-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gtSdTZrDPSAPWQAALWACuhmR5wYdmd3W0DCwh39SYZl/ijRc65Aeka6Ic9DmDDrE f3hqfPaAGtFY5cZZFufazg== 0000950103-95-000234.txt : 19950621 0000950103-95-000234.hdr.sgml : 19950621 ACCESSION NUMBER: 0000950103-95-000234 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950615 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY GROUP INC /DE/ CENTRAL INDEX KEY: 0000789625 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 132838811 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-57833 FILM NUMBER: 95547333 BUSINESS ADDRESS: STREET 1: 1251 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2127034000 424B5 1 PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 5 to PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833 Dated March 29, 1995 (Subject to Completion, Issued June 8, 1995) June [ ], 1995 Rule 424(b)(3) $200,000,000 Morgan Stanley Group Inc. MEDIUM-TERM NOTES, SERIES C Senior Floating Rate Notes NIKKEI 225 CASH EXCHANGEABLE NOTES DUE SEPTEMBER 30, 1998 Interest payable March 30, June 30, September 30 and December 30 The Nikkei 225 Cash Exchangeable Notes due September 30, 1998 (the "Notes") are Medium-Term Notes, Series C (Senior Floating Rate Notes) of Morgan Stanley Group Inc. (the "Company"), as further described below and in the Prospectus Supplement under "Description of Notes - Floating Rate Notes". Interest will be computed on an actual/360 basis. The Notes will be exchangeable on certain dates at the option of the holder but will not otherwise be redeemable by the Company in whole or in part prior to the Maturity Date. The Notes are issued in minimum denominations of $1,000 per Note. On any Exchange Date (as defined herein), the holder of a Note will have the right, upon completion and acknowledgment of a Notice of Exchange, to exchange the Note and receive Parity. Parity is an amount of cash in U.S. Dollars equal to the product of a) _____ (the "Exchange Ratio") and b) the Final Nikkei Value divided by [84.95] Yen per US $1.00. Due to this method of calculation, holders of the Notes will not be subject to currency risk related to fluctuations in the U.S. dollar value of the Nikkei 225 Index, which is quoted in Japanese Yen. The Exchange Dates will be June 28, 1996, June 30, 1997, June 30, 1998 and September 29, 1998. The Final Nikkei Value will equal the arithmetic average closing values (afternoon session) of the Nikkei 225 Index on the two Nikkei Determination Days (as defined herein) immediately succeeding the Exchange Date, except the Final Nikkei Value with respect to the September 29, 1998 Exchange Date (the "Final Exchange Date") will be the arithmetic average closing values (afternoon session) of the Nikkei 225 Index on certain scheduled Nikkei Determination Days preceding and excluding the Maturity Date. (See "Final Nikkei Value" herein.) In the event that Parity exceeds $1,000 per Note (Par) on the Final Exchange Date, holders of Notes will automatically be deemed to have exchanged the Notes for Parity on the Final Exchange Date. The Company will cause Parity to be determined by the Calculation Agent for Chemical Bank, as Trustee (the "Trustee") under the Senior Indenture. An investment in the Notes entails risks not associated with similar investments in a conventional debt security, as described under "Description of Notes -- Notes Exchangeable to Commodity Prices, Equity Indices or Other Factors" in the accompanying Prospectus Supplement. Application has been made to list the Notes on the New York Stock Exchange ("NYSE"). The NYSE symbol for the Notes is "[ ]." ________________ PRICE 100% AND ACCRUED INTEREST, IF ANY ________________ Capitalized terms not defined above have the meanings given to such terms in the accompanying Prospectus Supplement. MORGAN STANLEY & CO. Incorporated INFORMATION CONTAINED IN THIS PRELIMINARY PRICING SUPPLEMENT IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PRICING SUPPLEMENT IS DELIVERED. THIS PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. Principal Amount:.............. $200,000,000 Maturity Date:................. September 30, 1998 Base Rate:..................... LIBOR LIBOR Currency:................ U.S. Dollars Index Maturity:................ 3 Months Spread (Plus or Minus):........ Minus [ ]% Reference Screen:.............. Telerate Page 3750 Interest Accrual Date:......... June [16], 1995 Initial Interest Rate:......... 1% per annum Initial Interest Reset Date:... June 30, 1995 Maximum Interest Rate:......... N/A Minimum Interest Rate:......... 0% Exchange Dates:................ June 28, 1996, June 30, 1997, June 30, 1998 and September 29, 1998, or if any such day is not a Business Day the immediately succeeding day that is a Business Day. On any Exchange Date, the holder of a Note will have the right, upon completion and acknowledgment of a Notice of Exchange, to exchange the Note and receive Parity. Parity is an amount of cash in U.S. Dollars equal to the product of a) _____ and b) the Final Nikkei Value divided by [84.95] Yen per US $1.00. The Company shall cause the Calculation Agent to provide written notice to the Trustee at its New York office of the Parity amount promptly at the opening of business New York time on the second Business Day after the second Nikkei Determination Day immediately succeeding the Exchange Dates other than the final Exchange Date (if any holder has exercised such exchange right on such Exchange Date) and on the Business Day immediately preceding the Maturity Date (or any earlier date of maturity). In the event that Parity exceeds $1,000 per Note (Par) on the Final Exchange Date, holders of Notes will automatically be deemed to have exchanged the Notes for Parity on the Final Exchange Date. In the case of each Exchange Date other than the Final Exchange Date, a holder exercising such exchange right will receive payment of Parity on the third Business Day after the second Nikkei Determination Day immediately succeeding such Exchange Date. Holders deemed to have automatically exercised their exchange right on the Final Exchange Date, will receive payment of Parity on the Maturity Date. 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. Exchange Ratio................. Interest Payment Dates:........ Each March 30, June 30, September 30 and December 30, commencing June 30, 1995, or if any such day is not a Business Day the immediately succeeding day that is a Business Day, unless (except in the case of September 30, 1998) such succeeding Business Day falls in the next calendar month in which case such Interest Payment Date shall be the first preceding day that is a Business Day. Interest Payment Period:....... Quarterly, except for the period commencing on the Interest Accrual Date and ending June 30, 1995. Interest Reset Period:......... The period from and including June 30, 1995 to but excluding September 30, 1995 and each successive period beginning on, and including, an Interest Payment Date and ending on, but including, the next succeeding Interest Payment Date. Interest Reset Dates:.......... The first Interest Payment Date and each successive Interest Payment Date thereafter. Specified Currency:............ U.S. Dollars Issue Price:................... 100% Settlement Date (Original Issue Date):....................... June [16], 1995 Book Entry Note or Certificated Note:........................ Book Entry Note Senior Note or Subordinated Note:........................ Senior Note Minimum Denominations:......... $1,000 Calculation Agent:............. Morgan Stanley & Co. Incorporated Trustee:....................... Chemical Bank Final Nikkei Value:............ The arithmetic average of the closing values (afternoon session) of the Nikkei 225 Index (the "Nikkei 225") calculated and published by Nihon Keizai Shimbun, Inc. ("NKS") on the two Nikkei Determination Days immediately succeeding the Exchange Date, except the Final Nikkei Value with respect to the September 29, 1998 Exchange Date (the "Final Exchange Date") will be the arithmetic average of the closing values (afternoon session) on the first two Nikkei Determination Days during the period of 10 Business Days preceding, and excluding, the Maturity Date on which, without giving effect to any Market Disruption Events, the Tokyo Stock Exchange ("TSE") and the Osaka Securities Exchange ("OSE") would be scheduled to be open for business; provided that if, due to Market Disruption Events, there are no Nikkei Determination Days during such period, then the Final Nikkei Value with respect to the Final Exchange Date shall be the closing value (afternoon session) of the Nikkei 225 on the day first preceding the Maturity Date on which such closing value was calculated and published. See "Adjustments to Index," "Market Disruption Event" and "Discontinuance of the Index" below. Nikkei Determination Day:...... A Business Day which is also a day on which the TSE and the OSE are each open for business and on which a Market Disruption Event has not occurred. See "Market Disruption Event" below. The Nikkei 225 Index:.......... All information regarding the Nikkei 225 set forth herein, including, without limitation, its make-up, method of calculation and changes in its components, has been derived from publicly available information. Characteristics The Nikkei Stock Average (the "Nikkei Average" or the "Nikkei 225") is one of Japan's major stock market indices. Nihon Keizai Shimbun, Inc. continues to calculate and published the Nikkei 225 since 1970. The Nikkei Average is an average price adjusted by the Dow method, which is regarded as being suitable for monitoring the level of the stock market and its changes. The constituents of the Nikkei Average are 225 actively traded stocks listed on the 1st section of the Tokyo Stock Exchange ("TSE"). Since October 1991, constituents of the Nikkei Average are reviewed every year and relatively low liquidity stocks are replaced by liquidity stocks. The Nikkei Average therefore corresponds to the changes in the stock market whilst at the same time continuity is maintained. Deletion and Addition Rules The constituents of the Nikkei Average are reviewed in accordance with the following rules once a year. Constituents of the Nikkei Average The Nikkei Stock Average is calculated from the prices of 225 TSE 1st section stocks selected to represent the overall performance of the stock market. The intention is to maintain continuity whilst at the same time keeping it composed of stocks of higher market liquidity. High Liquidity Group Stocks with relatively high market liquidity are selected from the TSE 1st section listing and are categorized as the "high liquidity group". The market liquidity of each stock is measured by that stocks trading volume and its price fluctuation per trading volume for the preceding 10 years. The stocks ranking in the first half of the TSE 1st section as measured by these two parameters form the high liquidity group. Standard for Deletion Any constituent stock shall be deleted from the Nikkei 225 if it ceases to be traded on the TSE 1st section for any of the following reasons: (i) bankruptcy; (ii) merger or acquisition by another company; (iii) delisting or moving to "Seiri-Post" due to excess debt, etc.; (iv) moving to the 2nd section. Constituent stocks having relatively low market liquidity on the TSE 1st section (i.e. those not belonging to the high liquidity group) may be deleted. Such cases are limited to a maximum of 3 per cent of the total number of constituent stocks of the Nikkei Average i.e., 6 of them, per year. Standard for Addition If one or more constituent stocks are deleted from the Nikkei Average, they are replaced by the corresponding number of non-constituent stocks which have been selected as replacement candidates in accordance with the following procedure. Selection of Priority Industries Firstly, each industry's distribution in the high liquidity group is identified and the ideal number of the Nikkei Average constituents from each industry is determined in proportion to the number of stocks that industry has in the high liquidity group. Then, by reference to the ideal and actual numbers of the Nikkei Average constituents from the relevant industry, its shortage ratio is calculated. The industry classification used here is as defined by Nihou Keizai Shimbun, Inc. (36 sectors). Ideal number of constituents from the industry (A) = B x 225 ___ C/2 Shortage Ratio = A-D x 100 ____ D Where = B is the number of stocks the industry has in the then high liquidity group. C is the total number of stocks listed on the TSE 1st section. D is the actual number of Nikkei Average constituents from the industry. Addition candidates are selected from industries having a larger shortage ratio ("priority industries"). Selection of Addition Candidates from Priority Industries Addition candidates are selected from each priority industry in order of market liquidity. Notwithstanding the above, stocks may (in principle) not be adopted as addition candidates if they at the time of selection: (i) have been listed on the TSE 1st section for less than 3 years; or (ii) have less than 60 million shares outstanding (the number of outstanding shares of stocks with par value other than 50 yen is calculated after converting to a 50 yen par value basis). Exception If a stock newly listed by the TSE on its 1st section as an exceptional case is deemed to be representative of the overall performance of the market, such stock may replace a Nikkei Average constituent having lower market liquidity. Determination and announcement of the changes Deletion/addition stocks are determined and announced by Nihon Keizai Shimbun, Inc. after taking counsel of scholars, experts, etc. Method of calculation The Nikkei Average is an average price of 225 stocks traded on the TSE 1st section. However, it is different from a simple average in that the divisor is adjusted to maintain continuity. When there is a non-market change in the price of the constituents or constituents are changed, the divisor is adjusted, so that the index level remains unchanged by the event. NKS is under no obligation to continue the calculation or dissemination of the Nikkei 225. In the event that NKS discontinues or suspends calculation or publication of the Nikkei 225 or that the calculation of the Nikkei 225 is changed in a material respect, the Calculation Agent may calculate a stock average comparable to the Nikkei 225 and the Final Nikkei Value shall be calculated based on such comparable index at the Exchange Date (or any other date of maturity). See "Adjustments to the Index," "Market Disruption Event" and "Discontinuance of the Index" below. The use of and reference to the Nikkei 225 in connection with the Notes has been consented to by NKS, the publisher of the Nikkei 225. All rights to the Nikkei 225 are owned by NKS. The Company, the Calculation Agent, MS& Co. and the Trustee disclaim all responsibility for the calculation or other maintenance of or any adjustments to the Nikkei 225. In addition, NKS has no relationship to the Company or the Notes; it does not sponsor, endorse, authorize, sell or promote the Notes, and has no obligation or liability in connection with the administration, marketing or trading of the Notes or with the calculation of the value of Parity or the Final Nikkei Value, as described above. The following table sets forth the high and low daily closing values of the Nikkei 225 for each quarter, in the period from January 1, 1990 through June 5, 1995, as published by NKS. The historical experience of the Nikkei 225 should not be taken as an indication of its future performance, and no assurance can be given as to the level of the Nikkei 225 as of the relevant Nikkei Determination Days corresponding to any Exchange Date (or any earlier date of maturity). Daily Closing Values in Japanese Yen ------------------------------------ End of High Low Quarter --------- --------- --------- 1990: 1st Quarter..... 38,712.88 29,843.34 29,980.45 2nd Quarter..... 33,192.50 28,002.07 31,940.24 3rd Quarter..... 33,172.28 20,983.50 20,983.50 4th Quarter..... 25,352.63 20,221.86 23,848.71 1991: 1st Quarter..... 27,146.91 22,442.70 26,292.04 2nd Quarter..... 26,980.37 23,290.96 23,290.96 3rd Quarter..... 24,120.75 21,456.76 23,916.44 4th Quarter..... 25,222.28 21,502.90 22,983.77 1992: 1st Quarter..... 23,801.18 19,345.95 19,345.95 2nd Quarter..... 18,804.60 15,741.27 15,951.73 3rd Quarter..... 18,908.47 14,309.41 17,399.08 4th Quarter..... 17,690.67 15,993.48 16,924.95 1993: 1st Quarter..... 19,048.38 16,287.45 18,591.45 2nd Quarter..... 21,076.00 19,099.09 19,590.00 3rd Quarter..... 21,148.11 19,621.46 20,105.71 4th Quarter..... 20,500.25 16,078.71 17,417.24 1994: 1st Quarter..... 20,677.77 17,369.74 19,111.92 2nd Quarter..... 21,552.81 19,122.22 20,643.93 3rd Quarter..... 20,862.77 19,468.89 19,563.81 4th Quarter..... 20,148.83 18,666.93 19,723.06 1995: 1st Quarter..... 19,684.04 15,749.77 16,139.95 [ At June 5, 1995. 17,103.69 15,381.29 15,897.32] Nikkei 225 Index Underlying Stocks: A list of the issuers of the 225 stocks constituting the Nikkei 225 Index is available from the Nikkei Economic Electronic Databank System and from the Stock Market Indices Data Book published by NKS. NKS may delete, add or substitute any Stock underlying the Nikkei 225 Index. Adjustments to the Index: If at any time the method of calculating the Nikkei 225, or the value thereof, is changed in a material respect, or if the Nikkei 225 is in any other way modified so that the Nikkei 225 does not, in the reasonable opinion of the Calculation Agent fairly represent the value of the Nikkei 225 had such changes or modifications not been made (except for changes in the Stocks by NKS, as described above under "The Nikkei 225 Index"), then, from and after such time, the Calculation Agent shall, at the close of business in New York, New York, on each date that the closing value (afternoon session) of the Nikkei 225 is to be calculated to determine the Final Nikkei Value, make such adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a calculation of a value of a stock index comparable to the Nikkei 225 as if such changes or modifications had not been made, and calculate such closing value with reference to the Nikkei 225, as adjusted. Accordingly, if the method of calculating the Nikkei 225 is modified so that the value of the Nikkei 225 is a fraction or a multiple of what it would have been if it had not been modified (e.g., due to a split in the Nikkei 225), then the Calculation Agent shall adjust the Nikkei 225 in order to arrive at a value of the Nikkei 225 as if it had not been modified (e.g., as if such split had not occurred). Market Disruption Event: "Market Disruption Event" means the occurrence or existence of either of the following events on a Nikkei Determination Day as determined by the Calculation Agent: (i) a suspension or absence of trading on the TSE of 20% or more of the Stocks which then comprise the Nikkei 225 (or a Successor Index, as defined below) during the one-half hour period preceding the close of trading on the TSE; or (ii) the suspension or material limitation on the Singapore International Monetary Exchange Ltd. (the "SIMEX"), Osaka Securities Exchange (the "OSE") or any other major securities market of trading in futures or options contracts related to the Nikkei 225 during the one-half hour period preceding the close of trading on the applicable exchange. 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, (2) a decision to permanently discontinue trading in the relevant contract will not constitute a Market Disruption Event, (3) a suspension of trading in a futures or options contract on the Nikkei 225 by the TSE, the OSE or other major securities market by reason of (x) a price change exceeding limits set by such securities exchange or market, (y) an imbalance of orders relating to such contracts or (z) a disparity in bid and ask quotes relating to such contracts will constitute a suspension or material limitation of trading in futures or options contracts related to the Nikkei 225 and (4) an "absence of trading" on the SIMEX, OSE or a major securities market on which futures or options contracts related to the Nikkei 225 are traded will not include any time when the SIMEX, OSE or such securities market, as the case may be, itself is closed for trading under ordinary circumstances. Discontinuance of the Index: If the NKS discontinues publication of the Nikkei 225 and NKS or another entity publishes a successor or substitute index that the Calculation Agent determines to be comparable to Nikkei 225 (any such index being referred to hereinafter as a "Successor Index"), then, upon the Calculation Agent's notification of such determination to the Trustee and the Company, the Calculation Agent will substitute the Successor Index as calculated by the NKS or such other entity for the Nikkei 225, as the case may be, and calculate the Final Nikkei Value as described above under "Exchange Dates". After such substitution, the Exchange Ratio would be modified as follows: New Exchange Ratio = Original Exchange Ratio x Most Recent Nikkei 225 Value ____________________________ Successor Index Value where "Most Recent Nikkei 225 Value" and "Successor Value" are the closing levels (afternoon session) of the respective indexes on the same day, whether, in the case of the Most Recent Nikkei 225 Value, such closing level is determined at that point by NKS or the calculation, as described below. Upon any selection by the Calculation Agent of a Successor Index, the Company shall cause notice thereof to be given to holders of the Notes. If NKS discontinues publication of the Nikkei 225 and a Successor Index is not selected by the Calculation Agent or is no longer published on any of the Nikkei Determination Days, the value to be substituted for the Nikkei 225 for any such Nikkei Determination Day used to calculate the Final Nikkei Value will be a value computed by the Calculation Agent for each Nikkei Determination Day in accordance with the procedures last used to calculate the Nikkei 225 prior to any such discontinuance. If a Successor Index is selected or the Calculation Agent calculates a value as a substitute for the Nikkei 225 as described below, such Successor Index or value shall be substituted for the Nikkei 225 for all purposes, including for purposes of determining whether a Market Disruption Event exists. If NKS discontinues publication of the Nikkei 225 prior to any period during which the Final Nikkei Value is to be determined and the Calculation Agent determines that no Successor Index is available at such time, then on each Business Day until the earlier to occur of (i) the determination of the Final Nikkei Value and (ii) a determination by the Calculation Agent that a Successor Index is available, the Calculation Agent shall determine the value that would be used in computing the Final Nikkei Value as described in the preceding paragraph as if such day were a Nikkei Determination Day. The Company will cause notice of each such value to be published not less often than once each month in The Wall Street Journal (or another newspaper of general circulation), and arrange for information with respect to such values to be made available by telephone. Notwithstanding these alternative arrangements, discontinuance of the publication of the Nikkei 225 may adversely affect trading in the Notes. Use of Proceeds: 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. United States Federal Taxation: There is currently no specific guidance regarding the federal income tax treatment of the Notes. Proposed Treasury regulations issued on December 15, 1994, which generally would require current accrual of contingent amounts, apply only to debt instruments issued on or after the 60th day after the date the regulations are finalized. There can be no assurance that the ultimate tax treatment of the Notes would not differ significantly from the description herein. Prospective investors are urged to consult their tax advisors as to the possible consequences of holding the Notes. Payments of Interest. Under general tax principles, a United States Holder would be required to include interest paid on the Note in income at the time it accrues or is received in accordance with the United States Holder's method of accounting for federal income tax purposes. With respect to any contingent amount payable upon any exercise of the exchange option in excess of the Note's principal amount, an accrual basis taxpayer would be required to include any such amount in income only at the time such amount becomes fixed and determinable, which is on the second Nikkei Determination Date after each Exchange Date, except with respect to the Final Exchange Date for which such amount becomes fixed and determinable on the last Business Day (in the relevant 10 Business Day period) used as a reference in the calculation of the Final Nikkei Value of the Note. United States Holders that have acquired debt instruments similar to the Notes and have accounted for such debt instruments under proposed, but subsequently withdrawn, Treasury regulation Section 1.1275-4(g) may be deemed to have established a method of accounting that must be followed with respect to the Notes, unless consent of the Commissioner of the Internal Revenue Service is obtained to change such method. Absent such consent, such a Holder would be required to account for the Note in the manner prescribed in withdrawn Treasury regulation Section 1.1275-4(g). Accordingly, the Note would be bifurcated into its contingent and noncontingent components and the issue price of the Note would be allocated according to the fair market value of the components. The noncontingent component would be treated as a separate noncontingent debt instrument governed by Internal Revenue Code Sections 1271 through 1275. The contingent component would be treated in accordance with its economic substance as payments pursuant to an option. See also "United States Federal Taxation" in the accompanying Prospectus Supplement. -----END PRIVACY-ENHANCED MESSAGE-----