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Proc-Type: 2001,MIC-CLEAR
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S-2
Filed pursuant to Rule 424(b)(5)
File Nos. 333-74473 and 333-74473-01
Prospectus Supplement
(To Prospectus dated July 7,
1999)
[FINOVA LOGO]
$1,500,000,000
$350,000,000 Floating
Rate Notes
Due November 8,
2002
$1,150,000,000 7.25% Notes
Due November 8, 2004
FINOVA Capital Corporation
1850 N. Central Avenue
P.O.
Box 2209
Phoenix, Arizona 85002-2209
TERMS OF NOTES
Maturity
The
Floating Rate Notes will mature on
November 8, 2002.
The Notes
Due 2004 will mature on November 8, 2004.
Interest
Floating Rate
Notes:
Interest at a floating rate equal to the Three
Month Libor Rate plus 63 basis points paid on
February 8, May 8, August 8 and November 8
accruing from the
date we first issue the
Floating Rate Notes.
First interest
payment date on February 8, 2000.
Notes Due 2004:
Interest paid on
May 8 and November 8, accruing from
the date we first issue the Notes Due 2004.
First interest
payment date on May 8, 2000.
Redemption
No redemption before maturity
unless certain tax events occur. No sinking
fund.
Ranking
The Notes are unsecured. The Notes
rank equally with all of our existing and future senior debt and
senior to all of our existing and future subordinated
debt.
Listing
We are applying to list the Notes
on the Luxembourg Stock Exchange.
Form
Global
securities delivered through The Depository Trust Company and its
participants, including the Euroclear System and Cedelbank.
Floating Rate Notes
Notes Due
2004
Per
Note
Total
Per Note
Total
Price to the Public
100.000%
$ 350,000,000
99.608%
$ 1,145,492,000
Underwriting
Discounts and Commissions
0.225%
$ 787,500
0.350%
$ 4,025,000
Proceeds to FINOVA
97.775%
$ 349,212,500
99.258%
$ 1,141,467,000
Accrued interest from
the issuance date will be added to the price to the public.
The Notes
have not been approved or disapproved by the SEC or any state
securities commission. None of those authorities has determined that
the prospectus or this supplement is accurate or complete. Any
representation to the contrary is a criminal offense.
Book entry
delivery of Notes expected on
November 8, 1999, subject to
conditions.
Joint
Book-Running Managers
Deutsche Banc Alex.
Brown
Salomon Smith
Barney
Co-Lead Managers
Barclays
Capital
Credit Suisse First Boston
Morgan Stanley Dean Witter
Paribas
Co-Managers
ABN AMRO
Incorporated
Warburg Dillon Read
LLC
The date of this
Prospectus Supplement is November 1, 1999.
TABLE OF CONTENTS
Page
PROSPECTUS
SUPPLEMENT
FINOVA Capital
Corporation
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Recent Developments
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Our Directors and Executive
Officers
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Capitalization of FINOVA
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Description of Notes
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Certain United States Federal
Income Tax Considerations
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Underwriting
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General Information
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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
RECENT DEVELOPMENTS
OUR DIRECTORS AND EXECUTIVE OFFICERS
Samuel L. Eichenfield | Chairman and Chief Executive Officer | |
Matthew M. Breyne | President and Chief Operating Officer and Director | |
Bruno A. Marszowski | Senior Vice President
-- Controller and Chief Financial Officer | |
W. Carroll Bumpers | Director | |
Meilee Smythe | Senior Vice President -- Treasurer and Director | |
Gregory C. Smalis | Executive Vice President -- Portfolio Management and Director |
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CAPITALIZATION OF FINOVA
As of June 30, 1999 (U.S. dollars in Thousands) |
||
Short-term
debt | ||
Commercial paper and short-term bank loans
supported by unused long-term bank revolving credit agreements, less unamortized discount |
4,339,558 | |
Total short-term debt | 4,339,558 | |
Long-term debt | ||
Medium-term notes due to 2010, 5.9% to 10.2% | 2,187,275 | |
Term loans payable to banks due to 2000, 5.2% | 160,000 | |
Senior notes due to 2009, 5.9% to 12.0%, less unamortized discount | 2,776,634 | |
Small Business Administration Loans | 51,660 | |
Nonrecourse installment notes due to 2002, 10.6%
(assets of $22,838,000 pledged as collateral) |
8,503 | |
Total long-term debt | 5,184,072 | |
Shareholder's Equity | ||
Common stock $1.00 per value, 100,000 shares authorized, 25,000 shares issued | 25 | |
Additional capital | 1,173,995 | |
Retained income | 547,316 | |
Accumulated other comprehensive income | 5,302 | |
Net advances to parent | (67,852) | |
Total Shareholders' Equity | 1,658,786 | |
Total Debt | 9,523,630 | |
Total Capitalization | 11,182,416 |
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DESCRIPTION OF NOTES
Note Terms | ||
Maximum Amount: | $1,500,000,000 aggregate principal amount $ 350,000,000 principal amount of Floating Rate Notes $ 1,150,000,000 principal amount of Notes Due 2004 | |
Interest Rates: |
Floating Rate Notes: A floating rate equal to the Three Month Libor Rate plus 63 basis points Notes Due 2004: 7.25% per year | |
Maturities: |
Floating Rate Notes: November 8, 2002 Notes Due 2004: November 8, 2004 | |
Interest Payment Dates: | Floating Rate Notes: February 8, May 8, August 8 and November 8, accruing from the date we issue the Floating Rate Notes. First interest payment date is February 8, 2000. Notes Due 2004: May 8 and November 8, accruing from the date we issue the Notes Due 2004. First interest payment date is May 8, 2000. | |
Record Dates: | The fifteenth day before the interest payment date, subject to exceptions | |
Interest Calculations: | Floating Rate Notes: Based on the actual number of days elapsed in a 360-day
year Notes Due 2004: Based on a 360-day year of twelve 30-day months | |
Redemption or Sinking Fund: | No redemption before maturity unless certain tax events occur. No sinking fund. | |
Form of Note: | Global securities for each series of Notes, held in the name of The Depository Trust Company for its participants, including the Euroclear System and Cedelbank | |
Settlement and Payment: | Same-day -- immediately available funds | |
Secondary Trading Payments: | Same-day -- immediately available funds | |
Trustee: | Bank One Trust Company, NA One Bank One Plaza Mail Suite IL-0126 Chicago, IL 60670-0126 Telephone: (800) 524-9472 Attention: Investor Relations |
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The Floating Rate Notes
(i) | On the second London Business Day, preceding each Interest Reset Date (each an "Interest Determination Date"), Bank One Trust Company, NA (the "Calculation Agent"), as agent for FINOVA, will determine the Three Month LIBOR Rate which will be the rate for deposits in U.S. dollars having a three-month maturity commencing on the second London Business Day immediately following the interest Determination Date which appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the Interest Determination Date. "Telerate Page 3750" means the display page so designated on the Bridge Telerate, Inc. service (or another page as may replace that page on that service or another service or services as may be nominated by the British Bankers' Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits). If the Three Month LIBOR Rate on any Interest Determination Date does not appear on the Telerate Page 3750, the Three Month LIBOR Rate will be determined as described in (ii) below. | |
(ii) | With respect to an Interest Determination Date for which the Three Month LIBOR Rate does not appear on the Telerate Page 3750 as specified in (i) above, the Three Month LIBOR Rate will be determined on the basis of the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market selected by the Calculation Agent (the "Reference Banks") at approximately 11:00 a.m., London time, on the Interest Determination Date to prime banks in the London interbank market having a three-month maturity commencing on the second London Business Day immediately following the Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative for a single transaction in that market at that time. The Calculation Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two of these quotations are provided, the Three Month LIBOR Rate on the Interest Determination Date will be the arithmetic mean (rounded upwards, if necessary, to the nearest one hundred-thousandth of a percentage point, with 5 one-millionths of a percentage |
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point rounded upwards) of the quotations. If fewer than two quotations are provided, the Three Month LIBOR Rate on the Interest Determination Date will be the arithmetic mean (rounded upwards, if necessary, to the nearest one hundred-thousandth of a percentage point, with 5 one-millionths of a percentage point rounded upwards) of the rates quoted by three major banks in New York City selected by the Calculation Agent at approximately 11:00 a.m., New York City time, on the Interest Determination Date for loans in U.S. dollars to leading European banks, having a three-month maturity commencing on the second London Business Day immediately following that Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative for a single transaction in that market at that time; provided, however, that if the banks in New York City selected as noted above by the Calculation Agent are not quoting as mentioned in this sentence, the Floating Interest Rate for the Interest Period commencing on the Interest Reset Date following that Interest Determination Date will be the Floating Interest Rate in effect on that Interest Determination Date. |
Book-Entry, Delivery and Form
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systems continue to function appropriately regarding the timely payment of distributions (including principal and income payments) to securityholders, book-entry deliveries and settlement of trades within DTC. This program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames.
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it is regulated and examined by the Board of Governors of the Federal Reserve System and the New York State Banking Department, as well as the Belgian Banking Commission.
Global Clearance and Settlement Procedures
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deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Cedelbank's participants and Euroclear's participants may not deliver instructions directly to their respective U.S. depositaries.
Further Issuances
Payment of Additional Amounts
(1) is imposed or withheld solely because the holder, or a fiduciary, settlor, beneficiary, member, or shareholder of the holder if the holder is an estate, trust, partnership, or corporation, or a person holding a power over an estate or trust administered by a fiduciary holder:
(a) | is or was present or engaged in trade or business in the United States or has or had a permanent establishment in the United States; | |
(b) | has a current or former relationship with the United States, including a relationship as a citizen or resident thereof; | |
(c) | is or has been a foreign or domestic personal holding company, a passive foreign investment company, or a controlled foreign corporation with respect to the United States or a corporation that has accumulated earnings to avoid United States federal income tax or a private foundation or other tax-exempt organization; or | |
(d) | is or was a "10-percent shareholder" of FINOVA as defined in section 871(h)(3) of the Internal Revenue Code of 1986, as amended, or any successor provision; |
(2) is imposed or withheld solely because of the presentation by the holder of any Note for payment on a date more than 10 days after the date on which that payment became due and payable or the date on which payment thereof was duly provided for, whichever occurred later;
(3) is imposed or withheld on any payment on a Note to any holder that is not the sole beneficial owner of that Note, or a portion thereof, or that is a fiduciary or partnership, but only to the extent that the beneficial owner, a beneficiary or settlor with respect to the fiduciary, or a member of the partnership would S-10
not have been entitled to the payment of an additional amount had the beneficial owner, beneficiary, settlor, or member received directly its beneficial or distributive share of the payment;
(4) is imposed or withheld solely because the holder or any other person failed to comply with certification, identification, documentation, information or other reporting requirements concerning the nationality, residence, identity, or connection with the United States of the holder or beneficial owner of Notes, if, without regard to any tax treaty, compliance is required by statute or by regulation of the United States Treasury Department as a precondition to exemption from any tax, assessment, or other governmental charge;
(5) is payable other than by deduction or withholding from a payment by FINOVA or a paying agent;
(6) is imposed or withheld solely because of a change in law, regulation, or administrative or judicial interpretation that becomes effective more than 10 days after the payment becomes due or is duly provided for, whichever occurs later;
(7) is an estate, inheritance, gift, sales, excise, transfer, wealth, personal property or a similar tax, assessment, or governmental charge;
(8) any paying agent must withhold from any payment of principal of or interest on any Note, if the payment can be made without that withholding by any other paying agent;
(9) is imposed as the result of the receipt of interest by a bank on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business;
(10) is imposed or withheld solely because the Note constitutes a "United States real property interest" as defined in section 897(c)(1) of the United States Internal Revenue Code of 1986, as amended, with respect to the beneficial owner of that Note; or
(11) is any combination of the above items.
Redemption for Tax Reasons
we become or will become obligated to pay additional amounts as described under the heading "-- Payment of Additional Amounts" as a result of any change in, or amendment to, the laws, regulations or rulings of the United States (or any political subdivision or taxing authority thereof or therein), or any change in, or amendments to, any official position regarding the application or interpretation of those laws, regulations, or rulings, which change or amendment is announced or becomes effective on or after the date of this supplement, or a taxing authority of the United States takes an action on or after the date of this supplement, whether or not with respect to us or any of our affiliates, that results in a substantial probability that we will or may be required to pay additional amounts
then we may, at our option, redeem as a whole, but not in part, either series of Notes on any interest payment date on not less than 30 nor more than 60 calendar days' prior notice, at a redemption price equal to 100% of their principal amount, together with interest accrued thereon to the date fixed for redemption; provided that we determine, in our business judgment, that the obligation to pay additional amounts cannot be avoided by the use of reasonable measures available to us, not including substitution of the obligor under the Notes.
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Notices
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
U.S. Holders
S-12
Non-U.S. Holders
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effectively connected with the conduct by the individual of a trade or business in the United States.
Backup Withholding
New Withholding Regulations
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UNDERWRITING
Underwriters | Principle Amount of Floating Rate Notes |
Principle Amount of Notes Due 2004 | ||
---|---|---|---|---|
Deutsche Bank Securities Inc. | $ 148,750,000 | $ 488,750,000 | ||
Salomon Smith Barney Inc. | 148,750,000 | 488,750,000 | ||
Barclays Capital Inc. | 10,500,000 | 34,500,000 | ||
Credit Suisse First Boston Corporation | 10,500,000 | 34,500,000 | ||
Morgan Stanley & Co. Incorporated | 10,500,000 | 34,500,000 | ||
Paribas | 10,500,000 | 34,500,000 | ||
ABN AMRO Incorporated | 5,250,000 | 17,250,000 | ||
Warburg Dillon Read LLC | 5,250,000 | 17,250,000 | ||
Total | $ 350,000,000 | $1,150,000,000 |
(i)it has not offered or sold and will not offer or sell any Notes to persons in the United ingdom prior to the expiry of the period of six months from the issue date of the Notes except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Notes to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom such document may otherwise lawfully be issued or passed on; and
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(iii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
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GENERAL INFORMATION
Listing of Notes on the Luxembourg Exchange
Documents Available
Material Adverse Change
Litigation
Authorization
Euroclear and Cedel Common Code No. |
International Security Identification Number (Isin) |
CUSIP | |||||
Floating Rate Notes | 010401542 | US318074AX99 | 318074AX9 | ||||
Notes Due 2004 | 010401577 | US318074AY72 | 318074AY7 |
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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. |
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.
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:
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.
2
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
Specialty Finance
3
Capital Markets
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.
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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 |
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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 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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.
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:
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.
6
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
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."
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The supplement will address the following terms of the debt securities:
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.
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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
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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:
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designated subsidiary, provided they are not incurred in anticipation of those events.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:
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
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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
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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:
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
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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.
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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
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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:
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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,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:
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.
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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.
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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
19
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.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock or common stock. We may issue warrants independently or together with debt securities, common stock or preferred stock or attached to or separate from the offered securities. We will issue each series of warrants under a separate warrant agreement between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent for the warrants and will not act for or on behalf of the holders or beneficial owners of warrants. This summary of certain provisions of the warrants is not complete. You should refer to the provisions of the warrant agreement that will be filed with the SEC as part of the offering of any warrants. To obtain a copy of this document, see "Where You Can Find More Information" on page 2.
PLAN OF DISTRIBUTION
FINOVA Group and FINOVA Capital may offer securities directly or through underwriters, dealers or agents. The supplement will identify those underwriters, dealers or agents and will describe the plan of distribution, including commissions to be paid. If we do not name a firm in the supplement, that firm may not directly or indirectly participate in any underwriting of those securities, although it may participate in the distribution of securities under circumstances entitling it to a dealer's allowance or agent's commission.
Any underwriting agreement probably will entitle the underwriters to indemnity against some civil liabilities under the Federal securities laws and other laws. The underwriters' obligations to purchase securities will be subject to conditions and generally will require them to purchase all of the securities if any are purchased.
Unless otherwise noted in the supplement, the securities will be offered by the underwriters, if any, when, as and if issued by us, delivered to and accepted by the underwriters and subject to their right to reject orders in whole or in part.
FINOVA Group and FINOVA Capital may sell securities to dealers, as principals. Those dealers then may resell the securities to the public at varying prices set by those dealers from time to time.
FINOVA Group and FINOVA Capital also may offer securities through agents. Agents generally act on a "best efforts" basis during their appointment, meaning they are not obligated to purchase securities.
Dealers and agents may be entitled to indemnification as underwriters by us against some liabilities under the Federal securities laws and other laws.
FINOVA Group and FINOVA Capital or the underwriters or agents may
solicit offers by institutions approved by us to purchase securities
under contracts providing for future payment. Permitted institutions
include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions
and others. Conditions apply to those purchases.
20
Any underwriter may engage in over-allotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934.
Those activities may cause the price of the securities to be higher than it would otherwise be. The underwriters may engage in some activities on any exchange or other market in which the securities may be traded. If commenced, the underwriters may discontinue those activities at any time.
The supplement or pricing supplement, as applicable, will set forth the anticipated delivery date of the securities being sold at that time.
LEGAL MATTERS
Unless otherwise noted in a supplement, William J. Hallinan, Esq., Senior Vice President-General Counsel of FINOVA Group and FINOVA Capital, or Richard Lieberman, Esq., Vice President-Associate General Counsel of FINOVA Group and FINOVA Capital, will pass on the legality of the securities offered through this prospectus and any supplement. Brown & Wood LLP will act as counsel for any underwriters or agents, unless otherwise noted in a supplement.
EXPERTS
The financial statements incorporated in this prospectus by
reference from FINOVA Group Inc.'s and FINOVA Capital Corporation's
Annual Reports on Form 10-K/A for the year ended December 31, 1998 have
been audited by Deloitte & Touche LLP, independent auditors, as stated
in their reports dated February 10, 1999, April 23, 1999 as to Note T
for The FINOVA Group Inc. and Note R for FINOVA Capital Corporation
(which express an unqualified opinion and include an explanatory
paragraph relating to the restatements described in Note T of FINOVA
Group Inc.'s and Note R of FINOVA Capital Corporation's financial
statements) which is incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
21
THE ISSUER
FINOVA CAPITAL CORPORATION
1850 NORTH
CENTRAL AVENUE
P.O. BOX 2209
PHOENIX, ARIZONA
85002-2209
TRUSTEE, CALCULATION AGENT, REGISTRAR AND PAYING AGENT
BANK ONE TRUST
COMPANY, NA
ONE BANK ONE PLAZA
MAIL SUITE IL-0126
CHICAGO, IL
60670-0126
LUXEMBOURG LISTING AGENT AND
LUXEMBOURG PAYING
AGENT
BANQUE INTERNATIONALE A LUXEMBOURG
69, ROUTE D'ESCH
L-1470,
LUXEMBOURG
LEGAL ADVISORS
to FINOVA: | to the Underwriters: | |
RICHARD
LIEBERMAN, ESQ. 1850 NORTH CENTRAL AVENUE P.O. BOX 2209 PHOENIX, ARIZONA 85002-2209 |
BROWN
& WOOD LLP 555 CALIFORNIA STREET SAN FRANCISCO, CALIFORNIA 94104 |
BROWN
& WOOD M.P. PRINCES COURT 7 PRINCES STREET LONDON EC2R 8AQ ENGLAND |
INDEPENDENT PUBLIC ACCOUNTANTS FOR FINOVA
ERNST &
YOUNG LLP
40 NORTH CENTRAL AVENUE, SUITE 900,
PHOENIX, ARIZONA
85004
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