated with
reference to LIBOR and the spread and/or spread multiplier, if any)
specified in the LIBOR note and pricing supplement.
LIBOR will be determined by the calculation agent as follows:
(a) For an interest determination date, LIBOR will be determined as
specified in the pricing supplement by either:
(1) the average of the offered rates for deposits in U.S. dollars
having the index maturity beginning on the second London business day
immediately after that date, that appear on the Reuters Screen LIBO
page as of 11:00 A.M., London time, on that date, if at least two
offered rates appear on the Reuters Screen LIBO page; or
(2) the rate for deposits in U.S. dollars having the index maturity
beginning on the second London business day immediately after that
date, that appears on the Telerate page 3750 as of 11:00 A.M., London
time, on that date.
If the pricing supplement does not specify either the Reuters Screen
LIBO page or Telerate page 3750, LIBOR will be determined as if
Telerate page 3750 had been specified.
In the case where (1) above applies, if fewer than two offered rates
appear on the Reuters Screen LIBO page, or, in the case where (2) above
applies, if no rate appears on the Telerate page 3750, LIBOR for that
date will be determined as follows:
(b) LIBOR will be determined based on the rates at approximately 11:00
A.M., London time, on that interest determination date at which
deposits in U.S. dollars having the index maturity and in a principal
amount that is representative for a single transaction in that market
at the time (a "representative amount") are offered to prime banks
in the London interbank market by four major banks in the London
interbank market selected by the calculation agent. The offered rates
must begin on the second London business day immediately after that
interest determination date.
The calculation agent will request the principal London office of each
of those banks to provide a quotation of its rate. If at least two
quotations are provided, LIBOR for that date will be the average of
those quotations.
(c) If fewer than two quotations are provided, LIBOR for that date will
be the average of the rates quoted at approximately 11:00 A.M., New
York City time, on that date by three major banks in New York selected
by the calculation agent. The rates will be for loans in a
representative amount in U.S. dollars to leading European banks having
the index maturity beginning on the second London business day after
that date.
(d) Finally, if the three banks noted in (c) are not quoting as
mentioned, the rate of interest will be the same as that already in
effect on the interest determination date.
Prime Rate Notes
Each Prime rate note will bear interest at the rate (calculated with
reference to the Prime rate and the spread and/or spread multiplier, if
any) specified on the Prime rate note and in the applicable pricing
supplement.
"Prime rate" means, with respect to an interest determination date,
the rate set forth on that date in H.15(519) under the heading "Bank
Prime Loan."
The following procedures will occur if the rate cannot be set as
described above:
(a) If that rate is not so published by 3:00 P.M. the rate will be the
rate published in H.15 Daily Update under the caption "Bank Prime
Loans" on the calculation date.
(b) If that rate is not so published prior to 3:00 P.M. on the
calculation date, then the Prime rate will be the average of the rates
of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 page as its prime rate or base lending rate in effect
for that interest determination date.
(c) If fewer than four, but more than one, rates appear on the Reuters
Screen USPRIME1 page, the Prime rate will be the average of the prime
rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on the interest
determination date by three major banks in New York selected by the
calculation agent.
(d) Finally, if the banks and substitutes are not quoting as mentioned
above, the rate of interest will be the same as that already in effect
on the interest determination date.
Treasury Rate Notes
Each Treasury rate note will bear interest at the rate (calculated with
reference to the Treasury rate and the spread and/or spread multiplier,
if any) specified on the Treasury rate note and in the pricing
supplement.
"Treasury rate" means for an interest determination date the rate
for the auction held on that date of direct obligations of the United
States ("Treasury bills") having the index maturity under the
caption, "Investment Rate" on Telerate page 56 or page 57.
If the rate cannot be set as described above, the calculation agent
will use the following methods:
(a) If that rate is not so published by 3:00 P.M. on the calculation
date, the rate will be the Bond Equivalent Yield of the rate for
Treasury bills as published in H.15 Daily Update under the caption
"U.S. Government Securities/Treasury Bills/Auction High."
(b) If that rate is not so published by 3:00 P.M. on the calculation
date, the rate will be the Bond Equivalent Yield of the auction rate of
the Treasury bills announced by the U.S. Department of the Treasury.
(c) If that rate is not available, the rate will be the Bond Equivalent
Yield of the rate on the interest determination date of Treasury bills
having the index maturity as published in H.15(519) under the
caption "U.S. Government Securities/Treasury Bills/Secondary
market."
(d) If that rate is not so published by 3:00 P.M. on the calculation
date, the rate will be the rate on the interest determination date of
Treasury bills as published in H.15 Daily Update under the
caption "U.S. Government Securities/Treasury Bills/Secondary
Market."
(e) If that rate is not so published by 3:00 P.M. on the calculation
date, the rate will be the rate on the interest determination date
calculated by the calculation agent as the Bond Equivalent Yield of the
average of the secondary market bid rates, as of approximately 3:30
P.M. on the interest determination date, of three primary U.S.
government securities dealers selected by the calculation agent, for
the issue of Treasury bills with a remaining maturity closest to the
index maturity.
(f) Finally, if fewer than three of the dealers are quoting as
mentioned, the rate of interest will be the same as that already in
effect on the interest determination date.
PLAN OF DISTRIBUTION
Payment of the purchase price for the notes must be made in
immediately available funds in New York on the settlement date.
No Trading Market or Exchange Listing
The notes will not have an established trading market when issued. We do not
expect to list the notes on any securities exchange. Each of the agents
may from time to time purchase and sell notes in the secondary market,
but no agent is obligated to do so. There can be no assurance that
there will be a secondary market for the notes or liquidity in that
market if one develops. From time to time, each of the agents may make
a market in the notes, in its discretion.
Right to Change Offer and Reject Orders
We reserve the right to withdraw, cancel or modify the offer made by
this prospectus (including supplements) without notice. We may reject
orders in whole or in part, whether placed directly with us or through
one of the agents, underwriters or dealers. The agents in their
reasonable discretion may reject in whole or in part any offer to
purchase notes received by them.
SALE OF NOTES
We may sell the notes (a) through agents; (b) through underwriters or
dealers; or (c) directly to one or more purchasers. We are offering the
notes on a continuing basis from time to time.
By Agents
We may sell the notes through agents designated by us. The agents
listed on the front of this prospectus supplement have agreed to act as
agents for these notes. The agents have agreed to use their reasonable
best efforts to solicit offers to purchase the notes. Each of those
agents and/or their affiliates has engaged in transactions with and
performed investment banking and/or commercial banking services for us
and our affiliates. Those transactions have occurred from time to time
and are in the regular course of their and our business.
Unless otherwise indicated, the notes will be sold to the public at
100% of their principal amount. Agents will receive commissions on or
discounts from the principal amount of the notes they sell. The
commission schedule ranges from 0.125% to 0.750% of the principal
amount per note, depending on maturity. If we sell notes with
maturities in excess of 30 years, we will negotiate a commission with
the agents at that time, which commission might be greater than the
rates noted above.
We will receive from 99.875% to 99.25% of the principal amount of
each note, before deducting expenses. We have agreed to reimburse the
agents for most of their expenses in selling the notes. We anticipate
that the expenses of this offering will approximate $565,000 if all of
the notes are sold.
By Underwriters
If we use underwriters in the sale, they will acquire the notes for
their own account. We may also sell notes to an agent, as principal, or
to a group of underwriters for whom an agent acts as representative,
for resale to investors. We will sell the notes to the underwriters or
agents at the principal amount of the notes less a commission equal to
one for an agency sale of those notes.
The underwriters or agents may resell the notes in one or more
transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined by them at the time of
sale. The underwriters or agents may share any part of the discount or
commission received in that sale with other agents or dealers, as
appropriate. After the initial public offering of the notes, the
initial public offering price and any discounts or concessions allowed,
re-allowed or paid to dealers may be changed from time to time.
The obligations of the agents or underwriters to purchase the notes
will be subject to conditions. Underwriters will be obligated to
purchase all underwritten notes offered if any of the notes are
purchased at that time.
Direct Sales
We may also sell notes directly by us. In that case, no underwriters or
agents would be used for those sales.
GLOSSARY
Set forth below are definitions of some of the terms used in this
supplement.
"Bond Equivalent Yield" means the yield calculated as
follows:
| Bond Equivalent Yield = | D x N | x 100
|
| | 360 - (D x M) |
where "D" refers to the applicable per annum rate for Treasury
bills quoted on a bank discount basis, "N" refers to 365 or 366 (if
a leap year), as the case may be, and "M" refers to the actual
number of days in the interest period for which interest is being
calculated.
"business day" means any day other than a Saturday or
Sunday or other day on which banking institutions in New York, New York
are generally authorized or obligated by law, regulation or executive
order to be closed and for LIBOR notes, is also a London business day.
"designated CMT Telerate page" means the display on Telerate on the page
designated in the pricing supplement and on the face of the note (or
any successor page) for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519) or if no page is
specified in the pricing supplement, page 7052.
"H.15(519)" means the weekly statistical release designated as H.15(519)(or any successor
publication) published by the Board of Governors of the Federal Reserve
System.
"H.15 Daily Update" means the daily update of H.15(519),
available through the world wide web site of the Board of
Governors of the Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or publication.
"index maturity" means, for a floating rate note, the
period on which the interest rate formula is based, as indicated in the
pricing supplement.
"interest determination date" means the date as of which
the interest rate for a floating rate note is to be calculated, to be
effective as of the following interest reset date. The interest
determination dates will be indicated in the pricing supplement, and in
the note and above on page S-5.
"interest reset date" means the date on which a floating
rate note will begin to bear interest at the variable interest rate
determined on any interest determination date. The interest reset dates
will be indicated in the pricing supplement and in the note.
"London business day" means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
"Money Market Yield" is the yield calculated as
follows:
| Money Market Yield = | D x 360 | x 100 |
| | 360 - (D x M) |
where "D" refers to the per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal; and "M"
refers to the actual number of days in the interest period for which
interest is being calculated.
"Reuters Screen LIBO page" means the display
designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or any successor page on that service for the purpose of
displaying London interbank offered rates of major banks).
"Reuters Screen USPRIME1 page" means the display
designated as page "USPRIME1" on the Reuters Monitor Money Rates
Service (or a successor page on that service for the purpose of
displaying prime rates or base lending rates of major U.S.
banks).
"spread" means the number of basis points specified in
the pricing supplement as being applicable to the floating rate note.
"spread multiplier" means the percentage specified in
the pricing supplement as being applicable to the floating rate note.
"Telerate" means the Bridge Telerate, Inc. service or a successor service.
"Telerate page 3750" means the display designated as
page "3750" on Telerate (or a successor page nominated by the British Bankers Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits).
"Telerate page 7058" means the display on that page of Telerate.
Prospectus
| | [FINOVA LOGO] 1850 North Central
Avenue P.O. Box 2209 Phoenix, Arizona
85002-2209 |
THE [FINOVA LOGO] GROUP INC.
[FINOVA LOGO] CAPITAL CORPORATION
|
By this
prospectus, we may offer up to $3,000,000,000 of
our:
|
DEBT SECURITIES COMMON STOCK
(including, for The FINOVA Group Inc., Rights to Purchase
Junior Participating Preferred Stock) PREFERRED
STOCK DEPOSITARY SHARES WARRANTS
FINOVA Capital Corporation is a wholly owned subsidiary of The FINOVA Group
Inc. | |
We will provide the specific terms of
these securities in supplements to this prospectus. You should read
this prospectus and the supplements carefully before you invest.
|
|
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.
| |
We may offer the securities directly or through
underwriters, agents or dealers. The supplement will describe the terms
of that plan of distribution. "Plan of Distribution" below also
provides more information on this
topic.
|
July 7, 1999 |
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 information with
the SEC. You may read and copy any document we file at the SEC's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for more information on the
public reference room and their copy charges. Our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov,
which may also be available on our web site at http://www.finova.com.
You may also inspect our SEC reports and other information at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" the information we
file with them, which means we can disclose information to you by
referring you to those documents. Information incorporated by reference
is part of this prospectus. Later information filed with the SEC
updates and supersedes this prospectus.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until this offering is completed:
-
Annual Report on Form 10-K of FINOVA Group for the year ended
December 31, 1998 filed on March 2, 1999, as amended on Form 10-K/A
filed on March 8, 1999 and as comprehensively amended on Form 10-K/A
filed on May 7, 1999.
- Annual Report on Form 10-K of Finova Capital for the year
ended December 31, 1998 filed on March 5, 1999 as comprehensively
amended on Form 10-K/A filed on May 10, 1999.
- Portions of the Proxy Statement on Schedule 14A for FINOVA
Group's Annual Meeting of Shareholders held on May 13, 1999 that have
been incorporated by reference into our 10-K.
- Quarterly Reports on Form 10-Q of FINOVA Group and FINOVA
Capital for the quarter ended March 31, 1999.
- Current Reports on Form 8-K of FINOVA Group dated January 14,
March 22, April 14, and May 6, 1999.
- Current Reports on Form 8-K of FINOVA Capital dated January
15, and May 10, 1999.
- Schedules 13-D of FINOVA Group and FINOVA Capital dated
January 6, 1999.
You may request a copy of those filings or any other
information incorporated by reference in this prospectus, including
exhibits. You may do so orally or in writing by contacting us at:
Treasurer
The FINOVA Group Inc.
1850 North Central Avenue
P.O. Box 2209
Phoenix, Arizona 85002-2209
(602) 207-6900
We will provide that information at no charge to you.
THE COMPANIES
FINOVA Group is a financial services holding company. Through our
principal subsidiary, FINOVA Capital, we provide a broad range of
financing and capital market products to mid-size business. We
concentrate on lending to mid-size businesses. FINOVA Capital has been
in operation since 1954.
We extend revolving credit facilities, term loans, and equipment and
real estate financing primarily to "middle-market" businesses with
financing needs falling generally between $100,000 and $35 million.
We operate in 20 specific industry or market niches under three market
groups. We selected those groups because our expertise in evaluating
the creditworthiness of prospective customers and our ability to
provide value-added services enable us to differentiate ourselves from
our competitors. That expertise and ability also enable us to command
pricing that provides a satisfactory spread over our borrowing costs.
We seek to maintain a high quality portfolio and to minimize
non-earning assets and write-offs. We use clearly defined underwriting
criteria and stringent portfolio management techniques. We diversify
our lending activities geographically and among a range of industries,
customers and loan products.
Due to the diversity of our portfolio, we believe we are better able to
manage competitive changes in our markets and to withstand the impact
of deteriorating economic conditions on a regional or national basis.
There can be no assurance, however, that competitive changes,
borrowers' performance, economic conditions or other factors will not
result in an adverse impact on our results of operations or financial
condition.
We generate interest, leasing, fee and other income through charges
assessed on outstanding loans, loan servicing, leasing, brokerage and
other activities. Our primary expenses are the costs of funding our
loan and lease business, including interest paid on debt, provisions
for credit losses, marketing expenses, salaries and employee benefits,
servicing and other operating expenses and income taxes.
Business Groups
We operate the following principal lines of business under three market
groups:
Commercial Finance
- Business Credit offers collateral-oriented
revolving credit facilities and term loans for manufacturers,
distributors, wholesalers and service companies. Typical transaction
sizes range from $500,000 to $3 million.
- Commercial Services (formerly Factoring Services)
offers full service factoring and accounts receivable management
services for entrepreneurial and larger firms, primarily in the textile
and apparel industries. The annual factored volume of these companies
is generally between $5 million and $25 million. This line provides
accounts receivable financing and loans secured by equipment and real
estate.
- Corporate Finance provides a full range of cash
flow-oriented and asset-based term and revolving loan products for
manufacturers, wholesalers, distributors, specialty retailers and
commercial and consumer service businesses. Typical transaction sizes
range from $2 million to $35 million.
- Distribution & Channel Finance (formerly Inventory
Finance) provides inbound and outbound inventory financing, combined
inventory/accounts receivable lines of credit and purchase order
financing for equipment distributors, value-added resellers and dealers
nationwide. Transaction sizes generally range from $500,000 to $30
million.
- Growth Finance provides collateral-based working
capital financing primarily secured by accounts receivable. Typical
transaction sizes range from $100,000 to $1 million and are made to
small and mid-size businesses with annual sales under $10 million.
- Rediscount Finance offers revolving credit
facilities to the independent consumer finance industry including
sales, automobile, mortgage and premium finance companies. Typical
transaction sizes range from $1 million to $35 million.
Specialty Finance
- Commercial Equipment Finance offers equipment
leases, loans and "turnkey" financing to a broad range of midsize
companies. Specialty markets include the corporate aircraft and
emerging growth technology industries, primarily biotechnology and
electronics. Typical transaction sizes range from $500,000 to $15
million.
- Communications Finance specializes in term
financing to advertising and subscriber- supported businesses including
radio and television stations, cable operators, outdoor advertising
firms and publishers. Typical transaction sizes range from $1 million
to $40 million.
- Franchise Finance offers equipment, real estate and
acquisition financing for operators of established franchise concepts.
Transaction sizes generally range from $500,000 to $15 million.
- Healthcare Finance offers a full range of working
capital, equipment and real estate financing products for the U.S.
health care industry. Transaction sizes typically range from $500,000
to $25 million.
- Portfolio Services provides customized receivable
servicing and collections for time-share developers and other
generators of consumer receivables.
- Public Finance provides tax-exempt term financing
to state and local governments, non-profit corporations and entities
using industrial revenue or development bonds. Typical transaction
sizes range from $100,000 to $5 million.
- Resort Finance focuses on construction, acquisition
and receivables financing of timeshare resorts worldwide, second home
communities and fractional interest resorts. Typical transaction sizes
range from $5 million to $35 million.
- Specialty Real Estate Finance provides senior term
acquisition and bridge/interim loans from $5 million to $30 million or
more for hotel and resort properties in the U.S., Canada and the
Caribbean. Through this division, we also provide equity
investments in credit-oriented real estate sale leasebacks.
- Transportation Finance structures equipment loans,
leases, acquisition financing and leveraged lease equity investments
for commercial and cargo airlines worldwide, railroads and operators of
other transportation related equipment. Typical transaction sizes range
from $5 million to $30 million. Through FINOVA Aircraft Investors LLC,
FINOVA also seeks to use its market expertise and industry presence to
purchase, upgrade and resell used commercial aircraft.
Capital Markets
- Realty Capital specializes in providing capital
markets-funded commercial real estate financing products and commercial
mortgage banking services. Typical transaction sizes range from $1
million to $5 million.
- Investment Alliance provides equity and debt
financing for midsize businesses in partnership with institutional
investors and selected fund sponsors. Typical transaction sizes range
from $2 million to $15 million.
- Loan Administration provides in-house servicing for
FINOVA's commercial loan products as well as servicing and subservicing
of other mortgage and consumer loans, including residential real
estate, mobile homes, automobiles and other consumer products.
- Mezzanine Capital provides senior and subordinated
secured term loans to small, fast growing companies in a broad range of
industries that are located in the U.S. and Canada for expansions,
acquisitions, buy-outs and other strategic ventures. Typical
transaction sizes range from $1 million to $5 million.
- Harris Williams & Co. provides merger and
acquisition advisory services targeting middle market businesses.
Both FINOVA Group and FINOVA Capital are Delaware corporations. FINOVA
Group was incorporated in 1991 to serve as the successor to The Dial
Corp's financial services businesses. Dial transferred those businesses
to FINOVA Group in March 1992 in a spin-off. Since that time, FINOVA
Group has increased its total assets from $2.6 billion at December
31, 1992 to $10.4 billion at December 31, 1998. Income from continuing
operations increased from $36.8 million in 1992 to $160.3 million in
1998. We believe FINOVA Group ranks among the largest independent
commercial finance companies in the U.S., based on total assets. The
common stock of FINOVA Group is traded on the New York Stock Exchange.
FINOVA Capital was incorporated in 1965 and is the successor to a
California corporation that was formed in 1954. All of FINOVA Capital's
capital stock is owned by FINOVA Group.
Our principal executive offices are located at 1850 North Central
Avenue, P.O. Box 2209, Phoenix, Arizona 85002-2209. Our telephone
number is (602) 207-6900.
SELECTED FINANCIAL INFORMATION
The following information was derived from FINOVA Group's
financial statements. The information is only a summary and does not
provide all of the information contained in our financial statements,
including the related notes, and Management's Discussion and Analysis.
Those items are part of our Annual Reports on Form 10-K/A and Quarterly
Reports on Form 10-Q. You should read our financial statements and
other information that we have filed with the SEC. We have restated the
financial information through 1998 as noted more fully in Note T to the
financial statements for the year ended December 31, 1998. Prior year
amounts have also been reclassified to conform to the 1998 presentation
and to reflect a 2-for-1 stock split in 1997.
| | For
the Three
Months Ended
March 31, | | As of and for the Year Ended December 31, |
| |
| |
|
| | 1999 | |
1998 | | 1998
| | 1997 | | 1996 | | 1995 | | 1994 |
| | (Dollars
in thousands, except per share data) |
OPERATIONS:
|
Income earned from financing transactions | | $ 273,075 | | $
232,833 | | $ 1,007,773 | | $ 879,763 | | $ 756,996 | | $ 673,194 | | $
458,411 |
Interest margins earned | | 124,666 | | 105,383 | | 459,515
| | 392,124 | | 329,107
| | 280,788 | | 211,419 |
Volume-based fees
| | 12,735 | | 22,156
| | 77,723 | | 39,378 | | 28,588 | | 21,204
| | 10,796 |
Provision for credit losses | | 9,500 | |
9,500
| | 82,200 | | 69,200
| | 41,751 | | 39,568 | | 10,439 |
Gains on
disposal of assets | | 12,370 | |
1,525 | | 27,912 | | 30,333
| | 12,562 | | 10,490
| | 3,877 |
Income from continuing
operations | | 50,057 | | 39,741 | | 160,341 | | 137,910 | | 117,968
| | 95,621 | | 75,470
|
Net income | | 50,057 | |
39,741 | | 160,341
| | 137,910 | | 118,475
| | 97,060 | | 76,013 |
Basic earnings from
continuing operations per share | | 0.89 | | 0.71 | | 2.87 | | 2.53
| | 2.16 | | 1.75 |
| 1.52 |
Basic earnings per share | | 0.89
| | 0.71 | | 2.87 |
| 2.53 | | 2.17
| | 1.78 | | 1.53 |
Basic
adjusted weighted average outstanding shares(1) | | 56,294,000
| | 56,138,000 | |
55,946,000 | | 54,405,000 | | 54,508,000
| | 54,633,000 | |
49,765,000 |
Diluted earnings from continuing
operations per share | | $ 0.83 | | $ 0.67 | | $ 2.70 | | $ 2.40
| | $ 2.10 | | $ 1.72
| | $ 1.50 |
Diluted earnings per share
| | 0.83 | | 0.67 |
| 2.70 | | 2.40
| | 2.11 | | 1.75 |
| 1.51
|
Diluted adjusted weighted average shares(1) | | 61,318,000
| | 61,079,000 | |
60,705,000 | | 59,161,000 | | 56,051,000
| | 55,469,000 | |
50,436,000 |
Dividends declared per common share
| | $ 0.16 | | $ 0.14
| | $ 0.60 | | $ 0.52 | | $ 0.46 | | $ 0.42 | | $
0.37 |
FINANCIAL POSITION: | | | | | | | | | | | | | | |
Investment in financing
transactions | | $11,086,016 | |
$8,689,238 | | $10,020,221 | | $8,420,462 |
| $7,318,919 | | $6,364,189
| | $5,354,626
|
Nonaccruing assets | | 228,416 |
| 195,267 | | 205,233 | | 187,356
| | 155,505 | | 143,127
| | 149,046 |
Reserve for credit losses
| | 238,277 | | 175,967
| | 207,618 | | 177,088 | | 148,693 | |
129,077
| | 110,903 |
Total assets | | 11,730,347 |
| 9,037,349
| | 10,441,236 | |
8,724,626 | | 7,538,456 | | 7,045,547 | | 5,831,327
|
Total debt | | 9,327,137 | | 7,115,327 | | 8,394,578 | | 6,764,581
| | 5,850,223 | |
5,649,368 | | 4,573,354
|
Company-obligated mandatory redeemable convertible
preferred securities of subsidiary trust solely holding convertible
debentures of FINOVA Group ("TOPrS") | | 111,550 | |
111,550
| | 111,550 | | 111,550
| | 111,550 | | | | |
Shareowners' equity
| | 1,557,612 | |
1,128,594 | | 1,167,231 | | 1,092,254 | | 936,085
| | 829,040 | | 773,547
|
(1) Adjusted to reflect a
2-for-1 stock split on October 1, 1997.
RATIO OF INCOME TO TOTAL FIXED CHARGES
| | For
the Three Months Ended
March 31, | | Year Ended December
31, |
| |
| |
|
| | 1999 | | 1998
| | 1998 | | 1997
| | 1996 | | 1995 | | 1994 |
FINOVA Group | | 1.63x | |
1.60x
| | 1.55x | | 1.54x | | 1.51x | | 1.45x | | 1.59x
|
FINOVA Capital
| | 1.63x | | 1.60x |
| 1.55x | | 1.54x | | 1.51x | | 1.45x
| | 1.59x |
RATIO OF INCOME TO COMBINED FIXED CHARGES
AND PREFERRED
STOCK DIVIDENDS
| | For
the Three Months Ended
March 31, | | Year Ended December
31, |
| |
| |
|
| | 1999 | | 1998
| | 1998 | | 1997
| | 1996 | | 1995 | | 1994 |
FINOVA Group | | 1.61x | |
1.58x
| | 1.53x | | 1.51x | | 1.51x | | 1.45x | | 1.59x
|
FINOVA Capital
| | 1.63x | | 1.60x |
| 1.55x | | 1.54x | | 1.51x | | 1.45x
| | 1.59x |
Variations in interest rates generally do not
have a substantial impact on the ratio because fixed-rate and
floating-rate assets are generally matched with liabilities of similar
rate and term. Income available for fixed charges, for purposes of
computing the above ratios, consists of income from continuing
operations before income taxes plus fixed charges. Fixed charges
consist of interest and related debt expense, and a portion of rental
expense determined to be representative of interest.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus and any supplements are
"forward-looking," in that they do not discuss historical fact but
instead note future expectations, projections, intentions or other
items relating to the future. These forward-looking statements include
those made in documents incorporated in this prospectus by reference.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results or
performance to differ materially from those contemplated by the
forward-looking statements. Many of those factors are noted in
conjunction with the forward-looking statements in the text. Other
important factors that could cause actual results to differ include:
- The results of our efforts to implement our business strategy.
Failure to fully implement our business strategy might result in
decreased market penetration, adverse effects on results of operations
and other adverse results.
- The effect of economic conditions and the performance of our
borrowers. Economic conditions in general or in particular market
segments could impact the ability of our 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.
- Actions of our competitors and our ability to respond to those
actions. We seek to remain competitive without sacrificing prudent
lending standards. Doing business under those standards becomes more
difficult, however, when competitors offer financing with less
stringent criteria. We seek to maintain credit quality at the risk of
growth in assets, if necessary.
- The cost of our capital. That cost depends on many factors,
some of which are beyond our control, such as our portfolio quality,
ratings, prospects and outlook.
- Changes in government regulations, tax rates and similar
matters. For example, government regulations could significantly
increase the cost of doing business or could eliminate certain tax
advantages of some of our financing products.
- Necessary technological changes, including those addressing
"Year 2000" data systems issues, may be more difficult, expensive
or time consuming than anticipated.
- Costs or difficulties related to integration of acquisitions.
- Other risks detailed in our other SEC reports or filings.
We do not intend to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could
affect those statements. We cannot predict the risk from reliance on
forward-looking statements in light of the many factors that could
affect their accuracy.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities
for general corporate purposes. Those purposes include the repayment or
refinancing of debt, acquisitions in the ordinary course of business,
working capital, investment in financing transactions and capital
expenditures. We will describe in the supplement any proposed use of
proceeds other than for general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
Debt Securities
The following summary applies only to the debt securities of FINOVA
Capital. If we issue debt securities of FINOVA Group, we will describe
those securities and the indenture under which they are issued in the
applicable supplement.
The debt securities of FINOVA Capital will be issued under one or more
indentures between FINOVA Capital and one or more U.S. banking
institutions (a "trustee"). The indentures may but need not have
separate trustees for senior and subordinated debt. We will list the
trustee for each series of securities in the applicable supplement.
The following summary of certain provisions of the indentures is not
complete. You should look at the indenture that applies to your
offering ("your indenture"). The indentures are filed as exhibits
to the Registration Statement. To obtain a copy of your indenture, see
"Where You Can Find More Information" on page 2.
All capitalized terms have the meanings specified in the
indentures.
General Indenture Provisions that Apply
to Senior and
Subordinated Debt
- The indentures do not limit the amount of debt that FINOVA
Capital may issue nor provide holders any protection should there be a
highly leveraged transaction involving our company. We may issue
additional debt securities without your consent.
- If FINOVA Capital redeems debt which is convertible into its
capital stock or other securities, your right to convert that debt into
capital stock or other securities will expire on the redemption date.
- The indentures allow FINOVA Capital to merge or to consolidate
with another company, or sell all or substantially all of its assets to
another company. If these events occur, the other company will be
required to assume FINOVA Capital's responsibilities on the debt, and
FINOVA Capital will be released from all liabilities and obligations.
- The indentures provide that holders of a majority of the
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.
- FINOVA Capital may discharge the debt issued in any series at
any time by depositing sufficient funds with the trustee to pay the
obligations when due. All amounts due to you on the debt would be paid
by the trustee from the deposited funds.
- If FINOVA Capital fails to meet its obligations on the
debt, it will be in default. Defaults for senior debt securities
are described on pages 11 and 12 of this prospectus.
General
The debt securities of FINOVA Group and FINOVA Capital offered by this
prospectus will be limited to $3.0 billion principal amount. The
indentures do not limit the amount of debt securities FINOVA Capital
could offer under them. FINOVA Capital can issue debt securities in one
or more series, in each case as authorized by us from time to time.
Each series may differ as to its terms. The debt securities will be
FINOVA Capital's unsecured general obligations and may or may not be
subordinated to FINOVA Capital's other general indebtedness. Those that
are not subordinated are called "senior debt securities." The
others are "subordinated debt securities."
The supplement will address the following terms of the debt securities:
- Their title.
- Any limits on the principal amounts to be issued.
- The dates on which the principal is payable.
- The rates (which may be fixed or variable) at which they shall
bear interest, or the method for determining rates.
- The dates from which the interest will accrue and will be
payable, or the method of determining those dates, and any record dates
for the payments due.
- Any provisions for redemption, conversion or exchange, at our
option or otherwise, including the periods, prices and terms of
redemption or conversion.
- Any sinking fund or similar provisions, whether mandatory or
at the holder's option, along with the periods, prices and terms of
redemption, purchase or repayment.
- The amount or percentage payable if we accelerate their
maturity, if other than the principal amount.
- Any changes to the events of default or covenants set forth in
your indenture.
- The terms of subordination, if any.
- Whether the series can be reopened.
- Any other terms consistent with your indenture.
We may authorize and determine the terms of a series of debt
securities by resolution of our board of directors or one of its
committees or through one or more supplemental indentures.
Form of Debt Securities
The debt securities will be issued in registered form. Unless the
supplement otherwise provides, debt securities will be issued as one or
more global securities. This means that we will not issue certificates
to each holder. We generally will issue global securities in the total
principal amount of the debt securities distributed in that series. We
will issue debt securities only in denominations of $1,000 or integral
multiples of that amount, unless the supplement states otherwise.
Global Securities
In General. Debt securities in global form will be
deposited with or on behalf of a depositary. Global securities are
represented by one or more global certificates for the series
registered in the name of the depositary or its nominee. Debt
securities in global form may not be transferred except as a whole
among the depositary, a nominee of or a successor to the depositary and
any nominee of that successor. Unless otherwise identified in the
supplement, the depositary will be The Depository Trust Company
("DTC").
No Depositary or Global Securities. If a depositary for a
series is unwilling or unable to continue as depositary, and a
successor is not appointed by us within 90 days, we will issue debt
securities of that series in definitive form in exchange for the global
security or securities of that series. We also may determine at any
time in our discretion not to use global securities for any series. In
that event, we will issue debt securities in definitive form.
Ownership of the Global Securities; Beneficial
Ownership. So long as the depositary or its nominee is the
registered owner of a global security, that entity will be the sole
holder of the debt securities represented by that instrument. The
trustee and we are only required to treat the depositary or its nominee
as the legal owner of those securities for all purposes under your
indenture.
Each actual purchaser of debt securities represented by a global
security (a "beneficial owner") will not be entitled to receive
physical delivery of certificated securities, will not be considered
the holder of those securities for any purpose under your indenture,
and will not be able to transfer or exchange the global securities,
unless this prospectus or the supplement provide to the contrary. As a
result, each beneficial owner must rely on the procedures of the
depositary to exercise any rights of a holder under your indenture. In
addition, if the beneficial owner is not a direct or indirect
participant in the depositary (each a "participant") the beneficial
owner must rely on the procedures of the participant through which it
owns its beneficial interest in the global security.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of the securities in certificated
form. Those laws and the above conditions may impair the ability to
transfer beneficial interests in the global securities.
The Depository Trust Company
The following is based on information furnished by DTC and applies to
the extent it is the depositary, unless otherwise stated in a
supplement:
Registered Owner. The debt securities will be issued as
fully registered securities in the name of Cede & Co. (DTC's
partnership nominee). One fully registered global security generally
will be issued for each $200 million principal amount of debt
securities. The trustee will deposit the global securities with the
depositary. The deposit of the global securities with DTC and its
registration in the name of Cede & Co. will not change the beneficial
ownership of the securities.
DTC Organization. DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization"
within the meaning of that 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 under the
provisions of Section 17A of the Securities Exchange Act of 1934, as
amended.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Direct participants
include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations who directly
participate in DTC (each a "direct participant"). Other entities
("indirect participants") may access DTC's system by clearing
transactions through or maintaining a custodial relationship with
direct participants, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the SEC.
DTC Activities. DTC holds securities that its participants
deposit with it. DTC also facilitates the settlement among participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
participant's accounts. Doing so eliminates the need for physical
movement of securities certificates.
Participants' Records. Except as otherwise provided in
this prospectus or a supplement, purchases of the debt securities must
be made by or through direct participants, which will receive a credit
for the securities on the depositary's records. The beneficial owner's
ownership interest is in turn to be recorded on the direct and indirect
participants' records. Beneficial owners will not receive written
confirmations from the depositary of their purchase, but they are
expected to receive them, along with periodic statements of their
holdings, from the direct or indirect participants through whom they
entered into the transaction.
Transfers of interests in the global securities will be made on the
books of the participants on behalf of the beneficial owners.
Certificates representing the interest of the beneficial owners in the
securities will not be issued unless the use of global securities is
suspended, as provided above.
The depositary has no knowledge of the actual beneficial owners of the
global securities. Its records only reflect the identity of the direct
participants as owners of the securities. Those participants may or may
not be the beneficial owners. Participants are responsible for keeping
account of their holdings on behalf of their customers.
Notices Among The Depositary, Participants and Beneficial
Owners. Notices and other communications by the depositary, its
participants and the beneficial owners will be governed by arrangements
among them, subject to any legal requirements in effect.
Voting Procedures. Neither DTC nor Cede & Co. will give
consents for or vote the global securities. The depositary generally
mails an omnibus proxy to us just after the applicable record date.
That proxy assigns Cede & Co.'s consenting or voting rights to the
direct participants to whose accounts the securities are credited at
that time.
Payments. Principal and interest payments made by us will
be delivered to the depositary. DTC's practice is to credit direct
participants' accounts on the applicable payment date unless it has
reason to believe it will not receive payment on that date. Payments by
participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities
held for customers in bearer form or registered in "street name."
Those payments will be the responsibility of that participant, not the
depositary, the trustee or us, subject to any legal requirements in
effect at that time.
We are responsible for payment of principal, interest and premium, if
any, to the trustee, who is responsible to pay it to the depositary.
The depositary is responsible for disbursing those payments to direct
participants. The participants are responsible for disbursing payments
to the beneficial owners.
Transfer or Exchange of Securities
You may transfer or exchange the debt securities (other than a global
security) without service charge at our office designated for that
purpose or at the office of any transfer agent or security registrar
identified under your indenture. You must execute a proper form of
transfer and pay any taxes and other governmental charges resulting
from that action. You may transfer or exchange the debt securities
(other than a global security) initially at our offices at 1850 North
Central Avenue, P.O. Box 2209, Phoenix, Arizona 85002-2209 or at our
office or agency established for that purpose in New York, New York.
Debt securities in the several denominations will be interchangeable
without service charge, but we may require payment to cover taxes and
other governmental charges. The trustee noted in the supplement
initially will act as authenticating agent under your indenture.
Same-Day Settlement and Payment
Unless the supplement otherwise provides, the debt securities will be
settled in immediately available funds. We will make payments of
principal and interest in immediately available funds.
Payment and Paying Agent
If the debt securities are not held in global form, we will make
payment of principal and premium, if any, against surrender of the debt
securities at the principal office of the trustee in New York, New
York. We will pay any installment of interest on debt securities to the
record holder on the record date for that interest. We can make those
payments through the trustee, as noted above, by check mailed by first
class mail to the registered holders at their registered address or by
wire transfer to an eligible account of the registered holder.
If any payments of principal, premium or interest are not claimed
within three years of the date the payment became due, those funds are
to be repaid to us. The beneficial owners of those interests thereafter
will look only to us for payment for those amounts.
Indenture Covenants, Defaults
and Amendments
Limitation on Liens. The indentures prohibit FINOVA Capital
from creating or permitting any lien or similar encumberance (a
"lien") on any of its properties unless FINOVA Capital secures the
senior debt securities equally and ratably with any other obligation
secured in that manner. The indentures contain the following exceptions
to that prohibition:
- Leases of property in the ordinary course of business or if
the property is not needed in the operation of our business.
- Purchase money security interests that are non-recourse to
FINOVA Capital or designated subsidiaries except to the extent of the
property so acquired or any proceeds from that property, or both.
- Governmental deposits or security as a condition to the
transaction of business or the exercise of a privilege, or to maintain
self-insurance, or to participate in any fund in connection with
worker's compensation, unemployment insurance, pensions, social
security or for appeal bonds.
- Liens for taxes or assessments not yet due or which are
payable without a penalty or are being contested in good faith and with
adequate reserves, so long as foreclosure or similar proceedings are
not commenced.
- Judgment liens that have not remained undischarged or unstayed
for more than six months.
- Incidental or undetermined construction, mechanics or similar
liens arising in the ordinary course of business relating to
obligations not overdue or which are being contested by FINOVA Capital
or a designated subsidiary in good faith and deposits for releases of
such liens.
- Zoning restrictions, licenses, easements and similar
encumbrances or defects if immaterial.
- Other liens immaterial in the aggregate incidental to FINOVA
Capital's or a designated subsidiary's business or property, other than
for indebtedness.
- Banker's liens and set off rights in the ordinary course of
business.
- Leasehold or purchase rights, exercisable for fair
consideration, arising in the ordinary course of business.
- Liens on property or securities existing when an entity
becomes a designated subsidiary or merges with FINOVA Capital or a
designated subsidiary, provided they are not incurred in anticipation
of those events.
- Liens on property or securities existing at the time of
acquisition.
- Liens in a total amount less than $25 million, excluding liens
covered by the exceptions noted above.
- Liens securing indebtedness of FINOVA Capital or a designated
subsidiary provided those and similar liens on indebtedness do not
exceed 10% of consolidated net tangible assets, as that term is
defined in the indentures, excluding certain preexisting indebtedness
and those liens permitted above.
Merger, Consolidation and Sale of Assets. FINOVA Capital
cannot merge with or into, consolidate with, sell or lease all or
substantially all of its assets to or purchase all or substantially all
the assets of another corporation unless it will be the surviving
corporation or the successor is incorporated in the U.S. and
assumes all of FINOVA Capital's obligations under the debt securities
and your indenture. Immediately after that transaction, however, no
default can exist. A purchase by a subsidiary of all or substantially
all of the assets of another corporation will not be a purchase of
those assets by FINOVA Capital. If, however, any of the transactions
noted in this paragraph occurs and results in a lien on any of FINOVA
Capital's properties (except as permitted above), FINOVA Capital must
simultaneously secure the senior debt securities equally and ratably
with the debt secured by that lien.
Defaults. Events of default under the indenture for any
series are:
- Failure for 30 days to pay interest on any debt securities of
that series.
- Failure to pay principal (other than sinking fund redemptions)
or premium, if any, on debt securities of that series.
- Failure for 30 days to pay any sinking fund installment on
that series.
- Violation of a covenant under the indenture pertaining to that
series that persists for at least 90 days after FINOVA Capital is
notified by the trustee or the holders of 25% of the series.
- Default in other instruments or under any other series of debt
securities resulting in acceleration of indebtedness over $15 million,
unless that default is rescinded or discharged within 10 days after
written notice by the trustee or the holders of 10% of that series.
- Bankruptcy, insolvency or similar event.
- Any other event of default with respect to the debt securities
of that series.
If an event of default occurs and continues, the trustee or the holders
of at least 25% of the series may declare those debt securities due
and payable. FINOVA Capital is required to certify to the trustees
annually as to its compliance with the indentures. A default under one
series does not necessarily mean that a default or an event of default
will have occurred under another series under that indenture or any
other indenture.
Holders of a majority of the principal of a series may control certain
actions of the trustee and may waive past defaults for that series.
Except as provided in your indenture, the trustee will not be under any
obligation to exercise any of the rights or powers vested in it by your
indenture at the request, order or direction of any holder unless one
or more of them shall have offered reasonable indemnity to the trustee.
If an event of default occurs and is continuing, the trustee may
reimburse itself for its reasonable compensation and expenses incurred
out of any sums held or received by it before making any payments to
the holders of the debt securities of the defaulted series.
The right of any holders of debt securities of a series to commence an
action for any remedy is subject to certain conditions, including the
requirement that the holders of at least 25% of that series request
that the trustee take such action, and offer reasonable indemnity to
the trustee against its liabilities incurred in doing so.
Defeasance
FINOVA Capital may defease the debt securities of a series, meaning it
would satisfy its duties under that series before maturity. It may do
so by depositing with the trustee, in trust for the benefit of the
holders, either enough funds to pay, or direct U.S. government
obligations that, together with the income of those obligations
(without considering any reinvestment), will be sufficient to pay, the
obligation of that series, including principal, premium, if any, and
interest. Certain other conditions must be met before it may do so.
FINOVA Capital must deliver an opinion of counsel that the holders of
that series will have no Federal income tax consequences as a result of
that deposit.
Modification of Your Indenture. The trustee and FINOVA
Capital may amend your indenture without consent of the holders of debt
securities to do certain things, such as establishing the form and
terms of any series of debt securities. FINOVA Capital must obtain
consent of holders of at least two-thirds of the outstanding debt
securities affected by a change to amend the terms of your indenture or
any supplemental indenture applicable to your securities or the rights
of the holders of those debt securities.
Unanimous consent is required for changes to extend the fixed maturity
of any debt securities, reduce the principal, redemption premium or
rate of interest, extend the time of payment of interest, change the
form of currency, limit the right to sue for payment on or after
maturity of the debt securities, adversely affect the right, if any, to
convert or exchange the debt securities or adversely affect the
subordination provisions, if any. Unanimous consent is also required to
reduce the level of consents needed to approve any of those changes.
The trustee must consent to changes modifying its rights, duties or
immunities.
Subordination
The terms and conditions of any subordination of subordinated debt
securities to other indebtedness of FINOVA Capital will be described in
the supplement relating to the subordinated debt securities. The terms
will include a description of the indebtedness ranking senior to the
subordinated debt securities, the restrictions on payments to the
holders of the subordinated debt securities while a default exists with
respect to senior indebtedness, any restrictions on payments to the
holders of the subordinated debt securities following an event of
default and provisions requiring holders of the subordinated debt
securities to remit certain payments to holders of senior indebtedness.
Because of the subordination, if FINOVA Capital becomes insolvent,
holders of the subordinated debt securities may recover less, ratably,
than other creditors of FINOVA Capital, including holders of senior
indebtedness.
Conversion
Debt securities may be convertible into or exchangeable for common
stock, preferred stock, other debt securities, warrants or other
securities of FINOVA Capital, or securities of any other issuer or
obligor. The supplement will describe the terms of any conversion
rights.
Concerning the Trustees
The trustees may, but need not be, banks in FINOVA Capital's credit
agreements and from time to time may perform other banking, trust or
related services or investment banking services on behalf of FINOVA
Group, FINOVA Capital or our customers.
DESCRIPTION OF CAPITAL STOCK
The following summary of material provisions of the common stock,
the preferred stock, the junior participating preferred stock (the
"Junior Preferred Stock") and the rights to purchase the Junior
Preferred Stock (the "Rights") of FINOVA Group is not complete. You
should refer to the certificate of incorporation and bylaws of FINOVA
Group, as amended, FINOVA Group's certificate of designations for the
Junior Preferred Stock and the Rights Agreement dated as of February
15, 1992, as amended and restated as of September 14, 1995 (the
"Rights Agreement"), between FINOVA Group and Harris Trust &
Savings Bank, as successor Rights Agent. To obtain copies of those
documents, see "Where You Can Find More Information" on page 2. If
we issue capital stock of FINOVA Capital, we will describe those
securities in the applicable supplement.
FINOVA Group is authorized by its certificate of incorporation to issue
420,000,000 shares of capital stock, consisting of 20,000,000 shares of
preferred stock, par value $.01 per share, and 400,000,000 shares of
common stock, par value $.01 per share. As of May 25, 1999, there were
61,082,445 shares of common stock outstanding (excluding 3,555,481
treasury shares held by FINOVA Group) and no shares of preferred stock
outstanding. However, FINOVA Group has authorized 600,000 shares of
Junior Preferred Stock which have been reserved for issuance on the
exercise of the Rights.
Common Stock
The holders of the common stock are entitled to one vote per share.
FINOVA Group's certificate of incorporation does not provide for
cumulative voting in the election of directors. The board may declare
dividends on the common stock in its discretion, if funds are legally
available for those purposes. On liquidation, common stockholders are
entitled to receive pro rata any remaining assets of FINOVA Group,
after we satisfy or provide for the satisfaction of all liabilities as
well as obligations on our preferred stock, if any. The holders of
common stock do not have preemptive rights to subscribe for or purchase
any shares of capital stock or other securities of FINOVA Group.
Preferred Stock
Under FINOVA Group's certificate of incorporation, the board is
authorized, without stockholder action, to issue preferred stock in one
or more series, with the designations, powers, preferences, rights,
qualifications, limitations and restrictions as the board determines.
Thus, the board, without stockholder approval, could authorize the
issuance of preferred stock with voting, conversion and other rights
that could adversely affect the voting power and other rights of the
holders of the common stock or that could make it more difficult for
another company to enter into certain business combinations with FINOVA
Group. See "-- Additional Provisions of the Certificate of
Incorporation, the Bylaws and Delaware Law -- Preferred Stock" below.
Shareholder Rights Plan
In 1992, FINOVA Group issued one Right for each outstanding share of
common stock. FINOVA Group has and will continue to issue one Right
with each newly issued share of its common stock (including stock
issued on conversion of preferred securities). The obligation to
continue to issue the Rights, however, will terminate on the
expiration, exchange or redemption of the Rights.
Each Right entitles the registered holder to purchase from FINOVA Group 1/200th of a share of the Junior Preferred Stock. The purchase
price is $67.50 per 1/200th of a share, subject to adjustment
under certain circumstances.
The Rights will trade only with the common stock and FINOVA Group will
not issue separate certificates for the Rights until the "Rights
Distribution Date." That date occurs on the first to occur of the
following events:
- 10 days after a public announcement (the "Share Acquisition
Date") that a person or group of persons acting together has become
the beneficial owner of at least 20% or more of FINOVA Group's common
stock, directly or indirectly (becoming an "Acquiring Person"), or
- 10 business days after the start or announcement of an
intention to make a tender offer or exchange offer that would result in
a person or group acting together beneficially owning 20% or more of
FINOVA Group's common stock, directly or indirectly. The board,
however, may extend that 10 business day deadline prior to the time the
person or group becomes an Acquiring Person.
The Rights may not be exercised until the Rights Distribution Date. The
Rights will expire on February 28, 2002 unless we extend that date or,
unless we redeem or exchange the Rights before then.
The value of each 1/200th interest in a share of Junior
Preferred Stock is intended to approximate the value of one share of
FINOVA Group common stock, due to the dividend, liquidation and voting
rights of the Junior Preferred Stock, although there can be no
assurance the value will be the same.
How the Rights Work. If a person or group becomes an
Acquiring Person, their Rights become void. The other Rights holders
will have the right to exercise their Rights, at the then current
exercise price, for FINOVA Group common stock having a market value of
two times the exercise price of the Right. That right to purchase,
however, will not exist if the Rights Distribution Date is due to a
tender or exchange offer for all of FINOVA Group's common stock and the
independent members of our board determine that the offer is at a fair
price, on fair terms and is otherwise in the best interests of FINOVA
Group and its stockholders.
The other Rights holders also will have the same exercise rights
described above if, after a person or group becomes an Acquiring
Person, FINOVA Group is acquired in a merger or business combination or
at least half of our total assets and earning power are sold. The
exception is the same as the one noted in the above paragraph, provided
that the price offered to the shareholders for each share of common
stock is not less than that paid in the tender or exchange offer, and
the consideration is in the same form as that paid in the tender or
exchange offer. If the requirements of this exception are met, then the
Rights will expire.
Exchange of Rights. After a person or group becomes an
Acquiring Person but before the Acquiring Person acquires at least half
of the outstanding common stock, our board may exchange all or some of
the Rights at an exchange ratio of one share of common stock for 1/200th of a share of Junior Preferred Stock per Right,
subject to adjustment.
Redemption of Rights. We may redeem all the Rights, but not
some of them, for $.005 per Right at any time before the earlier of 15
days after the Share Acquisition Date or the expiration date noted
above. The board may determine the conditions, terms and effective date
for the redemption. We may pay the redemption price in cash, common
stock or any other method selected by the board. Upon redemption, the
right to exercise the Rights will terminate and the holders will only
have the right to receive the redemption price.
No Rights as a Stockholder. Rights holders, as Rights
holders, have no independent rights as stockholders of FINOVA Group,
including the right to vote or to receive dividends, until the Rights
are exercised.
Antitakeover Effects. The Rights may discourage a takeover.
The Rights will substantially dilute the ownership interest in our
shares of any Acquiring Person. That dilution would impair the ability
of the Acquiring Person to change the composition of our board. It also
would impact its ability to acquire FINOVA Group on terms not approved
by our board, including through a tender offer at a premium to the
market price, other than through an offer conditioned on a substantial
number of Rights being acquired. The Rights should not interfere with
any merger or business combination approved by the board, since we may
redeem the Rights before they become exercisable.
Junior Preferred Stock Not Registered. The Junior
Preferred Stock is not registered with the SEC or any other securities
administrator. If the Rights become exercisable, we intend to register
with the SEC the Junior Preferred Stock exchangeable for the Rights.
Additional Provisions of the Certificate of
Incorporation, the
Bylaws and Delaware Law
FINOVA Group's certificate of incorporation and bylaws contain
provisions that could make more difficult our acquisition by means of a
tender offer, a proxy contest or otherwise. This description is only a
summary and does not provide all the information contained in FINOVA
Group's certificate of incorporation and bylaws. To obtain copies of
these documents, see "Where You Can Find More Information" on page
2.
Delaware law permits a corporation to eliminate or limit the personal
liability of its directors to the corporation or to any of its
stockholders for monetary damages for a breach of fiduciary duty as a
director, except (i) for breach of the director's duty of loyalty, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for unlawful dividends
and stock purchases and redemptions or (iv) for any transaction from
which the director derived an improper personal benefit. FINOVA Group's
certificate of incorporation provides that no director will be
personally liable to FINOVA Group or its stockholders for monetary
damages for any breach of his or her fiduciary duty as a director,
except as provided by Delaware law.
Board of Directors. FINOVA Group's certificate of
incorporation and bylaws divide the board into three classes of
directors, with the classes to be as nearly equal in number as
possible. The stockholders elect one class of directors each year for a
three-year term.
The classification of directors makes it more difficult for
stockholders to change the composition of the board. At least two
annual meetings of stockholders, instead of one, generally will be
required to change a majority of the board. That delay may help ensure
that FINOVA Group's directors, if confronted by a proxy contest, tender
or exchange offer or extraordinary corporate transaction, would have
sufficient time to review the proposal as well as any available
alternatives to the proposal and to act in what they believe to be
the best interest of the stockholders. The classification provisions
apply to every election of directors, regardless of whether a change
in the composition of the board would be beneficial to FINOVA Group
and its stockholders and whether or not a majority of the
stockholders believe that such a change is desirable.
The classification provisions also could discourage a third party from
initiating a proxy contest, tender offer or other attempt to obtain
control of FINOVA Group, even though an attempt might be beneficial to
FINOVA Group and its stockholders. The classification of the board thus
increases the likelihood that incumbent directors will retain their
positions. In addition, because the classification provisions may
discourage accumulations of large blocks of FINOVA Group's stock by
purchasers whose objective is to take control of FINOVA Group and
remove a majority of the board, the classification of the board could
reduce the likelihood of fluctuations in the market price of the common
stock that might result from accumulations of large blocks.
Accordingly, stockholders could be deprived of certain opportunities to
sell their shares of common stock at a higher market price than
otherwise might be the case.
Number of Directors; Removal; Filling Vacancies. FINOVA
Group's certificate of incorporation provides that the number of
directors will be fixed in the manner provided in the bylaws, subject
to any rights of preferred stockholders to elect additional directors
under specified circumstances. FINOVA Group's bylaws provide that,
subject to any rights of holders of preferred stock to elect directors
under specified circumstances, the number of directors will be fixed
from time to time exclusively by directors constituting a majority of
the total number of directors that FINOVA Group would have if there
were no vacancies on the board, but must consist of between 3 and 17
directors.
In addition, FINOVA Group's bylaws provide that, subject to any rights
of preferred stockholders, and unless the board otherwise determines,
any vacancies will be filled only by the affirmative vote of a majority
of the remaining directors, though less than a quorum. Accordingly,
absent an amendment to the bylaws, the board could prevent any
stockholder from enlarging the board and filling the new directorships
with that stockholder's own nominees.
Under Delaware law, unless otherwise provided in the certificate of
incorporation, directors serving on a classified board may only be
removed by the stockholders for cause. In addition, FINOVA Group's
certificate of incorporation and bylaws provide that directors may be
removed only for cause and only upon the affirmative vote of holders of
at least 80% of the voting power of all the then outstanding shares of
stock entitled to vote generally in the election of directors, voting
together as a single class.
Stockholder Action by Written Consent; Special
Meetings. Stockholders of FINOVA Group must act only through an
annual or special meeting. Stockholders cannot act by written consent
in lieu of a meeting. Only the Chairman or a majority of the whole
board of FINOVA Group may call a special meeting. Stockholders of
FINOVA Group are not able to call a special meeting to require that the
board do so. At a special meeting, stockholders may consider only the
business specified in the notice of meeting given by FINOVA Group.
Preferred stockholders may be given different rights from those noted
above.
The provisions of FINOVA Group's certificate of incorporation and
bylaws prohibiting stockholder action by written consent may have the
effect of delaying consideration of a stockholder proposal until the
next annual meeting, unless a special meeting is called by the Chairman
or at the request of a majority of the whole board. These provisions
also would prevent the holders of a majority of stock from unilaterally
using the written consent procedure to take stockholder action.
Moreover, a stockholder could not force stockholder consideration of a
proposal over the opposition of the Chairman and the board by calling a
special meeting of stockholders prior to the time the Chairman or a
majority of the whole board believes that consideration to be
appropriate.
Advance Notice Provisions for Stockholder Nominations and
Stockholder Pro- posals. The bylaws establish an advance notice
procedure for stockholders to nominate directors, or bring other
business before an annual meeting of stockholders of FINOVA Group.
A person may not be nominated for a director position unless that
person is nominated by or at the direction of the board or by a
stockholder who has given appropriate notice to FINOVA Group's
Secretary during the periods noted below prior to the meeting.
Similarly, stockholders may not bring business before an annual meeting
unless the stockholder has given FINOVA Group's Secretary appropriate
notice of their or its intention to bring that business before the
meeting. FINOVA Group's Secretary must receive the nomination or
proposal between 70 and 90 days before the first anniversary of the
prior year's annual meeting. If FINOVA Group's annual meeting date is
advanced by more than 20 days or delayed by more than 70 days from that
anniversary date, then we must receive the notice between 90 days
before the meeting and the later of the 70th day before the meeting
or 10 days after the meeting date is first publicly announced.
If the board increases the number of directors and if we have not
publicly announced nominees for each open position within 80 days
before the first anniversary of the prior year's annual meeting,
stockholders may nominate directors for the new position, but only
those newly created positions, if FINOVA Group's Secretary receives the
notice no later than 10 days following public announcement of that
change.
Stockholders may nominate directors only at a special meeting by
sending appropriate notice for receipt by our Secretary between the
90th day before the meeting and the later of the 70th day before the
meeting or the 10th day after the first public announcement of the
meeting date.
A stockholder's notice proposing to nominate a person for election as a
director must contain certain information, including, without
limitation, the identity and address of the nominating stockholder, the
class and number of shares of stock of FINOVA Group beneficially owned
by the stockholder and all information regarding the proposed nominee
that would be required to be included in a proxy statement soliciting
proxies for the proposed nominee. A stockholder's notice relating to
the conduct of business other than the nomination of directors must
contain certain information about that business and about the proposing
stockholder, including, without limitation, a brief description of the
business the stockholder proposes to bring before the meeting, the
reasons for conducting that business at such meeting, the name and
address of such stockholder, the class and number of shares of stock of
FINOVA Group beneficially owned by that stockholder and any material
interest of the stockholder in the business so proposed. If the
Chairman or other officer presiding at a meeting determines that a
person was not nominated, or other business was not brought before the
meeting, in accordance with these procedures, the person will not be
eligible for election as a director, or the business will not be
conducted at the meeting, as appropriate.
Advance notice of nominations or proposed business by stockholders
gives the board time to consider the qualifications of the proposed
nominees, the merits of the proposals and, to the extent deemed
necessary or desirable by the board, to inform stockholders about those
matters. The board also may recommend positions regarding those
nominees or proposals, so that stockholders can better decide whether
to attend the meeting or to grant a proxy regarding the nominee or that
business.
Although the bylaws do not give the board any power to approve or
disapprove stockholder nominations for the election of directors or
proposals for action, these procedures may preclude a contest for the
election of directors or the consideration of stockholder proposals if
the proper procedures are not followed, and of discouraging or
deterring a third party from conducting a solicitation of proxies to
elect its own slate of directors or to approve its own proposal,
without regard to whether consideration of such nominees or proposals
might be harmful or beneficial to FINOVA Group and its stockholders.
Preferred Stock. FINOVA Group's certificate of
incorporation authorizes the board to establish one or more series of
preferred stock and to determine, with respect to any series of
preferred stock, the terms and rights of that series, including:
- the designation of the series,
- the number of shares of the series, which the board may
(except where otherwise provided by the terms of that series) increase
or decrease (but not below the number of shares thereof then
outstanding),
- whether dividends, if any, will be cumulative or noncumulative
and the dividend rate of the series, if any,
- the dates at which dividends, if any, will be payable,
- the redemption rights and price or prices, if any, for shares
of the series,
- the terms and amounts of any sinking fund provided for the
purchase or redemption of shares of the series,
- the amounts payable on shares of the series in the event of
any voluntary or involuntary liquidation, dissolution or winding up of
the FINOVA Group's affairs,
- whether the shares of the series will be convertible into
shares of any other class or series, or any other security, of FINOVA
Group or any other corporation, and, if so, the specification of
another class or series or another security, the conversion price or
prices or rate or rates, any adjustments to the prices 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,
- restrictions on the issuance of shares of the same series or
of any other class or series and
- the voting rights, if any, of the holders of shares of the
series.
FINOVA Group believes that the ability of the board to issue one or
more series of preferred stock will provide FINOVA Group with
flexibility in structuring possible future financings and acquisitions,
and in meeting other corporate needs which might arise. The authorized
shares of preferred stock, as well as shares of common stock, will be
available for issuance without further action by FINOVA Group's
stockholders, unless approval is required by applicable law or the
rules of any stock exchange or automated quotation system on which
FINOVA Group's securities are listed or traded. The NYSE currently
requires stockholder approval in several instances, including where the
present or potential issuance of shares could result in an increase in
the number of shares of common stock, or in the amount of voting
securities, outstanding of at least 20%, subject to certain
exceptions. If the approval of FINOVA Group's stockholders is not
required for the issuance of shares of preferred stock or common stock,
the board may determine not to seek stockholder approval.
Although the board has no intention at the present time of doing so, it
could issue a series of preferred stock that could, depending on its
terms, impede a merger, tender offer or other takeover attempt. The
board will make any determination to issue shares with those terms
based on its judgment as to the best interests of FINOVA Group and its
stockholders. The board, in so acting, could issue preferred stock
having terms that could discourage an acquisition attempt in which an
acquiror would change the composition of the board, including a tender
offer or other transaction. An acquisition attempt could be discouraged
in this manner even if some, or a majority, of FINOVA Group's
stockholders might believe it to be in their best interests or in which
stockholders might receive a premium for their stock over the then
current market price of the stock.
Merger/Sale of Assets. FINOVA Group's certificate of
incorporation provides that certain "business combinations" must be
approved by the holders of at least 66-2/3 of the voting power
of the shares not owned by an "interested shareholder", unless the
business combinations are approved by the "Continuing Directors" or
meet certain requirements regarding price and procedure. The terms
quoted in this paragraph are defined in the certificate of
incorporation.
Amendment of the Certificate of Incorporation and
Bylaws. Under Delaware law, stockholders may adopt, amend or
repeal the bylaws and, with approval of the board, the certificate of
incorporation of a corporation. In addition, a corporation's board may
adopt, amend or repeal the bylaws if allowed by the certificate of
incorporation. FINOVA Group's certificate of incorporation requires a
vote of:
- at least 80% of the outstanding shares of voting stock,
voting together as a single class, to amend provisions of the
certificate of incorporation relating to the prohibition of
stockholder action without a meeting; the number, election and term
of FINOVA Group's directors; and the removal of directors;
- at least 66-2/3 of the outstanding shares of voting
stock, voting together as a single class, to amend the provisions of
the certificate of incorporation relating to to approval of certain
business combinations; and
- at least a majority of the outstanding shares of voting stock,
voting together as a single class, to amend all other provisions of the
certificate of incorporation.
FINOVA Group's certificate of incorporation further provides that the
bylaws may be amended by the board or by the affirmative vote of the
holders of at least 80% of the voting power of the outstanding shares
of voting stock, voting together as a single class. These supermajority
voting requirements make the amendment by stockholders of the bylaws or
of any of the provisions of the certificate of incorporation described
above more difficult, even if a majority of FINOVA Group's
stockholders believe that amendment would be in their best interests.
Antitakeover Legislation. Subject to exceptions, Delaware
law does not allow a corporation to engage in a business combination
with any "interested stockholder" for a three-year period following
the date that the stockholder becomes an interested stockholder, unless
(i) prior to that date, the board approved either the business
combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) on that date, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain
shares) or (iii) on or subsequent to that date, the board and
66-2/3 of the outstanding voting stock not owned by the
interested stockholder approved the business combination. Except as
specified by Delaware law, an interested stockholder includes (x) any
person that is the owner of 15% or more of the outstanding voting
stock of the corporation, or is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation, at any time within three years immediately
prior to the relevant date, and (y) the affiliates and associates of
that person.
Under some circumstances, Delaware law makes it more difficult for an
"interested stockholder" to enter into various business
combinations with a corporation for a three-year period, although
stockholders may adopt an amendment to a corporation's certificate of
incorporation or bylaws excluding the corporation from those
restrictions. However, FINOVA Group's certificate of incorporation and
bylaws do not exclude FINOVA Group from the restrictions imposed under
Delaware law. These provisions of Delaware law may encourage companies
interested in acquiring FINOVA Group to negotiate in advance with the
board, since the stockholder approval requirement would be avoided if a
majority of the board approves either the business combination or the
transaction which results in the stockholder becoming an interested
stockholder.
DESCRIPTION OF DEPOSITARY SHARES
The following summary of certain provisions of the Deposit
Agreement, the depositary shares and depositary receipts is not
complete. You should refer to the forms of Deposit Agreement and
depositary receipts relating to each series of preferred stock that
will be filed with the SEC. To obtain copies of these documents once
filed, see "Where You Can Find More Information" on page 2.
General
We may offer fractional interests in shares of preferred stock, instead
of shares of preferred stock. If we do, we will have a depositary issue
to the public receipts for depositary shares, each of which will
represent fractional interests of a particular series of preferred
stock.
We will deposit shares of any series of preferred stock underlying the
depositary shares under a separate deposit agreement between us and a
bank or trust company selected by us having its principal office in the
U.S. and having a combined capital and surplus of at least $50 million.
Subject to the terms of the deposit agreement, each owner of depositary
shares will be entitled, in proportion to the applicable fractional
interests in shares of preferred stock underlying the depositary shares
to all the rights and preferences of the preferred stock underlying the
depositary shares. Those rights include dividend, voting, redemption,
conversion and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
under the deposit agreement. Individuals purchasing the fractional
interests in shares of the related series of preferred stock will
receive depositary receipts according to the terms of the offering
described in the supplement.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received for the preferred stock to the record holders of
depositary shares representing the preferred stock in proportion to the
number of depositary shares owned by those holders on the relevant
record date. The depositary will distribute only the amount that can be
distributed without attributing to any holder of depositary shares a
fraction of one cent. The undistributed balance will be added to and
treated as part of the next amount received by the depositary for
distribution to record holders of depositary shares.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary
shares, in proportion, if possible, to the number of depositary shares
owned by those holders, unless the depositary determines (after
consulting with us) that it cannot make the distribution. If this
occurs, the depositary may, with our approval, sell the property and
distribute the net proceeds from the sale to the holders of depositary
shares.
The deposit agreement also will state how any subscription or similar
rights offered by us to holders of the preferred stock will be made
available to holders of depositary shares.
Conversion and Exchange
If any series of preferred stock underlying the depositary shares is
subject to conversion or exchange, each record holder of depositary
receipts may convert or exchange the depositary shares represented by
those depositary receipts.
Redemption of Depositary Shares
If a series of the preferred stock underlying the depositary shares is
subject to redemption, the depositary will redeem the depositary shares
from the proceeds received by the depositary in the redemption, in
whole or in part, of the series of the preferred stock held by the
depositary. The depositary will mail notice of redemption within 30 to
60 days prior to the date fixed for redemption to the record holders of
the depositary shares to be redeemed at their addresses appearing in
the depositary's books. The redemption price per depositary share will
equal the applicable fraction of the redemption price per share payable
on such series of the preferred stock. Whenever we redeem shares of
preferred stock held by the depositary, the depositary will redeem as
of the same redemption date, the number of depositary shares
representing the preferred stock. The depositary shares to be redeemed
will be selected by lot or pro rata as determined by the depositary
when less than all outstanding depositary shares will be redeemed.
After the redemption date, the depositary shares redeemed will no
longer be outstanding. When this occurs, all rights of the holders will
cease, except the right to receive money, securities or other property
payable upon redemption and any money, securities or other property
that the holders of depositary shares were entitled to on the
redemption upon surrender to the depositary of the depositary receipts
evidencing the depositary shares redeemed.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the
preferred stock are entitled to vote, the depositary will mail all
relevant information to the record holders of the depositary shares
representing the preferred stock. The record holders may instruct the
depositary how to vote the shares of preferred stock underlying their
depositary shares. The depositary will try, if practical, to vote the
number of shares of preferred stock underlying the depositary shares
according to the instructions, and we will agree to take all reasonable
action requested by the depositary so the depositary may follow the
instructions.
Amendment and Termination of
Depositary Agreement
The form of depositary receipt and any provision of the deposit
agreement may be amended by agreement between us and the depositary.
However, any amendment that materially and adversely alters the rights
of the existing holders of depositary shares will not be effective
unless approved by the record holders of at least a majority of the
depositary shares then outstanding. We or the depositary may only
terminate the deposit agreement if (a) all related outstanding
depositary shares have been redeemed or (b) there has been a final
distribution of the preferred stock of the relevant series in
connection with our liquidation, dissolution or winding up and that
distribution has been distributed to the holders of the related
depositary shares.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. We
will pay associated charges of the depositary for the initial deposit
of the preferred stock and any redemption of the preferred stock.
Holders of depositary shares will pay transfer and other taxes and
governmental charges and any other charges stated in the deposit
agreement to be for their accounts.
Resignation and Removal of Depositary
The depositary may resign by delivering notice to us, and we may remove
the depositary. Resignations or removals will take effect upon the
appointment and acceptance of a successor depositary. We must appoint a
successor depositary within 60 days after delivery of the notice of
resignation or removal. The successor depositary must be a bank or
trust company having its principal office in the U.S. and having a
combined capital and surplus of at least $50 million.
Miscellaneous
The depositary will send to the holders of depositary shares all
reports and communications from us that we must furnish to the holders
of preferred stock.
We and the depositary will not be liable if we are prevented or
delayed by law or any circumstance beyond our control in performing
our obligations under the deposit agreement. Those obligations will
be limited to performance in good faith of duties set forth in the
deposit agreement. We and the depositary will not be obligated to
prosecute or defend any legal proceeding connected with any depositary
shares or preferred stock unless satisfactory indemnity is furnished.
We and the depositary may rely upon written advice of counsel or
accountants, or information provided by persons presenting preferred
stock for deposit, holders of depositary shares, or other persons
believed to be competent and on documents believed to be genuine.