SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-10308
_____________
May 1, 2002 (May 1, 2002)
Date of Report (Date Of Earliest Event Reported)
Cendant Corporation
(Exact name of Registrant as specified in its charter)
Delaware 06-0918165
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
9 West 57th Street, New York, New York 10019
(Address of Principal Executive Office) (Zip Code)
(212) 413-1800
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if applicable)
Item 5. Other Events.
On May 4, 2001, Cendant Corporation (the "Company") and The Bank
of New York, as trustee (the "Trustee") entered into an Indenture (the
"Original Indenture") pursuant to which the Company issued Zero-Coupon
Convertible Debentures due 2021 (the "Debentures"). On May 1, 2002, the
Company and the Trustee entered into a First Supplemental Indenture under
the Original Indenture (the "Supplemental Indenture") (the Original
Indenture, as supplemented by the Supplemental Indenture, is hereinafter
referred to as the "Indenture") to amend the terms of the Debentures to add
cash interest payments of 3% per annum beginning May 5, 2002 through and
including May 4, 2003 and to permit holders to require the Company to
repurchase the Debentures on May 4, 2003. The Company will pay the cash
interest semi-annually on November 4, 2002 and May 5, 2003 to holders of
record at the close of business on October 4, 2002 and April 4, 2002,
respectively. Holders may require the Company to repurchase the Debentures
on May 4, 2002, 2003, 2004, 2006, 2008, 2011 and 2016.
A copy of the Supplemental Indenture is attached as Exhibit 4.1
and is incorporated by reference in its entirety. A copy of the press
release regarding the amendment of the terms of the Debentures is attached
as Exhibit 99.1 and is incorporated by reference in its entirety.
Certain United States Federal Income Tax Consequences
This discussion describes certain United States federal income tax
consequences to holders of Debentures of the amendment to the terms of the
Debentures. It applies only to holders that hold their Debentures as
capital assets for United States federal income tax purposes at the
effective time of the amendment. This section does not apply to holders
that are members of a class of holders subject to special rules, such as
dealers in securities or currencies, traders in securities that elect to
use a mark-to- market method of accounting for their securities holdings,
banks, life insurance companies, tax-exempt organizations, persons treated
as partnerships for United States federal income tax purposes, persons that
hold Debentures that are a hedge or that are hedged against interest rate
risks, persons that hold Debentures as part of a straddle or conversion
transaction for United States federal income tax purposes and persons whose
functional currency for United States federal income tax purposes is not
the U.S. dollar. If a partnership holds the Debentures, the tax treatment
of a partner will generally depend upon the status of the partner and the
activities of the partnership. A partner in a partnership that holds
Debentures should consult its tax advisor. In addition, the summary below
does not address all of the tax consequences, such as state, local and
foreign tax consequences, that may be relevant to holders of the Debentures.
This discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), its legislative history, existing and proposed
Treasury Regulations, published rulings and court decisions as currently in
effect, all of which are subject to change and differing interpretations,
possibly on a retroactive basis.
No statutory, administrative or judicial authority directly
addresses the treatment of the amendment to the terms of the Debentures for
United States federal income tax purposes. No rulings have been sought or
are expected to be sought from the Internal Revenue Service (the "IRS")
with respect to any of the United States federal income tax consequences
discussed below, and no assurance can be given that the IRS will not take
contrary positions. As a result, no assurance can be given that the IRS
will agree with the tax characterizations and the tax consequences
described below.
The Company urges holders of Debentures to consult their tax
advisors with respect to the tax consequences to them of the amendment to
the terms of the Debentures in light of their particular circumstances,
including the tax consequences under state, local, foreign and other tax
laws and the possible effects of changes in United States federal or other
tax laws.
Consequences of the Amendment
The Company believes that the amendment to the terms of the
Debentures will be treated as an exchange of the Debentures (the "Old
Debentures") for new debentures (the "New Debentures") that qualifies as a
reorganization within the meaning of Section 368(a)(1)(E) of the Code. The
remainder of this discussion assumes that the amendment will be treated as
such. Accordingly, a holder of Old Debentures will not recognize gain or
loss as a result of the amendment. A holder's tax basis in the New
Debentures will equal the holder's adjusted tax basis in the Old
Debentures, and a holder's holding period in the New Debentures will
include the holder's holding period in the Old Debentures.
Classification of the New Debentures
Pursuant to the terms of the Indenture, each holder of the
Debentures has agreed, for United States federal income tax purposes, to
treat the New Debentures as indebtedness for United States federal income
tax purposes subject to the Treasury Regulations that govern contingent
payment debt instruments and to be bound by our application of those
regulations to the New Debentures, including our determination of the rate
at which interest will be deemed to accrue on the New Debentures for United
States federal income tax purposes. The remainder of this discussion
assumes that the New Debentures will be treated in accordance with that
agreement and our determinations. However, the proper application of the
Treasury Regulations that govern contingent payment debt instruments to a
holder of New Debentures is uncertain in a number of respects, and no
assurance can be given that the IRS will not assert that the New Debentures
should be treated differently or that such an assertion would not prevail.
Such treatment could affect the amount, timing and character of income,
gain or loss in respect of the New Debentures. In particular, it might be
determined that a holder should have accrued interest income at a lower
rate, should not have recognized income or gain upon a conversion, and
should have recognized capital gain upon a taxable disposition of its New
Debentures.
Interest Accruals
Provided that a substantial amount of the New Debentures are
traded on an established market, as defined in the relevant Treasury
Regulations, as the Company expects to be the case, the issue price of the
New Debentures will be the fair market value of the New Debentures on the
effective date of the amendment. Pursuant to the contingent payment debt
regulations, a holder of New Debentures will not recognize income as a
result of the receipt of the cash interest payments referred to above. For
purposes of calculating original issue discount on the New Debentures, the
Company has determined that the comparable yield will be 9.2% compounded
semi-annually. The Company's determination of the projected payment
schedule for the New Debentures may be obtained by submitting a written
request for it to the Company at the address set forth in the Indenture.
A holder whose tax basis in the New Debentures differs from the
issue price of the New Debentures must reasonably allocate any difference
between the issue price and the holder's tax basis in the New Debentures to
daily portions of interest or projected payments over the term of the New
Debentures. If a holder's tax basis in the New Debentures is greater than
the issue price of the New Debentures, the amount of the difference
allocated to a daily portion of interest or to a projected payment is
treated as a "negative adjustment" on the day the daily portion accrues or
the payment is made, respectively. If a holder's tax basis in the New
Debentures is less than the issue price of the New Debentures, the amount
of the difference allocated to a daily portion of interest or to a
projected payment is treated as a "positive adjustment" on the day the
daily portion accrues or the payment is made, respectively. Any such
negative or positive adjustment will decrease or increase, respectively,
the holder's adjusted tax basis in the New Debentures. Any Forms 1099-OID
received by holders will not reflect the effect of any such positive or
negative adjustments.
Except as set forth above, the United States federal income tax
consequences to a holder of Debentures of the amendment to the terms of the
Debentures do not differ from those set forth in the prospectus relating to
the Debentures which forms part of the Registration Statement on Form S-3
filed by the Company with the Securities and Exchange Commission (File No.
333-65578).
Because the proper federal income tax treatment of the amendment
to the terms of the Debentures is uncertain in a number of respects,
holders of Debentures should consult their tax advisors regarding the
United States federal, state, local and foreign tax consequences of the
amendment to the terms of the Debentures.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit No. Description
- ----------- -----------
4.1 First Supplemental Indenture, dated as of May 1,
2002, between Cendant Corporation and The Bank
of New York, as trustee.
99.1 Press Release issued by Cendant Corporation
dated May 1, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant had duly caused this report to be signed on its
behalf by the undersigned hereunder duly authorized.
CENDANT CORPORATION
By: /s/ Eric J. Bock
-------------------------------
Eric J. Bock
Executive Vice President,
Law and Secretary
Date: May 1, 2002
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
Report Dated May 1, 2002 (May 1, 2002)
EXHIBIT LIST
Exhibit No. Description
- ----------- -----------
4.1 First Supplemental Indenture, dated as of May 1,
2002, between Cendant Corporation and The Bank
of New York, as trustee.
99.1 Press Release issued by Cendant Corporation dated
May 1, 2002.
Exhibit 4.1
Cendant Corporation
Zero-Coupon Convertible Debentures due 2021
------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of May 1, 2002
TO
INDENTURE
Dated as of May 4, 2001
------------------------------------------------------------------
The Bank of New York
TRUSTEE
------------------------------------------------------------------
TABLE OF CONTENTS
Page
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ARTICLE 1
AMENDMENTS TO TERMS OF THE ORIGINAL INDENTURE
Section 1.1 Amendment to Section 3.7(a).................................2
Section 1.2 Amendment to Exhibit A-1....................................2
Section 1.3 Interest....................................................2
Section 1.4 Amendment to Section 6.1....................................2
ARTICLE 2
MISCELLANEOUS
Section 2.1 Execution of Supplemental Indenture.........................3
Section 2.2 Trust Indenture Act Controls................................3
Section 2.3 Notices.....................................................3
Section 2.4 Separability Clause.........................................4
Section 2.5 GOVERNING LAW...............................................4
Section 2.6 Successors..................................................4
Section 2.7 Multiple Originals..........................................4
FIRST SUPPLEMENTAL INDENTURE, dated as of May 1, 2002 (herein
called the "Supplemental Indenture") between CENDANT CORPORATION, a
Delaware corporation (the "Company"), and THE BANK OF NEW YORK, a New York
banking corporation, as trustee (the "Trustee"), to the Indenture dated as
of May 4, 2001, between the Company and the Trustee (hereinafter called the
"Original Indenture"). Capitalized terms used in this Supplemental
Indenture and not other wise defined herein shall have the meanings set
forth in the Original Indenture.
RECITALS
WHEREAS, the Company has duly authorized the issuance from time to
time of its Zero-Coupon Convertible Debentures due 2021 (the "Securities")
pursuant to the Original Indenture;
WHEREAS, in accordance with Section 9.1 of the Original Indenture,
the Company and the Trustee may enter into supplemental indentures to the
Original Indenture without the consent of the Holders of Securities to,
among other things, add to the Company's covenants for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company, so long as such changes do not materially and adversely affect the
interests of any Securityholder;
WHEREAS, the Company desires to amend and supplement the Original
Indenture in accordance with the terms thereof; and
WHEREAS, the Company has determined that the requirements of
Article IX of the Original Indenture have been satisfied and has requested
the Trustee to join with it in the execution and delivery of this
Supplemental Indenture; all requirements necessary to make this
Supplemental Indenture a valid instrument in accordance with its terms have
been met; and the execution and delivery hereof have been in all respects
duly authorized by the Company;
NOW, THEREFORE, for good and valuable consideration, the
sufficiency of which is hereby acknowledged, each party agrees as follows
for the benefit of the other party and for the equal and ratable benefit of
the Holders of the Securities:
ARTICLE 1
AMENDMENTS TO TERMS OF THE ORIGINAL INDENTURE
Section 1.1 Amendment to Section 3.7(a).
Section 3.7(a) of the Original Indenture is hereby amended by
inserting the words "May 4, 2003," following the words "May 4, 2002," which
appear in the first sentence thereof.
Section 1.2 Amendment to Exhibit A-1.
The first paragraph of Paragraph 6 of the Form of Global Security
attached as Exhibit A-1 to the Original Indenture is hereby amended by
inserting the words "May 4, 2003," following the words "May 4, 2002," which
appear in the third line of such paragraph.
Section 1.3 Interest.
Notwithstanding anything to the contrary in the Original Indenture
and the Form of Global Security attached as Exhibit A-1 thereto, the
Company will pay cash interest on the Securities at a rate of 3% per annum
beginning May 5, 2002 through and including May 4, 2003. Cash interest will
be paid semi-annually on November 4, 2002 and May 5, 2003 to Holders of
record at the close of business on October 4, 2002 and April 4, 2003,
respectively.
Section 1.4 Amendment to Section 6.1.
Section 6.1 of the Original Indenture is hereby amended by
deleting and removing the words "(after an Upward Interest Adjustment or
any election by the Company to pay cash interest on the Securities
following a Tax Event)," which appear in clause (2) thereof.
ARTICLE 2
MISCELLANEOUS
Section 2.1 Execution of Supplemental Indenture.
This Supplemental Indenture is executed and shall be construed as
an indenture supplemental to the Original Indenture and, as provided in
Section 9.7 of the Original Indenture, this Supplemental Indenture forms a
part thereof. The Original Indenture, as supplemented and amended by this
Supplemental Indenture, is in all respects hereby adopted, ratified and
confirmed.
Section 2.2 Trust Indenture Act Controls. If any provision of this
Supplemental Indenture limits, qualifies, or conflicts with another
provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 2.3 Notices. Any request, demand, authorization, notice,
waiver, consent or communication shall be in writing and delivered in
person or mailed by first-class mail, postage prepaid, addressed as follows
or transmitted by facsimile transmission (confirmed by guaranteed overnight
courier) to the following facsimile numbers:
if to the Company:
Cendant Corporation
9 West 57th Street
New York, New York 10019
Attn: Secretary
Telephone No.: (212) 413-1800
Facsimile No.: (212) 413-1922
if to the Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telephone No.: (212) 328-7629
Facsimile No.: (212) 896-7294
Attn: Corporate Trust Administration
The Company or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subse quent notices or communications.
Any notice or communication given to a Securityholder shall be
mailed to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to the
Securityholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar,
Paying Agent, Conversion Agent or co-registrar.
Section 2.4 Separability Clause. In case any provision in the
Supplemental Indenture, the Original Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 2.5 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS SUPPLEMENTAL INDENTURE.
Section 2.6 Successors. All agreements of the Company in this
Supplemental Indenture shall bind its successor. All agreements of the
Trustee in this Supplemental Indenture shall bind its successor.
Section 2.7 Multiple Originals. The parties may sign any number of
copies of this Supplemental Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One signed
copy is enough to prove this Supplemental Indenture.
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this First Supplemental Indenture on behalf of the respective
parties hereto as of the date first above written.
CENDANT CORPORATION
By: /s/ Eric J. Bock
-------------------------------
Name: Eric J. Bock
Title: Executive Vice President,
Law and Secretary
THE BANK OF NEW YORK
By: /s/ Julie Salovitch-Miller
------------------------------
Name: Julie Salovitch-Miller
Title: Vice President
Exhibit 99.1
CENDANT CORPORATION TO AMEND TERMS
OF ITS ZERO-COUPON CONVERTIBLE DEBENTURES DUE MAY 2021
Will Add Cash Interest Payments through May 2003
and "Put" Right Exercisable in May 2003
New York, NY, May 1, 2002--Cendant Corporation (NYSE: CD) announced that it
intends to add cash interest payments of 3% per annum beginning May 5, 2002
and continuing through May 4, 2003 to its outstanding Zero-Coupon
Convertible Debentures due May 2021, as well as an additional option for
holders to "put" the debentures to Cendant at par on May 4, 2003. The
aggregate face value of the outstanding debentures is $1.0 billion.
The additional interest will be paid on a semi-annual basis to holders who
retain their debentures past May 4, 2002. The interest payments will be
made on November 4, 2002 and May 5, 2003 to holders of record at the close
of business on October 4, 2002 and April 4, 2003, respectively. The
specific terms of the payments and the additional holders' right to require
redemption - commonly known as a "put" option - are expected to be set
forth in a supplemental indenture. A form of that supplemental indenture
will be filed shortly with the Securities and Exchange Commission on Form
8-K. The Form 8-K will also include a summary of certain U.S. federal
income tax consequences of the proposed amendments to the terms of the
debentures.
Each holder of the debentures has the right to require Cendant to
repurchase on May 4, 2002 all or any part of such holder's debentures for
cash at a price equal to 100% of the principal amount thereof. In order to
exercise this repurchase right, a holder must provide notice (a "Purchase
Notice") on or before the close of business on May 3, 2002 to the Trustee
in accordance with the procedures of The Depository Trust Company. Any
holder who delivers a Purchase Notice to the Trustee as set forth above may
withdraw such Purchase Notice at any time prior to the close of business on
May 3, 2002 also in accordance with the procedures of The Depository Trust
Company.
The debentures are convertible in certain circumstances into 39.0755 shares
of Cendant common stock per $1,000 principal amount of debentures, subject
to adjustment under certain circumstances. The debentures are not currently
convertible.
Additionally, the Company has consulted with investment advisors with
respect to the debentures, and such advisors may make a market in, purchase
or sell such debentures in the open market from time to time.
The terms of Cendant's other outstanding securities, including its Zero
Coupon Senior Convertible Contingent Debt Securities due February 2021, are
unchanged.
Cendant Corporation is primarily a provider of travel and residential real
estate services. With approximately 70,000 employees, New York City-based
Cendant provides these services to businesses and consumers in over 100
countries. More information about Cendant, its companies, brands and
current SEC filings may be obtained by visiting the Company's Web site at
www.Cendant.com or by calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Relations Contact:
Elliot Bloom Sam Levenson
212-413-1832 212-413-1834
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