UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 13, 2004
BELLSOUTH CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
GEORGIA
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(State or Other Jurisdiction of Incorporation)
1-8607 58-1533433
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(Commission File Number) (IRS Employer Identification No.)
Room 15G03, 1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
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(Address of Principal Executive Offices) (Zip Code)
(404) 249-2000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
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|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets
On October 14, 2004, BellSouth closed the sale of its wireless
operations in Ecuador, Guatemala and Panama to Telefonica Moviles, S.A.
("Telefonica"), the wireless affiliate of Telefonica, S.A. BellSouth will
receive $1.2 billion for its interest in the three properties and will recognize
an after-tax gain of approximately $600 million, or approximately 33 cents per
share, in the fourth quarter of 2004.
The two companies announced in March 2004 that they had reached a
definitive agreement for BellSouth to sell its interest in 10 Latin American
operations to Telefonica. The agreement provided a purchase price based on total
enterprise value of $5.85 billion for all 10 operations. As announced at that
time, the transaction will close in stages with transfer of BellSouth's interest
in the operations in the remaining seven Latin American countries (Argentina,
Chile, Colombia, Nicaragua, Peru, Uruguay and Venezuela) expected to close by
the end of 2004, subject to all requisite governmental approvals being obtained.
Including proceeds from the closing noted above and proceeds from the additional
interest in Telcel described in Item 8.01 below, BellSouth currently expects to
receive after-tax cash proceeds of approximately $4.5 billion.
Item 8.01 Other Events
As part of the pending sale of our Latin American operations,
Telefonica has agreed to purchase, at a specified price, any and all equity
interests in Telcel, our Venezuelan operation, that we purchase from the other
major shareholder as a result of ongoing arbitration. In a 2 to1 decision issued
on October 13, 2004, an arbitration panel in New York ordered that BellSouth
purchase 11.1% of Telcel from the other major shareholder for approximately $403
million, plus interest since June 20, 2004. Under the purchase agreement with
Telefonica, BellSouth will receive approximately $150 million for this
additional interest in Telcel.
The price determined by the arbitration panel is based upon the
valuation of Telcel as of the Fall of 2000, when this shareholder originally
attempted to exercise its put rights under an existing shareholders agreement.
The arbitration panel also required that BellSouth purchase the shareholder's
remaining 10.7% interest in Telcel at a purchase price based upon Telcel's
valuation as of June 2003. The price will be set by the arbitration panel after
future hearings if the parties are unable to reach an agreement on price. While
we believe the value of Telcel declined substantially from the Fall of 2000 to
June 2003, the shareholder may contend that the value of its remaining interest
in Telcel is higher than the price Telefonica has agreed to pay BellSouth for
this interest. At this time, the likely purchase price cannot be predicted, nor
can a reasonable estimate of the amount of loss, if any, be made.
In addition, the arbitration panel ordered us to pay this shareholder
approximately $25 million to satisfy its claims that we breached certain
Investment Tax Credit Contracts. A provision for this payment had already been
provided for in BellSouth's financial statements. The arbitration panel rejected
the shareholder's claim that BellSouth breached an oral agreement to buy out the
shareholder's entire interest in Telcel, and denied all other claims raised by
the parties. The arbitration decision is not expected to impact the progress or
timing of BellSouth's pending sale of its Latin American operations to
Telefonica.
Because these payments exceed the amount Telefonica will pay us for the
additional interest in Telcel, BellSouth will incur an after-tax charge of
approximately $165 million, or approximately 9 cents per share, in the third
quarter of 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELLSOUTH CORPORATION
By: /s/ W. Patrick Shannon
W. Patrick Shannon
Vice President - Finance
October 14, 2004