424B5
The
information in this prospectus supplement is not complete and
may be changed. This preliminary prospectus supplement and the
accompanying prospectus are not an offer to sell these
securities and are not soliciting an offer to buy these
securities in any jurisdiction where such offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED
SEPTEMBER 19, 2007
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 24, 2007)
Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-145668
$350,000,000
Leucadia
National Corporation
% Senior Notes due
2015
The
Company
We are a diversified holding company engaged in a variety of
businesses, including manufacturing, telecommunications,
property management and services business, gaming entertainment,
real estate activities, medical product development, winery
operations and residual banking and lending activities that are
in run-off. We also own equity interests in operating businesses
and investment partnerships which are accounted for under the
equity method of accounting, including a broker-dealer engaged
in the trading of high yield and special situation securities,
land based contract oil and gas drilling, real estate activities
and development of a copper mine in Spain.
The
Notes
Interest Payments. We will pay interest on the notes at
an annual rate of %. We will make
interest payments on the notes semiannually, on each
March 15 and September 15, beginning on March 15,
2008.
Maturity Date. September 15, 2015.
Ranking. The notes will be our senior unsecured
obligations and will rank equally in right of payment with all
of our existing and future senior unsecured indebtedness and
senior in right of payment to all of our existing and future
subordinated indebtedness. The notes will be effectively
subordinated to all existing and future indebtedness of our
subsidiaries.
Redemption. The notes are not subject to redemption prior
to their maturity.
Change of Control Offer. If we experience a change of
control, we must give holders of the notes the opportunity to
sell us their notes at 101% of their principal amount, plus
accrued and unpaid interest.
The
Concurrent Offering
Concurrent with this offering, and by a separate prospectus
supplement, we are offering 5.5 million of our common
shares. The completion of the concurrent common share offering
and the completion of this offering are each conditioned upon
the completion of the other.
Investing in the notes involves a high degree of risk that we
describe in the Risk Factors section beginning on
page S-5.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
related prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
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Per Note(1)
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Total
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Initial Public Offering Price
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%
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$
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Underwriting Discount
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%
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$
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Proceeds to Leucadia (before
expenses)
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%
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$
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(1) |
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Plus accrued interest, if any, from the date of initial
issuance. |
We expect that delivery of the notes will be made through The
Depository Trust Company in New York, New York on or about
September , 2007.
Jefferies &
Company
The
date of this prospectus supplement
is ,
2007
TABLE OF
CONTENTS
Prospectus
Supplement
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ii
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ii
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S-1
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S-5
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S-7
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S-8
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S-10
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S-21
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S-23
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S-26
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S-26
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S-26
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S-27
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Prospectus
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About This Prospectus
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1
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Forward-Looking Statements
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Our Company
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Risk Factors
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Use of Proceeds
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Ratio of Earnings to Fixed Charges
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Description of Capital Stock
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Description of Other Securities
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Plan of Distribution
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Selling Securityholders
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Validity of Securities
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Where You Can Find More Information
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Incorporation by Reference
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i
INFORMATION
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of an automatic shelf
registration statement on
Form S-3
that we filed with the Securities and Exchange Commission, or
the SEC, as a well-known seasoned issuer as defined
in Rule 405 under the Securities Act of 1933, as
amended, or the Securities Act. By using a shelf registration
statement, we may sell, at any time and from time to time, in
one or more offerings, any combination of the securities
described in the accompanying prospectus. As allowed by SEC
rules, this prospectus supplement does not contain all of the
information included in the registration statement. For further
information, we refer you to the registration statement,
including its exhibits, the documents incorporated by reference
therein and herein as well as the accompanying prospectus.
Statements contained in this prospectus supplement and the
accompanying prospectus about the provisions or contents of any
agreement or other document are not necessarily complete. If the
SECs rules and regulations require that an agreement or
document be filed as an exhibit to the registration statement,
please see that agreement or document for a complete description
of these matters.
You should read this prospectus supplement and the accompanying
prospectus together with any additional information you may need
to make your investment decision. You should also read and
carefully consider the information in the documents we have
referred you to in Where You Can Find More
Information. Information incorporated by reference after
the date of this prospectus supplement is considered a part of
this prospectus supplement and may add, update or change
information contained in this prospectus supplement. The
information in this prospectus supplement, the accompanying
prospectus or any document incorporated herein or therein by
reference is accurate as of the date contained on the cover of
such documents or the date such documents are filed with the
SEC, as the case may be. Neither the delivery of this prospectus
supplement or the accompanying prospectus, nor any sale made
under this prospectus supplement nor the accompanying prospectus
will, under any circumstances, imply that the information in
this prospectus supplement or the accompanying prospectus is
correct as of any date after the date of this prospectus
supplement or the accompanying prospectus. Any information in
such subsequent filings that is inconsistent with this
prospectus supplement will supersede the information in this
prospectus supplement and the accompanying prospectus.
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not, and the underwriter has
not, authorized anyone to provide you with different or
additional information. We are not, and the underwriter is not,
making an offer of these securities in any state where the offer
is not permitted.
FORWARD-LOOKING
STATEMENTS
Some of the statements contained in or incorporated by reference
in this prospectus supplement and the accompanying prospectus
contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act. These statements may relate, but are not limited, to
projections of revenues, income or loss, capital expenditures,
plans for growth and future operations, competition and
regulation, as well as assumptions relating to the foregoing.
Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted or quantified.
When used in this prospectus supplement and the accompanying
prospectus, the words estimates,
expects, anticipates,
believes, plans, intends and
variations of these words and similar expressions are intended
to identify forward-looking statements that involve risks and
uncertainties. Future events and actual results could differ
materially from those set forth in, contemplated by or
underlying the forward-looking statements.
The factors that could cause actual results to differ materially
from those suggested by any of these statements include, but are
not limited to, those discussed or identified from time to time
in our public filings, including without limitation our Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2006, as amended,
and our Quarterly Reports on
Form 10-Qs
for the quarters ended March 31, 2007 and June 30,
2007, such as:
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risks associated with future acquisitions and investments;
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dependence on key management personnel;
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a worsening of general economic and market conditions or
increases in prevailing interest rate levels or a continued
weakening of the U.S. Dollar against the Euro;
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declines in U.S. commercial and residential real estate
markets;
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increased competition in the international and domestic plastics
market and volatility of raw material prices;
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availability of key raw materials;
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changes in foreign and domestic laws, regulations and taxes;
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adverse legal and regulatory developments that may affect our
particular businesses;
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changes in mortgage interest rate levels or changes in consumer
lending practices;
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risks associated with the operation of a new business without a
proven track record;
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ability to obtain, maintain and defend patent protection for our
products and technologies, preserve trade secrets and operate
without infringing the intellectual property rights of others;
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increased competition in the luxury segment of the premium table
wine market;
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ability to obtain sufficient or cost effective
telecommunications termination capacity from high quality
carriers to particular destinations;
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reliance on independent distributors to generate
telecommunications revenue;
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increased competition and adverse changes in pricing
environments;
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increased default rates and decreased value of assets pledged to
us;
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adverse economic, political or environmental developments where
we have mining interests (including Spain and Australia) that
could delay or preclude the issuance of permits, result in
increased development costs or increased financing costs, or any
other developments that result in a decrease in mineral prices;
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changes in the composition of our assets and liabilities through
acquisitions and dispositions;
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weather related conditions and significant natural disasters,
including hurricanes, tornadoes, windstorms, earthquakes and
hailstorms that may affect our operations or investments;
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ability to insure certain risks economically; and
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ability to generate sufficient taxable income to fully realize
our deferred tax asset.
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Accordingly, we caution you against relying on these
forward-looking statements, which are applicable only as of the
date of this prospectus supplement. We undertake no obligation
to revise or update these forward-looking statements to reflect
events or circumstances that arise after the date of this
prospectus supplement and the accompanying prospectus or to
reflect the occurrence of unanticipated events.
iii
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights certain information concerning our
business and this offering. It does not contain all of the
information that may be important to you and to your investment
decision. The following summary is qualified in its entirety by
the more detailed information and financial statements and notes
thereto in the accompanying prospectus and the documents
incorporated by reference herein and therein. You should
carefully read this entire prospectus supplement and the
accompanying prospectus, including the information incorporated
herein and therein by reference. Unless otherwise expressly
stated herein or the context otherwise requires, all references
in this prospectus supplement to Leucadia,
we, us, our, our
company or the company refer to Leucadia
National Corporation, a New York corporation, and its direct and
indirect subsidiaries.
Our
Company
We are a diversified holding company engaged in a variety of
businesses, including manufacturing, telecommunications,
property management and services business, gaming entertainment,
real estate activities, medical product development, winery
operations and residual banking and lending activities that are
in run-off. We also own equity interests in operating businesses
and investment partnerships which are accounted for under the
equity method of accounting, including a broker-dealer engaged
in the trading of high yield and special situation securities,
land based contract oil and gas drilling, real estate activities
and development of a copper mine in Spain. We concentrate on
return on investment and cash flow to maximize long-term
shareholder value. Additionally, we continuously evaluate the
retention and disposition of our existing operations and
investigate possible acquisitions of new businesses. In
identifying possible acquisitions, we tend to seek assets and
companies that are out of favor or troubled and, as a result,
are selling substantially below the values we believe to be
present.
Our manufacturing operations are conducted through Idaho Timber,
LLC, or Idaho Timber, and Conwed Plastics, LLC, or Conwed
Plastics. Idaho Timber primarily remanufactures dimension lumber
and remanufactures, packages
and/or
produces other specialized wood products. Conwed Plastics
manufactures and markets lightweight plastic netting used for a
variety of purposes including, among other things, building and
construction, erosion control, agriculture, packaging, carpet
padding, filtration and consumer products.
Our telecommunications operation is conducted through STi
Prepaid, LLC, a seller of international prepaid phone cards and
other telecommunication services in the United States.
Our property management and services business is conducted
through ResortQuest International, Inc., a company engaged in
offering management services to vacation properties in beach and
mountain resort locations in the continental United States and
Canada, as well as in real estate brokerage services and other
rental and property owner services.
Our gaming entertainment operations are conducted through our
controlling interest in Premier Entertainment Biloxi, LLC, or
Premier, which is the owner of the Hard Rock Hotel &
Casino Biloxi, or Hard Rock Biloxi, located in Biloxi,
Mississippi. The Hard Rock Biloxi was severely damaged by
Hurricane Katrina and re-opened in June 2007 after an extensive
rebuilding effort. In August 2007, Premier and its subsidiary
emerged from bankruptcy pursuant to their Chapter 11
reorganization plan.
Our domestic real estate operations include a mixture of
commercial properties, residential land development projects and
other unimproved land, all in various stages of development and
all available for sale.
Our medical product development operation is conducted through
our majority-owned, development stage subsidiary, Sangart, Inc.,
or Sangart. Sangart is developing a product called
Hemospan®
which is a form of cell-free hemoglobin that is designed for
intravenous administration to treat a variety of medical
conditions, including use as an alternative to red blood cell
transfusions.
Our winery operations consist of Pine Ridge Winery in Napa
Valley, California and Archery Summit in the Willamette Valley
of Oregon. These wineries primarily produce and sell wines in
the luxury segment of the premium table wine market.
S-1
Our land based contract oil and gas drilling investment is
conducted through our equity interest in Goober Drilling, LLC,
or Goober. Based in Stillwater, Oklahoma, Goober provides
drilling services to exploration and production companies. In
August 2007, we invested an additional $20,000,000 in Goober,
increasing our equity interest to 50%.
Our investment in the development of a copper mine consists of
our 30% interest in Cobre Las Cruces, S.A., a former subsidiary
that holds the exploration and mineral rights to the Las Cruces
copper deposit in the Pyrite Belt of Spain. We also hold an
11.6% interest in Inmet Mining Corporation, a Canadian-based
global mining company, that produces copper, zinc and gold, that
owns the remaining 70% of Cobre Las Cruces.
Our largest equity investment is our 9.93% interest in Fortescue
Metals Group Ltd, or Fortescue, a publicly traded company listed
on the Australian Stock Exchange. We have invested an aggregate
of $452,200,000 in Fortescues Pilbara iron ore and
infrastructure project in Western Australia, including a
$100,000,000 note of Fortescues subsidiary, FMG Chichester
Pty Ltd. Interest on the note is calculated as 4% of the
revenue, net of government royalties, invoiced from the iron ore
produced from that projects Cloud Break and Christmas
Creek areas. The Fortescue shares acquired by us may be sold
without restriction. As of September 18, 2007, our
investment in Fortescue stock had a market value of $907,600,000.
Our principal executive offices are located at 315 Park Avenue
South, New York, New York 10010. Our telephone number is
(212) 460-1900.
Our website is
http://www.leucadia.com.
The information contained on our website does not constitute a
part of this prospectus supplement or the accompanying
prospectus.
S-2
The
Offering
The summary below describes the principal terms of the notes.
Certain of the terms and conditions described below are subject
to important limitations and exceptions. The section of this
prospectus supplement entitled Description of Notes
contains a more detailed description of the terms and conditions
of the notes.
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Issuer |
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Leucadia National Corporation. |
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Notes Offered |
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$350.0 million aggregate principal amount
of % Senior
Notes due 2015. |
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Maturity Date |
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September 15, 2015. |
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Interest Rate |
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We will pay interest on the notes at an annual rate
of %. |
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Interest Payment Dates |
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We will make interest payments on the notes semiannually on each
March 15 and September 15, beginning on March 15,
2008. |
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Ranking |
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The notes will be our senior unsecured obligations and will rank
equally in right of payment with all of our existing and future
senior unsecured indebtedness and senior in right to all of our
existing and future subordinated indebtedness. The notes will be
effectively subordinated to all existing and future indebtedness
of our subsidiaries. Had the notes been issued as of
June 30, 2007, they would have been effectively
subordinated to approximately $844.7 million of
indebtedness and other liabilities of our subsidiaries,
including trade payables but excluding intercompany obligations. |
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Redemption |
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The notes are not subject to redemption prior to their maturity
or to sinking fund payments. |
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Change of Control Offer |
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If we experience a change of control, each holder of notes will
have the right to sell to us all or a portion of such
holders notes at 101% of their principal amount, plus
accrued but unpaid interest, if any, to the date of repurchase.
A change of control will occur at the time Ian M. Cumming,
our chairman of the board, and Joseph S. Steinberg, a director
and our president, cease to beneficially own, in the aggregate,
a specified percentage of our outstanding common shares, coupled
in various circumstances with the notes being rated below
investment grade. See Description of Notes
Repurchase at Option of Holders Upon a Change of Control. |
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Restrictive Covenants |
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The indenture governing the notes will contain covenants that,
among other things, limit: |
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our ability to incur additional indebtedness;
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our ability to incur liens;
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our ability to enter into sale-leaseback
transactions;
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our ability to enter into transactions with
affiliates;
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the ability of certain of our subsidiaries to incur
debt; and
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our ability to consummate certain mergers.
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These covenants are subject to a number of important exceptions
described in Description of Notes. |
S-3
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Form of Notes |
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The notes will be issued in book-entry form and will be
represented by global certificates in denominations of $2,000
and integral multiples of $2,000, deposited with a custodian for
and registered in the name of a nominee of The Depository
Trust Company. |
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Absence of a Public Market for the Notes |
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We do not intend to apply for listing of the notes on any
securities exchange. Accordingly, we cannot assure you that a
liquid market for the notes will be developed or maintained. The
underwriter has advised us that it intends to make a market in
the notes. The underwriter is not obligated, however, to make a
market in the notes and any such market may be discontinued by
the underwriter in its sole discretion at any time without
notice. See Underwriting. |
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The Concurrent Offering |
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Concurrent to this offering, and by a separate prospectus
supplement, we are offering 5.5 million of our common
shares. The completion of the concurrent common share offering
and the completion of this offering are each conditioned upon
the completion of the other. |
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Use of Proceeds |
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We intend to use the net proceeds from the sale of the notes,
together with the net proceeds from the concurrent common share
offering, for general corporate purposes, which may include
working capital, acquisitions or other investment opportunities.
See Use of Proceeds. |
S-4
Investing in the notes involves a high degree of risk. You
should carefully consider the risks described below, as well as
those risk factors incorporated by reference in this prospectus
supplement and the accompanying prospectus under the captions
Item 1A. Risk Factors in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, as amended,
and our Quarterly Reports on
Form 10-Q
for the fiscal quarters ended March 31, 2007 and
June 30, 2007, before making a decision to invest in the
notes. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may
also impair our business operations or adversely affect our
results of operations or financial condition. If any of such
risks actually occur, our business and results of operations
could be materially affected. In that case, you could lose all
or part of your investment in the notes.
Risks
Related to this Offering
The
level of our indebtedness could adversely affect our financial
condition and therefore make it more difficult for us to fulfill
our obligations under the notes.
At June 30, 2007, on a pro forma basis after giving effect
to the completion of this offering, we would have had total
indebtedness of $2,050.6 million, consisting of
$1,325.5 million of senior debt, $350.0 million of
senior subordinated debt, $98.2 million of subordinated
debt and $276.9 million of subsidiary debt.
Our substantial indebtedness level and interest expense could
have important consequences to our company and you, including:
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limiting our ability to borrow additional amounts for working
capital, capital expenditures, debt service requirements,
funding of future acquisitions or other general corporate
purposes;
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limiting our ability to use operating cash flow in other areas
of our business because we must dedicate a substantial portion
of these funds to service the debt;
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increasing our vulnerability to general adverse economic and
industry conditions;
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placing us at a competitive disadvantage as compared to our
competitors that have less leverage;
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limiting our ability to capitalize on business opportunities and
to react to competitive pressures and adverse changes in
government regulation; and
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limiting our ability or increasing the costs to refinance
indebtedness.
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Although we have substantial indebtedness outstanding, the
indenture governing the notes will permit us to incur additional
indebtedness in the future. If we or our subsidiaries incur
additional debt, the risks we now face as a result of our
leverage could intensify.
Your
right to receive payments on the notes is effectively junior to
all existing and future indebtedness and other liabilities of
our subsidiaries.
The notes will be effectively junior to all existing and future
indebtedness of our subsidiaries. For example, the notes will
effectively rank junior to $844.7 million of indebtedness
and other liabilities of our subsidiaries as of June 30,
2007. Although the indenture contains restrictions on the
ability of certain of our subsidiaries to incur indebtedness,
these restrictions are subject to important limitations and
exceptions that permit our subsidiaries to incur a substantial
amount of additional indebtedness. Accordingly, in the event of
a bankruptcy, liquidation or reorganization affecting us or any
of our subsidiaries, your rights to receive payment effectively
will be subordinated to the creditors of those subsidiaries.
We may
be unable to repay or repurchase the notes upon a change of
control.
If we experience a change of control, as that term is defined in
Description of Notes, we may be required to make an
offer to repurchase all of your notes prior to maturity. We
cannot assure you that we will have sufficient funds or be able
to arrange for additional financing to repurchase notes tendered
to us following a change of control.
S-5
There
is no public market for the notes and we do not know if a market
will ever develop or, if a market does develop, whether it will
be sustained.
The notes are a new issue of securities and there is no existing
trading market for the notes. Although the underwriter has
informed us that it intends to make a market in the notes, it
has no obligation to do so and may discontinue making a market
at any time without notice. In addition, any market making
activity will be subject to the limits imposed by applicable
law. As a result, we cannot assure you that a liquid market will
develop for the notes, that you will be able to sell your notes
at a particular time or that the prices that you receive when
you sell the notes will be favorable. If a liquid market is
established, various factors could have a material adverse
effect on the trading of the notes, including fluctuations in
prevailing interest rates.
Historically, the market for non-investment grade debt has been
subject to substantial volatility. We cannot assure you that the
market for the notes will be free from similar volatility.
Changes
in our credit ratings or the financial and credit markets could
adversely affect the market prices of the notes.
The future market prices of the notes will be affected by a
number of factors, including:
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our ratings with major credit rating agencies;
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the prevailing interest rates being paid by companies similar to
us; and
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the overall condition of the financial and credit markets.
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The condition of the financial and credit markets and prevailing
interest rates have fluctuated in the past and are likely to
fluctuate in the future. These fluctuations could have an
adverse effect on the prices of the notes. In addition, credit
rating agencies continually revise their ratings for companies
that they follow, including us. We cannot assure you that credit
rating agencies will continue to rate the notes or that they
will maintain their ratings on the notes. A negative change in
our rating could have an adverse effect on the market prices of
the notes.
S-6
We estimate the net proceeds from the issuance of the notes will
be approximately $ million.
We intend to use the net proceeds from the offering, together
with the net proceeds from the concurrent common share offering,
for general corporate purposes, which may include working
capital, acquisitions or other investment opportunities. Except
as publicly disclosed, we have no material arrangement,
commitment or understanding with respect to any specific
acquisitions or investment opportunities. Accordingly, our
management will have broad discretion over the use of proceeds
from this offering. Pending the specific uses described above,
we intend to invest the net proceeds in short-term investment
grade obligations.
S-7
DESCRIPTION
OF CERTAIN INDEBTEDNESS AND OTHER OBLIGATIONS
71/8% Senior
Notes due 2017
We currently have outstanding $500 million aggregate
principal amount of
71/8% Senior
Notes due 2017, or the
71/8% senior
notes. The
71/8% senior
notes were issued pursuant to an indenture dated as of
March 6, 2007, with The Bank of New York, as trustee. The
71/8% senior
notes are our senior unsecured obligations and rank senior in
right of payment to all of our existing and future subordinated
indebtedness and pari passu in right of payment with all of our
existing and future senior indebtedness, including the notes
offered hereby, the
73/4% Senior
Notes due 2013, or the
73/4% senior
notes, and the 7% Senior Notes due 2013, or the
7% senior notes. The terms of the indenture governing the
71/8% senior
notes are substantially identical to the terms of the indenture
governing the notes offered hereby other than the optional
redemption provisions applicable to the
71/8%
senior notes.
73/4% Senior
Notes due 2013
We currently have outstanding $100 million aggregate
principal amount of
73/4% senior
notes. The
73/4% senior
notes were issued pursuant to an indenture dated as of
August 15, 1993, with U.S. Bank (formerly, Continental
Bank, National Association), as trustee. The
73/4% senior
notes are our senior unsecured obligations and rank senior in
right of payment to all of our existing and future subordinated
indebtedness and pari passu in right of payment with all of our
existing and future senior indebtedness, including the notes
offered hereby, the
71/8% senior
notes and the 7% senior notes. The terms of the indenture
governing the
73/4% senior
notes are substantially identical to the terms of the indenture
governing the notes offered hereby.
We currently have outstanding $375 million aggregate
principal amount of 7% senior notes issued pursuant to an
indenture dated as of November 5, 2003, with The Bank of
New York (formerly, JPMorgan Chase Bank), as trustee. The
7% senior notes are our senior unsecured obligations and
rank senior in right of payment to all of our existing and
future subordinated indebtedness, and pari passu in right of
payment with all of our existing and future senior indebtedness,
including the notes offered hereby, the
71/8% senior
notes and the
73/4% senior
notes. The terms of the indenture governing the 7% senior
notes are substantially identical to the terms of the indenture
governing the notes offered hereby.
33/4% Convertible
Senior Subordinated Notes due 2014
We currently have outstanding $350 million aggregate
principal amount of
33/4% Convertible
Senior Subordinated Notes due 2014, or the
33/4%
convertible senior subordinated notes. The
33/4%
convertible senior subordinated notes were issued pursuant to an
indenture dated as of April 29, 2004, with HSBC Bank USA,
as trustee. The
33/4%
convertible senior subordinated notes are convertible into our
common shares at $22.97 per share at any time before their
maturity, subject to certain restrictions, at a conversion rate
of 43.5414 shares per each $1,000 principal amount of the
notes subject to adjustment (an aggregate of
15,239,490 shares). The
33/4%
convertible senior subordinated notes are our unsecured senior
subordinated obligations and rank pari passu in right of payment
to all of our existing and future subordinated indebtedness and
junior in right of payment with all of our existing and future
senior indebtedness, including the notes offered hereby. The
indenture governing the
33/4%
convertible senior subordinated notes does not restrict the
incurrence of senior indebtedness or other debt by us or our
subsidiaries. In addition, we are not restricted from paying
dividends or issuing or repurchasing
33/4%
convertible senior subordinated notes under the indenture. In
addition, if we experience a change of control, we will be
required to offer to purchase all of the outstanding
33/4%
convertible senior subordinated notes at purchase price in cash
equal to 101% of the principal amount thereof on the date of
purchase, including accrued and unpaid interest, if any, to the
date of purchase. Under the terms of the indenture governing the
33/4%
convertible senior subordinated notes, a change of control will
occur at the time Ian M. Cumming, our chairman of the board, and
Joseph S. Steinberg, a director and our president, cease to
beneficially own, in the aggregate, a specified percentage of
our outstanding common shares, which percentage ownership
requirement is in excess of 10%, coupled in various
circumstances with the
33/4%
convertible senior subordinated notes being rated below
investment grade.
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8.65%
Junior Subordinated Deferrable Interest Debentures due
2027
We currently have outstanding $98.2 million principal
amount of 8.65% Junior Subordinated Deferrable Interest
Debentures due 2027. These debentures were issued pursuant to an
indenture dated as of January 21, 1997, with The Bank of
New York (formerly, JPMorgan Chase Bank), as trustee. The
debentures are subordinated to all of our existing and future
senior indebtedness, including the notes offered hereby, our
outstanding
71/8%
senior notes, the
73/4% senior
notes, the 7% senior notes and the
33/4%
convertible senior subordinated notes.
Bank
Credit Facility
In June 2006, we entered into a new credit agreement with
various bank lenders for a $100 million unsecured credit
facility that matures in five years and bears interest based on
the Eurocurrency rate or the prime rate. As of the date of this
prospectus supplement, no amounts were outstanding under this
bank credit facility.
Aircraft
Financing
During 2001, we borrowed $53.1 million secured by our
corporate aircraft. This debt bears interest based on a floating
rate, requires monthly payments of principal and interest and
matures in ten years. As of June 30, 2007,
$40.3 million was outstanding and the interest rate was
9.3%. We have entered into an interest rate swap agreement on
this financing, which fixed the interest rate at approximately
5.7%.
Capital
Leases
Capital leases primarily consist of a sale-leaseback transaction
related to certain corporate aircraft originally entered into in
May 2003, which was amended in 2005 to among other matters
extend the lease term through 2015.
S-9
The notes are to be issued under an indenture to be dated as of
September 25, 2007 (the Indenture) between the
Company and The Bank of New York, as trustee (the
Trustee). The terms of the notes include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended
(the Trust Indenture Act).
This Description of Notes summarizes certain provisions of the
Indenture and makes use of defined terms in the Indenture. The
following summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all of the
provisions of the Indenture, and terms made a part of the
Indenture by reference to the Trust Indenture Act. We urge
you to read the Indenture and the Trust Indenture Act
because they, and not this description, define your rights as a
holder of notes. Copies of the Indenture are available from the
Company as described below under the heading Where You Can
Find More Information.
You can find the definitions of certain terms used in this
Description of Notes throughout this Description of Notes. As
used in this Description of Notes, references to we,
us or the Company mean Leucadia National
Corporation (and its successors in accordance with the terms of
the Indenture) and not any of its subsidiaries.
General
The notes will bear interest from the date of their initial
issuance at the rate shown on the cover page of this prospectus
supplement, payable on March 15 and September 15 in
each year to the noteholders of record at the close of business
on the March 1 and September 1 (whether or not a
business day) immediately preceding such interest payment date,
commencing March 15, 2008. The notes will be due on
September 15, 2015, will be issued only in denominations of
$2,000 and integral multiples of $2,000, and will be general
unsecured obligations of the Company. The Indenture authorizes
an initial aggregate principal amount of $350,000,000 of the
notes plus an unlimited amount of additional notes which may be
issued in the future in accordance with the terms of the
Indenture.
Ranking
The notes will be senior unsecured obligations of the Company
and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company and prior in right of
payment to all subordinated indebtedness of the Company. The
notes will be effectively subordinated to all existing and
future indebtedness of our subsidiaries. Had the notes been
issued as of June 30, 2007, they would have been
effectively subordinated to approximately $844.7 million of
indebtedness and other liabilities of our subsidiaries,
including trade payables but excluding intercompany obligations.
The notes will rank pari passu with the Companys
71/8% Senior
Notes due 2017,
73/4% Senior
Notes due 2013 and 7% Senior Notes due 2013. The notes will
rank senior to the Companys
33/4% Convertible
Senior Subordinated Notes due 2014 and the Companys 8.65%
Junior Subordinated Deferrable Interest Debentures due 2027.
Redemption
The notes are not subject to redemption prior to their maturity.
Sinking
Fund
The notes are not subject to sinking fund payments.
Certain
Covenants
The Indenture will contain the following covenants:
Restriction on Incurrence of Indebtedness by the Company and
on the Incurrence of Indebtedness and Issuance of Preferred
Stock by Its Subsidiaries. The Company shall not,
and shall not permit any Subsidiary to, create, incur, assume or
guarantee the payment of any Indebtedness, and shall not permit
any of its Subsidiaries to issue any Preferred Stock, if, at the
time of such event and after giving effect thereto on a pro
forma basis, the Companys ratio of Consolidated Debt to
Consolidated Tangible Net Worth, as of the most recent date for
which consolidated
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financial statements are available and adjusted for the
incurrence of all Indebtedness and the issuance of all Preferred
Stock by Subsidiaries (other than Permitted Indebtedness) since
that date, would be greater than 1.75 to 1. This restriction
shall not preclude the incurrence of Permitted Indebtedness.
Consolidated Debt means, on any date, the sum
of (i) total Indebtedness of the Company and its
Subsidiaries, at such date, determined in accordance with GAAP
on a consolidated basis, and (ii) the aggregate liquidation
preference of all Preferred Stock of Subsidiaries of the
Company, at such date, other than Preferred Stock to the extent
held by the Company and its Subsidiaries; provided, that
Consolidated Debt shall not include Permitted Indebtedness.
GAAP means United States generally accepted
accounting principles as in effect on December 31, 1992.
Indebtedness of any Person means (i) any
liability of such Person (a) for borrowed money,
(b) evidenced by a note, debenture or similar instrument
(including a Purchase Money Obligation or deferred payment
obligation) given in connection with the acquisition of any
property or assets (other than inventory or similar property
acquired in the ordinary course of business), including
securities, (c) for the payment of a Capitalized Lease
Obligation of such Person or (d) with respect to the
reimbursement of any letter of credit, bankers acceptance
or similar credit transaction (other than trade letters of
credit issued in the ordinary course of business;
provided, that the failure to make prompt reimbursement
of any trade letter of credit shall be deemed to be the
incurrence of Indebtedness); and (ii) any guarantee by such
Person of any liability of others described in clause (i)
above or any obligation of such Person with respect to any
liability of others described in clause (i) above.
Indebtedness shall not include deposits at the Companys
banking and lending Subsidiaries.
Permitted Indebtedness means (i) any
Indebtedness of the Company and its Subsidiaries outstanding on
the date of the Indenture, or any refinancing or replacement
thereof; provided, that the aggregate amount of such
Indebtedness is not increased, (ii) Acquired Indebtedness,
(iii) Preferred Stock of Subsidiaries held by the Company
or its Subsidiaries (it being understood that the sale of such
Preferred Stock by the Company or such Subsidiary to any Person
other than the Company or a Subsidiary of the Company or such
Subsidiary no longer being a Subsidiary shall be deemed the
issuance of Preferred Stock for purposes of the above test) and
(iv) intercompany Indebtedness.
Acquired Indebtedness means Indebtedness of a
Person either (i) existing at the time such Person becomes
a Subsidiary, (ii) assumed in connection with the
acquisition of assets of such Person or (iii) any
refinancing or replacement by such Person of such Indebtedness;
provided, that the aggregate amount of such Indebtedness
then outstanding is not increased. Acquired Indebtedness shall
not include (x) any such Indebtedness created in
anticipation of such Person becoming a Subsidiary (other than a
refinancing or replacement of Indebtedness of such Person, which
original Indebtedness was not incurred in anticipation of such
Person becoming a Subsidiary), or (y) any Indebtedness that
is recourse to the Company or any Subsidiary or any of their
respective assets, other than to such Person and its
Subsidiaries and their respective assets.
Limitation on Funded Debt of Material
Subsidiaries. Without limiting the preceding
covenant, the Company will not permit any Material Subsidiary to
(a) create, incur or assume any Funded Debt other than
(i) Funded Debt secured by a Lien on Principal Property
which is permitted under the provision described below under
Limitations on Liens, (ii) Funded Debt owed to
the Company or any Subsidiary, (iii) Funded Debt of a
corporation which is merged with or into the Company or a
Material Subsidiary, (iv) Funded Debt in existence on the
date of the Indenture, (v) Funded Debt created in
connection with, or with a view to, compliance by a Material
Subsidiary with the requirements of any program adopted by any
federal, state or local governmental authority and applicable to
such Material Subsidiary and providing financial or tax benefits
to such Material Subsidiary which are not available directly to
the Company and (vi) Funded Debt that is Acquired
Indebtedness; or (b) to guarantee, directly or indirectly
through any arrangement that is substantially the equivalent of
a guarantee, the payment of any Funded Debt except for
(i) guarantees existing on the date of the Indenture,
(ii) guarantees which, on the date of the Indenture, a
Material Subsidiary is obligated to give and
(iii) guarantees of Funded Debt permitted under
clause (a) of this paragraph. Notwithstanding the
foregoing, any Material Subsidiary may create, incur, assume or
guarantee the payment of Funded Debt in addition to that
permitted in this paragraph and extend, renew, substitute or
replace, in whole or in part, such Funded Debt, provided,
that at the time of such creation, incurrence, assumption,
guarantee, extension, renewal, substitution or replacement, and
after giving effect thereto, the aggregate principal amount of
all Funded Debt of Material Subsidiaries does not exceed 15% of
Consolidated Tangible Net Worth.
S-11
The term Consolidated Tangible Net Worth means, as
of any date, the total shareholders equity of the Company
determined in accordance with GAAP less any and all goodwill and
other intangible assets reflected on the consolidated balance
sheet of the Company as of such date. Deferred policy
acquisition costs (DPAC), that portion of the value
of insurance in force resulting from an acquisition and
equivalent to the amount of DPAC of the acquired entity
outstanding immediately prior to such acquisition and deferred
taxes shall not be deemed goodwill or other intangible assets
for purposes of determining Consolidated Tangible Net Worth.
The term Funded Debt means Indebtedness which by its
terms matures at, or can be extended or renewed at the option of
the obligor to, a date more than twelve months after the date of
the creation of such Indebtedness, including, without
limitation, revolving credit loans.
Limitations on Liens. The Company will not,
and will not permit any Material Subsidiary to, (a) issue,
assume or guarantee any Indebtedness if such Indebtedness is
secured by a Lien upon, or (b) directly or indirectly
secure any outstanding Indebtedness of the Company or any
Material Subsidiary by a Lien upon, any Principal Property, now
owned or hereafter acquired, without effectively providing that
the notes shall be secured equally and ratably with such
Indebtedness, except that the foregoing restrictions shall not
apply to (i) Liens on any Principal Property acquired after
the date of the Indenture to secure or provide for the payment
of the purchase price or acquisition cost thereof,
(ii) Liens on Principal Property acquired after the date of
the Indenture existing at the time such Principal Property is
acquired, (iii) Liens on any Principal Property acquired
from a corporation merged with or into the Company or a Material
Subsidiary, (iv) Liens in favor of the Company or any
Subsidiary, (v) Liens in existence on any Principal
Property on the date of the Indenture, (vi) Liens on any
Principal Property constituting unimproved real property
constructed or improved after the date of the Indenture to
secure or provide for the payment or cost of such construction
or improvement, (vii) Liens in favor of, or required by,
governmental authorities, (viii) pledges or deposits in
connection with workers compensation, unemployment
insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or
self-insurance arrangements or other pledges or deposits in the
ordinary course of the insurance business of a Material
Subsidiary of the Company that is a licensed insurance company,
including, without limitation, those relating to the insurance
or reinsurance operations of such Material Subsidiaries and
those relating to the requirements to create separate
accounts, (ix) Liens for taxes not yet due or which
are being contested in good faith by appropriate proceedings,
(x) Liens securing any extension, renewal, substitution or
replacement (or successive extensions, renewals, substitutions
or replacements) of Indebtedness of the Company or any Material
Subsidiary outstanding as of March 31, 1993, and
(xi) any extension, renewal, substitution or replacement
(or successive extensions, renewals, substitutions or
replacements), in whole or in part, of any Lien referred to in
the foregoing clauses (i) through (x), inclusive.
Notwithstanding the foregoing, the Company and any Material
Subsidiary may, without equally and ratably securing the notes,
issue, assume or guarantee secured Indebtedness (which would
otherwise be subject to the foregoing Lien restrictions) in an
aggregate amount which, together with all other such secured
Indebtedness of the Company and its Material Subsidiaries (that
is, not including secured Indebtedness of the Company and its
Material Subsidiaries permitted pursuant to the preceding
paragraph) and the Attributable Debt in respect of Sale and
Lease-Back Transactions existing at such time (other than Sale
and Lease-Back Transactions permitted in accordance with the
first paragraph under the caption Limitation on Sale and
Lease-Back Transactions below), does not at the time
exceed 15% of the shareholders equity in the Company and
its consolidated Subsidiaries as shown on the audited
consolidated balance sheet contained in the latest annual report
to shareholders of the Company.
Lien means any mortgage, lien, pledge,
security interest, conditional sale or other title retention
agreement or other security interest or encumbrance of any kind
(including any agreement to give any security interest).
The term Material Subsidiary means (i) any
Subsidiary of the Company which at December 31, 1992 was a
significant subsidiary under
Regulation S-X
promulgated by the SEC or any successor to such Subsidiary and
(ii) any other Subsidiary of the Company; provided,
that the Companys investments in and advances to such
Subsidiary at the date of determination thereof, without giving
effect to any write-downs in such investments or advances taken
within the prior 12 months, represent 20% or more of the
Companys Consolidated Tangible Net Worth as of such time;
provided, however, that this clause (ii) shall not
include any Subsidiary if, at the time that it
S-12
became a Subsidiary, the Company contemplated commencing a
voluntary case or proceeding under the Bankruptcy Law with
respect to such Subsidiary.
The term Principal Property means all property,
assets or revenue of the Company and each Material Subsidiary
now owned or hereafter acquired and all shares of stock and
Indebtedness of any Material Subsidiary now owned or hereafter
acquired.
Limitation on Sale and Lease-Back
Transactions. Sale and Lease-Back Transactions by
the Company or any Material Subsidiary are prohibited unless the
proceeds of such sale or transfer are at least equal to the fair
value (as determined by the Board of Directors) of the Principal
Property to be leased pursuant to such Sale and Lease-Back
Transaction and either (i) the Company or such Material
Subsidiary could incur a Lien on such Principal Property under
the covenant described in Limitation on Liens above,
(ii) such Sale and Lease-Back Transactions are between or
among the Company and any of its Subsidiaries or between or
among Subsidiaries, (iii) the lease is for a period not
exceeding three years and the Company or such Material
Subsidiary that is a party to such lease intends that its use of
such Principal Property will be discontinued on or before the
expiration of such period, or (iv) the Company applies, or
causes such Material Subsidiary to apply, an amount equal to the
fair value (as determined by the Board of Directors) of the
Principal Property sold pursuant to such Sale and Lease-Back
Transaction to (A) the retirement, within 60 days
after the effective date of any such Sale and Lease-Back
Transaction, of Funded Debt of the Company or of such Material
Subsidiary, or (B) the purchase of other property that will
constitute a Principal Property.
Notwithstanding the provisions of the preceding paragraph, the
Company or any Material Subsidiary may enter into any Sale and
Lease-Back Transaction which would otherwise be subject to the
following restrictions, if the amount of Attributable Debt in
respect of such Sale and Lease-Back Transaction, together with
all secured Indebtedness of the Company and its Material
Subsidiaries (other than secured Indebtedness of the Company and
Material Subsidiaries permitted under the first paragraph under
the caption Limitation on Liens above) and all other
Attributable Debt in respect of Sale and Lease-Back Transactions
existing at such time (other than Sale and Lease-Back
Transactions permitted pursuant to the preceding paragraph),
does not at the time exceed 15% of the shareholders equity
in the Company and its consolidated Subsidiaries as shown on the
audited consolidated balance sheet contained in the latest
annual report to shareholders of the Company.
The term Attributable Debt means, as of any
particular time, the present value, discounted at a rate per
annum equal to the interest rate of the notes, of the rental
payments (not including amounts payable by the lessee for
maintenance, property taxes and insurance) due during the
remaining term of any lease (including any period for which such
lease has been extended or may, at the option of the lessor, be
extended).
The term Sale and Lease-Back Transaction means the
sale or transfer of any property owned by the Company or any
Subsidiary with the intention of taking back a lease on such
property other than any such arrangements with the government of
the United States of America, any of its territories or
possessions, or any State thereof, or any department, agency,
instrumentality or political subdivision of them.
Although the Indenture contains the foregoing restrictions on
the ability of the Company and its Subsidiaries to incur
Indebtedness, the Company and its Subsidiaries may engage in
transactions that, although in compliance with such
restrictions, would result in additional leverage, which may
adversely affect the noteholders.
Repurchase
at Option of Holders Upon a Change of Control
In the event of any Change of Control, each noteholder shall
have the right, at such noteholders option, to require the
Company to purchase all or any portion (in integral multiples of
$2,000) of such noteholders notes on the date (the
Change of Control Payment Date) which is 20 business
days after the date the Change of Control Notice (as defined
below) is mailed (or such later date as is required by
applicable law) at 101% of the principal amount (excluding
premium) thereof, plus accrued interest to the Change of Control
Payment Date: provided, that the Company will not be obligated
to purchase any of such notes unless noteholders of at least 10%
of the notes outstanding at the Change of Control Payment Date
(other than notes held by the Company and its Affiliates) shall
have tendered their notes for repurchase.
S-13
The Company is obligated to send to all noteholders, within five
business days after the occurrence of each Change of Control, a
notice of the occurrence of such Change of Control (the
Change of Control Notice), specifying a date by
which a noteholder must notify the Company of such
noteholders intention to exercise the repurchase right and
describing the procedure that such noteholder must follow to
exercise such right. The Company is required to deliver a copy
of such notice to the Trustee and to cause a copy of such notice
to be published in a daily newspaper of national circulation. To
exercise the repurchase right, the noteholder must deliver, on
or before the fifth calendar day prior to the Change of Control
Payment Date, written notice (which shall be irrevocable, except
as provided below) to the Company (or an agent designated by the
Company for such purpose) of the noteholders exercise of
such right, together with (i) the note or notes with
respect to which the right is being exercised, duly endorsed for
transfer with the form entitled Option of Holder to Elect
Purchase on the reverse of the note completed, and
(ii) if the Change of Control Payment Date falls between
any record date for the payment of interest on the notes and the
next succeeding interest payment date, an amount equal to the
interest which the noteholder is entitled to receive on such
interest payment date. The Company will comply with all
applicable Federal and state securities laws; including
Rule 14e-1
of the Exchange Act and other applicable tender offer rules, in
connection with each Change of Control Notice.
A Change of Control shall be deemed to occur if
(i) the Company has any other Indebtedness outstanding
(other than Indebtedness under a bank credit agreement or
similar bank financing) which provides for a Change of Control
(as defined in the instrument governing such Indebtedness) if
Ian M. Cumming or Joseph S. Steinberg ceases to beneficially
own, in the aggregate, a certain percentage of the outstanding
Common Shares, which percentage ownership requirement is in
excess of 10%, and a Change of Control (as defined in the
instrument governing such Indebtedness) occurs under such
Indebtedness or (ii) at any time when the Company does not
have any other Indebtedness outstanding of the type referred to
in clause (i), Ian M. Cumming
and/or
Joseph S. Steinberg, individually or in the aggregate, sell,
transfer or otherwise dispose of (a Disposition),
after the date hereof, Common Shares so that, after giving
effect thereto, the sole beneficial ownership of outstanding
Common Shares by Mr. Cumming
and/or
Mr. Steinberg would, in the aggregate, fall below 10% of
the then outstanding Common Shares; provided, that no
Change of Control shall be deemed to have occurred under
clause (ii) if the notes are rated by either Moodys
or S&P as Investment Grade both at the time of such
Disposition and for a period of 90 days from the date of
such Disposition (it being understood that, with respect to the
foregoing proviso, a Change of Control shall be deemed to occur
on the first date during such
90-day
period when the notes are no longer rated as Investment Grade by
Moodys and S&P). The term Common Shares
shall include any securities issued as dividends or
distributions on the Common Shares. For purposes hereof,
sole beneficial ownership of Common Shares shall be
deemed to include (i) all Common Shares received after
June 15, 1992 from Mr. Cumming or Mr. Steinberg
by any member of their respective immediate families or by any
trust for the benefit of either of them or any member of their
respective immediate families (a Recipient), which
Common Shares remain held by a Recipient during the lifetime of
Mr. Cumming or Mr. Steinberg (unless sold, transferred
or disposed of by such Recipient during the lifetime of
Mr. Cumming or Mr. Steinberg, as the case may be, in
which case such Disposition by such Recipient shall constitute a
Disposition by Mr. Cumming or Mr. Steinberg, as the
case may be) and (ii) after the death of Mr. Cumming
and/or
Mr. Steinberg, all Common Shares owned as of the date of
death by the decedent, and any Recipient of the decedent,
regardless of whether such Recipient continues to own such
Common Shares after the date of death. In determining the number
of outstanding Common Shares then held by Messrs. Cumming
and Steinberg and the total number of outstanding Common Shares,
there shall be excluded Common Shares issued by the Company
after December 31, 1991, or the conversion into or exchange
for, after December 31, 1991, Common Shares or securities
convertible into or exchangeable for Common Shares. As
calculated pursuant to this provision, Messrs. Cumming and
Steinberg beneficially own, in the aggregate, approximately 49%
of the Common Shares as of June 30, 2007.
As of the date hereof, the Company does not have any
Indebtedness outstanding of the type referred to in
clause (i) of the preceding paragraph. There can be no
assurance that the Company will have sufficient funds or the
financing to satisfy its obligations to repurchase the notes and
other Indebtedness that may come due upon a Change of Control.
In such case, the Companys failure to purchase tendered
notes would constitute an Event of Default under the Indenture.
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The holders of a majority in principal amount of notes then
outstanding may waive compliance by the Company of the
repurchase of notes obligation upon a Change of Control. The
Company may not waive such provisions. See
Modification of the Indenture.
The term Investment Grade is defined as BBB- or
higher by S&P or Baa3 or higher by Moodys or the
equivalent of such ratings by Moodys or S&P.
Transactions
with Affiliates
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, enter into any transaction or series of
related transactions with any Affiliate (other than with the
Company or a Wholly-Owned Subsidiary), including, without
limitation, any loan, advance or investment or any purchase,
sale, lease or exchange of property or the rendering of any
service, unless such transaction or series of transactions is in
good faith and at arms-length and on terms which are at
least as favorable as those available in a comparable
transaction from an unrelated Person. Any such transaction that
involves in excess of $10,000,000 shall be approved by a
majority of the Independent Directors on the Board of Directors
of the Company; or, in the event that at the time of any such
transaction or series of related transactions there are no
Independent Directors serving on the Board of Directors of the
Company, such transaction or series of related transactions
shall be approved by a nationally recognized expert with
experience in appraising the terms and conditions of the type of
transaction for which approval is required.
Successor
Corporation
The Company may not consolidate with, merge into or transfer all
or substantially all of its assets (i.e., 90% or more) to
another person unless (a) the successor person shall be
existing under the laws of the United States, any state thereof
or the District of Columbia, (b) there shall not be any
Default or Event of Default under the Indenture, (c) such
successor person assumes all of the obligations of the Company
under the notes and the Indenture and (d) after giving
effect to such transaction, such successor person shall have a
Consolidated Net Worth equal to or greater than the Company.
Thereafter all such obligations of the Company will terminate.
The term Consolidated Net Worth means, as of any
date, total shareholders equity of the Company as of such
date determined on a consolidated basis in accordance with GAAP.
Reports
to Noteholders
The Company will mail copies of its annual reports and quarterly
reports mailed to its shareholders to noteholders. If the
Company is not required to furnish annual or quarterly reports
to its shareholders, the Company will, upon request, mail to
each noteholder, at such noteholders address as appearing
on the note register, audited annual financial statements
prepared in accordance with United States generally accepted
accounting principles and unaudited condensed quarterly
financial statements. Such financial statements shall be
accompanied by managements discussion and analysis of the
results of operations and financial condition of the Company for
the period reported upon in substantially the form required
under the rules and regulations of the Securities Exchange
Commission currently in effect.
The
Trustee
The Bank of New York will be the Trustee under the Indenture.
The noteholders of a majority in principal amount of all
outstanding notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the Trustee. The Indenture will provide that, in
case an Event of Default shall occur and be continuing, the
Trustee will be required to use the degree of care of a prudent
person in the conduct of his own affairs in the exercise of its
powers. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the
Indenture at the request of any of the noteholders, unless they
shall have offered to the Trustee security and indemnity
satisfactory to it.
S-15
Events of
Default and Notice Thereof
The term Event of Default when used in the Indenture
shall mean any one of the following: (i) failure to pay
interest for 30 days or principal (including premium, if
any); (ii) failure to perform any covenants not described
in clause (i) for 30 days after receipt of notice;
(iii) the occurrence of a default in the payment when due
of principal of, or interest on, or other amounts payable in
respect of, any instrument evidencing or securing other
Indebtedness of the Company or any Material Subsidiary of the
Company in the aggregate principal amount of $30,000,000 or
more; (iv) the occurrence of any other event of default
under an instrument evidencing or securing other Indebtedness of
the Company or any Material Subsidiary of the Company in the
aggregate principal amount of $30,000,000 or more resulting in
the acceleration of such indebtedness, which acceleration is not
rescinded or annulled pursuant to the terms of such instrument;
and (v) certain events of bankruptcy, insolvency or
reorganization relating to the Company or any Material
Subsidiary of the Company.
The Indenture will provide that the Trustee shall, within
90 days after the occurrence of a default, provide to the
noteholders notice of all uncured defaults known to it (the term
default to include the events specified above without grace or
notice); provided, that, except in the case of default in
the payment of principal of, premium, if any, or interest on any
of the notes, the Trustee shall be protected in withholding such
notice if and so long as a committee of its Trust Officers
in good faith determines that the withholding of such notice is
in the interests of the noteholders.
In case an Event of Default (other than an Event of Default with
respect to the Company specified in clause (v) above) shall
have occurred and be continuing, the Trustee or the holders of
at least 25% in aggregate principal amount of the notes then
outstanding, by notice in writing to the Company and to the
Trustee, may declare to be due and payable immediately the
outstanding principal amount and accrued interest, premiums,
penalties and other amounts in respect of the notes and the
Indenture. Such declaration may be annulled and past defaults
(except, unless theretofore cured, a default in payment of
principal, premium, if any, or interest on the notes) may be
waived by the holders of a majority in principal amount of the
notes, upon the conditions provided in the Indenture.
If an Event of Default with respect to the Company specified in
clause (v) above occurs, all unpaid principal of, premium,
if any, and accrued interest on the notes then outstanding shall
ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any
holder of notes.
The Indenture will include a covenant that the Company will file
annually with the Trustee a statement regarding compliance by
the Company with the terms thereof and specifying any defaults
of which the signers may have knowledge.
Modification
of the Indenture
Under the Indenture, the rights and obligations of the Company
and the rights of noteholders may be modified by the Company and
the Trustee only with the consent of the noteholders holding a
majority in principal amount of the notes then outstanding; but
no extension of the maturity of any notes, or reduction in the
interest rate or premium, if any, or extension of the time of
payment of principal of (including premium, if any) or interest
on, or any other modification in the terms of payment of the
principal of, or premium, if any, or interest on the notes or
reduction of the percentage required for modification will be
effective against any noteholder without its consent. The
holders of a majority in principal amount of notes then
outstanding may waive compliance by the Company with certain
covenants, including those described under
Repurchase at Option of Holders Upon a Change
of Control.
Satisfaction
and Discharge of Indenture
The Indenture will be discharged and cancelled upon payment of
all the notes or upon deposit with the Trustee, within not more
than one year prior to the maturity of the notes or the date on
which all of the notes are to be called for redemption, of funds
sufficient for such payment.
Book-Entry
Procedures; Delivery, Form, Transfer and Exchange
Each of the Global Notes initially will be represented by one or
more notes in registered, global form without interest coupons
and will be deposited upon issuance with the Trustee as
custodian for The Depository
S-16
Trust Company (DTC), in New York, New York, and
registered in the name of DTC or its nominee, in each case for
credit to the accounts of DTCs Participants (as defined
below), including Euroclear Bank S.A./N.V., as operator of the
Euroclear System (Euroclear), or Clearstream
Banking, Societe anonyme (Clearstream), which in
turn have accounts at Direct Participants of DTC.
Transfers of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of DTC and its
Participants, including, if applicable, those of Euroclear and
Clearstream, which may change from time to time.
Except in certain limited circumstances, the Global Notes may be
transferred, in whole and not in part, only to DTC, to another
nominee of DTC or to a successor of DTC or its nominee.
Beneficial interests in the Global Notes may not be exchanged
for notes in certificated form, except in certain limited
circumstances. See Exchange of Interests in Global
Notes for Certificated Notes.
Initially, the Trustee will act as Paying Agent and Registrar.
The Company may change the Paying Agent or Registrar without
prior notice to the holders of the notes, and the Company or any
of its Subsidiaries may act as Paying Agent or Registrar. The
notes may be presented for registration of transfer and exchange
at the offices of the Registrar.
Certain
Depository Procedures
The description of the operations and procedures of DTC,
Euroclear and Clearstream contained in this prospectus
supplement is provided solely as a matter of convenience. These
operations and procedures are solely within their control and
are subject to change by them from time to time. Neither we, the
Trustee nor the underwriter takes any responsibility for these
operations and procedures, and we urge investors to contact the
applicable system or its participants directly to discuss these
matters.
DTC has advised us as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, 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
pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities for its participating organizations
(collectively, the Direct Participants) and
facilitates the clearance and settlement of transactions in
those securities between Direct Participants through electronic
book-entry changes in accounts of Direct Participants. The
Direct Participants include securities brokers and dealers
(including the underwriter), banks, trust companies, clearing
corporations and certain other organizations. Access to
DTCs system is also available to other Persons that clear
through or maintain a direct or indirect custodial relationship
with a Direct Participant (collectively, the Indirect
Participants and, together with the Direct Participants,
the Participants). Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only
through the Participants.
DTC has advised us that, pursuant to DTCs procedures,
(i) upon deposit of the Global Notes, DTC will credit the
account of each Direct Participant designated by the underwriter
with the portion of the principal amount of each Global Note
that has been allocated to such Direct Participant by the
underwriter, and (ii)
DTC will maintain records of the ownership interests of such
Direct Participants in each Global Note and the transfer of
ownership interests by and between Direct Participants. DTC will
not maintain records of the ownership interests of, or the
transfer of ownership interests by and between, Indirect
Participants or other owners of beneficial interests in the
Global Notes. Direct Participants and Indirect Participants must
maintain their own records of the ownership interests of, and
the transfer of ownership interests by and between, Indirect
Participants and other owners of beneficial interests in the
Global Notes.
Investors in the Global Notes may hold their interests therein
directly through DTC if they are Direct Participants in such
system or indirectly through organizations that are Direct
Participants in such system. All interests in the Global Notes,
including those of customers securities accounts held
through Euroclear or Clearstream, may be subject to the
procedures and requirements of DTC.
The laws of some states in the United States require that
certain persons take physical delivery in definitive,
certificated form of securities that they own. This may limit or
curtail your ability to transfer your beneficial interest
S-17
in a Global Note to such persons. Because DTC can act only on
behalf of Direct Participants, which in turn act on behalf of
Indirect Participants and others, your ability to pledge your
beneficial interest in a Global Note to Persons that are not
Direct Participants in DTC, or to otherwise take action in
respect of such interest, may be affected by the lack of a
physical certificate evidencing such interest. For certain other
restrictions on the transferability of the notes, see
Exchange of Interests in Global Notes for
Certificated Notes.
As long as DTC, or its nominee, is the registered holder of a
Global Note, DTC or such nominee, as the case may be, will be
considered the sole owner and holder of the notes represented by
such Global Note for all purposes under the Indenture and the
notes. Except in the limited circumstances described under
Exchange of Interests in Global Notes for
Certificated Notes, you will not be entitled to have any
portion of a Global Note registered in your name, will not be
entitled to receive physical delivery of notes in certificated
form and will not be considered the registered owner or holder
of a Global Note (or any note represented thereby) under the
Indenture or the notes for any purpose.
Under the terms of the Indenture, we and the Trustee will treat
the persons in whose names the notes are registered (including
notes represented by Global Notes) as the owners thereof for the
purpose of receiving payments and for any and all other purposes
whatsoever. Payments in respect of the principal, premium, if
any, and interest on Global Notes registered in the name of DTC
or its nominee will be payable by the Trustee to DTC or its
nominee as the registered holder under the Indenture.
Consequently, none of the Company, the Trustee or any agent of
the Company or the Trustee has or will have any responsibility
or liability for (i) any aspect of DTCs records or
any Participants records relating to or payments made on
account of beneficial ownership interests in the Global Notes or
for maintaining, supervising or reviewing any of DTCs
records or any Participants records relating to the
beneficial ownership interests in any Global Note or
(ii) any other matter relating to the actions and practices
of DTC or any of its Participants.
DTC has advised us that its current payment practice (for
payments of principal, premium and interest) with respect to
securities such as the notes is to credit the accounts of the
relevant Direct Participants with such payment on the payment
date in amounts proportionate to such Direct Participants
respective ownership interest in the Global Notes as shown on
DTCs records. Payments by Direct Participants and Indirect
Participants to the beneficial owners of the notes will be
governed by standing instructions and customary practices
between them and will not be the responsibility of DTC, the
Trustee or the Company. Neither the Company nor the Trustee will
be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of
the notes, and the Company and the Trustee may conclusively rely
on and will be protected in relying on instructions from DTC or
its nominee as the registered owner of the notes for all
purposes.
Interests in the Global Notes will be eligible to trade in
DTCs
Same-Day
Funds Settlement System, and secondary market trading activity
in such interests will, therefore, settle in immediately
available funds, subject in all cases to the rules and
procedures of DTC and its Direct Participants. Transfers between
Direct Participants will be effected in accordance with
DTCs procedures, and will be settled in immediately
available funds. Transfers between Indirect Participants who
hold an interest through a Direct Participant (other than
Indirect Participants who hold an interest in the notes through
Euroclear or Clearstream) will be effected in accordance with
the procedures of such Direct Participant but generally will
settle in immediately available funds. Transfers between and
among Indirect Participants who hold interests in the notes
through Euroclear and Clearstream will be effected in the
ordinary way in accordance with their respective rules and
operating procedures.
Crossmarket transfers between Direct Participants in DTC, on the
one hand, and Indirect Participants who hold interests in the
notes through Euroclear or Clearstream, on the other hand, will
be effected by Euroclears or Clearstreams respective
nominee through DTC in accordance with DTCs rules on
behalf of Euroclear or Clearstream; however, delivery of
instructions relating to crossmarket transactions must be made
directly to Euroclear or Clearstream, as the case may be, by the
counterparty in accordance with the rules and procedures of
Euroclear or Clearstream and within their established deadlines
(Brussels time for Euroclear and UK time for Clearstream).
Indirect Participants who hold an interest in the notes through
Euroclear or Clearstream may not deliver instructions directly
to Euroclears or Clearstreams nominee. Euroclear or
Clearstream will, if the transaction meets its settlement
requirements, deliver instructions to its respective nominee to
deliver or receive
S-18
interests on Euroclears or Clearstreams behalf in
the relevant Global Note in DTC, and make or receive payment in
accordance with normal procedures for
same-day
funds settlement applicable to DTC.
Because of time zone differences, the securities accounts of an
Indirect Participant who holds an interest in the notes through
Euroclear or Clearstream purchasing an interest in a Global Note
from a Direct Participant in DTC will be credited, and any such
crediting will be reported to Euroclear or Clearstream during
the European business day immediately following the settlement
date of DTC in New York. Although recorded in DTCs
accounting records as of DTCs settlement date in New York,
Euroclear and Clearstream customers will not have access to the
cash amount credited to their accounts as a result of a sale of
an interest in a Global Note to a DTC Participant until the
European business day for Euroclear or Clearstream immediately
following DTCs settlement date.
DTC has advised us that it will take any action permitted to be
taken by a holder of notes (including the presentation of notes
for exchange as described above) only at the direction of one or
more Direct Participants to whose account interests in the
Global Notes are credited and only in respect of such portion of
the aggregate principal amount of the notes to which such Direct
Participant or Direct Participants has or have given direction.
However, if there is an Event of Default under the notes, DTC
reserves the right to exchange Global Notes (without the
direction of one or more of its Direct Participants) for
legended notes in certificated form, and to distribute such
certificated forms of notes to its Direct Participants. See
Exchange of Interests in Global Notes for
Certificated Notes.
Although DTC, Euroclear and Clearstream have agreed to the
foregoing procedures to facilitate transfers of interests in the
Global Notes, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be
discontinued at any time. None of the Company, the underwriter
or the Trustee shall have any responsibility for the performance
by DTC, Euroclear or Clearstream or any of their Participants of
their respective obligations under the rules and procedures
governing any of their operations.
The information in this section concerning DTC, Euroclear and
Clearstream, their respective Participants and the book-entry
system has been obtained from sources that we believe to be
reliable, but we take no responsibility for the accuracy thereof.
Exchange
of Interests in Global Notes for Certificated
Notes
You may not exchange your beneficial interest in a Global Note
for a definitive note in registered, certificated form without
interest coupons (a Certificated Note) except as set
forth below.
An entire Global Note may be exchanged for Certificated Notes if:
(1) DTC (a) notifies us that it is unwilling or unable
to continue as depositary for the Global Notes, or (b) has
ceased to be a clearing agency registered under the Exchange
Act, and in either case we fail to appoint a successor
depositary within 90 days of such notice or of our becoming
aware of such cessation;
(2) we, at our option and subject to the procedures of DTC,
notify the Trustee in writing that we are electing to issue
Certificated Notes; or
(3) there shall have occurred and be continuing a Default
or an Event of Default with respect to the notes.
In any such case, we will notify the Trustee in writing that,
upon surrender by the Participants of their interests in such
Global Note, Certificated Notes will be issued to each person
that such Participants and DTC identify as being the beneficial
owner of the related notes.
Certificated Notes delivered in exchange for any beneficial
interest in any Global Note will be registered in the names, and
issued in any approved denominations, requested by DTC on behalf
of such Participants (in accordance with DTCs customary
procedures).
Any such exchange of beneficial interests in Global Notes for
Certificated Notes will be effected through the DWAC system and
an appropriate adjustment will be made to the records of the
registrar to reflect a decrease in the principal amount of the
Global Note.
S-19
Neither the Company nor the Trustee will be liable for any delay
by the holder of any Global Note or DTC in identifying the
beneficial owners of notes, and the Company and the Trustee may
conclusively rely on, and will be protected in relying on,
instructions from the holder of the Global Note or DTC for all
purposes.
Same-Day
Settlement and Payment
The Indenture will require that payments in respect of the notes
represented by a Global Note (including principal, premium, if
any, and interest) be made by wire transfer of immediately
available
same-day
funds to the accounts specified by the holder of interests in
such Global Note. With respect to Certificated Notes, we will
make all payments of principal, premium, if any, and interest by
wire transfer of immediately available
same-day
funds to the accounts specified by the holders thereof or, if no
such account is specified, by mailing a check to each such
holders registered address. We expect that secondary
trading in the Certificated Notes will also be settled in
immediately available funds.
S-20
CERTAIN
U.S. FEDERAL INCOME TAX CONSEQUENCES
This section summarizes certain material U.S. federal
income tax consequences to
Non-U.S. Holders
(as defined below) of the purchase, ownership and disposition of
notes. This summary deals only with notes that are held as
capital assets by
Non-U.S. Holders
that purchase the notes in this offering at the notes
issue price. A
Non-U.S. Holder
is a beneficial owner of notes and is generally an individual,
corporation, estate or trust other than:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation for
U.S. federal income tax purposes) created or organized in
the United States or under the laws of the United States or any
subdivision thereof;
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an estate the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its
source; and
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a trust if a court within the U.S. is able to exercise
primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all
substantial decisions of the trust or such trust has a valid
election in effect under applicable Treasury regulations to be
treated as a U.S. person.
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If a partnership holds notes, the tax treatment of a partner
will generally depend upon the status of the partner and the
activities of the partnership. Special rules may apply if a
Non-U.S. Holder
is a controlled foreign corporation or passive
foreign investment company, as defined under the Internal
Revenue Code of 1986, as amended (the Code), and to
certain expatriates or former long-term residents of the United
States. If you fall within any of the foregoing categories, you
should consult your own tax advisor to determine the
U.S. federal, state, local and foreign tax consequences
that may be relevant to you.
This summary does not describe all of the U.S. federal
income tax consequences that may be relevant to the purchase,
ownership and disposition of notes by a prospective
Non-U.S. Holder
in light of that investors particular circumstances. In
addition, this summary does not address other U.S. federal
taxes (such as gift or estate taxes or alternative minimum
taxes) or state, local or foreign taxes.
This section is based upon the Code, judicial decisions and
Treasury regulations, published rulings and other administrative
pronouncements, changes to any of which subsequent to the date
of this prospectus supplement may affect the tax consequences
described herein, possibly with retroactive effect.
Please consult your own tax advisor as to the particular tax
consequences to you of purchasing, holding and disposing of
notes in your particular circumstances under the Code and the
laws of any other taxing jurisdiction.
U.S.
Federal Withholding Tax
Subject to the discussion below concerning backup withholding,
U.S. federal withholding tax will not apply to any payment
of principal or interest on the notes, provided that in the case
of interest:
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and the Treasury regulations;
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you are not a controlled foreign corporation that is related,
directly or indirectly, to us through stock ownership; and
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(a) you provide your name, address and certain other
information on an Internal Revenue Service (IRS)
Form W-8BEN
(or a suitable substitute form), and certify, under penalties of
perjury, that you are not a U.S. person or (b) you
hold your notes through certain foreign intermediaries or
certain foreign partnerships and certain certification
requirements are satisfied.
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In addition, interest payments that are effectively connected
with the conduct of a trade or business by you within the United
States are also not subject to the U.S. federal withholding
tax, but instead may be subject to U.S. federal income tax,
as described under U.S. Federal Income
Tax.
S-21
If you cannot satisfy the requirements described above, payments
of interest will be subject to a 30% U.S. federal
withholding tax unless a tax treaty applies. If a tax treaty
applies to you, you may be eligible for a reduced rate of
withholding.
In order to claim any exemption from or reduction in the 30%
withholding tax, you should provide a properly executed IRS
Form W-8BEN
(or suitable substitute form) claiming a reduction of or an
exemption from withholding under an applicable tax treaty or a
properly executed IRS
Form W-8ECI
or W-8BEN
(or a suitable substitute form) stating that such payments are
not subject to withholding tax because they are effectively
connected with your conduct of a trade or business in the United
States.
U.S.
Federal Income Tax
If you are engaged in a trade or business in the United States
(and, if a tax treaty applies, if you maintain a permanent
establishment within the United States) and interest on the
notes is effectively connected with the conduct of such trade or
business (and, if a tax treaty applies, attributable to such
permanent establishment), you will be subject to
U.S. federal income tax (but not withholding tax assuming a
properly executed
Form W-8ECI
or W-8BEN
(or suitable substitute form) is provided) on such interest on a
net income basis in generally the same manner as if you were a
U.S. person. In addition, in certain circumstances, if you
are a foreign corporation you may be subject to a 30% (or, if a
tax treaty applies, such lower rate as provided) branch profits
tax.
Any gain or income realized on the disposition of a note
(including a redemption or retirement) will generally not be
subject to U.S. federal income tax unless:
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such gain or income is effectively connected with your conduct
of a trade or business in the United States (and, where an
applicable tax treaty so provides, is also attributable to a
U.S. permanent establishment maintained by you); or
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you are an individual who is present in the United States for
183 days or more in the taxable year of the disposition and
certain other conditions are met.
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Backup
Withholding and Information Reporting
Unless you are an exempt recipient, such as a corporation,
interest payments on the notes and the proceeds received from a
disposition (including a redemption or retirement) of notes may
be subject to U.S. federal backup withholding at the
applicable rate and/or related information reporting if you fail
to comply with applicable certification requirements. The
certification procedures required to claim the exemption from
withholding tax on interest described above will satisfy the
certification requirements necessary to avoid the backup
withholding tax as well.
Any amounts so withheld under the backup withholding rules may
be allowed as a credit against your U.S. federal income tax
liability provided you timely furnish the required information
to the IRS.
The preceding discussion of certain material
U.S. federal income tax consequences is general information
only and is not tax advice. Accordingly, you should consult your
own tax advisor as to the particular tax consequences to you of
purchasing, holding or disposing of notes, including the
applicability and effect of any state, local or
non-U.S. tax
laws, and of any changes or proposed changes in applicable
law.
S-22
Under the terms of an underwriting agreement, which we will file
as an exhibit to a current report on
Form 8-K
and incorporate by reference in this prospectus supplement and
the accompanying prospectus, Jefferies & Company,
Inc., or the underwriter, has agreed to purchase from us the
entire principal amount of notes offered hereby.
The underwriting agreement provides that the obligations of the
underwriter are subject to certain conditions precedent. We have
agreed to indemnify the underwriter and each of its controlling
persons against certain liabilities in connection with this
offering, including liabilities under the Securities Act, and to
contribute to payments that the underwriter may be required to
make in respect to those liabilities. The underwriter is
obligated under the underwriting agreement to purchase all of
the notes if any of the notes are purchased.
The notes will initially be offered at the price indicated on
the cover page of this prospectus supplement. After the initial
offering of the notes, the offering price and other selling
terms of the notes may be changed at any time without notice.
The following table shows the underwriting discounts we will pay
to the underwriter:
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Underwriters
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Discount
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Per note
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%
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Total
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$
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We estimate that our expenses for this offering and the
concurrent common share offering, excluding underwriting
discounts, will be approximately $400,000.
The notes will constitute a new class of securities with no
established trading market. The underwriter has advised us that,
following the completion of this offering, it intends to make a
market in the notes as permitted by applicable laws and
regulations. However, the underwriter is not obligated to do so,
and may discontinue any market making activities with respect to
the notes at any time in their sole discretion. Accordingly, no
assurance can be given that a liquid trading market will develop
for the notes, that you will be able to sell any of the notes
held by you at a particular time or that the prices that you
receive when you sell will be favorable.
In connection with this offering, the underwriter may engage in
transactions that stabilize, maintain or otherwise affect the
price of the notes. Specifically, the underwriter may bid for
and purchase notes in the open market to stabilize the price of
the notes. The underwriter also may overallot the offering,
creating a short position, by selling more notes than we have
sold to it and may bid for and purchase notes in the open market
to cover the short position. In addition, the underwriter may
bid for and purchase notes in market-making transactions. These
activities may stabilize or maintain the market price of the
notes at levels above that which might otherwise prevail in the
open market in the absence of those transactions.
Electronic
Distribution
A prospectus supplement together with the accompanying
prospectus in electronic format may be made available on the
Internet sites or through other online services maintained by
the underwriter. In those cases, prospective investors may view
offering terms online and prospective investors may be allowed
to place orders online. The underwriter may agree with us to
allocate a specific amount of notes for sale to online brokerage
account holders.
Other than the prospectus supplement together with the
accompanying prospectus in electronic format, the information on
the underwriters web site and any information contained in
any other web site maintained by the underwriter is not part of
the prospectus supplement, the prospectus or the registration
statement of which this prospectus supplement and the
accompanying prospectus form a part, has not been approved
and/or
endorsed by us or the underwriter in its capacity as underwriter
and should not be relied upon by investors.
S-23
Relationships
Jefferies & Company, Inc., or Jefferies, and its
affiliates from time to time have provided in the past and may
provide future commercial or investment banking and financial
advisory services to us and our affiliates in the ordinary
course of business, for which they have received or will receive
customary compensation. We have an equity interest in Jefferies
High Yield Holdings, LLC, or JHYH. JHYH owns a registered
broker-dealer engaged in the secondary sales and trading of high
yield securities and specialized situation securities formerly
conducted by Jefferies, including bank debt, post-reorganization
equity, equity, equity derivatives, credit default swaps and
other financial instruments. JHYH commits capital to the market
by making markets in high yield and distressed securities and
invests in and provides research coverage on these types of
securities. We and Jefferies each have the right to nominate two
of a total of four directors to JHYHs board, and each own
50% of the voting securities of JHYH. Previously, we had an
interest in Jefferies Partners Opportunity Fund II, LLC, or
JPOF II, a registered broker-dealer managed and controlled by
Jefferies. For further information about our equity interest in
JPOF II, see our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, as amended,
and our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007; for further
information about our equity interest in JHYH, see our Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2007, each incorporated by
reference into this prospectus supplement. Jefferies is also
acting as underwriter of the concurrent common share offering.
Foreign
Selling Restrictions
Notice
to Prospective Investors in the United Kingdom
This document is only being distributed to and is only directed
at (i) persons who are outside the United Kingdom or
(ii) to investment professionals falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the Order) or
(iii) high net worth entities, and other persons to whom it
may lawfully be communicated, falling within
Article 49(2)(a) to (e) of the Order (all such persons
together being referred to as relevant persons). The
notes are only available to, and any invitation, offer or
agreement to subscribe, purchase or otherwise acquire such notes
will be engaged in only with, relevant persons. Any person who
is not a relevant person should not act or rely on this document
or any of its contents.
The underwriter has only communicated or caused to be
communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the Financial
Services and Markets Act 2000 or FSMA) received by it in
connection with the issue or sale of the notes in circumstances
in which Section 21(1) of the FSMA does not apply to us and
has complied with, and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the notes in, from or otherwise involving the United
Kingdom.
Notice
to Prospective Investors in the European Economic
Area
To the extent that the offer of the notes is made in any Member
State of the European Economic Area that has implemented the
Prospectus Directive before the date of publication of a
prospectus in relation to the notes which has been approved by
the competent authority in the Member State in accordance with
the Prospectus Directive (or, where appropriate, published in
accordance with the Prospectus Directive and notified to the
competent authority in the Member State in accordance with the
Prospectus Directive), the offer (including any offer pursuant
to this document) is only addressed to qualified investors in
that Member State within the meaning of the Prospectus Directive
or has been or will be made otherwise in circumstances that do
not require us to publish a prospectus pursuant to the
Prospectus Directive.
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), the underwriter, with effect
from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the Relevant
Implementation Date), has not made and will not make an
offer of notes to the public in that Relevant Member State prior
to the publication of a prospectus in relation to the notes
which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in
that Relevant Member State, all in accordance with the
Prospectus Directive, except that it may, with effect from and
S-24
including the Relevant Implementation Date, make an offer of
notes to the public in that Relevant Member State at any time:
(a) to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities,
(b) to any legal entity which has two or more of
(1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts, or
(c) in any other circumstances which do not require the
publication by us of a prospectus pursuant to Article 3 of
the Prospectus Directive.
For the purposes of this provision, the expression an
offer of notes to the public in relation to any
notes in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the notes to be offered so as to enable an
investor to decide to purchase or subscribe the notes, as the
same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and
the expression Prospectus Directive means Directive
2003/71/EC and includes any relevant implementing measure in
each Relevant Member State.
S-25
Weil, Gotshal & Manges LLP, New York, New York, has
passed upon the validity of the notes offered hereby on behalf
of us. Certain legal matters will be passed upon for the
underwriter by Cahill Gordon & Reindel LLP,
New York, New York.
The consolidated financial statements and managements
assessment of the effectiveness of internal control over
financial reporting (which is included in Managements
Report on Internal Control over Financial Reporting),
incorporated in this prospectus by reference to Leucadia
National Corporations Annual Report on
Form 10-K
for the year ended December 31, 2006 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
The financial statements of Olympus Re Holdings, Ltd.
incorporated by reference in this prospectus by reference to
Leucadia National Corporations Annual Report on
Form 10-K
for the year ended December 31, 2006, as amended, have been
so incorporated in reliance on the report of
PricewaterhouseCoopers, an independent registered public
accounting firm, given on the authority of said firm as experts
in accounting and auditing.
The statement of financial condition, including the condensed
schedule of investments, of Jefferies Partners Opportunity
Fund II, LLC as of December 31, 2005, and the related
statements of earnings, changes in members equity, and
cash flows for the year then ended, appearing in Leucadias
Annual Report on
Form 10-K,
as amended, for the year ended December 31, 2006, have been
audited by KPMG LLP, independent registered public accounting
firm, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report
and upon the authority of such firm as experts in accounting and
auditing.
The financial statements of EagleRock Capital Partners (QP), LP
and EagleRock Master Fund, LP as of December 31, 2006 and
2005 and for the years ended December 31, 2006, 2005 and
2004, respectively, appearing in the Annual Report on
Form 10-K
for the year ended December 31, 2006, as amended, have been
audited by BDO Seidman, LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein
by reference in reliance upon such report given on the authority
of such firm as experts in accounting and auditing.
The combined financial statements of ResortQuest Mainland at
December 31, 2006 and 2005, and for each of the three years
in the period ended December 31, 2006, appearing in
Leucadia National Corporations Current Report on
Form 8-K/A
dated June 15, 2007, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report
thereon included therein, and incorporated herein by reference.
Such combined financial statements are incorporated herein by
reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy
materials with the SEC at the SECs public reference room,
located at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of its public reference
room. Our SEC filings are also available to the public on the
SECs Internet site at
http://www.sec.gov.
Our SEC filings can also be found on our website at
http://www.leucadia.com.
In addition, you may obtain a copy of our SEC filings at no cost
by writing or telephoning us at:
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: Corporate Secretary
Telephone:
(212) 460-1900
S-26
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference
information that we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus. This prospectus and the
information that we file later with the SEC may update and
supersede the information we incorporate by reference. We
incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act:
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our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 filed on
February 28, 2007, as amended by Amendment No. 1 on
Form 10-K/A
filed on March 23, 2007;
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our Quarterly Reports on
Form 10-Q
for the period ended March 31, 2007, filed on May 9,
2007, and for the period ended June 30, 2007, filed on
August 8, 2007; and
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our Current Reports on
Form 8-K
filed on January 18, 2007, January 24, 2007,
February 28, 2007, March 6, 2007, March 12, 2007,
May 9, 2007, May 18, 2007, June 6, 2007 (as
amended by our Current Report on
Form 8-K/A
filed on June 15, 2007), August 8, 2007,
August 15, 2007 and August 23, 2007.
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You may also request a copy of these filings at no cost by
writing or telephoning us at the address indicated above. We
will not send exhibits to our filings, however, unless we
specifically have incorporated those exhibits by reference in
this prospectus or an accompanying prospectus supplement or a
document incorporated in this prospectus or an accompanying
prospectus supplement.
S-27
PROSPECTUS
Leucadia National
Corporation
Common Shares
Preferred Shares
Debt Securities
Convertible
Securities
Warrants
Units
We and/or
selling securityholders may offer and sell shares of our common
shares, par value $1.00 per share, and we may offer and sell
shares of our preferred shares, par value $1.00 per share, debt
securities, convertible securities, warrants or units from time
to time in amounts, at prices and on terms that will be
determined at the time of any such offering. Each time our
securities are offered, we will provide a prospectus supplement
containing more specific information about the particular
offering and attach it to this prospectus. The prospectus may
not be used to offer or sell securities without a prospectus
supplement which includes a description of the method and terms
of the offering.
You should carefully read this prospectus and any accompanying
prospectus supplement, together with the documents we
incorporate by reference, before you invest in our securities.
We and/or
certain selling securityholders may offer and sell these
securities to or through one or more underwriters, dealers and
agents, or directly to purchasers, on a continuous or delayed
basis. We will not receive any proceeds of any sale by any
selling securityholder. The prospectus supplement will provide
the specific terms of the plan of distribution.
Our common shares are listed on the New York Stock Exchange
under the symbol LUK.
Investing in our securities involves risks. Please
refer to the Risk Factors section contained in any
applicable prospectus supplement and in the documents we
incorporate by reference for a description of the risks you
should consider when evaluating such investment.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is August 24, 2007
TABLE OF
CONTENTS
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i
This prospectus is part of an automatic shelf registration
statement on
Form S-3
that we filed with the Securities and Exchange Commission, or
the SEC, as a well-known seasoned issuer as defined
in Rule 405 under the Securities Act of 1933, as amended,
or the Securities Act. By using a shelf registration statement,
we and/or
certain selling securityholders may sell, at any time and from
time to time, in one or more offerings, our common shares,
preferred shares, debt securities, convertible securities,
warrants or units as described in this prospectus or any
accompanying prospectus supplement. As allowed by SEC rules,
this prospectus does not contain all of the information included
in the registration statement. For further information, we refer
you to the registration statement, including its exhibits, the
documents incorporated by reference therein and herein as well
as any accompanying prospectus supplements. Statements contained
in this prospectus and any accompanying prospectus supplement
about the provisions or contents of any agreement or other
document are not necessarily complete. If the SECs rules
and regulations require that an agreement or document be filed
as an exhibit to the registration statement, please see that
agreement or document for a complete description of these
matters.
You should read this prospectus and any accompanying prospectus
supplement together with any additional information you may need
to make your investment decision. You should also read and
carefully consider the information in the documents we have
referred you to in Where You Can Find More
Information. Information incorporated by reference after
the date of this prospectus is considered a part of this
prospectus and may add, update or change information contained
in this prospectus. The information in this prospectus, any
accompanying prospectus supplement or any document incorporated
herein or therein by reference is accurate as of the date
contained on the cover of such documents. Neither the delivery
of this prospectus nor any accompanying prospectus supplement,
nor any sale made under this prospectus nor any accompanying
prospectus supplement will, under any circumstances, imply that
the information in this prospectus or any accompanying
prospectus supplement is correct as of any date after the date
of this prospectus or any such accompanying prospectus
supplement. Any information in such subsequent filings that is
inconsistent with this prospectus will supersede the information
in any accompanying prospectus supplement. You should rely only
on the information incorporated by reference or provided in this
prospectus and any supplement. We have not authorized anyone
else to provide you with any other information.
Unless otherwise expressly stated herein or the context
otherwise requires, all references in this prospectus to
Leucadia, we, us,
our, our company or the
company refer to Leucadia National Corporation, a New York
corporation, and its direct and indirect subsidiaries.
FORWARD-LOOKING
STATEMENTS
Some of the statements contained in or incorporated by reference
in this prospectus contain forward-looking statements within the
meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act. These statements may relate, but
are not limited, to projections of revenues, income or loss,
capital expenditures, plans for growth and future operations,
competition and regulation, as well as assumptions relating to
the foregoing.
Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted or quantified.
When used in this prospectus, the words estimates,
expects, anticipates,
believes, plans, intends and
variations of these words and similar expressions are intended
to identify forward-looking statements that involve risks and
uncertainties. Future events and actual results could differ
materially from those set forth in, contemplated by or
underlying the forward-looking statements.
The factors that could cause actual results to differ materially
from those suggested by any of these statements include, but are
not limited to, those discussed or identified from time to time
in our public filings, including without limitation our Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2006, as amended,
and our Quarterly Reports on
Form 10-Qs
for the quarters ended March 31, 2007 and June 30,
2007, such as:
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risks associated with future acquisitions and investments;
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dependence on key management personnel;
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a worsening of general economic and market conditions or
increases in prevailing interest rate levels or a continued
weakening of the U.S. Dollar against the Euro;
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declines in U.S. commercial and residential real estate
markets;
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increased competition in the international and domestic plastics
market and volatility of raw material prices;
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availability of key raw materials;
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changes in foreign and domestic laws, regulations and taxes;
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adverse legal and regulatory developments that may affect our
particular businesses;
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changes in mortgage interest rate levels or changes in consumer
lending practices;
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risks associated with the operation of a new business without a
proven track record;
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ability to obtain, maintain and defend patent protection for our
products and technologies, preserve trade secrets and operate
without infringing the intellectual property rights of others;
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increased competition in the luxury segment of the premium table
wine market;
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ability to obtain sufficient or cost effective
telecommunications termination capacity from high quality
carriers to particular destinations;
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reliance on independent distributors to generate
telecommunications revenue;
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increased competition and adverse changes in pricing
environments;
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increased default rates and decreased value of assets pledged to
us;
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adverse economic, political or environmental developments where
we have mining interests (including Spain and Australia) that
could delay or preclude the issuance of permits, result in
increased development costs or increased financing costs, or any
other developments that result in a decrease in mineral prices;
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changes in the composition of our assets and liabilities through
acquisitions and dispositions;
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weather related conditions and significant natural disasters,
including hurricanes, tornadoes, windstorms, earthquakes and
hailstorms that may affect our operations or investments;
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ability to insure certain risks economically; and
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ability to generate sufficient taxable income to fully realize
our deferred tax asset.
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Accordingly, we caution you against relying on these
forward-looking statements, which are applicable only as of the
date of this prospectus. We undertake no obligation to revise or
update these forward-looking statements to reflect events or
circumstances that arise after the date of this prospectus or to
reflect the occurrence of unanticipated events.
2
We are a diversified holding company engaged in a variety of
businesses, including manufacturing, telecommunications,
property management and services business, gaming entertainment,
real estate activities, medical product development, winery
operations and residual banking and lending activities that are
in run-off. We also own equity interests in operating businesses
and investment partnerships which are accounted for under the
equity method of accounting, including a broker-dealer engaged
in the trading of high yield and special situation securities,
land based contract oil and gas drilling, real estate activities
and development of a copper mine in Spain. We concentrate on
return on investment and cash flow to maximize long-term
shareholder value. Additionally, we continuously evaluate the
retention and disposition of our existing operations and
investigate possible acquisitions of new businesses. In
identifying possible acquisitions, we tend to seek assets and
companies that are out of favor or troubled and, as a result,
are selling substantially below the values we believe to be
present.
Our manufacturing operations are conducted through Idaho Timber,
LLC, or Idaho Timber, and Conwed Plastics, LLC, or Conwed
Plastics. Idaho Timber primarily remanufactures dimension lumber
and remanufactures, packages
and/or
produces other specialized wood products. Conwed Plastics
manufactures and markets lightweight plastic netting used for a
variety of purposes including, among other things, building and
construction, erosion control, agriculture, packaging, carpet
padding, filtration and consumer products.
Our telecommunications operation is conducted through STi
Prepaid, LLC, a seller of international prepaid phone cards and
other telecommunication services in the U.S.
Our property management and services business is conducted
through ResortQuest International, Inc., a company engaged in
offering management services to vacation properties in beach and
mountain resort locations in the continental United States and
Canada, as well as in real estate brokerage services and other
rental and property owner services.
Our gaming entertainment operations are conducted through our
controlling interest in Premier Entertainment Biloxi, LLC, or
Premier, which is the owner of the Hard Rock Hotel &
Casino Biloxi, or Hard Rock Biloxi, located in Biloxi,
Mississippi. The Hard Rock Biloxi was severely damaged by
Hurricane Katrina and re-opened in June 2007 after an extensive
rebuilding effort. In August 2007, Premier and its subsidiary
emerged from bankruptcy pursuant to their Chapter 11
reorganization plan.
Our domestic real estate operations include a mixture of
commercial properties, residential land development projects and
other unimproved land, all in various stages of development and
all available for sale.
Our medical product development operation is conducted through
our majority-owned, development stage subsidiary, Sangart, Inc.,
or Sangart. Sangart is developing a product called
Hemospan®
which is a form of cell-free hemoglobin that is designed for
intravenous administration to treat a variety of medical
conditions, including use as an alternative to red blood cell
transfusions.
Our winery operations consist of Pine Ridge Winery in Napa
Valley, California and Archery Summit in the Willamette Valley
of Oregon. These wineries primarily produce and sell wines in
the luxury segment of the premium table wine market.
Our land based contract oil and gas drilling investment is
conducted through our equity interest in Goober Drilling, LLC,
or Goober. Based in Stillwater, Oklahoma, Goober provides
drilling services to exploration and production companies. In
August 2007, we invested an additional $20,000,000 in Goober,
increasing our equity interest to 50%.
Our investment in the development of a copper mine consists of
our 30% interest in Cobre Las Cruces, S.A., a former subsidiary
that holds the exploration and mineral rights to the Las Cruces
copper deposit in the Pyrite Belt of Spain. We also hold an
11.6% interest in Inmet Mining Corporation, a Canadian-based
global mining company, that produces copper, zinc and gold, that
owns the remaining 70% of Cobre Las Cruces.
Our largest equity investment is our 9.93% interest in Fortescue
Metals Group Ltd, or Fortescue, a publicly traded company listed
on the Australian Stock Exchange. We have invested an aggregate
of $452,200,000 in Fortescues Pilbara iron ore and
infrastructure project in Western Australia, including a
$100,000,000 note of
3
Fortescues subsidiary, FMG Chichester Pty Ltd. Interest on
the note is calculated as 4% of the revenue, net of government
royalties, invoiced from the iron ore produced from that
projects Cloud Break and Christmas Creek areas. The
Fortescue shares acquired by us may be sold without restriction.
As of August 23, 2007, our investment in Fortescue stock
had a market value of $734,000,000.
Our principal executive offices are located at 315 Park Avenue
South, New York, New York 10010. Our telephone number is
(212) 460-1900.
Our website is
http://www.leucadia.com.
The information contained on our website does not constitute a
part of this prospectus.
Please carefully consider the risk factors described in our
periodic reports filed with the SEC, which are incorporated by
reference in this prospectus. Before making an investment
decision, you should carefully consider these risks as well as
other information we include or incorporate by reference in this
prospectus or include in any applicable prospectus supplement.
Additional risks and uncertainties not presently known to us or
that we deem currently immaterial may also impair our business
operations or adversely affect our results of operations or
financial condition.
The use of proceeds will be specified in the applicable
prospectus supplement. We will not receive any proceeds from any
sales by selling securityholders.
RATIO
OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed
charges for each of the periods indicated:
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Six Months Ended
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June 30,
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Year Ended December 31,
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2007
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2006
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2006
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2005
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2004
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2003
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2002(b)
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Ratio of Earnings to Fixed
Charges(a)
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2.53
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5.50
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3.42
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2.77
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2.02
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1.28
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n/a
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Notes:
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(a) |
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For purposes of computing these ratios, earnings represented
consolidated pre-tax income from continuing operations before
cumulative effect of a change in accounting principles and
equity in undistributed earnings or loss of associated
companies, plus fixed charges. Fixed charges include
all interest expense, the portion of net rental expense
representative of the interest factor and amortization of debt
expense. Fixed charges include amounts related to continuing and
discontinued operations. |
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For the year ended December 31, 2002 fixed
charges exceeded earnings by $5,900,000. |
DESCRIPTION
OF CAPITAL STOCK
The following description of our common stock does not purport
to be complete and is subject in all respects to applicable New
York law and qualified by reference to the provisions of our
restated certificate of incorporation, as amended, and our
bylaws. Copies of our restated certificate of incorporation and
bylaws will be sent to shareholders upon request. See
Where You Can Find More Information.
Authorized
Capital
Our authorized capital stock consists of 600,000,000 common
shares, par value $1.00 per share, and 6,000,000 preferred
shares, par value $1.00 per share.
4
Our
Common Shares
As of August 23, 2007, there were 216,638,665 shares
of our common shares outstanding.
Dividends. Subject to the rights of the
holders of any preferred shares that may be outstanding, holders
of our common shares are entitled to receive dividends as may be
declared by our board of directors out of funds legally
available to pay dividends.
Voting. Each holder of common shares is
entitled to one vote for each share held of record on the
applicable record date for all matters submitted to a vote of
shareholders. Holders of common shares have no cumulative voting
rights.
Preemptive Rights, Conversion and
Redemption. Holders of common shares have no
preemptive rights to purchase or subscribe for any stock or
other securities, and there are no conversion rights or
redemption, purchase, retirement or sinking fund provisions with
respect to our common shares.
Liquidation, Dissolution and
Winding-up. In
the event of liquidation, dissolution or
winding-up
of our affairs, holders of our common shares are entitled to
share in any distribution of our assets after payment or
providing for the payment of liabilities and the liquidation
preference of any outstanding preferred shares.
Our
Preferred Shares
We are authorized by our restated certificate of incorporation
to issue up to 6,000,000 shares of preferred stock in one
or more series, of which no shares are issued and outstanding.
The board of directors has the authority, without any vote or
action by our shareholders, to (a) authorize the issuance
of preferred stock up to the limit set by our certificate of
incorporation, (b) create new series of preferred stock and
(c) fix the terms of each series, including any rights
related to dividends, voting, conversion, redemption and
liquidation preference. The issuance of preferred stock could
adversely affect the voting and other rights of holders of our
common shares and may have the effect of delaying or preventing
a change in control of our company.
Transfer
Restrictions on our Common Shares
General. In order to protect our significant
tax loss carryforwards and other tax attributes, our common
shares are subject to certain transfer restrictions contained in
our restated certificate of incorporation. The transfer
restriction imposes restrictions on the transfer of our common
shares to designated persons.
Tax Law Limitations. The benefit of a
companys existing tax loss and credit carryovers, as well
as the benefit of built-in losses, can be reduced or eliminated
under Section 382 of the Internal Revenue Code.
Section 382 limits the use of losses and other tax benefits
by a company that has undergone an ownership change,
as defined in Section 382 of the Code. Generally, an
ownership change occurs if one or more shareholders,
each of whom owns 5% or more in value of a companys
capital stock, increase their aggregate percentage ownership by
more than 50 percentage points over the lowest percentage
of stock owned by such shareholders over the preceding
three-year period. For this purpose, all holders who each own
less than 5% of a companys capital stock are generally
treated together as one 5% shareholder. In addition, certain
attribution rules, which generally attribute ownership of stock
to the ultimate beneficial owner thereof without regard to
ownership by nominees, trusts, corporations, partnerships or
other entities, are applied in determining the level of stock
ownership of a particular shareholder. Options (including
warrants and other rights) to acquire capital stock may be
treated as if they had been exercised, on an
option-by-option
basis, if the issuance, transfer or structuring of the option
meets certain tests. All percentage determinations are based on
the fair market value of a companys capital stock,
including any preferred stock which is voting or convertible (or
otherwise participates in corporate growth).
If an ownership change were to occur in respect of
the company or any of its subsidiaries or subsidiary groups, the
amount of taxable income in any year (or portion of a year)
subsequent to the ownership change that could be offset by net
operating losses (NOLs) or other tax attributes
existing (or built-in) prior to such ownership
change could not exceed an amount equal to the product
obtained by multiplying (1) the aggregate value of the
company, the subsidiary or the subsidiary group that underwent
the ownership change by (2) the federal
long-term tax exempt rate. Because the aggregate value of the
company or any of its subsidiaries, as well as
5
the federal long-term tax-exempt rate, fluctuate, it is
impossible to predict with any accuracy the annual limitation
upon the amount of taxable income that could be offset by such
NOLs or other tax attributes (and built-in losses)
were an ownership change to occur in the future.
However, if such limitation were to exceed the taxable income
against which it otherwise would be applied for any year
following an ownership change, the limitation for
the ensuing year would be increased by the amount of such excess.
Description of the Transfer Restrictions. Our
restated certificate of incorporation generally restricts until
December 31, 2024 (or earlier, in certain events) any
attempted transfer of our common shares or any other securities
that would be treated as our stock under the
applicable tax regulations (which we refer to herein as
Leucadia Stock) to a person or group of persons who
own, or who would own as a result of such transfer, 5% or more
of the Leucadia Stock. The transfer restriction also restricts
any other attempted transfer of Leucadia Stock that would result
in the identification of a new 5-percent shareholder
of our company, as determined under applicable tax regulations.
This would include, among other things, an attempted acquisition
of Leucadia Stock from an existing
5-percent
shareholder. For these purposes, numerous rules of attribution,
aggregation and calculation prescribed under the Internal
Revenue Code (and related regulations) will be applied in
determining whether the 5% threshold has been met and whether a
group exists. The transfer restriction may also apply to
proscribe the creation or transfer of certain
options, which are broadly defined, in respect of
the Leucadia Stock.
Acquisitions of Leucadia Stock directly from us, whether by way
of option exercise or otherwise, are not subject to the transfer
restriction. Consequently, persons or entities that are able to
acquire our common shares directly from us, including our
employees, officers and directors, may do so without application
of the transfer restriction, irrespective of the number of our
common shares they are acquiring. As a result, those persons or
entities dealing directly with us may be seen to receive an
advantage over persons or entities who are not able to acquire
our common shares directly from us and, therefore, are
restricted by the terms of the transfer restriction. It should
be noted, however, that any direct acquisitions of our common
shares from us first requires board approval and in granting
such approval, the board will review the implications of any
such issuance for our NOLs and other tax attributes.
Our board of directors has the discretion to approve a transfer
of Leucadia Stock that would otherwise violate the transfer
restriction. Nonetheless, if the board of directors decides to
permit a transfer that would otherwise violate the transfer
restriction, that transfer or later transfers may result in an
ownership change that would limit the use of the tax
attributes of Leucadia. The board of directors intends to
consider any attempted transfer individually and determine at
the time whether it is in the best interest of our company,
after consideration of any factors that the board deems
relevant, to permit the transfer notwithstanding that an
ownership change may occur.
The transfer restriction will restrict a shareholders
ability to acquire additional Leucadia Stock in excess of the
specified limitations. Furthermore, a shareholders ability
to dispose of his Leucadia Stock, or any other Leucadia Stock
which the shareholder may acquire, may be restricted as a result
of the transfer restriction.
Generally, the restriction is imposed only with respect to the
number of shares of Leucadia Stock, or options with respect to
Leucadia Stock (the Excess Stock), purportedly
transferred in excess of the threshold established in the
transfer restriction. In any event, the restriction does not
prevent a valid transfer if either the transferor or the
purported transferee obtains the approval of our board of
directors.
The transfer restriction restricts any person or entity, or
group of persons or entities, from acquiring sufficient Leucadia
Stock to cause that person or entity to become the owner of 5%
of the Leucadia Stock, and prohibits the current 5-percent
shareholders, as determined under applicable tax regulations,
from increasing their ownership of Leucadia Stock without
obtaining the approval of our board of directors.
Our restated certificate of incorporation further provides that
all certificates representing Leucadia Stock bear the following
legend: THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY
IS SUBJECT TO RESTRICTIONS PURSUANT TO PART III OF
ARTICLE FOURTH OF THE CERTIFICATE OF INCORPORATION OF THE
CORPORATION REPRINTED IN ITS ENTIRETY ON THE BACK OF THIS
CERTIFICATE.
In accordance with the transfer restriction, we will not permit
any of our employees or agents, including the transfer agent, to
record any transfer of Leucadia Stock purportedly transferred in
excess of the threshold established in the transfer restriction.
As a result, requested transfers of Leucadia Stock may be
delayed or refused.
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Our restated certificate of incorporation provides that any
transfer attempted in violation of the restrictions would be
void ab initio, even if the transfer has been recorded by the
transfer agent and new certificates issued. The purported
transferee of the Leucadia Stock would not be entitled to any
rights of shareholders with respect to the Excess Stock,
including the right to vote the Excess Stock, or to receive
dividends or distributions in liquidation in respect thereof, if
any.
If our board of directors determines that a purported transfer
has violated the transfer restriction, we will require the
purported transferee to surrender the Excess Stock, and any
dividends the purported transferee has received on the Excess
Stock, to an agent designated by the board of directors. The
agent will then sell the Excess Stock in one or more
arms-length transactions, executed on the New York Stock
Exchange, if possible, to a buyer or buyers, which may include
us; provided that nothing will require the agent to sell the
Excess Stock within any specific time frame if, in the
agents discretion, the sale would disrupt the market for
the Leucadia Stock or have an adverse effect on the value of the
Leucadia Stock. If the purported transferee has resold the
Excess Stock before receiving our demand to surrender the Excess
Stock, the purported transferee generally will be required to
transfer to the agent the proceeds of the sale and any
distributions the purported transferee has received on the
Excess Stock. From such proceeds, the agent will pay any amounts
remaining after repaying its own expenses and reimbursing the
purported transferee for the price paid for the Excess Stock (or
the fair market value of the Excess Stock at the time of the
attempted transfer to the purported transferee by gift,
inheritance or similar transfer) to a named charity or, in
certain circumstances, charities selected by the Board of
Directors.
The transfer restriction and related provisions contained in our
amended and restated bylaws may be deemed to have an
anti-takeover effect because they restrict the
ability of a person or entity, or group of persons or entities,
from accumulating in the aggregate at least 5% of the Leucadia
Stock and the ability of persons, entities or groups now owning
at least 5% of the Leucadia Stock from acquiring additional
Leucadia Stock. The transfer restriction discourages or
prohibits accumulations of substantial blocks of shares for
which shareholders might receive a premium above market value.
Notwithstanding the restrictions, however, there remains a risk
that certain changes in relationships among shareholders or
other events will cause a change of ownership to occur under
Section 382 of the Internal Revenue Code. Further, there
can be no assurance, in the event transfers in violation of the
transfer restriction are attempted, that the IRS will not assert
that those transfers have federal income tax significance
notwithstanding the transfer restriction. As a result, the
transfer restriction serves to reduce, but not necessarily
eliminate, the risk that Section 382 will cause the
limitations described above on the use of tax attributes of
Leucadia.
We have been advised by our counsel, Weil, Gotshal &
Manges LLP, that, absent a court determination, (1) there
can be no assurance that the transfer restriction will be
enforceable against all of our shareholders and (2) the
transfer restriction may be subject to challenge on equitable
grounds.
However, it should be noted that the existing transfer
restriction has been in place since December 31, 1992 and
has not been challenged to date.
The determination of 5% shareholder status is based upon the
outstanding Leucadia Stock, which currently consists of only
common shares. Consequently, in determining the existence of a
5% shareholder, a holders percentage ownership, taking
into account certain rules of attribution, would be calculated
with reference to outstanding common shares (increased, for such
holder, by the number of common shares deemed to be, but not
actually outstanding). Future changes in the capitalization of
Leucadia may affect who will be deemed a 5% shareholder, thereby
affecting the applicability of the transfer restriction to
future transfers of common shares. However, because the transfer
restriction generally applies (with certain exceptions) to a
person or group of persons who owns (including by attribution)
at least 5% of all stock of Leucadia, a change in
capitalization that increases the stock of Leucadia
likely would result in a reduction in the number of individuals
or groups who would be subject to the transfer restriction,
while a diminution of stock of Leucadia would have
the opposite effect.
Holders are advised to carefully monitor their ownership of
common shares (and any future securities of Leucadia that may
constitute Leucadia Stock for purposes of the transfer
restriction) and should consult their own legal advisors
and/or
Leucadia to determine whether their ownership approaches the
prohibited level.
7
Transfer
Agent
American Stock Transfer & Trust Company is the
transfer agent and registrar for our common shares.
New York
Stock Exchange Listing
Our common shares are listed on the New York Stock Exchange
under the symbol LUK.
DESCRIPTION
OF OTHER SECURITIES
We will set forth in the applicable prospectus supplement a
description of any debt securities, convertible securities,
warrants or units that may be offered pursuant to this
prospectus.
The securities being offered by this prospectus may be sold by
us or by a selling securityholder:
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through agents;
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to or through underwriters;
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through broker-dealers (acting as agent or principal);
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directly by us or a selling securityholder to purchasers,
through a specific bidding or auction process or otherwise;
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through a combination of any such methods of sale; or
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through any other methods described in a prospectus supplement.
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The distribution of securities may be effected from time to time
in one or more transactions, including block transactions and
transactions on the New York Stock Exchange or any other
organized market where the securities may be traded. The
securities may be sold at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at
prices relating to the prevailing market prices or at negotiated
prices. The consideration may be cash or another form negotiated
by the parties. Agents, underwriters or broker-dealers may be
paid compensation for offering and selling the securities. That
compensation may be in the form of discounts, concessions or
commissions to be received from us or from the purchasers of the
securities. Dealers and agents participating in the distribution
of the securities may be deemed to be underwriters, and
compensation received by them on resale of the securities may be
deemed to be underwriting discounts. If such dealers or agents
were deemed to be underwriters, they may be subject to statutory
liabilities under the Securities Act.
Agents may from time to time solicit offers to purchase the
securities. If required, we will name in the applicable
prospectus supplement any agent involved in the offer or sale of
the securities. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a best efforts basis for
the period of its appointment. Any agent selling the securities
covered by this prospectus may be deemed to be an underwriter,
as that term is defined in the Securities Act, of the securities.
If underwriters are used in a sale, securities will be acquired
by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying
prices determined at the time of sale, or under delayed delivery
contracts or other contractual commitments. Securities may be
offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by
one or more firms acting as underwriters. If an underwriter or
underwriters are used in the sale of securities, an underwriting
agreement will be executed with the underwriter or underwriters
at the time an agreement for the sale is reached. The applicable
prospectus supplement will set forth the managing underwriter or
underwriters, as well as any other underwriter or underwriters,
with respect to a particular underwritten offering of
securities, and will set forth the terms of the transactions,
including compensation of the underwriters and dealers and the
public offering price, if applicable. The prospectus and the
applicable prospectus supplement will be used by the
underwriters to resell the securities.
8
If a dealer is used in the sale of the securities, we, a selling
securityholder, or an underwriter will sell the securities to
the dealer, as principal. The dealer may then resell the
securities to the public at varying prices to be determined by
the dealer at the time of resale. To the extent required, we
will set forth in the prospectus supplement the name of the
dealer and the terms of the transactions.
We or a selling securityholder may directly solicit offers to
purchase the securities and we or a selling securityholder may
make sales of securities directly to institutional investors or
others. These persons may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale of
the securities. To the extent required, the prospectus
supplement will describe the terms of any such sales, including
the terms of any bidding or auction process, if used.
Agents, underwriters and dealers may be entitled under
agreements which may be entered into with us to indemnification
by us against specified liabilities, including liabilities
incurred under the Securities Act, or to contribution by us to
payments they may be required to make in respect of such
liabilities. If required, the prospectus supplement will
describe the terms and conditions of such indemnification or
contribution. Some of the agents, underwriters or dealers, or
their affiliates may be customers of, engage in transactions
with or perform services for us or our subsidiaries in the
ordinary course of business.
Under the securities laws of some states, the securities offered
by this prospectus may be sold in those states only through
registered or licensed brokers or dealers.
Any person participating in the distribution of common stock
registered under the registration statement that includes this
prospectus will be subject to applicable provisions of the
Exchange Act, and the applicable SEC rules and regulations,
including, among others, Regulation M, which may limit the
timing of purchases and sales of any of our common stock by any
such person. Furthermore, Regulation M may restrict the
ability of any person engaged in the distribution of our common
stock to engage in market-making activities with respect to our
common stock. These restrictions may affect the marketability of
our common stock and the ability of any person or entity to
engage in market-making activities with respect to our common
stock.
Certain persons participating in an offering may engage in
over-allotment, stabilizing transactions, short-covering
transactions and penalty bids in accordance with
Regulation M under the Exchange Act that stabilize,
maintain or otherwise affect the price of the offered
securities. If any such activities will occur, they will be
described in the applicable prospectus supplement.
Information about selling securityholders, where applicable,
will be set forth in a prospectus supplement, in a
post-effective amendment, or in filings we make with the SEC
which are incorporated by reference into this prospectus.
The validity of the securities offered hereby will be passed
upon for us by Weil, Gotshal & Manges LLP, New York,
New York.
The consolidated financial statements and managements
assessment of the effectiveness of internal control over
financial reporting (which is included in Managements
Report on Internal Control over Financial Reporting),
incorporated in this prospectus by reference to Leucadia
National Corporations Annual Report on
Form 10-K
for the year ended December 31, 2006 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
The financial statements of Olympus Re Holdings, Ltd.
incorporated by reference in this prospectus by reference to
Leucadia National Corporations Annual Report on
Form 10-K
for the year ended December 31, 2006,
9
as amended, have been so incorporated in reliance on the report
of PricewaterhouseCoopers, an independent registered public
accounting firm, given on the authority of said firm as experts
in accounting and auditing.
The statement of financial condition, including the condensed
schedule of investments, of Jefferies Partners Opportunity
Fund II, LLC as of December 31, 2005, and the related
statements of earnings, changes in members equity, and
cash flows for the year then ended, appearing in Leucadias
Annual Report on
Form 10-K,
as amended, for the year ended December 31, 2006, have been
audited by KPMG LLP, independent registered public accounting
firm, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report
and upon the authority of such firm as experts in accounting and
auditing.
The financial statements of EagleRock Capital Partners (QP), LP
and EagleRock Master Fund, LP as of December 31, 2006 and
2005 and for the years ended December 31, 2006, 2005 and
2004, respectively, appearing in the Annual Report on
Form 10-K
for the year ended December 31, 2006, as amended, have been
audited by BDO Seidman, LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein
by reference in reliance upon such report given on the authority
of such firm as experts in accounting and auditing.
The combined financial statements of ResortQuest Mainland at
December 31, 2006 and 2005, and for each of the three years
in the period ended December 31, 2006, appearing in
Leucadia National Corporations Current Report on
Form 8-K/A
dated June 15, 2007, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report
thereon included therein, and incorporated herein by reference.
Such combined financial statements are incorporated herein by
reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy
materials with the SEC at the SECs public reference room,
located at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of its public reference
room. Our SEC filings are also available to the public on the
SECs Internet site at
http://www.sec.gov.
Our SEC filings can also be found on our website at
http://www.leucadia.com.
In addition, you may obtain a copy of our SEC filings at no cost
by writing or telephoning us at:
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: Corporate Secretary
Telephone:
(212) 460-1900
10
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference
information that we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus. This prospectus and the
information that we file later with the SEC may update and
supersede the information we incorporate by reference. We
incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act:
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our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 filed on
February 28, 2007, as amended by Amendment No. 1 on
Form 10-K/A
filed on March 23, 2007;
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our Quarterly Reports on
Form 10-Q
for the period ended March 31, 2007, filed on May 9,
2007, and for the period ended June 30, 2007, filed on
August 8, 2007; and
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our Current Reports on
Form 8-K
filed on January 18, 2007, January 24, 2007,
February 28, 2007, March 6, 2007, March 12, 2007,
May 9, 2007, May 18, 2007, June 6, 2007 (as
amended by our Current Report on Form
8-K/A filed
on June 15, 2007), August 8, 2007, August 15,
2007 and August 23, 2007.
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You may also request a copy of these filings at no cost by
writing or telephoning us at the address indicated above. We
will not send exhibits to our filings, however, unless we
specifically have incorporated those exhibits by reference in
this prospectus or an accompanying prospectus supplement or a
document incorporated in this prospectus or an accompanying
prospectus supplement.
11
$350,000,000
Leucadia National
Corporation
% Senior Notes due
2015
PROSPECTUS SUPPLEMENT
September , 2007
Jefferies &
Company