BellSouth LA Sale Impacts
October 15 2004 - 3:01AM
UK Regulatory
RNS Number:1150E
Bellsouth Corp
14 October 2004
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
(Exact Name of Registrant as Specified in Its Charter)
GEORGIA
(State or Other Jurisdiction of Incorporation)
1-8607 58-1533433
(Commission File Number) (IRS Employer Identification No.)
Room 15G03, 1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of Principal Executive Offices) (Zip Code)
(404) 249-2000
(Registrant's Telephone Number, Including Area Code)
(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):
o Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the
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: ___________________
W. Patrick Shannon
Vice President - Finance
October 14, 2004
This information is provided by RNS
The company news service from the London Stock Exchange
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