-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nvp/FCOjBq3NJqnrdrXphBuWpPPr80Xx3yO7U4WEEItNCCeqibpxp59d+qJSfZyw ZVf1wegECsYRP2XvvVWJMA== 0000950103-97-000272.txt : 19970430 0000950103-97-000272.hdr.sgml : 19970430 ACCESSION NUMBER: 0000950103-97-000272 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970429 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY GROUP INC /DE/ CENTRAL INDEX KEY: 0000789625 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 132838811 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-18005 FILM NUMBER: 97590143 BUSINESS ADDRESS: STREET 1: 1585 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2127034000 424B3 1 PROSPECTUS Dated January 24, 1997 Pricing Supplement No. 34 to PROSPECTUS SUPPLEMENT Registration Statement No. 333-18005 Dated February 21, 1997 Dated April 21, 1997 Rule 424(b)(3) $4,600,000 Morgan Stanley Group Inc. MEDIUM-TERM NOTES, SERIES E WTI CURVE LINKED NOTES DUE MAY 6, 1998 ------------ The WTI Curve Linked Notes due May 6, 1998 (the "Notes") are Medium-Term Notes, Series E of Morgan Stanley Group Inc. (the "Company"), as further described herein and in the Prospectus Supplement under "Description of Notes--Fixed Rate Notes" and "--Notes Linked to Commodity Prices, Single Securities, Baskets of Securities or Indices." The Notes are being issued in minimum denominations of $10,000 and will mature on May 6, 1998 (the "Maturity Date"). There will be no periodic payments of interest on the Notes. The Notes will not be redeemable by the Company in whole or in part prior to the Maturity Date other than under the circumstances described under "Description of Notes -- Tax Redemption" in the accompanying Prospectus Supplement. The Notes will be issued in bearer form, which form is further described under "Description of Notes -- Forms, Denominations, Exchange and Transfer" in the accompanying Prospectus Supplement. Notes in bearer form will not be exchangeable at any time for Notes in registered form. At maturity, the holder of each Note will receive the par amount of such Note ($10,000) ("Par") plus an amount (the "Supplemental Redemption Amount") based on the average spread, during a reference period, between the prices of specified futures contracts on West Texas Intermediate Light Sweet Crude Oil ("WTI"), traded on the New York Mercantile Exchange (the "NYMEX"). The Supplemental Redemption Amount, if any, payable with respect to each Note at maturity will equal the product of (i) the par amount of such Note, (ii) .04 and (iii) the CURVE. The Supplemental Redemption Amount cannot be less than zero. The CURVE will equal the arithmetic average of the spreads, calculated on each NYMEX Trading Day in the Reference Period, that equal the greater of (i) zero and (ii) the settle price of the front WTI futures contract (the "Front WTI Settle Price") minus the settle price of the thirteenth WTI futures contract (the "Thirteenth WTI Settle Price"). The Reference Period extends from January 1, 1998 to March 31, 1998, inclusive. The Front WTI Settle Price and the Thirteenth WTI Settle Price for any day in the Reference Period will be the prices for the respective futures contracts reported by the NYMEX for such day in the Daily Futures Report. See "Discontinuance of the Daily Futures Report; Alteration of Calculation Method." If the CURVE does not exceed zero, the holder of each Note will be repaid the par amount of such Note, but will not receive any Supplemental Redemption Amount. For information as to the calculation of the Supplemental Redemption Amount, and certain tax consequences to beneficial owners of the Notes, see "Supplemental Redemption Amount," "CURVE," "Reference Period" and "United States Federal Taxation" in this Pricing Supplement. The Company will cause the "Supplemental Redemption Amount" to be determined by Morgan Stanley & Co. International Limited (the "Calculation Agent") for The Chase Manhattan Bank, as Trustee under the Senior Debt Indenture. An investment in the Notes entails risks not associated with similar investments in a conventional debt security, as described under "Risk Factors" on PS-4 through PS-5 herein. Capitalized terms not defined above have the meanings given to such terms in the accompanying Prospectus Supplement. MORGAN STANLEY & CO. International Principal Amount.............. $4,600,000 Maturity Date................. May 6, 1998 Interest Rate................. 0.00% Specified Currency............ U.S. Dollars Issue Price................... 100% Settlement Date (Original Issue Date)................. May 6, 1997 Book Entry Note or Certificated Note........... Book Entry Senior Note or Subordinated Note........................ Senior Minimum Denominations......... $10,000 Trustee....................... The Chase Manhattan Bank Common Code................... 7596413 ISIN.......................... XS0075964139 Maturity Redemption Amount ... At maturity (including as a result of acceleration or otherwise), the holder of each Note will receive the par amount of such Note ($10,000) ("Par") plus the Supplemental Redemption Amount, if any. Supplemental Redemption Amount ..................... The Supplemental Redemption Amount, if any, payable with respect to each Note at maturity will equal the product of (i) the par amount of such Note, (ii) .04 and (iii) the CURVE. The Supplemental Redemption Amount shall not be less than zero. The Supplemental Redemption Amount is described by the following formula: Par x .04 x CURVE The Company shall cause the Calculation Agent to provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Supplemental Redemption Amount, if any, on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date. See "Discontinuance of the Daily Futures Report; Alteration of Calculation Method" below. All percentages resulting from any calculation with respect to the Notes will be rounded 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) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent with one-half cent being rounded upwards. CURVE......................... The CURVE shall equal the arithmetic average of the spreads, calculated on each NYMEX Trading Day in the Reference Period, that equal the greater of (i) zero and (ii) the Front WTI Settle Price minus the Thirteenth WTI Settle Price, as determined by the Calculation Agent. Front WTI Settle Price........ For any NYMEX Trading Day during the Reference Period, the Front WTI Settle Price shall be the settle price for the first WTI futures contract scheduled for settlement following such day listed in the Daily Futures Report. Thirteenth WTI Settle Price... For any NYMEX Trading Day during the Reference Period, the Thirteenth WTI Settle Price shall be the settle price for the thirteenth WTI futures contract scheduled for settlement following such day listed in the Daily Futures Report. Daily Futures Report.......... The Daily Futures Report is published daily by the NYMEX and lists pricing information for futures contracts in oil products. Futures contracts on WTI are listed under the heading "Crude Oil." WTI is the grade of light sweet crude oil that is traded on the NYMEX. The Front WTI Settle Price and the Thirteenth WTI Settle Price for a particular day may also be obtained via the NYMEX automated phone system. NYMEX Trading Day............. A NYMEX Trading Day is a day on which the NYMEX is open for business and there has not been a Market Disruption Event. Reference Period.............. The Reference Period extends from January 1, 1998 to March 31, 1998, inclusive. Market Disruption Event....... "Market Disruption Event" means, with respect to NYMEX: (i) a suspension, absence or material limitation of trading on the NYMEX of futures contracts relating to light sweet crude oil or WTI in each case as determined by the Calculation Agent in its sole discretion; and (ii) a determination by the Calculation Agent in its sole discretion that the event described in clause (i) above materially interfered with the ability of the Company or any of its affiliates to unwind all or a material portion of the hedge with respect to the Notes. For purposes of determining whether a Market Disruption Event has occurred: (1) a limitation on the hours or number of days of trading will not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the relevant exchange or market, (2) but a limitation on trading imposed during the course of the day by reason of price movements exceeding levels permitted by NYMEX will constitute a Market Disruption Event. Calculation Agent............. Morgan Stanley & Co. International Limited ("MSIL") All determinations made by the Calculation Agent shall be at the sole discretion of the Calculation Agent and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Company and holders of the Notes. Because the Calculation Agent is an affiliate of the Company, potential conflicts of interest may exist between the Calculation Agent and the holders of the Notes, including with respect to certain determinations and judgments that the Calculation Agent must make in determining the Supplemental Redemption Amount or whether a Market Disruption Event has occurred. See "Alteration of Calculation Method" below and "Market Disruption Event" above. MSIL is obligated to carry out its duties and functions as Calculation Agent in good faith and using its reasonable judgment. Risk Factors.................. An investment in the Notes entails significant risks not associated with similar investments in a conventional security, including the following. If the CURVE does not exceed zero, the holders of the Notes will receive only the par amount of each Note at maturity. The CURVE is an average of the spreads between the Front WTI Settle Price and the Thirteenth WTI Settle Price calculated on each NYMEX Trading Day during the Reference Period. Due to volatility in the oil futures market, a large spread on NYMEX Trading Days early in the reference period may be mitigated by the absence of a positive spread on NYMEX Trading Days later in the Reference Period. The Notes do not bear any periodic payment of interest. Because the Supplemental Redemption Amount may be equal to zero, the effective yield to maturity may be less than that which would be payable on a conventional fixed-rate debt security having the same maturity date as the Notes and issued by the Company on the Original Issue Date. The Notes will not be listed on any exchange. There can be no assurance as to whether there will be a secondary market in the Notes or if there were to be such a secondary market, whether such market would be liquid or illiquid. It is expected that the secondary market for the Notes will be affected by the creditworthiness of the Company and by a number of factors, including, but not limited to, the volatility and direction of settlement prices for WTI futures contracts, the time remaining to the Reference Period and to the maturity of the Notes and market interest rates. In addition, the CURVE value depends on a number of interrelated factors, including economic, financial and political events, over which the Company has no control. The oil market is particularly volatile and can be affected by a variety events on a global basis, including, without limitation, the available stock in crude oil, the available storage space for oil, environmental regulations, any embargo on oil, and any turmoil in oil-producing nations. Historical information regarding the Front WTI Settle Price and the Thirteenth WTI Settle Price should not be taken as an indication of the likely settle prices during the Reference Period or the likely value of the CURVE during such period. Because the Calculation Agent is an affiliate of the Company, potential conflicts of interest may exist between the Calculation Agent and the holders of the Notes, including with respect to certain determinations and judgments that the Calculation Agent must make in determining the Supplemental Redemption Amount or whether a Market Disruption Event has occurred. See "Discontinuance of the Daily Futures Report; Alteration of Calculation Method" below and "Market Disruption Event" above. MSIL, as a registered broker-dealer, is required to maintain policies and procedures regarding the handling and use of confidential proprietary information, and such policies and procedures will be in effect throughout the term of the Notes to restrict the use of information relating to the calculation of the CURVE that the Calculation Agent may be required to make prior to its dissemination. MSIL is obligated to carry out its duties and functions as Calculation Agent in good faith and using its reasonable judgment. It is suggested that prospective investors who consider purchasing the Notes should reach an investment decision only after carefully considering the suitability of the Notes in light of their particular circumstances. Investors should also consider the tax consequences of investing in the Notes. See "United States Federal Taxation." NYMEX......................... Unless otherwise stated, all information herein relating to the New York Mercantile Exchange (NYMEX) has been derived from information published by the NYMEX and other publicly-available sources. In 1994, the NYMEX and the Commodity Exchange (COMEX) merged to form the world's largest physical commodity futures exchange under the NYMEX name. A futures contract is a legally binding obligation requiring the holder to buy or sell a particular commodity at a particular price and location at a specific date. Contracts are standardized so that each investor trades contracts with the same requirements as to quality, quantity, and delivery terms. The NYMEX division trades crude oil, heating oil, gasoline, natural gas, electricity, propane, platinum, and palladium. The COMEX division trades gold, silver, copper, and the Eurotop 100 stock index. Trading occurs during exchange hours on the floor of the exchange (the "open outcry session)." After hours, trading may be conducted on NYMEX ACCESS, NYMEX's electronic trading system. Between the open outcry session and NYMEX ACCESS, trading occurs about 22 hours a day. NYMEX ensures that trading is orderly and fair through a strict network of rules including those regarding margin deposits, trading and delivery procedures, and membership qualifications. Light Sweet Crude Oil or WTI is the most actively traded futures contract for a physical commodity. Prior to 1970, oil prices remained relatively stable. The 1973 Yom Kippur War and 1979 Iranian Revolution altered that reality. Prices increased through much of the 1970s (from $2 a barrel in 1973 to $32 a barrel in 1980), as U.S. government price and allocation controls prevented the market from responding to any weakness in demand and oil-producing nations were able to keep upward pressure on prices. In 1982 and 1983, as government controls were lifted, the market began responding to supply and demand. As the market changed, the NYMEX introduced light sweet crude oil futures to provide the oil industry with a hedge against price volatility. The oil market is particularly volatile as oil is traded worldwide. Oil prices may be affected by a variety of events on a global basis, including, without limitation, the available stock in crude oil, the available storage space for crude oil, environmental regulations, any United States embargo on oil and any turmoil in oil-producing nations. The following is summary of selected specifications relating to Light Sweet Crude Oil Futures: Trading Unit: 1000 U.S. barrels (42,000 gallons) Trading Hours: 9:45 a.m. for 3:10 p.m. for the open outcry session. After-hours trading is conducted on NYMEX ACCESS between 4:00 p.m. and 8:00 a.m. on Monday through Thursday. On Sunday the electronic session begins at 7:00 p.m. The settle prices listed in the Daily Futures Report are those gathered during the closing minutes of the open outcry session (between 3:08 p.m. and 3:10 p.m.). Trading Months: 30 consecutive months plus two long-dated futures initially listed 36 and 48 months prior to delivery. Price Quotation: Dollars and cents per barrel. Minimum Price Fluctuation: $.01 per barrel ($10.00 per contract). Maximum Daily Price Fluctuation: $15.00 per barrel ($15,000 per contract) in two stages for the first two contract months. Initial back month limits of $1.50 per barrel rise to $3.00 per barrel if the previous day's settlement price is at the $1.50 limit. In the event of a $7.50 move in either of the first two contract months, back month limits are expanded to $7.50 per barrel from the limit in place in the direction of the move. Last Trading Day: Trading terminates at the close of business on the third business day prior to the 25th calendar day of the month preceding the delivery month. As such, on or before the third business day prior to the 25th day of any month, the Front WTI Settle Price will refer to the futures contract settled in the immediately succeeding calender month. After the third business day prior to the 25th day of such month through the last day of such month, the Front WTI Settle Price will refer to the futures contract settled in the second succeeding calender month. Delivery: F.O.B. seller's facility, Cushing, Oklahoma, at any pipeline or storage facility with access to Arco, Cushing Storage, or Texaco Trading and Transportation Inc., by in-tank transfer, in-line transfer, book-out or inter-facility transfer (pump-over). Delivery Period: All deliveries are rateable over the course of the month and must be initiated on or after the first calendar day and completed by the last calender day of the delivery month. Alternate Delivery Procedure: If buyer and seller agree to consummate delivery under terms different from those prescribed in the contract specifications, they may proceed on that basis after submitting a notice of their intention to the Exchange. Deliverable Grades: Specific domestic crudes with 0.42% sulfur by weight or less, not less than 37 degrees API gravity nor more than 42 degrees API gravity. The following domestic crude streams are deliverable: West Texas Intermediate, Low Sweet Mix, New Mexican Sweet, North Texas Sweet, Oklahoma Sweet, and South Texas Sweet. Specific foreign crudes of not less than 34 degrees API nor more than 42 degrees API. The following foreign streams are deliverable: Brent, Forties, Bonny Light, and Oseberg. Brent, Forties, and Oseberg carry a 30 cent-per-barrel discount below the settlement price, while Bonny Light carries a 60 cent-per-barrel premium. Inspection: Inspection shall be conducted in accordance with pipeline practices. Margin Requirements: Margins are required for open futures or short options positions. Discontinuance of the Daily Futures Report; Alteration of Calculation Method............ If NYMEX discontinues preparation or publication of the Daily Futures Report and NYMEX or another entity prepares or publishes a successor or substitute report, tape recording, or other information source, that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued Daily Futures Report (such report being referred to herein as a "Successor Report"), then the CURVE shall be calculated by reference to the values of the Front WTI Settle Price and the Thirteenth WTI Settle Price, or their equivalent, in such Successor Report. Upon any selection by the Calculation Agent of a Successor Report, the Calculation Agent shall cause written notice thereof to be furnished to the Trustee, to the Company and to the holders of the Notes within three Trading Days of such selection. If NYMEX discontinues trading in WTI futures contracts, and such discontinuance is continuing on, any of the dates during the Reference Period and the Calculation Agent determines that another crude oil futures contract (a "Successor Contract") traded on the NYMEX is equivalent to the WTI futures contract, the Front WTI Settle Price and the Thirteenth WTI Settle Prices will be the front settle price and the thirteenth settle price of the Successor Contract. If the Calculation Agent determines that no Successor Contract exists, then on each date during the Reference Period until the earlier to occur of (i) the final date of the Reference Period and (ii) a determination by the Calculation Agent that a Successor Contract is available on the NYMEX, the Calculation Agent shall determine the Front WTI Settle Price and the Thirteenth WTI Settle Price based on the front settle price and the thirteenth settle price for light sweet crude oil on another exchange expressed in dollars; provided that, if the Calculation Agent determines that no Successor Contract exists, the CURVE will be (x) calculated on the basis of the days during the Reference Period when a spread could be calculated or (y) if there are no such days, shall be deemed to be zero. Notwithstanding these alternative arrangements, discontinuance of the publication of the Daily Futures Report may adversely affect the value of the Notes. If at any time the method of calculating the Front WTI Settle Price or the Thirteenth WTI Settle Price, or the value thereof, is changed in a material respect by the NYMEX or any other relevant exchange, or if the Daily Futures Report or a Successor Report is in any other way modified so that such Report does not, in the opinion of the Calculation Agent, fairly represent the value of the Front WTI Settle Price and the Thirteenth WTI Settle Price as described herein, the Calculation Agent shall, at the close of business in New York City on each day of the Reference Period, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a value of the Front WTI Settle Price and the Thirteenth WTI Settle Price. The Calculation Agent shall cause written notice of such calculations and adjustments to be furnished to the holders of the Notes. Historical Information........ The following table sets forth the Front WTI Settle Price and the Thirteenth WTI Settle Price on the first day of each month in the period from January 1, 1992 to April 1, 1997 as presented in the Daily Futures Report. The historical values of the Front WTI Settle Price and the Thirteenth WTI Settle Price should not be taken as an indication of future performance, and no assurance can be given that the holders of the Notes will receive any Supplemental Redemption Amount. WTI SETTLE PRICES (in dollars and cents per barrel) Thirteenth Front WTI WTI Settle Settle Price Price ------------ ---------- 1992 January 1..... 19.49 19.66 February 1.... 18.96 19.31 March 1....... 18.34 18.88 April 1....... 19.84 19.42 May 1......... 20.85 20.12 June 1........ 22.03 21.07 July 1........ 21.86 20.69 August 1...... 21.58 20.29 September 1... 21.64 20.46 October 1..... 21.83 20.78 November 1.... 20.77 20.37 December 1.... 19.51 19.69 1993 January 1..... 19.04 19.51 February 1.... 20.31 20.42 March 1....... 20.47 20.60 April 1....... 20.52 20.63 May 1......... 20.57 20.75 June 1........ 20.24 20.52 July 1........ 18.45 19.88 August 1...... 17.97 19.20 September 1... 17.97 19.23 October 1..... 18.63 19.29 November 1.... 17.43 18.93 December 1.... 15.48 17.50 1994 January 1..... 14.56 17.13 February 1.... 15.92 17.10 March 1....... 14.67 16.75 April 1....... 15.79 17.07 May 1......... 17.16 16.92 June 1........ 18.21 17.55 July 1........ 19.53 18.11 August 1...... 20.55 18.89 September 1... 17.47 17.78 October 1..... 18.19 18.34 November 1.... 18.68 18.01 December 1.... 17.82 17.81 1995 January 1..... 17.44 17.74 February 1.... 18.52 17.70 March 1....... 18.32 17.58 April 1....... 19.03 17.82 May 1......... 20.50 18.34 June 1........ 18.90 18.09 July 1........ 17.18 17.17 August 1...... 17.70 17.33 September 1... 18.04 17.32 October 1..... 17.64 16.98 November 1.... 17.74 16.98 December 1.... 18.43 17.17 1996 January 1..... 19.81 17.59 February 1.... 17.71 16.80 March 1....... 19.44 16.99 April 1....... 22.26 18.08 May 1......... 20.81 17.87 June 1........ 19.85 17.52 July 1........ 21.53 17.90 August 1...... 21.04 18.25 September 1... 23.40 18.71 October 1..... 24.14 19.51 November 1.... 23.03 19.68 December 1.... 24.80 20.64 1997 January 1..... 25.69 20.23 February 1.... 24.15 20.35 March 1....... 20.25 19.61 April 1....... 20.28 20.19 Use of Proceeds and Hedging... The net proceeds to be received by the Company from the sale of the Notes will be used for general corporate purposes and, in part, by the Company or one or more of its affiliates in connection with hedging the Company's obligations under the Notes, including hedging market risks associated with the Supplemental Redemption Amount. Such hedging may involve the purchase or sale of WTI futures contracts, OTC swap agreements or options agreements the settlement of which is priced based on the NYMEX settlement price of WTI futures contracts, or purchases and sales of the cash commodity or positions in any other instruments that it may wish to use in connection with such hedging. Although the Company has no reason to believe that its hedging activity will have a material impact on the price of such options, futures contracts, and options on futures contracts, there can be no assurance that the Company will not affect such prices as a result of its hedging activities. The Company, through its subsidiaries, is likely to modify its hedge position throughout the life of the Notes by purchasing and selling such options, futures contracts and options on futures contracts. See also "Use of Proceeds" in the accompanying Prospectus. United States Federal Taxation.................... The investor should refer to the discussion under "United States Federal Taxation" in the accompanying Prospectus Supplement. -----END PRIVACY-ENHANCED MESSAGE-----