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would include the 1977 and 1979 HGI notes. The audited financial
statements of both City and HGI were included in the offering
circular.
4. 1979 Issuance of Notes
On August 1, 1979, Finance was the named issuer of $50
million of floating rate notes (FR notes) on the Eurobond market,
due August 1, 1986. Interest on the FR notes was payable
semiannually at a rate equal to one-half percent above the London
interbank offered rate for 6-month Eurodollar deposits. The FR
notes also provided that the issuer would, in general, indemnify
the holders with respect to any withholding taxes that might be
imposed by the United States or the Netherlands Antilles with
respect to the payments under the Notes, by providing for the
payment of additional interest sufficient to make the interest
payment equal to the stated rate.5 Finance’s obligations to make
principal and interest payments under the FR notes were
unconditionally guaranteed by City.
On the same day the FR notes were issued, Finance
transferred the $50 million proceeds to City. City issued a
promissory note to Finance in the principal amount of $50 million
(1979 promissory note). As with the 1977 promissory note, the
1979 promissory note provided that the principal amount owed
5 The FR notes further provided the issuer with a right to
redeem in the event that the foregoing additional interest became
payable.
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