<PAGE>
PROSPECTUS
BELL ATLANTIC FINANCIAL SERVICES, INC.
ISSUER
BELL ATLANTIC CORPORATION
SUPPORT PROVIDER
$2,455,000,000
5.75% SENIOR EXCHANGEABLE NOTES DUE 2003
---------------------
At various times, the holders identified in this Prospectus may offer to
sell the 5.75% Senior Exchangeable Notes due 2003 of Bell Atlantic Financial
Services, Inc. at prevailing market prices at the time of sale or at prices
privately negotiated by them. The holders may sell the notes to or through
underwriters, broker-dealers or agents, who may be compensated with discounts,
concessions or commissions.
INFORMATION ABOUT THE NOTES:
- The notes will mature on April 1, 2003, unless the holders exchange the
notes or we redeem the notes before April 1, 2003.
- We will pay interest on the notes on April 1 and October 1 of each year.
We began paying interest on October 1, 1998.
- We have the option to redeem all or a portion of the notes at any time
after April 1, 2001, at the redemption prices set forth on page 19 of this
Prospectus.
- Holders may exchange the notes for fully paid ordinary shares of Telecom
Corporation of New Zealand Limited beginning September 1, 1999 until the
notes mature. Holders will receive 178.0369 TCNZ ordinary shares for each
U.S. $1,000 principal amount of notes they exchange. At the August 24,
1999, TCNZ ordinary share closing price of N.Z. $8.30 and a reported
currency exchange rate of U.S. $.5260 for each N.Z. $1.00, each note has a
current exchange value of approximately U.S. $780. However, we have the
right to pay to the holders a cash amount in U.S. dollars equal to the
current market value of the TCNZ shares instead of delivering TCNZ shares
to holders who exchange their notes. Some events described in this
prospectus may change what holders may receive upon exchange of the notes.
- Bell Atlantic Corporation has agreed to provide us with funds to support
the payment of principal, premium, if any, and interest on the notes. Bell
Atlantic Corporation has also agreed to provide any necessary funds if we
elect to deliver cash to holders who exchange their notes.
- The notes are listed on the Luxembourg Stock Exchange and are quoted on
the Australian Stock Exchange Limited.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 8 IN THIS
PROSPECTUS BEFORE INVESTING IN THE NOTES.
------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE NOTES
OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is August 31, 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a shelf registration process in accordance with the Registration
Rights Agreement dated as of February 26, 1998 by and among our company, Bell
Atlantic Corporation and the managers (the "Registration Rights Agreement").
Under this process, the holders named in the "Selling Holders" section of this
prospectus, or in any supplement to this prospectus, may sell the notes
described in this prospectus from time to time. This prospectus provides you
with a general description of the notes. Each time that additional selling
holders want to offer notes and have provided us with a notice in accordance
with the terms of the Registration Rights Agreement, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. We have the right to suspend the use
of this Prospectus in accordance with the Registration Rights Agreement. You
should read both this and any prospectus supplement together with any additional
information described under the heading "How to Obtain More Information about
Bell Atlantic."
HOW TO OBTAIN INFORMATION ABOUT BELL ATLANTIC
Bell Atlantic Corporation ("Bell Atlantic"), our indirect parent
corporation, files annual, quarterly and current reports and other information
with the SEC. You may read and copy any document Bell Atlantic Corporation files
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Bell Atlantic's SEC filings are also available to
the public over the Internet at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information that Bell
Atlantic files with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that Bell
Atlantic files later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, until all of the notes offered by the holders
have been sold:
- Bell Atlantic's Annual Report on Form 10-K for the year ended December 31,
1998;
- Bell Atlantic's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999;
- Bell Atlantic's Current Reports on Form 8-K filed with the SEC on April
23, April 28, May 10, July 22 and August 26, 1999; and
- The Joint Proxy Statement and Prospectus of Bell Atlantic and GTE
Corporation in respect of the proposed merger of Bell Atlantic and GTE
Corporation dated April 13, 1999.
You may request a copy of Bell Atlantic's Annual Report or any of the above
documents at no cost by writing or telephoning:
Director--Reporting and Consolidation
Bell Atlantic Corporation
1717 Arch Street, 47(th) Floor
Philadelphia, PA 19103
Telephone: (215) 963-6360
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. The selling holders are
not making any offer of these notes in any state where the offer is
2
<PAGE>
not permitted. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on the
front of those documents.
HOW TO OBTAIN INFORMATION ABOUT
TELECOM CORPORATION OF NEW ZEALAND LIMITED
Telecom Corporation of New Zealand ("TCNZ") files an annual and other
reports with the SEC. You may read and copy any document TCNZ files at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. TCNZ's SEC filings may also be available to the public
over the Internet at the SEC's web site at http://www.sec.gov.
3
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS. WE URGE
YOU TO CAREFULLY READ AND REVIEW THE ENTIRE PROSPECTUS AND THE OTHER DOCUMENTS
TO WHICH IT REFERS TO FULLY UNDERSTAND THE TERMS OF THE NOTES AND THE OFFERING.
<TABLE>
<S> <C>
Bell Atlantic Financial
Services, Inc.............. We are a wholly-owned indirect subsidiary of Bell Atlantic,
and we were incorporated in 1983 under the laws of the State
of Delaware. We were established to provide financing to
Bell Atlantic and certain of its subsidiaries and
affiliates. We do not engage in any separate business
activities. Our principal executive offices are located at
3900 Washington Street, 2(nd) Floor, Wilmington, Delaware
19802 (telephone number (302) 761-4200).
Bell Atlantic Corporation.... Bell Atlantic was incorporated in 1983 under the laws of the
State of Delaware and completed a merger with NYNEX
Corporation on August 14, 1997. Bell Atlantic's principal
executive offices are located at 1095 Avenue of the
Americas, New York, New York 10036 (telephone number
212-395-2121).
The Notes.................... $2,455,000,000 principal amount of 5.75% Senior Exchangeable
Notes due 2003. The notes are governed by an indenture among
us, Bell Atlantic and The Chase Manhattan Bank, as trustee
(the "Trustee"), dated as of February 26, 1998 (the
"Indenture").
Support Agreement............ On February 1, 1998, we entered into a Support Agreement
with Bell Atlantic in which Bell Atlantic agreed, among
other things, to
- make sure that we have a positive tangible net worth; and
- provide us with the funds we need to pay principal,
premium, if any, and interest on, the notes, or deliver
cash, if we cannot obtain funds from other sources on
commercially reasonable terms.
If we fail to make any payment on the notes, holders will
have a claim against Bell Atlantic directly for the amount
owed to holders, but holders will not have any recourse to
the stock or assets of any of Bell Atlantic's telephone
subsidiaries, or Bell Atlantic's interest in TCNZ or any
operating telephone company which may at the time be owned
directly or indirectly by Bell Atlantic. The "Description of
the Notes--Support Agreement" section of this Prospectus
beginning on page 12 contains more information about the
Support Agreement.
Ranking...................... The notes are general indebtedness of our company. The notes
rank equal in right of payment with all of our existing and
future senior indebtedness. Bell Atlantic's obligations
under the Support Agreement rank equal with Bell Atlantic's
other unsecured debt, except that holders have no recourse
to the stock or assets of Bell Atlantic's telephone
subsidiaries, or Bell Atlantic's interest in TCNZ or any
operating telephone company which may at the time be owned
directly or indirectly by Bell Atlantic. Bell Atlantic is a
holding company, and therefore, the rights of Bell Atlantic
and, its creditors (including holders) to realize upon the
assets of any
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
subsidiary of Bell Atlantic are subject to prior claims of
creditors of each such subsidiary, except to the extent that
claims of Bell Atlantic itself as a creditor of a subsidiary
may be recognized. See "Description of the Notes--Support
Agreement."
Maturity Date................ April 1, 2003.
Interest..................... We will pay interest on the notes semi-annually on April 1
and October 1 of each year. We began paying interest on
October 1, 1998.
Denomination................. We issued registered notes in denominations of U.S.$1,000
and integral multiples of U.S. $1,000. We issued bearer
notes in denominations of U.S.$1,000, U.S.$10,000 and
U.S.$100,000.
Exchange Rights.............. At any time after September 1, 1999 and prior to April 1,
2003, and unless the notes are redeemed, holders have the
option to exchange their notes for fully paid TCNZ ordinary
shares. Holders will receive 178.0369 TCNZ ordinary shares
for each $1,000 principal amount of notes they exchange. The
exchange ratio is subject to adjustment as described in this
Prospectus. At the August 24, 1999, TCNZ ordinary share
closing price of N.Z. $8.30 and a reported currency exchange
rate of U.S. $.5260 for each N.Z. $1.00, each note has a
current exchange value of approximately U.S. $780. However,
instead of delivering TCNZ ordinary shares, we may choose to
pay cash equal to the market price in U.S. dollars of such
TCNZ ordinary shares. In connection with any redemption and
at final maturity, we also have the option to pay an amount
based on the daily volume-weighted average price of the TCNZ
ordinary shares. We refer to this amount as the "average
market value amount."
Other Exchange Property...... If certain events affecting the TCNZ ordinary shares occur,
including certain events which result in the conversion of
TCNZ ordinary shares into other assets, we may provide such
assets in lieu of the TCNZ ordinary shares. If events have
occurred that result in holders of the notes having the
right to receive other exchange property, rather than TCNZ
ordinary shares, you should consider statements in this
prospectus relating to TCNZ ordinary shares to refer to such
other exchange property, unless the context indicates
otherwise.
Our Option to Redeem the
Notes...................... We may not redeem the notes before April 1, 2001, unless
certain circumstances involving U.S. taxation or information
reporting requirements occur. On or after April 1, 2001, we
may choose to redeem all or part of the notes for cash, at
the redemption prices set forth in this Prospectus. If we
choose to redeem the notes, we will pay to holders any
accrued and unpaid interest to the date of redemption.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Tax Redemption............... We may redeem all or part of the notes if certain events
involving United States taxation or information reporting
requirements occur:
- at any time before September 1, 1999 at a redemption price
of (i) 100% of the principal amount of the notes plus (ii) a
cash amount equal to the excess, if any, of the market price
as of the date fixed for redemption of the number of TCNZ
ordinary shares deliverable upon the exchange of the notes
if the notes were exchangeable at that time minus 100% of
the principal amount of the notes plus (iii) accrued
interest to the date fixed for redemption; and
- at any time on or after September 1, 1999 at a redemption
price of (i) 100% of the principal amount of the notes, plus
(ii) accrued interest to the date fixed for redemption.
Form of the Notes............ The notes initially were represented by three global notes.
The Rule 144A global note is registered in the name of Cede
& Co., as nominee for the Depository Trust Company ("DTC").
The Regulation S global note is registered in the name of
Chase Nominees Limited and was deposited with the common
depositary for Euroclear and Cedel. The global bearer note
was deposited with the common depositary for, and in respect
of, interests held through Euroclear and Cedel. We will
issue an unrestricted global note, registered in the name of
Cede & Co., which will represent notes sold under this
prospectus. Except as described in this Prospectus,
certificates for individual notes will not be issued in
exchange for interests in the global notes. See "Description
of Notes--Book Entry; Form and Denomination" on page 24 of
this Prospectus.
Liens on Assets.............. Subject to certain exceptions, if at any time we mortgage,
pledge, or otherwise subject any property or assets now
owned or later acquired by us to any lien, we have agreed to
take the following actions. We will secure the outstanding
notes, and any of our other obligations which are then
outstanding and entitled to the benefit of a similar
covenant, equally and ratably with the indebtedness or
obligations secured by the mortgage, pledge, or lien. This
obligation continues for the period that the indebtedness or
obligation is secured. No provisions of the Indenture
prevent any of our affiliates, including Bell Atlantic, from
mortgaging, pledging, or subjecting to any lien any of their
respective property or assets, even if they have acquired
the property or assets from us.
U.S. Federal Income Tax
Considerations............. The notes will be treated as contingent-payment debt
instruments due to their exchangeable nature. Investors
should carefully review the section captioned "Certain
United States Federal Income Tax Considerations" for a
discussion of the U.S. federal income tax consequences of an
investment in the notes.
No Proceeds.................. Although we received proceeds from the initial placement of
the notes in February 1998, neither we nor Bell Atlantic
will receive any proceeds of the sale of the notes by the
selling holders.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Registration Rights.......... This Prospectus is part of a registration statement filed
pursuant to a Registration Rights Agreement relating to the
notes dated as of February 26, 1998 by and among us, Bell
Atlantic and the Managers, for the benefit of the owners of
the notes. We have agreed, together with Bell Atlantic, to
use our best efforts to keep the registration statement
effective until the notes mature, are exchanged or redeemed,
subject to certain permitted exceptions. If we are not in
compliance, or Bell Atlantic is not in compliance, with our
obligations under the Registration Rights Agreement, the
interest rate on the notes may increase. See "Registration
Rights" on page 32. If the interest rate on the notes
increases, we will notify the Luxembourg Stock Exchange and
holders in the manner specified in "Description of the
Notes--Notices" on page 25.
The Registration Rights Agreement does not relate to the
offer of sale of the TCNZ ordinary shares that are
deliverable upon exercise of the notes. Prior to June 1,
1999, Bell Atlantic shall have taken all steps necessary to
disaffiliate from TCNZ. Accordingly, we believe, and Bell
Atlantic believes, that upon exchange of the notes for TCNZ
ordinary shares, holders (other than TCNZ and affiliates of
TCNZ) will receive TCNZ ordinary shares that are not subject
to restrictions on sale under the Securities Act of 1933, as
amended.
TCNZ Ordinary Shares......... The TCNZ ordinary shares are listed on the New Zealand Stock
Exchange ("NZSE") under the symbol "TEL" and the Australian
Stock Exchange ("ASX") under the symbol "TEL." The American
Depositary Receipts of TCNZ are listed on the New York Stock
Exchange ("NYSE") under the symbol "NZT."
</TABLE>
WE URGE YOU TO CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE 8 FOR A
DISCUSSION OF FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN THE NOTES.
7
<PAGE>
RISK FACTORS
In addition to the other information, you should carefully consider the
following risk factors and the other information in this Prospectus before
investing in the notes.
RESTRICTIONS IN NEW ZEALAND AND AUSTRALIA ON THE OWNERSHIP AND TRANSFER OF
TCNZ ORDINARY SHARES MAY LIMIT THE AMOUNT OF NOTES THAT CAN BE ACQUIRED BY
INVESTORS
The New Zealand Minister of Finance, on behalf of the New Zealand
Government, holds a special rights convertible preference share in TCNZ, known
as the "Kiwi Share." The Kiwi Share requires that the holder of the Kiwi share
consent to the amendment or removal of, or any act or omission that fails to
comply with, certain provisions of TCNZ's Constitution. These provisions of
TCNZ's Constitution require, among other things:
- each of the Minister of Finance and the TCNZ board of directors (the "TCNZ
Board") to give prior written consent for a person to hold a "relevant
interest" in 10% or more of the total voting shares in TCNZ; and
- the Minister of Finance to give prior written approval for a person who is
not a New Zealand national to hold a "relevant interest" of more than
49.9% of the total voting shares of TCNZ.
The term "relevant interest" includes:
- "beneficial ownership" as that term is defined within the meaning of Rule
13d-3 of the Exchange Act;
- an interest pursuant to any agreement or arrangement under which any of
the foregoing rights arise.
The term "relevant interest" excludes certain limited interests arising from
defined financial, custodial, trading and similar relationships.
If the TCNZ Board (or the holder of the Kiwi Share after consultation with
the TCNZ Board) determines that there are reasonable grounds to believe that any
person has a "relevant interest" in voting shares in excess of the above
limitations, the TCNZ Board (or the holder of the Kiwi Share if the TCNZ Board
fails to act) may, after following certain procedures, prohibit the exercise of
the voting rights relating to the shares (in which case voting rights vest in
the chairman of TCNZ) and may force the sale of the shares. The TCNZ Board may
also refuse to register a transfer of shares if it reasonably believes that the
transfer would breach the restrictions described above. The TCNZ Board and/or
the holder of the Kiwi Share may enforce these provisions of the TCNZ
Constitution against the Depositary or Custodian for the current TCNZ American
Depositary Receipt ("ADR") facility as holders of TCNZ ordinary shares.
We believe that the notes will be deemed to be subject to the Kiwi Share
provisions and therefore, each holder's "relevant interest" represented by the
notes must be aggregated with any other relevant interest of such holder in TCNZ
to determine whether such holder's aggregate relevant interest exceeds the
specified thresholds. The "relevant interest" represented by the notes will be
calculated on the basis of the number of TCNZ ordinary shares deliverable upon
the exchange of the notes or ADRs representing the TCNZ ordinary shares held or
beneficially held by the holder. Accordingly, we believe that any investor must
obtain the approval of the New Zealand Minister of Finance and the TCNZ Board if
an investor wishes to acquire a "relevant interest" in the notes exchangeable
for an amount of TCNZ ordinary shares that is equal to or greater than 10% of
the total voting shares of TCNZ, when combined with his other "relevant
interests" in TCNZ.
New Zealand law also requires a person who obtains a "relevant interest" in
5% or more of the shares of a listed company to provide notification to both the
company and the New Zealand Stock Exchange ("NZSE"). The term "relevant
interest" in this context is defined broadly and includes,
8
<PAGE>
among others, the same circumstances as constitute a "relevant interest" under
the Kiwi Share definition described above. Additionally, the listing rules of
the NSZE require that a person follow specified procedures before the person
acquires interests in more than 20% of TCNZ's voting shares.
Finally, a holder is subject to Australian law and the rules of the
Australian Stock Exchange ("ASX") by virtue of the listing of TCNZ on the ASX.
Under Australian law, any person who becomes entitled to 5% or more of the
shares of a listed company must notify the ASX and the listed company. The term
"entitlement" is defined broadly and includes, among others, the same
circumstances as constitute a "relevant interest" under the Kiwi Share
definition described above.
THE TCNZ ORDINARY SHARES AND ADRS ARE SUBJECT TO FLUCTUATION IN MARKET VALUE
DUE TO A NUMBER OF FACTORS, INCLUDING TCNZ'S OPERATIONS, EXCHANGE RATE
FLUCTUATIONS AND OTHER FACTORS, WHICH MAY ALSO AFFECT THE VALUE OF THE NOTES
Trading prices of TCNZ ordinary shares and ADRs are influenced by TCNZ's
operational results. Trading prices are also influenced by complex interrelated
political, economic, financial and other factors that can affect the capital
markets generally, the local markets on which the TCNZ Ordinary Shares are
traded, the New York Stock Exchange ("NYSE") (on which the ADRs are traded) and
the market segment in which TCNZ participates. It is impossible to predict
whether the prices of TCNZ Ordinary Shares or ADRs will rise or fall. In
addition, fluctuations in the N.Z. dollar/U.S. dollar exchange rate may affect
the U.S. dollar price of the ADRs on the NYSE, the value in U.S. dollars of the
TCNZ ordinary shares which may be delivered if a holder exchanges the notes and
the market value of the notes.
Any market that develops for the notes may influence and be influenced by
the market for the TCNZ ordinary shares or ADRs. For example, the price of the
TCNZ ordinary shares or ADRs may become more volatile. The price may be
depressed by investors' anticipation of the potential distribution into the
market of substantial additional amounts of TCNZ ordinary shares or ADRs at the
maturity of the notes, by possible sales of TCNZ ordinary shares or ADRs by
investors who received the TCNZ securities upon exchange of the notes, and by
hedging or arbitrage trading activity that may develop involving the notes and
the TCNZ ordinary shares or ADRs.
TCNZ HAS NO OBLIGATION WITH RESPECT TO THE NOTES, AND YOU MAY LOOK ONLY TO US
AND, TO THE EXTENT SET FORTH IN THE SUPPORT AGREEMENT, BELL ATLANTIC FOR
PAYMENT AND OTHER OBLIGATIONS
TCNZ was not involved in the initial offering of the notes, is not a party
to the indenture and has no obligation with respect to the notes or any amounts
to be paid to the holders of the notes. Therefore, a holder of notes can look
only to us and to Bell Atlantic, to the extent of Bell Atlantic's obligations
under the Support Agreement, for repayment of the notes. Holders of notes have
no recourse against TCNZ.
IF WE AND BELL ATLANTIC ARE IN DEFAULT OF OUR OBLIGATIONS WITH RESPECT TO THE
NOTES, HOLDERS HAVE NO RECOURSE TO THE TELEPHONE SUBSIDIARIES OF BELL
ATLANTIC OR TO BELL ATLANTIC'S INTEREST IN CERTAIN OTHER OPERATING TELEPHONE
COMPANIES
Under the terms of the Support Agreement, holders have no recourse to or
against the stock or assets of the telephone subsidiaries of Bell Atlantic, or
Bell Atlantic's interest in TCNZ or any other operating telephone company which
may at the time be owned directly or indirectly by Bell Atlantic.
BECAUSE BELL ATLANTIC'S OBLIGATIONS UNDER THE SUPPORT AGREEMENT ARE, IN
EFFECT, SUBORDINATED TO CREDITORS CLAIMS AGAINST BELL ATLANTIC SUBSIDIARIES,
THE ABILITY OF HOLDERS TO ENFORCE BELL ATLANTIC'S OBLIGATIONS THROUGH
RECOURSE TO SUBSIDIARY STOCK OR ASSETS IS SUBJECT TO PRIOR CLAIMS OF THE
SUBSIDIARIES' CREDITORS
Bell Atlantic is a holding company and therefore, the right of Bell Atlantic
and creditors of Bell Atlantic (including the holders), to realize upon the
stock or assets of any subsidiary of Bell Atlantic, is
9
<PAGE>
subject to prior claims of creditors of each subsidiary. This limitation does
not apply to the extent that claims of Bell Atlantic as a creditor of a
subsidiary are recognized.
THE INDENTURE DOES NOT PREVENT US OR BELL ATLANTIC FROM INCURRING ADDITIONAL
DEBT ON TERMS THAT MAY INCREASE THE CREDIT RISKS UNDER THE NOTES
The Indenture pursuant to which the notes were issued does not restrict us,
Bell Atlantic or Bell Atlantic's subsidiaries from incurring additional
indebtedness. Additionally, indebtedness incurred by us or Bell Atlantic may
increase credit risk under the notes.
BECAUSE THERE IS CURRENTLY NO PUBLIC MARKET FOR THE NOTES, A HOLDER MAY NOT
READILY BE ABLE TO RESELL THE NOTES.
There is currently no active trading market for the notes. A trading market
for the notes may never develop.
WE MAY CHOOSE TO DELIVER CASH TO HOLDERS EXERCISING THEIR EXCHANGE RIGHTS, IN
WHICH CASE THE HOLDERS WILL NOT RECEIVE TCNZ ORDINARY SHARES
We have the option under certain circumstances, exercisable in our sole
discretion, to satisfy our obligations if the notes are exchanged by delivering
to holders cash instead of TCNZ ordinary shares which would otherwise be
delivered on the exchange. Although we may deliver TCNZ ordinary shares, we
cannot assure you that we will do so.
BELL ATLANTIC MAY RESELL THE TCNZ ORDINARY SHARES AT ANY TIME AND HOLDERS
HAVE NO RECOURSE AGAINST TCNZ ORDINARY SHARES
Bell Atlantic Holdings, Limited ("BA Holdings"), an indirect subsidiary of
Bell Atlantic, owns 437,080,670 TCNZ ordinary shares. The Indenture does not
restrict the ability of Bell Atlantic or any of its affiliates, including BA
Holdings, to sell, pledge or otherwise convey (or cause the sale, pledge or
conveyance) all or part of the TCNZ ordinary shares held by it. Neither Bell
Atlantic nor BA Holdings nor any of their respective affiliates have pledged or
otherwise held in escrow any TCNZ ordinary shares for exchange at the maturity
of the notes. Additionally, under the Telecommunications Act of 1996, creditors
may not make any claims against any TCNZ ordinary shares owned by Bell Atlantic,
whether such claims arise as a result of the bankruptcy, insolvency or
liquidation of Bell Atlantic, or from any other events.
TO ACHIEVE CERTAIN TAX CONSEQUENCES, TCNZ IS SUBJECT TO CERTAIN CONTINUITY OF
OWNERSHIP RESTRICTIONS UNDER NEW ZEALAND LAW
In general, a portion of the dividends payable by TCNZ are eligible for
imputation tax credits in New Zealand. However, if TCNZ fails to satisfy certain
continuity of ownership requirements, the imputation tax credits will be lost
unless they are attached to dividends paid before the change in continuity of
ownership. The imputation tax credits will be lost if there is greater than a
34% change in continuity at a time between the time the imputation tax credits
are derived and the time they attach to dividends. Exchanges of the notes for
TCNZ ordinary shares count toward the 34% threshold. Because the exchanges of
the notes are treated as "off-market" under New Zealand law, there is a
significant risk that TCNZ will not be able to rely on the exemption treating
all shareholders holding less than 10% of the stock of TCNZ as a single
shareholder for purposes of determining continuity. This, in turn, significantly
increases the risk that the 34% threshold would be breached at some point and
that the imputation tax credits would be lost.
10
<PAGE>
USE OF PROCEEDS
Although we received proceeds from the initial placement of the notes in
February 1998, we will not receive any proceeds from the sale of the notes by
the selling holders. Bell Atlantic also will not receive any proceeds from the
sale of the notes by the selling holders.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
Bell Atlantic for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, TWELVE MONTHS ENDED DECEMBER 31,
- ----------------------------- -----------------------------------------------------
1999 1998 1997 1996 1995 1994
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
5.71 4.31 3.69 4.35 3.94 3.33
</TABLE>
For the purpose of this ratio:
- Earnings have been calculated by adding minority interest, loss from
unconsolidated businesses, dividends from unconsolidated businesses,
interest expense (including interest related to lease financing
activities), the portion of rent expense representing interest, and
amortization of capitalized interest to income before provision for income
taxes, extraordinary items, and cumulative effect of changes in accounting
principles, and by deducting therefrom income from unconsolidated
businesses; and
- Fixed charges are comprised of interest expense (including interest
related to lease financing activities), the portion of rent expense
representing interest, capitalized interest, priority distributions, and
preferred stock dividend requirement.
11
<PAGE>
DESCRIPTION OF THE NOTES
The notes were issued under an indenture, dated as of February 26, 1998 (the
"Indenture"), by and among our company, Bell Atlantic and The Chase Manhattan
Bank, as trustee (the "Trustee"). Holders may request a copy of the Indenture
from us or Bell Atlantic. The following summary of the material provisions of
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Trust Indenture Act of 1939, as
amended (the "TIA"), and to all of the provisions of the Indenture, including
the definitions of certain terms therein, and those terms made a part of the
Indenture by reference to the TIA as in effect on the date of the Indenture. The
definitions of certain terms used in the following summary are set forth below
under "--Certain Definitions."
GENERAL
We issued $2,455,000,000 aggregate principal amount of the notes. The notes
are general indebtedness of our company, ranking equal with all our existing and
future senior indebtedness. The Indenture does not restrict our ability, or the
ability of Bell Atlantic or its subsidiaries to incur indebtedness.
SUPPORT AGREEMENT
Under a support agreement, dated as of February 1, 1998 (the "Support
Agreement"), Bell Atlantic has agreed to:
- own directly or indirectly all of our voting capital stock issued and
outstanding at any time;
- make sure that we have a positive tangible net worth, as determined in
accordance with generally accepted accounting principles;
- provide us with any funds we need to make any payment of principal,
premium or interest on, or delivery of property upon exchange of, the
notes, if we cannot obtain funds from other sources on commercially
reasonable terms.
We and Bell Atlantic cannot terminate the Support Agreement until all of the
notes have been paid in full, redeemed or exchanged. We and Bell Atlantic cannot
amend the Support Agreement in any way that adversely affects your rights unless
you agree to the amendments in writing and the SEC has approved the change.
If we fail to make any payment of principal, premium or interest, or fail to
deliver the TCNZ ordinary shares or other exchange property, you have the right
to sue Bell Atlantic directly for payment of the amount owed to you. If you
obtain a judgment against Bell Atlantic, you will not have recourse to or
against the stock or assets of the following subsidiaries of Bell Atlantic,
which are referred to in this prospectus as the "telephone subsidiaries":
- Bell Atlantic--Pennsylvania, Inc.;
- Bell Atlantic--New Jersey, Inc.;
- Bell Atlantic--Delaware, Inc.;
- Bell Atlantic--Maryland, Inc.;
- Bell Atlantic--Virginia, Inc.;
- Bell Atlantic--West Virginia, Inc.;
- Bell Atlantic--Washington, D.C., Inc.;
- New York Telephone Company d/b/a Bell Atlantic-New York;
- The New England Telephone and Telegraph Company d/b/a Bell Atlantic-New
England;
- Bell Atlantic Network Services, Inc.;
12
<PAGE>
- or Bell Atlantic's interest in TCNZ, or any other operating telephone
company which may at the time be owned directly or indirectly by Bell
Atlantic.
We refer to the exclusion of this stock or assets from recourse under the
notes as the "asset carve-out." Other than with respect to the asset carve-out,
Bell Atlantic's obligations under the Support Agreement rank equally with Bell
Atlantic's other unsecured debt.
Bell Atlantic is a holding company, and therefore, the right of Bell
Atlantic and the right of creditors of Bell Atlantic (including the holders), to
realize upon the assets of any subsidiary of Bell Atlantic, whether upon
liquidation or reorganization of such subsidiaries, or otherwise, is subject to
prior claims of creditors of each such subsidiary. This limitation does not
apply to the extent that claims of Bell Atlantic as a creditor of a subsidiary
are recognized.
PRINCIPAL, MATURITY AND INTEREST
The notes are limited in aggregate principal amount to $2,455,000,000 and
will mature on April 1, 2003. Unless the notes are previously redeemed or
exchanged, we will pay all notes outstanding on April 1, 2003 in full at their
face amount, together with any accrued but unpaid interest, in United States
dollars. Interest on the notes accrues at a rate of 5.75% per year. We pay
interest twice a year in arrears on April 1 and October 1 (each an "Interest
Payment Date"). We pay interest on notes in registered form to record holders on
the March 15 (for the April 1 Interest Payment Date) and September 15 (for the
October 1 Interest Payment Date) immediately preceding each Interest Payment
Date (each a "Regular Record Date"). We pay interest on notes in bearer form
when the definitive notes or coupons attached to the definitive notes are
surrendered. Interest on the notes accrues from the most recent date on which
interest has been paid. We compute interest on the notes on the basis of a
360-day year comprising twelve 30-day months.
EXCHANGE RIGHTS
GENERAL
On or after September 1, 1999, holders may exchange their notes for TCNZ
ordinary shares or other exchange property at any time or from time to time.
Holders have the right to exchange their notes until the close of business on
April 1, 2003, unless we have previously redeemed the notes at the redemption
prices set forth in this Prospectus. The holders may exchange their notes at the
ratio of 178.0369 TCNZ ordinary shares for each $1,000 principal amount of the
notes, subject to adjustment under the circumstances described below under
"Adjustment Events" and subject also to our right to pay exchanging holders cash
instead of TCNZ ordinary shares under the circumstances described below or under
the circumstances described in "Redemption--Company Election to Pay Average
Market Value Amount." Holders of notes have no rights in respect of the TCNZ
ordinary shares, unless and until the notes are exchanged for TCNZ ordinary
shares.
On or after September 1, 1999 and before the close of business on April 1,
2003, instead of delivering TCNZ ordinary shares in exchange for any notes, we
may choose to make a cash settlement in respect of any note surrendered for
exchange by delivering a notice to the tendering holder not more than five
Trading Days after the note is surrendered for exchange. We will make a cash
settlement in an amount for each $1,000 principal amount of notes exchanged
equal to the Market Price, as of the second Trading Day after delivery of notice
to such holder, of the TCNZ ordinary shares (or the number or amount of each
type of other Exchange Property) that would be deliverable upon exchange of the
notes if they were exchanged at that time. If other exchange property would be
deliverable on exchange, we will make a cash settlement based on the Market
Price of such other exchange property. We will pay the cash settlement amount in
United States dollars as promptly as practicable, but no later than ten business
days, after completion of the five Trading Day period used to determine the
Market Price. We may not make this cash settlement if, in connection with a call
for
13
<PAGE>
redemption or final maturity, we have previously elected to pay in cash the
Average Market Value Amount upon any exchange before the applicable Redemption
Date or final maturity date.
METHOD OF EXCHANGE
Holders must include appropriate notices (including a duly signed and
completed notice of exchange), any unmatured coupons and any payments in respect
of applicable interest or taxes when surrendering their notes for exchange.
Holders may obtain copies of the notice of exchange at the office of the
Principal Paying Agent, any Exchange Agent and the Paying Agent in Luxembourg.
Once a holder gives a notice of exchange, the notice of exchange will be
irrevocable and may not be withdrawn without our written consent. We may reject,
and the Trustee or any Exchange Agent on our behalf, may reject, any incomplete
or incorrect notice of exchange. All costs and expenses incurred or caused by an
incomplete or incorrect notice of exchange will be for the account of the holder
giving the incomplete or incorrect notice of exchange. Unless we have elected
the cash settlement option, as promptly as practicable (but in no event later
than ten business days) after the exchange date, we will deliver or cause to be
delivered at the office of the relevant Exchange Agent or Trustee, the TCNZ
ordinary shares or other exchange property, issuable upon exchange of the
surrendered notes, plus payment in cash in lieu of any fractional security.
We will not make a payment or adjustment for interest accrued or dividends
on any TCNZ ordinary shares on the exchange of any note. If a holder surrenders
a note for exchange after the Regular Record Date for an interest payment and
before the Interest Payment Date, we will pay the interest due on the Interest
Payment Date to the registered holder at the close of business on the Regular
Record Date. However, a holder who surrenders any note for exchange during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
(other than notes or portions of notes called for redemption on a Redemption
Date within that period) must include, with the notes being exchanged, the
interest payable on that Interest Payment Date on the principal amount of the
notes being surrendered for exchange. We will pay to the holder, upon exchange,
the interest payable on any Interest Payment Date with respect to any note or
portion of a note which has been called for redemption on a Redemption Date that
occurs during the period from the close of business on the related Regular
Record Date to the opening of business on such Interest Payment Date, if the
note is surrendered for exchange during that period. The payment will be equal
to the interest that would have been payable on the portion of the note that is
being called for redemption and is being exchanged if the portion had been
exchanged as of the close of business on the Interest Payment Date. We will pay
the interest payable on any Interest Payment Date on any note or portion of a
note, which we have not called for redemption on a Redemption Date occurring
during the period from the close of business on the Regular Record Date next
preceding the Interest Payment Date to the opening of business on the Interest
Payment Date, which note (or portion thereof) is surrendered for exchange during
that period, to the holder of the note as of the Regular Record Date. In the
event we call the notes for redemption, the exchange rights will terminate at
the close of business on the business day preceding the Redemption Date.
As a result of the foregoing provisions, we will not pay any interest to
holders that surrender their notes for exchange for the period from the most
recent Interest Payment Date next preceding the date of exchange to the date of
exchange, unless the date of exchange is the next Interest Payment Date. We will
not pay interest in these circumstances even if holders surrender their notes
after a notice of redemption has been given; provided, however that we will pay
interest on notes called for redemption on a Redemption Date between a Regular
Record Date and the Interest Payment Date to which it relates, as provided
above. We will make no other payment or adjustment for interest, or for any
dividends in respect of TCNZ ordinary shares upon exchange. Holders of TCNZ
ordinary shares issued to them upon exchange will not be entitled to receive any
dividends payable to holders of TCNZ
14
<PAGE>
ordinary shares as of any record date before the close of business on the
exchange date. Upon exchange by the holders, we will pay them cash instead of
issuing fractional shares.
ADJUSTMENT EVENTS
Holders will receive an exchange ratio per $1,000 principal amount of notes
of 178.0369 multiplied by the aggregate number or amount of each type of
exchange property.
"Exchange Property" means:
- initially one TCNZ ordinary share; and
- subject to the three paragraphs immediately following this definition of
Exchange Property, all property received in respect of the TCNZ ordinary
shares (either directly or as a result of successive applications of this
paragraph) upon an Adjustment Event.
"Adjustment Event" means:
- the distribution of a dividend on Exchange Property in the same type of
Exchange Property;
- the combination of Exchange Property into a smaller number of shares or
other units;
- the subdivision of outstanding shares or other units of Exchange Property;
- the conversion or reclassification of Exchange Property by issuance or
exchange of other securities;
- any consolidation or merger of TCNZ, or any surviving entity or subsequent
surviving entity of TCNZ (a "TCNZ successor"), with or into another entity
(other than a merger or consolidation in which TCNZ is the continuing
corporation and in which the TCNZ ordinary shares outstanding immediately
prior to the merger or consolidation are not exchanged for cash,
securities or other property of TCNZ or another corporation);
- any statutory exchange of securities of TCNZ or any TCNZ successor with
another corporation (other than in connection with a merger or acquisition
and other than a statutory exchange of securities in which TCNZ is the
continuing corporation and in which the TCNZ ordinary shares outstanding
immediately prior to the statutory exchange are not exchanged for cash,
securities or other property of TCNZ or another corporation);
- any liquidation, dissolution or winding up of TCNZ or any TCNZ successor;
- any distribution of cash or other property on Exchange Property of a
particular type (excluding cash dividends and other cash distributions
other than Extraordinary Cash Dividends); or
- any tender or exchange offer for Exchange Property of a particular type.
Notice of an adjustment event will be given to holders in the manner
specified below. See "--Notices."
If there is any tender or exchange offer for Exchange Property of a
particular type, Exchange Property shall include the amount of cash or other
property paid by the offeror in the tender or exchange offer and actually
received by Bell Atlantic (directly or through its subsidiaries), with respect
to such Exchange Property. However, Bell Atlantic (or its subsidiaries) is not
obligated to exchange any Exchange Property for cash, securities or other
property on a voluntary basis. In certain situations, this could be detrimental
to the interests of the holders of the notes. In order to participate in any
voluntary exchange, holders may be required to exchange their notes for Exchange
Property. However, a holder may be unable to participate in a voluntary exchange
if we elect to exercise the Cash Settlement Option with respect to any exchange
of notes by the holder. In addition, holders may not
15
<PAGE>
exchange their notes before September 1, 1999. As a result, holders may not
participate in any voluntary exchange that occurs before September 1, 1999.
With respect to Exchange Property, if cash is received, or deemed to be
received (excluding cash dividends and other distributions other than
Extraordinary Cash Dividends), the amount of cash at any date of determination
of the value of property received shall be increased by an amount per year equal
to the yield on the then-prevailing 3-month U.S. Treasury bill as determined by
the Quotation Agent between the date of receipt or deemed receipt of the
property and the earliest of (1) the exchange date, (2) Redemption Date or (3)
maturity date of the notes with respect to which the determination is to be
made.
If TCNZ or any TCNZ successor distributes rights or warrants to subscribe
for or purchase any of its securities to all holders of a particular type of
Exchange Property, and the expiration date of the rights or warrants precedes
the maturity date or earlier Redemption Date of the notes, then Exchange
Property shall include a cash amount equal to the Market Price as of the Trading
Day immediately before the expiration date of the portion of the rights or
warrants relating to the Exchange Property. In these circumstances Exchange
Property will include such cash amount whether or not Bell Atlantic (directly or
through its subsidiaries) exercises the rights or warrants. However, if Bell
Atlantic (directly or through its subsidiaries) sells, transfers or otherwise
disposes of the rights or warrants for fair market value before the expiration
date, Exchange Property shall include the amount of cash or other property
received in consideration of such sale, transfer or disposition.
Holders must pay any and all brokerage costs incurred upon the subsequent
sale of Exchange Property that is delivered when they exchange their notes.
AVAILABILITY OF ADR
Unless we have elected to exercise the Cash Settlement Option (or to pay the
Average Market Value Amount), we will deliver TCNZ ordinary shares to holders
who exchange their notes. If legally permissible, holders may deposit their TCNZ
ordinary shares at the corporate trust office of the Bank of New York, which is
currently located at 48 Wall Street, New York, NY 10286. The Bank of New York
serves as the depositary (the "ADR Depositary") pursuant to the Deposit
Agreement (the "Deposit Agreement") among TCNZ, the ADR Depositary and the
holders of ADRs or through the facilities of DTC. Holders may request that the
ADR Depositary issue ADRs in exchange for their deposited TCNZ ordinary shares.
We are not obligated, nor is Bell Atlantic obligated, to deliver or cause the
delivery of ADRs upon exchange of notes or otherwise. Additionally, the Deposit
Agreement may be amended or terminated by TCNZ and the ADR Depositary. Moreover,
the ADR Depositary may not be required or legally permitted to issue ADRs upon
any deposit of TCNZ ordinary shares by holders at the time of any exchange.
REDEMPTION
REDEMPTION OF NOTES AT OUR OPTION
Unless we redeem the notes under the circumstances described in "--Tax
Redemption," we may not redeem the notes prior to April 1, 2001. We may redeem
all or part of the notes at our option on or after April 1, 2001. We must give
at least 30 but no more than 60 days' notice of redemption to holders as
described in "Notices" below, unless a shorter notice is satisfactory to the
Trustee. During the period from April 1, 2001 to March 31, 2002, we may redeem
the notes at a price of 102.3% of the principal amount of the notes. After March
31, 2002 and prior to maturity, we may redeem the notes at 101.15% of the
principal amount. Our right to redeem is subject to the right of holders of
record on a Regular Record Date to receive the interest due on an Interest
Payment Date that is on or prior to the Redemption Date.
16
<PAGE>
We must specify the aggregate number or amount of each type of Exchange
Property and cash that would be delivered to a holder upon exchange should the
holder elect to exchange notes before the relevant Redemption Date in a notice
of redemption. We must redeem the notes in multiples of $1,000 principal amount.
Other than in connection with a redemption described under "--Tax
Redemption," if we will redeem less than all of the notes, the Trustee will
select the notes to be redeemed in principal amounts of $1,000 or multiples of
$1,000 by lot, pro rata or by another method the Trustee considers fair and
appropriate. If we select a portion of a holder's notes for partial redemption
and the holder exchanges a portion of the notes prior to redemption, the
exchanged portion will be deemed to be the portion selected for redemption. We
will use this formula solely for purposes of determining the aggregate principal
amount of notes that we will redeem.
Holders must submit their notes to the Trustee for cancellation in
connection with any redemption prior to maturity.
OUR ELECTION TO PAY AVERAGE MARKET VALUE AMOUNT
We may elect to make a cash payment of the Average Market Value Amount to
satisfy our obligations to holders who exchange their notes for TCNZ ordinary
shares. We may make this election in connection with a redemption of the notes
or the final maturity of the notes. If we make this election, holders of notes
will no longer be entitled to receive TCNZ ordinary shares in exchange for the
notes called for redemption.
To make this election in respect of any notes to be redeemed on a Redemption
Date or repaid on the final maturity date, we must give an irrevocable notice of
the election to holders no later than the 35th Trading Day before the Redemption
Date or final maturity date. If we make this election, we must pay the Average
Market Value Amount in respect of all notes to be redeemed or repaid to holders
who elect to exchange their notes for TCNZ ordinary shares on such redemption
date or final maturity date.
TAX REDEMPTION
ALL NOTES
We have the option to redeem all or part of the notes if a tax event occurs
and we provide the holders with a notice of redemption. In these circumstances,
if we redeem the notes before September 1, 1999, we will pay the early tax
redemption price to holders, which is equal to 100% of the principal amount of
the notes plus an amount in cash equal to the excess, if any, of the Market
Price as of the date fixed for redemption of the number of TCNZ Ordinary Shares
(or the number or amount of each type of other Exchange Property) that we would
deliver upon exchange of the notes if the notes could be exchanged at that time
over 100% of the principal amount of the notes. In these circumstances, if we
redeem the notes on or after September 1, 1999, we will pay the tax redemption
price to holders, which is equal to 100% of the principal amount of the notes.
In each case we will pay holders accrued interest to the date fixed for
redemption.
A "tax event" has occurred if we determine that we have or will become
obligated to pay Additional Amounts with respect to the Notes as a result of:
- any change in or amendment to the laws (or any regulations or rulings
promulgated under such laws) of the United States or of any political
subdivision or taxing authority of or in the United States affecting
taxation;
- any change in official position regarding the application or
interpretation of such laws, regulations or rulings, which becomes
effective on or after February 23, 1998; or
17
<PAGE>
- the TCNZ ordinary shares or the ADRs no longer being, or the Exchange
Property not being, actively traded within the meaning of Section
871(h)(4)(C)(v)(I) of the Internal Revenue Code of 1986, as amended (the
"Code").
Before we notify holders of a tax redemption, we will deliver to the Trustee (1)
a certificate stating that we are entitled to effect a tax redemption and
setting forth a statement of facts showing that the conditions precedent to our
right to redeem have occurred (the date on which such certificate is delivered
to the Trustee is the "Redemption Determination Date"), and (2) an opinion of
independent counsel that we are entitled to effect a tax redemption based on the
statement of facts. However, we may not notify holders of a tax redemption more
than 60 days prior to the earliest date on which we would be obligated to pay
Additional Amounts if a payment in respect of the notes were due.
We will notify holders of a redemption not less than 30 nor more than 60
days prior to the date fixed for redemption. We will specify the date and the
applicable redemption price in the notice. We will give notice in accordance
with "Notices" below.
SPECIAL TAX REDEMPTION OF BEARER NOTES
If we determine that any payment made outside the United States by us or any
Paying Agent of principal, premium, if any, or interest (including original
issue discount) due in respect of any bearer note or attached coupon would,
under any present or future laws or regulations of the United States, be subject
to any certification, identification or other information reporting requirement
of any kind that would disclose the nationality, residence or identity of a
beneficial owner of a bearer note or coupon who is a United States alien to us,
any Paying Agent or any governmental authority, we will redeem the bearer notes,
as a whole. We may redeem the notes at the early tax redemption price or the tax
redemption price, as applicable, or, at our option, we may pay the Additional
Amounts if the conditions of the next paragraph are satisfied. We are not
required to redeem the bearer notes if the certification, identification or
other information reporting requirement:
(a) would not be applicable to a payment made by us or any Paying Agent (1)
directly to the beneficial owner or (2) to a custodian, nominee or other
agent of the beneficial owner;
(b) that can be satisfied by the custodian, nominee or other agent
certifying that the beneficial owner is a United States alien; provided
that, in each case referred to in clauses (a)(2) and (b), payment by the
custodian, nominee or agent to the beneficial owner is not otherwise
subject to any such requirement; or
(c) is imposed as a result of presentation of the bearer note or coupon for
payment more than 15 days after the date on which payment becomes due
and payable or on which payment of the bearer note or coupon is duly
provided for, whichever occurs later.
We will make the determination and election described above as soon as
practicable and publish prompt notice (the "Determination Notice") stating (1)
the effective date of the certification, identification or other information
reporting requirements, (2) whether we will redeem the bearer notes or we have
elected to pay Additional Amounts and (3) if applicable, the last date by which
the redemption of the bearer notes must take place. If we redeem the bearer
notes, the redemption will take place on a date we choose by giving notice to
the Trustee at least 60 days before the date fixed for redemption. This date may
not be later than one year after the publication of the determination notice. We
will notify holders of the redemption of the bearer notes no more than 60 and no
less than 30 days before the date fixed for redemption. The redemption notice
will include a statement as to the last date by which the bearer notes to be
redeemed may be exchanged for registered notes. However, we may not redeem the
bearer notes if we agree to pay Additional Amounts or we later determine not
less than 30 days prior to the date fixed for redemption, that subsequent
payments would not be subject to any certification, identification or other
information reporting requirement, in which case we will
18
<PAGE>
publish prompt notice of determination. Any earlier redemption notice shall be
revoked and of no further effect. The right of the holders of bearer notes
called for redemption to exchange their bearer notes for registered notes will
terminate at the close of business of the Principal Paying Agent on the
fifteenth day prior to the date fixed for redemption. At that time, no further
exchanges of bearer notes for registered notes will be permitted. In the event
the bearer notes are called for redemption, the exchange rights of holders whose
notes are subject to such redemption will terminate at the close of business on
the business day before the redemption date.
If and as long as the certification, identification or other information
reporting requirements referred to above would be fully satisfied by payment of
a backup withholding tax or similar charge, we may elect to pay as Additional
Amounts such amounts as are necessary so that every net payment made outside the
United States following the effective date of such requirements by us or any
Paying Agent of principal, premium, if any, or interest due (including original
issue discount) in respect of any bearer note or any attached coupon of which
the beneficial owner is a United States alien (but without any requirement that
the nationality, residence or identity of such beneficial owner be disclosed to
us, any Paying Agent or any governmental authority, with respect to the payment
of Additional Amounts), after deduction or withholding for or on account of such
backup withholding tax or similar charge (other than a backup withholding tax or
similar charge that would not be applicable in the circumstances referred to in
clause (c) of the preceding paragraph), will not be less than the amount
provided for in such bearer note or coupon to be then due and payable.
In the event we elect to pay any Additional Amounts pursuant to this
paragraph, we have the right to redeem the bearer notes as a whole at any time
pursuant to the applicable provisions of the preceding paragraph. The redemption
price of the bearer notes will not be reduced for applicable withholding taxes.
If we elect to pay Additional Amounts pursuant to this paragraph and the
condition specified in the first sentence of this paragraph is no longer
satisfied, then we will redeem the bearer notes as a whole, pursuant to the
applicable provisions of the preceding paragraph.
PAYMENT OF ADDITIONAL AMOUNTS
We will, subject to certain exceptions and limitations, pay additional
amounts (the "Additional Amounts") to the holder of any note or of any coupon
who is a United States alien. We will pay Additional Amounts only as necessary
in order that every net payment of the principal of, premium (if any) and
interest (including original issue discount) on the note and any other amounts
payable on the note, after withholding for or on account of any present or
future tax, assessment or governmental charge imposed upon or as a result of
such payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided for in
the note or coupon to be then due and payable.
We are not required to make any payment of Additional Amounts to any holder
for or on account of:
- any such tax, assessment or other governmental charge that would not have
been so imposed but for:
(1) the existence of any present or former connection between such holder
(or between a fiduciary, settlor, beneficiary, member or shareholder of
such holder, if such holder is an estate, a trust, a partnership or a
corporation) and the United States and its possessions, including,
without limitation, such holder (or such fiduciary, settlor, beneficiary,
member or shareholder) being or having been a citizen or resident of the
United States or its possessions or being or having been engaged in a
trade or business or present in the United States or its possessions or
having, or having had, a permanent establishment therein or
19
<PAGE>
(2) the presentation by the holder of any such note or coupon for payment on
a date more than 15 days after the date on which such payment became due
and payable or the date on which payment the note is duly provided for,
whichever occurs later;
- any estate, inheritance, gift, sales, transfer or personal property tax or
any similar tax, assessment or governmental charge;
- any tax, assessment or other governmental charge imposed by reason of such
holder's past or present status as a personal holding company or foreign
personal holding company or controlled foreign corporation or passive
foreign investment company with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax or as a private foundation or other tax-exempt organization;
- any tax, assessment or other governmental charge that is payable otherwise
than by withholding from payments on or in respect of any note;
- any tax, assessment or other governmental charge required to be withheld
by any paying agent from any payment of principal of, or interest on, any
note, if such payment can be made without such withholding by any other
paying agent in a city in western Europe;
- any tax, assessment or other governmental charge that would not have been
imposed but for the failure to comply with certification, information or
other reporting requirements concerning the nationality, residence or
identity of the holder or beneficial owner of such note, if such
compliance is required by statute or by regulation of the United States or
of any political subdivision or taxing authority of or in the United
States or any political subdivision as a precondition to relief or
exemption from such tax, assessment or other governmental charge;
- any tax, assessment or other governmental charge imposed by reason of such
holder's past or present status as the actual or constructive owner of 10%
or more of the total combined voting power of all classes of stock
entitled to vote of the Company or as a direct or indirect subsidiary of
the Company; or
- any combination of the items described above; nor shall additional amounts
be paid with respect to any payment on a note to a United States alien who
is a fiduciary or partnership or other than the sole beneficial owner of
such payment to the extent such payment would be required by the laws of
the United States (or any political subdivision of the United States) to
be included in the income, for tax purposes, of a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a
beneficial owner who would not have been entitled to the additional
amounts had such beneficiary, settlor, member or beneficial owner been the
holder of the note.
The term "United States alien" means any person who, for United States
federal income tax purposes, is (1) a foreign corporation, (2) a nonresident
alien individual, (3) a nonresident alien fiduciary of a foreign estate or
trust, or (4) a foreign partnership where one or more of the members is a
foreign corporation, a nonresident alien individual or a nonresident alien
fiduciary of a foreign estate or trust.
20
<PAGE>
BOOK ENTRY; FORM AND DENOMINATION
The notes currently are represented by three global notes. Notes offered in
offshore transactions pursuant to Regulation S are represented by (1) the global
bearer note, which represents Regulation S notes held in bearer form, and (2)
the Regulation S global note, which represents Regulation S notes held in
registered form without coupons. A third global note, the Rule 144A global note,
represents notes originally issued in registered form without interest coupons
and sold in the United States in reliance on Rule 144A under the Securities Act.
We will issue an unrestricted global note to represent notes sold under this
prospectus. In the future, we may issue additional unrestricted global notes to
represent additional notes sold under this prospectus.
Any beneficial interest in one of the global notes that is exchanged for an
interest in another global note will no longer be an interest in the initial
global note and will become an interest in the other global note.
REGISTERED NOTES
The Rule 144A global note is registered in the name of Cede & Co., as
nominee for DTC. The Rule 144A global note is deposited on behalf of the
purchasers of the notes represented by the Rule 144A global note with a
custodian for DTC for credit to the respective accounts of the purchasers (or to
such other accounts as they may direct) at DTC. Owners of beneficial interests
in the Rule 144A global note hold their interests pursuant to the procedures and
practices of DTC, and they must exercise any rights in respect of their
interests (including any right to exchange) in accordance with DTC procedures
and practices. These beneficial owners are not holders, and are not entitled to
any rights under any note or the Indenture, with respect to any Rule 144A global
note. We and the Trustee, and any of our agents, may treat DTC as the holder and
owner of any Rule 144A global note. Holders may exchange beneficial interests in
the Rule 144A global note for notes in definitive, registered form without
interest coupons, in the denomination of U.S.$1,000. Exchanges of beneficial
intererests in the Rule 144A global note may occur only in the limited
circumstances described under "Description of the Notes--Definitive Notes" in
this Prospectus. Beneficial interests in the Rule 144A global note may not be
exchanged for bearer notes or interests in bearer notes.
The Regulation S global note is registered in the name of Chase Nominees
Limited and deposited with a common depositary for Euroclear or Cedel.
The unrestricted global note will be registered in the name of Cede & Co.,
as nominee for DTC. The unrestricted global note will be deposited on behalf of
the purchasers of notes under this prospectus with a custodian for DTC for
credit to the respective accounts of the purchasers (or to such other accounts
as they may direct) at DTC. Owners of beneficial interests in the unrestricted
global note will hold their interests pursuant to the procedures and practices
of DTC, and they must exercise any rights in respect of their interests
(including any right to exchange) in accordance with DTC procedures and
practices. These beneficial owners are not holders, and are not entitled to any
rights under any note or the Indenture, with respect to any unrestricted global
note. We and the Trustee, and any of our agents, may treat DTC as the holder and
owner of any unrestricted global note. Holders may exchange beneficial interests
in the unrestricted global note for notes in definitive, registered form without
interest coupons, in the denomination of U.S.$1,000. Beneficial interests in the
unrestricted global note may not be exchanged for bearer notes or interests in
bearer notes.
BEARER NOTES HELD THROUGH EUROCLEAR AND CEDEL
The global bearer note was initially evidenced by a temporary global bearer
note without interest coupons. The temporary global bearer note was deposited
with a common depositary for Cedel and Euroclear for the accounts of the
subscribers of the notes on February 26, 1998 (the "Settlement Date"). On the
Settlement Date, Cedel or Euroclear credited each subscriber with a principal
amount
21
<PAGE>
of notes for which it subscribed and paid. The beneficial owners are entitled to
exchange their interests in the temporary global bearer note after the
expiration of the Restricted Period for (1) an interest in the permanent global
bearer note to be held by a common depositary for Cedel and Euroclear or
definitive notes in bearer form only in authorized denominations of U.S. $1,000,
U.S. $10,000 and U.S. $100,0000 with coupons attached or (2) interests in the
Regulation S global note. A holder must provide an Ownership Certificate to
exchange an interest in a permanent global bearer note for definitive notes in
bearer form. We may not pay principal or interest to any holder of an interest
in the temporary global bearer note until he provides us with an Ownership
Certificate.
An offer or sale is considered to be made to a person within the United
States if the offeror or seller of the note has a United States address for the
offeree or purchaser of the bearer note with respect to the offer or sale.
Bearer notes may not be delivered in the United States. Each bearer note and
coupon carries the following legend: "any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code of 1986, as amended."
DTC PROCEDURES
Upon deposit of the Rule 144A global note or the unrestricted global note,
we expect that, pursuant to procedures established by DTC, DTC or its custodian
will credit on its internal system portions of each note to the respective
accounts of Persons who have accounts with the depositary. Ownership of the
notes is shown on, and the transfer of ownership thereof is effected only
through, records maintained by DTC or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to interests of
persons other than Participants). Ownership of beneficial interests in the Rule
144A global note and the unrestricted global note is limited to Persons who have
accounts with DTC ("Participants") or Persons who hold interests through
Participants. Qualified institutional buyers may hold their interests in the
Rule 144A global note directly through DTC if they are participants in DTC, or
they may hold their interests in the Rule 144A global note indirectly through
organizations which are participants in such system.
DTC or its nominee will be considered the sole owner or holder of the notes
represented by the Rule 144A global note or the unrestricted global note for all
purposes under the Indenture and the notes for as long as DTC or its nominee is
the registered owner or holder of the notes. A beneficial owner of an interest
in the Rule 144A global note or the unrestricted global note will not be able to
transfer that interest except in accordance with the applicable procedures of
DTC and the procedures set forth in the Indenture.
We will make payments of the principal, premium and interest on the Rule
144A global note and the unrestricted global note to DTC or its nominee as the
registered owner. We will not, and the Trustee or any Paying Agent or Exchange
Agent under the Indenture will not, have any responsibility or liability (1) for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Rule 144A global note or the unrestricted global note
or (2) for maintaining, supervising or reviewing any records relating to the
beneficial ownership interest.
We expect that DTC or its nominee will credit participants' accounts with
payments in amounts proportionate to their beneficial interests in the principal
amount of the Rule 144A global note or the unrestricted global note as shown on
the records of DTC or its nominee, upon receipt of any payment by us of the
principal, premium and interest on such notes. We also expect that payments by
participants to owners of beneficial interests in the global note held through
participants will be governed by standing instructions and customary practice as
is now the case with securities held for the accounts of customers registered in
the names of nominees for such customers. These payments will be the
responsibility of the participants.
22
<PAGE>
Transfers between participants in DTC will be effected in accordance with
DTC rules. Transfers between participants will be settled in immediately
available funds. If a holder requires physical delivery of a certificated note
for any reason, including to sell notes to Persons in states which require
physical delivery of securities or to pledge the securities, he must transfer
his interest in the Rule 144A global note or the unrestricted global note in
accordance with the normal procedures of DTC and the procedures set forth in the
Indenture.
DTC has advised us that it is: (1) a limited purpose trust company organized
under the laws of the State of New York, (2) a member of the federal reserve
system, (3) a "clearing corporation" within the meaning of the uniform
commercial code and (4) a "clearing agency" registered under the provisions of
Section 17(a) of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants. Therefore, DTC eliminates the need for physical
movement of certificates. Participants in DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Banks, brokers, dealers and trust companies that indirectly or
directly clear through or maintain a direct or indirect custodial relationship
with a participant, either directly or indirectly ("Indirect Participants") have
indirect access to the DTC system.
Although we expect DTC, Euroclear and Cedel to follow these procedures in
order to facilitate transfers of interests in the global notes among their
participants, they are under no obligation to perform these procedures. These
procedures may be discontinued at any time. Neither we nor the Trustee has any
responsibility for the performance by DTC, Euroclear, Cedel or the participants
or indirect participants of their obligations under the rules and procedures
governing their operations.
DEFINITIVE NOTES
Holders of interests in the registered global notes may exchange or transfer
them for definitive registered notes if:
- in the case of Rule 144A global notes or the unrestricted global notes,
DTC notifies us that it is unwilling or unable to continue as depositary
for the Rule 144A global notes or the unrestricted global notes, or DTC
ceases to be a "clearing agency" registered under the Exchange Act, and we
do not appoint a successor depositary within ninety (90) days;
- in the case of Regulation S notes, either Euroclear or Cedel (or any
Alternative Clearing System on behalf of which the Regulation S notes may
be held) is closed for business for a continuous period of 14 days (other
than by reason of holidays, statutory or otherwise) or announces an
intention to permanently cease business or does permanently cease
business; or
- an Event of Default has occurred and is continuing with respect to the
registered notes.
If one of these three events occurs, we will cause the appropriate
definitive registered notes to be delivered.
PAYMENT
We will pay registered notes in U.S. Dollars when surrendered at the
corporate trust office of the Trustee in New York City. Subject to any
applicable laws and regulations, we may make payment at the office of any Paying
Agent, by dollar check drawn on, or by transfer to a dollar account maintained
by the holder with, a bank in New York City. We will pay any installment of
interest on registered notes to the person in whose name the note is registered
in our register at the close of business on the relevant Regular Record Date. At
our option, we may pay this interest with a dollar check drawn on a bank in New
York City and mail the check to the holder at his registered address. If holders
have given wire transfer instructions on or before the applicable Regular Record
Date, we must make all payments with
23
<PAGE>
respect to their notes by wire transfer of immediately available funds to the
accounts they have specified.
We may make any payment on the notes that is due on any day which is not a
Business Day on the next succeeding Business Day. The payment will have the same
force and effect as if we paid it on the due date. No interest shall accrue for
the period from and after the due date.
Holders of bearer notes must present their bearer notes, together with all
unmatured coupons, for payment upon redemption, outside the United States. The
amount of any missing unmatured coupons will be deducted from the amount paid to
them. We will pay each amount deducted when the related missing coupon is
surrendered, outside the United States. Interest payable on bearer notes on any
Redemption Date that is an Interest Payment Date will be paid to the holders of
the coupons maturing on the interest payment date. Interest payable on
registered notes on any Redemption Date that is an Interest Payment Date will be
paid to holders of record reflected on our Security Register on the immediately
preceding Regular Record Date.
All moneys deposited with the Trustee or any Paying Agent, or then held by
us, in trust for the payment of principal of or interest on any notes which
remain unclaimed at the end of two years after the payment has become due and
payable will be repaid to us. The holder of any such unclaimed note or any
coupon relating to an unclaimed note may then look only to us for payment
without interest after the date payment has become due and payable. A holder
will have such right only until the payment amount must be remitted to the state
under escheat or similar laws. However, all such amounts payable in respect of
bearer notes may be paid only outside the United States within the meaning of
Section 1.163-5(c)(2)(v) of the Treasury Regulations.
TRUSTEE, REGISTRAR, PAYING AGENTS AND EXCHANGE AGENTS
We have appointed the Trustee as (1) registrar acting through its corporate
trust offices in New York City and (2) transfer agent acting through its
corporate trust offices in New York City and London. We reserve the right to
vary or terminate the appointment of the registrar or of any transfer agent or
to appoint additional or other registrars or transfer agents. We also reserve
the right to approve any change in the office through which any registrar or any
transfer agent acts. However, there will at all times be a registrar in New York
City and a transfer agent in a western European city and a paying agent,
transfer agent and exchange agent with an office in Luxembourg for so long as
the notes are listed on the Luxembourg Stock Exchange.
We initially appointed The Chase Manhattan Bank and certain of its affilites
as paying agent and exchange agent, and Chase Manhattan Bank Luxembourg S.A. as
Luxembourg paying and exchange agent. We may at any time terminate the
appointment of any paying agent or exchange agent or appoint additional or other
paying agents and exchange agents. However, until the notes are delivered to the
Trustee for cancellation, or moneys sufficient to pay the principal of and
interest on the notes are made available for payment and either paid or returned
to us, as provided in the Indenture, the Trustee will maintain an office or
agency in New York City for payments with respect to registered notes and for
surrender of notes for exchange (but only in the circumstances described in the
First paragraph under "Payment" and not otherwise, with respect to bearer
notes), and in a western European city and a New Zealand city for payments with
respect to the notes and for the surrender of notes for exchange. Notice of any
termination or appointment and of any change in the office through which any
paying agent or exchange agent will act will be given in accordance with
"Notices" below.
Holders may present notes for exchange at the office of any transfer agent
or at the office of the Registrar. Registered notes may be presented by holders
for registration or transfer (with the form of transfer endorsed thereon duly
executed), at the office of any transfer agent or any office of the Registrar.
Holders will not incur a service charge but will be required to pay any taxes
and other governmental charges with respect to the registration or transfer of
the registered notes as described in
24
<PAGE>
the Indenture. The transfer agent or the registrar, as the case may be, will
effect the registration of transfer or exchange upon being satisfied with the
documents of title and identity of the person making the request. With respect
to registered notes, the transfer agent or registrar will effect the
registration of transfer or exchange upon registration of the transfer in our
security register, and subject to such reasonable regulations as we agree to
with the transfer agents and the registrar. Registered notes may be transferred
in whole or in part in the amount of $1,000 or any multiple of $1,000. If a
holder presents a note, accompanied by a duly executed written instrument of
exchange or transfer in a form approved by us, for exchange or transfer at the
office of the transfer agent and if a holder completes any certification
required by the Indenture, or if a note is partially redeemed, the note shall be
exchanged, transferred or redeemed in part, as the case may be. One or more new
notes will be authenticated and issued in lieu of the original note.
CONCERNING THE TRUSTEE
Bell Atlantic or its affiliates maintain banking relationships in the
ordinary course of business with the Trustee. The Trustee also serves as Trustee
for various debt issues by affiliates of Bell Atlantic. Walter V. Shipley, the
chairman of the board of the Trustee and the Chase Manhattan Corporation, the
parent of the Trustee, is a director of Bell Atlantic. John R. Stafford, a
director of the Trustee and the Chase Manhattan Corporation, is a director of
Bell Atlantic.
NOTICES
We will give publish notice to holders of the bearer notes in newspapers of
general circulation (in western Europe and New Zealand). We expect to publish
notice in THE WALL STREET JOURNAL, FINANCIAL TIMES, NEW ZEALAND HERALD, The
AUSTRALIAN FINANCIAL REVIEW and the LUXEMBURGER WORT. We will mail notices to
holders of registered notes at the addresses of the holders as they appear in
our Security Register. Notices will be deemed to have been given on the date of
publication or, if published in newspapers listed above on different dates, on
the date of the first publication, or on the date of such mailing, as the case
may be.
So long as global notes are held on behalf of DTC, Euroclear or Cedel or any
other clearing system as we designate (the "Alternative Clearing System), we may
deliver (rather than publishing as required by the Indenture) to DTC, Euroclear
and Cedel Bank or, as the case may be, the Alternative Clearing System, notices
we are required to give to holders. As long as the notes are listed on the
Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange
exchange so require, we must also publish notices to all holders of notes in a
leading daily newspaper having general circulation in Luxembourg. This newspaper
is expected to be the LUXEMBURGER WORT.
CERTAIN COVENANTS
LIENS ON ASSETS
We have covenanted in the Indenture that if at any time, we mortgage,
pledge, or otherwise subject any property or assets now owned or hereafter
acquired by us to any lien, except as provided below in this paragraph, we will
secure the outstanding notes, and any of our other obligations which are then
outstanding and entitled to the benefit of a similar covenant, equally and
ratably with the indebtedness or obligations secured by the mortgage, pledge, or
lien, for as long as any the indebtedness or obligations are secured. This
obligation does not apply to the creation, extension, renewal or refunding of
purchase-money mortgages or liens, or other liens to which any property or asset
acquired by us is subject as of the date of its acquisition by us. Further, this
obligation does not apply to the making of any deposit or pledge to secure
public or statutory obligations or with any governmental agency at any time
required by law in order to qualify us to conduct our business or any part of
our business or in order to entitle us to maintain self-insurance or to obtain
the benefit of any
25
<PAGE>
law relating to workers' compensation, unemployment insurance, old age pensions
or other social security, or with any court, board, commission, or governmental
agency as security incident to the proper conduct of any proceeding before it.
Nothing contained in the Indenture prevents any of our affiliates, including
Bell Atlantic, from mortgaging, pledging, or subjecting to any lien any of its
property or assets, whether or not such affiliate acquired the property or
assets from us.
RESTRICTIONS ON MERGERS AND SALES OF ASSETS
We may not, nor may Bell Atlantic, consolidate with or merge into any other
corporation, or convey, transfer or lease its properties and assets
substantially as an entirety to any person. We and Bell Atlantic may not, permit
any person to consolidate with or merge into us or Bell Atlantic or convey,
transfer or lease its properties and assets substantially as an entirety to us
or Bell Atlantic unless:
- the corporation formed by the consolidation or into which our company or
Bell Atlantic is merged or the person to which our properties and assets
or the properties and assets of Bell Atlantic are transferred
substantially as an entirety is a corporation organized and existing under
the laws of the United States, any state thereof or the District of
Columbia and expressly assumes the payment of the principal of, and any
premium and interest on, the notes and the performance of the other
covenants under the Indenture and the Support Agreement, on the part of
our company or Bell Atlantic, as applicable;
- after giving effect to the transaction, no Event of Default as defined
below under "--Events of Default; Notice and Waiver", or event which after
notice or lapse of time or both would become an Event of Default, shall
have occurred and be continuing; and
- if, as a result of the transaction, our properties or assets would become
subject to a Mortgage not permitted by the Indenture without equally and
ratably securing the notes as provided in the Indenture, steps shall have
been taken to secure the notes equally and ratably with (or prior to) all
indebtedness secured thereby pursuant to the Indenture.
MODIFICATION AND WAIVER
We, together with Bell Atlantic and the Trustee, may modify and amend
certain provisions of the Indenture, including any provision of the Support
Agreement and provisions affecting the rights of holders of notes, only with the
consent of the holders of a majority in aggregate principal amount of the notes.
However, we may not make a modification or amendment which may, without the
consent of the holder of each note affected by the modification or amendment:
- change the Stated Maturity date of the principal of, or any installment of
principal or interest on (including Additional Amounts, if any), the
notes;
- reduce the principal amount of, or any premium or interest on (including
additional amounts, if any), or the amount of Exchange Property
deliverable in exchange for, the notes;
- change the coin or currency in which any principal of, or any premium or
interest on (including additional amounts, if any), the notes is payable;
- reduce the above-stated percentage of the notes to the extent the consent
of the holders is necessary to modify or amend the Indenture; or
- modify any provision of the Support Agreement adverse to the holders of
the notes.
We, together with Bell Atlantic and the Trustee, may modify or amend the
Indenture without the consent of the holders of notes to:
- evidence succession to our company, Bell Atlantic or the Trustee;
26
<PAGE>
- add covenants or defaults;
- cure ambiguities;
- change provisions that are effective after the retirement of the notes;
and
- secure the notes.
REPORTS
Whether or not we or Bell Atlantic, or any of our successors, is subject to
the reporting requirements of section 13 or 15(d) of the Exchange Act, Bell
Atlantic shall deliver to the Trustee annual and quarterly consolidated
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the SEC if Bell Atlantic were subject
to the requirements of section 13 or 15(d) of the Exchange Act. Bell Atlantic
shall deliver these financial statements within fifteen (15) days after Bell
Atlantic is or would have been required to file them with the SEC. The financial
statements shall include, with respect to annual information only, a report by
Bell Atlantic's certified independent public accountants as such would be
required in reports to the SEC. Both the annual and quarterly financial
statements shall include a management's discussion and analysis of results of
operations and financial condition as would be so required. In addition, for as
long as any beneficial owner continues to own an interest in the Rule 144A
global note, Bell Atlantic will continue to provide to holders of notes and to
prospective purchasers of the notes the information required by Rule 144A(d)(4).
EVENTS OF DEFAULT; NOTICE AND WAIVER
The following events are defined under the Indenture as "Events of Default":
- default for fifteen (15) 15 days in payment when due of interest or
Additional Amounts on the notes;
- default in payment of the principal amount at maturity or otherwise with
respect to any note when the same becomes due and payable (whether or not
such payment is prohibited by the provisions of the Indenture);
- failure by us to deliver Exchange Property (and/or cash in lieu thereof)
when such Exchange Property (or cash in lieu thereof) is required to be
delivered following exchange of a note and continuance of such default for
ten (10) days;
- failure by us to comply with any of our other agreements in the notes or
the Indenture upon the receipt by us of notice of such default from the
Trustee or from holders of not less than 25% in aggregate principal amount
at maturity of the notes then outstanding and our failure to cure such
default within ninety (90) days after receipt by us of such notice; and
- certain events of bankruptcy, reorganization, or insolvency.
The Indenture provides that, if an Event of Default has occurred and is
continuing, either the Trustee or the holders of not less than 25% in aggregate
principal amount at maturity of the notes then outstanding may declare all the
notes to be immediately due and payable. In the case of certain events of
bankruptcy or insolvency, all outstanding notes will automatically become and be
immediately due and payable without any further action or notice on the part of
the Trustee or any holder. Under certain circumstances, the holders of a
majority in aggregate principal amount at maturity of the outstanding notes may
rescind any such acceleration with respect to the notes and its consequences.
The Trustee shall, within ninety (90) days after the occurrence of any
default, provide all holders of the notes with notice of all defaults of which
the Trustee is aware, unless the defaults have been cured or waived before the
notice is given. However, the Trustee may withhold notice as to any default
27
<PAGE>
other than a payment default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in aggregate principal amount at maturity of the
outstanding notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However,such direction may not conflict with any
law or the Indenture and is subject to certain other limitations. The Trustee
may refuse to perform any duty or exercise any right or power or extend or risk
its own funds or otherwise incur any financial liability unless it receives
indemnity satisfactory to it against any loss, liability or expense. No holder
of any note has any right to pursue any remedy with respect to the Indenture or
the notes, unless:
- the holder has previously given the Trustee written notice of a continuing
event of default;
- the holders of at least 25% in aggregate principal amount at maturity of
the outstanding notes have made a written request to the Trustee to pursue
the remedy;
- the holder or holders have offered reasonable security or indemnity to the
Trustee against any loss, liability or expense satisfactory to the
Trustee;
- the Trustee has failed to comply with the request within ninety (90) days
after receipt of the notice, request and offer of security or indemnity;
and
- the holders of a majority in aggregate principal amount at maturity of the
outstanding notes have not given the Trustee a direction inconsistent with
the request within ninety (90) days after receipt of the request.
The holders of a majority in aggregate principal amount at maturity of the
outstanding notes may waive any existing default and its consequences, except:
- any default in any payment on the notes;
- any default with respect to the exchange rights of the notes; or
- any default in respect of certain covenants or provisions in the Indenture
which may not be modified without the consent of the holder of each note.
When a default is waived, it is deemed cured and ceases to exist. No waiver
shall extend to any subsequent or other default or impair any consequent right.
We are required to furnish to the Trustee annually a statement as to any
default by us in the performance and observance of our obligations under the
Indenture. In addition, we must file written notice of the occurrence of any
default or Event of Default with the Trustee within ten (10) days of our
becoming aware of such default or Event of Default.
DISCHARGE OF THE INDENTURE
Subject to applicable federal and state laws, we may satisfy and discharge
our obligations under the Indenture by delivering all outstanding notes to the
Trustee for cancellation.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that none of our past, present or future
stockholders, employees, officers or directors, and none of the past, present or
future stockholders, employees or directors of any corporation succeeding us
will have any personal liability with respect to our obligations under the
Indenture or the notes by reason of his, her or its status as a stockholder,
employee, officer or director.
GOVERNING LAW
The Indenture, the notes and the coupons are governed by and construed in
accordance with the laws of the State of New York.
28
<PAGE>
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Average Market Value" of TCNZ ordinary shares or other Exchange Property on
the date of computation means the arithmetic average of the daily
volume-weighted average price of the TCNZ ordinary shares or other exchange
security, as reported on the NZSE, or if the TCNZ ordinary shares or other
exchange security is not then listed on the NZSE, as reported by the principal
securities exchange or interdealer quotation system on which the TCNZ ordinary
shares or other exchange security is then traded, or in the case of Exchange
Property other than exchange securities, the Market Price of such Exchange
Property, for the 30-Trading Day period ending two Trading Days prior to such
date of computation as computed by the Quotation Agent.
"Average Market Value Amount" per $1,000 principal amount of notes means the
average market value of the TCNZ ordinary shares (or other Exchange Property)
that otherwise would be deliverable upon exchange of such notes were such notes
exchanged at such time as of any redemption date or final maturity date, as the
case may be.
"Cash Settlement Option" means our option to make, in accordance with the
terms of Section 1301 of the Indenture, a cash settlement in respect of any note
surrendered for exchange by delivering notice thereof to the tendering holder
not more than five Trading Days after the note is delivered for exchange in lieu
of delivering TCNZ ordinary shares or other Exchange Property for any notes. The
cash settlement shall be in an amount per $1,000 principal amount of notes
delivered for exchange equal to the Market Price as of the second Trading Day
after delivery of such notice to such holder of the TCNZ ordinary shares (or the
number or amount of each type of other Exchange Property) that would be
deliverable upon exchange of such notes were such notes exchanged at such time.
We may elect the Cash Settlement Option beginning on or after September 1, 1999
and prior to the close of business on April 1, 2003, unless we have previously
elected in connection with a call for redemption or at maturity to pay in cash
the Average Market Value Amount upon any exchange prior to the applicable
Redemption Date or at Maturity (provided that in the case of a redemption in
part, only until such redemption in part is completed).
"Cedel" means Cedel Bank, SOCIETE ANONYME.
"Closing Price" of any Exchange Security means, on any date of
determination, the closing sale price (or, if no closing sale price is reported,
the last reported sale price) of such Exchange Security on the NZSE on any such
date or, if such Exchange Security is not listed for trading on the NZSE on any
such date, as reported in the composite transactions for the principal
securities exchange on which such Exchange Security is listed for trading, or,
if such Exchange Security is not listed for trading on a securities exchange, as
reported in the composite transactions for the principal over-the-counter market
in which such Exchange Security is traded, or, if such price is not available,
the market value of such Exchange Security on such date as determined by an
internationally recognized investment banking firm retained by us for this
purpose, provided that if the Closing Price of any item of Exchange Property as
of any date is reported in N.Z. Dollars or any currency other than U.S. Dollars,
then such Closing Price shall be expressed in the U.S. Dollar equivalent of such
amount, based on the currency exchange rate for such day.
"Currency Exchange Rate" between the N.Z. Dollar and the U.S. Dollar for any
date shall be determined by obtaining the N.Z. Dollar/U.S. Dollar exchange rate
for such day from Reuter's page "NZD="(or, any successor page) at approximately
3:30 p.m., New Zealand time, (the "Reuter's quote"); provided that if no
Reuter's quote is shown for such day, the currency exchange rate between the
N.Z. Dollar and the U.S. Dollar shall be determined by obtaining the N.Z.
Dollar/U.S. Dollar
29
<PAGE>
exchange rate (at which a leading foreign exchange dealer selected by the
Company (a "Reference Dealer") is willing to purchase N.Z. Dollars and sell U.S.
Dollars) for such day from three Reference Dealers at approximately 3:30 p.m.,
New Zealand time, (or if quotes are unavailable from three Reference Dealers,
from two such dealers) and calculating the arithmetic mean of such quotes. The
Currency Exchange Rate between the U.S. Dollar and any currency other than the
N.Z. Dollar shall be determined by obtaining such exchange rate for such day
from the comparable Reuter's page at the close of business in the local market
for the non-U.S. Currency, provided that if no such Reuter's quote is available,
the Currency Exchange Rate shall be determined pursuant to a methodology
comparable to that set forth above.
"DTC" means The Depository Trust Company.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system, or any successor thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute.
"Exchange Agent" means The Chase Manhattan Bank Luxembourg S.A.
"Exchange Ratio" means the ratio, subject to adjustment as set forth in the
Indenture, of 178.0369 TCNZ ordinary shares per $1,000 principal amount of
notes.
"Extraordinary Cash Dividend" means, with respect to any Exchange Property
consisting of capital stock, any distribution consisting of cash, excluding any
cash distribution on such stock to the extent that with respect to any
consecutive 365-day period the aggregate cash distribution per share of such
stock having its record date during such period does not exceed the greater of
(x) four multiplied by the amount per share of such capital stock of the next
preceding quarterly dividend to the extent that such dividend did not require an
adjustment pursuant to this provision (as adjusted to reflect subdivisions or
combinations of such stock) and (y) 10 percent of the average of the daily
Closing Prices of such stock for the ten (10) consecutive Trading Days
immediately prior to the record date for payment of such distribution, and
excluding any dividend or distribution in connection with the liquidation,
dissolution or winding up of the issuer of such stock.
"Market Price" means, for any item of Exchange Property as of any date, (a)
if such item of Exchange Property consists of cash, the amount of such cash, (b)
if such item of Exchange Property consists of property other than cash or
Exchange Securities (as defined herein), the fair market value of such property
(as determined by our company which shall be entitled to rely for such purpose
on the advice of an internationally recognized investment banking firm retained
by us for this purpose) and (c) if such item of Exchange Property consists of a
security (an "Exchange Security"), an amount equal to the average Closing Price
per unit of such exchange security on the five Trading Days including and
immediately following such date.
"Mortgage" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law.
"Ownership Certificate" means a signed certificate in writing (or an
electronic certificate described in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(3)(ii)) stating that on such date such bearer note (i) is
owned by a person that is not a United States person, (ii) is owned by a United
States person that (a) is a foreign branch of a United States financial
institution (as defined in United States Treasury Regulations Section
1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own account or
for resale, or (b) is acquiring such bearer note through a foreign branch of a
United States financial institution and who holds the bearer note through such
financial institution through such date (and in either case (a) or (b), each
such United States financial institution agrees, on its own behalf or through
its agent, that we may be advised that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Code, and the regulations thereunder) or
(iii) is owned by a
30
<PAGE>
United States or foreign financial institution for the purposes of resale during
the restricted period, and in addition if the owner of such bearer note is a
United States or foreign financial institution described in clause (iii) above
(whether or not also described in clause (i) or (ii)), such financial
institution certifies that it has not acquired the bearer note for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
"Paying Agent" means any Person authorized by us to pay the principal of,
and premium, if any, or interest on any notes on our behalf.
"Person" means any individual, corporation, partnership, joint venture,
associate, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Principal Paying Agent" means The Chase Manhattan Bank.
"Quotation Agent" means the Trustee and its successors or substitutes.
"Redemption Date" means, when used with respect to any note to be redeemed
pursuant to any provision in the Indenture, the date fixed for such redemption
by or pursuant to the Indenture.
"Registered Securities" means the Rule 144A global note and the Regulation S
global note.
"Registrar" means The Chase Manhattan Bank.
"Restricted Period" means, with respect to the bearer notes, the period
which begins on the earlier of the date on which we receive the proceeds of the
sale of bearer notes and the first date on which the bearer notes are offered to
persons other than the managers, and which ends 40 days after the date on which
we receive the proceeds of the sale of such bearer notes; provided that with
respect to a bearer note held as part of an unsold allotment or subscription,
any offer or sale of such bearer note by us or any manager shall be deemed to be
during the Restricted Period.
"Security Register" means the register in which, subject to such reasonable
regulations as we may prescribe, we provide for the registration of registered
securities and the transfer of registered securities.
"Stated Maturity" means, when used with respect to any note or any
installment of principal thereof or interest thereon, with respect to the
payment of principal, April 1, 2003, and with respect to an installment of
interest shall mean each Interest Payment Date during the period when the note
is outstanding.
"Trading Day" means any day on which the Exchange Security the Closing Price
of which is being determined (a) is not suspended from trading on any national
or regional securities exchange or association or over-the-counter market at the
close of business and (b) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
principal market for the trading of such Exchange Security.
"United States" includes the United States of America, the District of
Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island, and the Northern Mariana Islands.
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
31
<PAGE>
REGISTRATION RIGHTS
This prospectus is part of a shelf registration statement filed by us and
Bell Atlantic pursuant to the Registration Rights Agreement. We and Bell
Atlantic will use our best efforts to keep the shelf registration statement
effective until the maturity or earlier redemption or exchange of the notes. We
will (1) provide to each holder that has given us notice that such holder
intends to sell notes under this registration statement (each, a "notice
holder") copies of this prospectus and any supplement which is a part of the
shelf registration statement, (2) notify each such notice holder when the shelf
registration statement becomes effective and (3) take certain other actions
intended to generally permit unrestricted resales of the notes. We may suspend
the use of this Prospectus for a period of not more than ninety (90) days
(whether or not consecutive) in any 12-month period under certain circumstances.
A holder of notes that sells his notes pursuant to the shelf registration
statement generally will be required to be named as a selling holder in this
prospectus or a prospectus supplement and must deliver this prospectus and any
applicable prospectus supplement to purchasers. Additionally, he will be subject
to certain of the civil liability provisions under the Securities Act in
connection with the sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to him, including certain
indemnification obligations. In addition, each holder of the notes will be
required to deliver information to be used in connection with the shelf
registration statement and to provide comments on the shelf registration
statement within the time periods set forth in the Registration Rights Agreement
in order to have their notes included in the shelf registration statement and to
benefit from the provisions regarding liquidated damages set forth in the
following paragraph.
If (1) we do not file the shelf registration statement with the SEC by June
1, 1999, (2) the SEC does not declare the shelf registration statement effective
by September 1, 1999 or (3) the shelf registration statement ceases to be
effective during any period in which it is required to be kept effective (other
than as a result of the effectiveness of a successor registration statement) and
effectiveness is not restored within forty-five (45) days (each such event
referred to in clauses (1), (2) and (3) is a "Registration Default"), we will
pay liquidated damages to each holder of notes that are "restricted" securities
under the Securities Act intended to be eligible for resale under the shelf
registration statement and who has complied with its obligations under the
Registration Rights Agreement. Liquidated damages shall be in the form of an
increase of the interest rate on the notes by one-quarter of one percent per
annum upon the occurrence of a registration default (except that in the case of
a Registration Default discussed in clause (1) above, we will only incur
liquidated damages if the Registration Default has not been cured by July 15,
1999. However, if we have not cured the Registration Default by July 15, 1999,
we must pay liquidated damages retroactive to June 1, 1999 and liquidated
damages will increase and accrue in the manner set forth below), which rate (as
increased) will increase by an additional one-quarter of one percent during each
90-day period that such additional interest continues to accrue under any such
circumstance, with an aggregate maximum increase in the interest rate equal to
one percent (1%) per annum. In the event of such an increase, we have agreed to
notify the Luxembourg Stock Exchange and the Trustee. Once we have cured all
Registration Defaults, the accrual of additional interest will cease and the
interest rate will revert to the original interest rate.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy or copies of which are available upon request to us.
32
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary discusses certain material United States federal
income tax considerations that apply to the acquisition, ownership, exchange and
disposition of notes in registered form by a United States holder or a United
States alien holder. You are a United States holder for United States federal
income tax purposes if you are:
- an individual citizen or resident of the United States;
- a corporation created or organized in or under the laws of the United
States or any political subdivision of the United States;
- an estate, the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.
You are a United States alien holder for United States federal income tax
purposes if you are:
- a nonresident alien individual;
- a foreign corporation; or
- a nonresident alien fiduciary of a foreign estate or trust.
This summary deals only with notes that United States holders and United
States alien holders hold as capital assets. This summary does not consider the
facts and circumstances that may be relevant to particular holders and does not
address the treatment of holders of notes under the laws of any state, local or
foreign taxing jurisdiction.
We do not address in this discussion tax considerations relating to the
acquisition, ownership, exchange or disposition of TCNZ ordinary shares. For
information regarding such tax consequences, you should consult the annual and
other reports filed by TCNZ with the SEC for information regarding United States
and New Zealand tax consequences. See "How To Obtain Information About Telecom
Corporation Of New Zealand Limited" above on how to obtain such information.
The discussion below is based upon the provisions of the United States
Internal Revenue Code of 1986, as amended, which we refer to as the Code, and
regulations, rulings and judicial decisions thereunder as of the date hereof.
Any such authority may be repealed, revoked or modified, perhaps with
retroactive effect, so as to result in federal income tax consequences different
from those discussed below.
WE INTEND THE DISCUSSION SET OUT BELOW AS A SUMMARY OF CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES. THE DISCUSSION
BELOW DOES NOT ADDRESS THE UNITED STATES FEDERAL INCOME TAX OR NEW ZEALAND TAX
CONSEQUENCES OF THE ACQUISITION, OWNERSHIP OR DISPOSITION OF THE TCNZ ORDINARY
SHARES THAT YOU MAY RECEIVE UPON EXCHANGE OF THE NOTES. YOU ARE URGED TO CONSULT
YOUR OWN TAX ADVISOR AS TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES OR
OWNERSHIP OF THE TCNZ ORDINARY SHARES THAT YOU MAY RECEIVE UPON EXCHANGE OF THE
NOTES, INCLUDING THE APPLICATION TO YOUR PARTICULAR SITUATION OF THE TAX
CONSIDERATIONS DISCUSSED BELOW, AND THE APPLICATION OF STATE, LOCAL OR FOREIGN
TAX LAWS.
33
<PAGE>
The discussion under "Tax Consequences to United States Holders" is
applicable to United States holders, and the discussion under "Tax Consequences
to United States Alien Holders" is applicable to United States alien holders.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
ACCRUAL OF INTEREST ON THE NOTES
The notes will be treated as contingent-payment debt instruments that are
subject to the Treasury regulations governing such debt instruments, which we
refer to as the contingent-payment regulations. Under the contingent-payment
regulations, you will be required to accrue interest income on the notes (in
amounts described in the next paragraph), regardless of whether you use the cash
or accrual method of tax accounting. As a result, you will be required to
include the interest accruing on the note in income each year, whether or not
the cash payments on the note are sufficient to pay any tax that results to you.
Under the contingent-payment regulations, for each accrual period before and
including the maturity date of the notes, you will be required to include in
income interest that accrues as original issue discount. The amount that you
will be required to include in ordinary income on a note equals the product of
(a) the adjusted issue price (as defined below) as of the beginning of the
accrual period and (b) the comparable yield (as defined below), adjusted for the
length of the accrual period. This amount is ratably allocated to each day in
the accrual period.
The "adjusted issue price" means the $1,000 issue price of a note, increased
by any interest
previously accrued (without regard to any adjustment for differences between
actual and projected payments described below) and decreased by the amount of
any noncontingent payments made on the note in all prior accrual periods.
The "comparable yield" means the annual yield we would pay, as of the issue
date, on a fixed-rate debt security with no contingent payments but with terms
and conditions otherwise comparable to those of the notes. Amounts treated as
interest under the contingent-payment regulations are treated as original issue
discount for all purposes of the Code. None of the stated interest payments on
the notes will be "qualified stated interest" and, accordingly, all such
payments will be treated as payments of original issue discount or as return of
principal.
We have determined that the comparable yield is 6.00%, compounded
semiannually. Under the contingent-payment regulations, we are required solely
for United States federal income tax purposes to provide a schedule of the
projected amounts of payments,which we refer to as the projected payment
schedule, on the notes. This schedule must produce the comparable yield. Based
on our determination of the comparable yield, the projected payment schedule for
a note, assuming a principal amount of $1,000 or with respect to each integral
multiple thereof, consists of (x) payments of stated interest on all interest
payment dates and (y) payment of a projected amount at maturity of the note,
equal to $1,014.65. The comparable yield and the projected payment schedule
determined by us are fixed as of the issue date of the notes for the entire term
of the notes and generally are binding on the holders of the notes.
THE COMPARABLE YIELD AND THE PROJECTED PAYMENT SCHEDULE ARE NOT PROVIDED FOR
ANY PURPOSE OTHER THAN THE DETERMINATION OF HOLDERS' INTEREST ACCRUALS AND
ADJUSTMENTS THEREOF IN RESPECT OF THE NOTES FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES AND DO NOT CONSTITUTE A REPRESENTATION REGARDING THE ACTUAL AMOUNTS
THAT WILL BE PAID UNDER THE NOTES
If, during any taxable year, the actual amount of the payments made on the
note during a taxable year exceeds the projected amount of payments for that
taxable year, you will be required to include
34
<PAGE>
the difference in income as additional interest for that taxable year. If, at
maturity, the actual payments are less than the projected payments, you will be
required to reduce interest income otherwise taken into account for the taxable
year by the difference. You will be required to treat any excess remaining after
such reduction as an ordinary loss to the extent of the aggregate interest
income from the note included in income by you in prior taxable years. The
actual amount of payments may be different from the projected amount of payments
for reasons such as the payment of liquidated damages under the terms described
in "Registration Rights" or the amount of cash or the then fair market value of
the TCNZ ordinary shares, if any, received on the maturity date of the note,
excluding the stated interest received on such date.
If you purchase a note for an amount that is different from the adjusted
issue price of the note, you will be required to take that difference into
account in determining the interest accruals and adjustments described above.
You must take this difference into account by reasonably allocating the
difference between your purchase price and the adjusted issue price of the note
to daily interest accruals and projected payments over the remaining term of the
note. In general, you must allocate such difference to your remaining interest
accruals to the extent it is attributable to changes in prevailing market
interest rates. However, it must be allocated to the remaining projected
payments to the extent it is attributable to changes in the expected amount of
any remaining contingent payments. On the date a daily portion of interest
accrues or a projected payment is made to which an adjustment is allocable, if
the adjustment is positive, you must treat the amount of the adjustment as
additional interest for the taxable year. If the adjustment is negative, you
must treat the amount of the adjustment as a reduction to interest income
otherwise taken into account for the taxable year, and treat any excess as an
ordinary loss to the extent of the aggregate interest income from the note
included in income by you in prior taxable years.
SALE OR EXCHANGE OF THE NOTES
When you sell or exchange a note before the maturity date, including, for
example, if you exchange a note for TCNZ ordinary shares or we redeem a note
that you own, you will recognize gain or loss equal to the difference between
the amount realized on the sale or exchange and the "adjusted tax basis" of the
note in your hands. Your initial adjusted tax basis of a note that you own
generally will be your original cost basis for the note. Your adjusted tax basis
will be increased by the interest income that you previously included with
respect to the note and decreased by the amount of all prior payments on the
note to you. In addition, you will be required to increase or decrease your
adjusted tax basis in a note by the amount of any positive or negative
adjustments on account of the difference between your purchase price and the
adjusted issue price of a note. In general, any gain that you recognize on the
sale or exchange of a note will be treated as ordinary interest income, and any
loss that you recognize will be treated as ordinary loss to the extent of your
prior interest inclusions, and thereafter generally as capital loss. For these
purposes, the amount that you realize upon a sale or exchange of a note will
include the amount of cash or the then fair market value of the TCNZ ordinary
shares that you receive upon such sale or exchange, and any cash that you
receive in lieu of fractional shares.
The distinction between capital loss and ordinary loss is potentially
significant in several respects. For example, limitations apply to your ability
to offset capital losses against ordinary income.
TAX BASIS AND HOLDING PERIOD OF THE TCNZ ORDINARY SHARES
If you receive TCNZ ordinary shares upon exchange of a Note, you will have
an initial tax basis in such TCNZ ordinary shares equal to the fair market value
of such TCNZ ordinary shares on the date of such exchange. Your holding period
for such TCNZ ordinary shares will begin on the day following the date of
exchange.
35
<PAGE>
BACKUP WITHHOLDING TAX
If you are a noncorporate holder, you may be subject to backup withholding
tax at a rate of 31 percent on payments of principal, premium and interest
(including original issue discount) on, and the proceeds of disposition of, a
note. Backup withholding tax at a 31 percent rate will apply to such payments if
you fail to provide your Taxpayer Identification Number in accordance with
applicable requirements or in certain other cases. You should consult your own
tax advisors regarding your qualification for an exemption from backup
withholding tax and the procedure for obtaining such an exemption if applicable.
The amount of any backup withholding tax from a payment to you will be
allowed as a credit against your United States federal income tax liability and
may entitle you to a refund, provided that you furnish the required information
to the Internal Revenue Service.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
WITHHOLDING TAX
Under present United States federal income tax law and subject to the
discussion of backup withholding tax below, payments of principal, premium (if
any) and interest (including original issue discount) on the notes by us or any
paying agent (in its capacity as such) to you, and gain that you realize on the
sale or exchange of a note, will be exempt from United States federal income or
withholding tax (we refer to this exemption from withholding tax as the
portfolio interest exemption), provided that:
- you do not own, actually or constructively, 10 percent or more of the
total combined voting power of all classes of our stock entitled to vote,
are not a controlled foreign corporation related us through stock
ownership and are not a bank receiving interest described in Section
881(c)(3)(A) of the Code;
- the beneficial owner of the note has provided the statement described
below, or such statement has been provided on behalf of such beneficial
owner;
- such payments or gain are not effectively connected with your conduct of a
trade or business in the United States; and
- the TCNZ ordinary shares (or ADRs) or other Exchange Property continue to
be "actively traded" within the meaning of Section 871(h)(4)(C)(v)(I) of
the Code.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
portfolio interest exemption either:
- the beneficial owner of a note; or
- a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (which we refer to as a "Financial Institution") and that holds
the note on behalf of the beneficial owner,
must file a statement with the withholding agent to the effect that the
beneficial owner is not a United States person. Under the law applicable to
stated interest paid on a note on or before December 31, 2000 and to payments on
or before such date of the proceeds from a sale or exchange of a note, the
statement requirement of Sections 871(h) and 881(c) will be satisfied if:
- the beneficial owner of a note certifies on an appropriate form (generally
Internal Revenue Service Form W-8BEN, or, for payments on or before
December 31, 2000, Internal Revenue Service Form W-8), under penalty of
perjury, that it is not a United States person and provides its name and
address; and
36
<PAGE>
- any Financial Institution holding the note on behalf of the beneficial
owner files a statement with the withholding agent to the effect that it
has received such a statement from the beneficial owner (and furnishes the
withholding agent with a copy thereof).
Under the law applicable to stated interest paid on a note after December 31,
2000 and to payments made after such date of the proceeds from a sale or
exchange of a note, you will generally satisfy the statement requirement of
Sections 871(h) and 881(c) if you satisfy the two conditions set forth in the
preceding sentence (except that Internal Revenue Service Form W-8BEN should
generally be used). However, if you are a beneficial owner that is a foreign
estate or trust, or fiduciary thereof, a foreign partnership that has entered
into a withholding agreement with the Internal Revenue Service or you are
holding a note through your United States branch, you will be required to
provide your Taxpayer Identification Number on an appropriate form (generally
Internal Revenue Service Form W-8BEN or W-8IMY, as applicable), in addition to
the items required on the certification under current law.
If:
- you are engaged in a trade or business in the United States; and
- interest income (including gain treated as interest income) on the note is
effectively connected with your conduct of such trade or business,
then you generally will be subject to regular United States federal income tax
on that interest income in the same manner as if you were a United States
holder. In addition, if you are a foreign corporation, then you may be subject
to a branch profits tax equal to 30 percent (or a lower rate provided by an
applicable treaty) of your effectively connected earnings and profits for the
taxable year, subject to certain adjustments. In lieu of the certificate
described above, you will be required to provide to the withholding agent an
appropriate form (generally Internal Revenue Service Form W-8ECI, or, for
payments on or before December 31, 2000, Internal Revenue Service Form 4224),
properly executed, in order to obtain an exemption from withholding tax on
stated interest paid on the notes and payments of proceeds from a sale or
exchange of a note, on which you provide your name, address and Taxpayer
Identification Number and state, under penalty of perjury, that stated interest
paid on and gain on the sale or exchange of a note is effectively connected with
your United States trade or business.
ESTATE TAX
Under Section 2105(b) of the Code, if you are an individual and you hold a
note at the time of your death, such note will not be subject to United States
federal estate tax as a result of your death, provided that:
- you do not own, actually or constructively, 10 percent or more of the
total combined voting power of all classes of our stock entitled to vote;
- at the time of your death, payments with respect to such note would not
have been effectively connected to your conduct of a trade or business in
the United States; and
- at the time of your death, the TCNZ ordinary shares (or ADRs) or other
Exchange Property continue to be "actively traded" within the meaning of
Section 871(h)(4)(C)(v)(I) of the Code.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Backup withholding tax will not apply to payments made by us or a paying
agent (in its capacity as such) if the certifications required by Sections
871(h) and 881(c) are received, provided that we or such paying agent, as the
case may be, does not have actual knowledge (and, with respect to payments made
after December 31, 2000, does not have reason to know) that the payee is a
United States person.
37
<PAGE>
Payments of proceeds from the sale or exchange of a note generally will not
be subject to backup withholding tax if they are made to or through a foreign
office of a broker. However, if such broker is:
- a United States person;
- a controlled foreign corporation for United States tax purposes;
- a foreign person 50 percent or more of whose gross income is effectively
connected with a United States trade or business for a specified
three-year period; or
- in the case of payments made after December 31, 2000, a foreign
partnership at least 50 percent of the capital or profits interests in
which are owned by United States persons or that has a United States trade
or business,
information reporting will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption. Payments to or through the United States office of a broker will
be subject to backup withholding tax and information reporting unless you
certify, under penalty of perjury, that you are not a United States person or
otherwise establish an exemption.
You should consult your tax advisor regarding the application of information
reporting and backup withholding tax in your particular situation, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available. You will be allowed as a credit against your United
States federal income tax liability any amounts withheld from a payment to you
under the backup withholding tax rules. In addition, you may be entitled to a
refund, provided that the required information is furnished to the IRS.
SELLING HOLDERS
We originally issued the notes. The notes were sold by the managers in a
transaction exempt from the registration requirements of the Securities Act to
persons reasonably believed by the managers to be "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act) or other
institutional "accredited investors") as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act. Selling holders, including their transferees,
pledgees, donees or successors, may from time to time offer and sell any or all
of their notes pursuant to this prospectus.
The selling Noteholders will be those who provide us with notice and the
requisite information required under the terms of the Registration Rights
Agreement. As of August 17, 1999, certain Noteholders have provided us with the
requisite notice and information to entitle them to be included in this
Prospectus as selling Noteholders. The following table sets forth information
regarding the beneficial ownership of the Notes by each such selling Noteholder.
Unless otherwise indicated, each of the selling Noteholders intends to sell the
entire amount of the Notes beneficially owned by the selling Noteholder.
Consequently, the principal amount of the Notes to be sold and the principal
amount of the Notes owned by the selling Noteholder are the same and the
Noteholder will not own any notes following the completion of the offering
described in this Prospectus. In addition, unless otherwise indicated, none of
the selling Noteholders has had, during the past three years, any position,
office or other material relationship with Bell Atlantic Corporation. Finally,
unless otherwise indicated, each of the selling Noteholders will own less than
1% of the aggregate principal amount of the outstanding
38
<PAGE>
Notes after the offering described in this Prospectus. The information contained
in this paragraph and in the following table is based solely on information
obtained from the selling Noteholders.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF NOTES
NAME AND ADDRESS OF BENEFICIALLY OWNED
SELLING NOTEHOLDER AND TO BE SOLD
- --------------------------------------------------------------------------------------- -------------------------
<S> <C>
New York Life Insurance Company....................................... $ 21,000,000
51 Madison Avenue, Room 203
New York, NY 10021
New York Life Insurance & Annuity Corporation......................... $ 5,000,000
51 Madison Avenue, Room 203
New York, NY 10021
Calamos Asset Management, Inc.*....................................... $ 13,050,000
1111 E. Warrenville Road
Naperville, Illinois 60563
Pacific Life Insurance Company........................................ $ 26,500,000
700 Newport Center Drive
Newport Beach, CA 92660
AXP Utilities Income Fund, Inc........................................ $ 7,000,000
c/o American Express Financial Corporation
733 Marquette Avenue
Minneapolis, MN 55402
IL Annuity & Insurance Co............................................. $ 40,000,000
c/o Lord Abbett & Co.
The GM Building
767 5(th) Avenue
New York, NY 10153
TradeStreet Investment Associates, Inc.*.............................. $ 8,710,000
601 W. Riverside Avenue
Suite 420
Spokane, WA 99201-0621
Oaktree Capital Management, LLC*...................................... $ 3,240,000
333 South Grand Avenue
28th Floor
Los Angeles, CA 90071
Key Asset Management, Inc.*........................................... $ 8,490,000
127 Public Square
20th Floor
Cleveland, OH 44113
Advent Capital Management*............................................ $ 430,000
FBO: UVA, MLIG
30 Broad Street, 30th Floor
New York, NY 10004
Pacific Investment Management Co.*.................................... $ 8,240,000
840 Newport Center Drive
P.O. Box 6430
Newport Beach, CA 92658-6430
</TABLE>
- ------------------------
* As investment manager for various institutional investors, no one of which
owns more than 1% of the outstanding principal amount of the Notes.
39
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES
NAME AND ADDRESS OF BENEFICIALLY OWNED
SELLING NOTEHOLDER AND TO BE SOLD
- ---------------------------------------------------------------------- --------------------
<S> <C> <C>
BNP Arbitrage SNC...................................................................... $ 250,000
555 Croton Road
4th Floor, Attn.: John Fair
King of Prussia, PA 19406
J.P. Morgan & Co., Inc................................................................. $ 12,600,000
522 Fifth Avenue
New York, NY 10036
California Public Employees Retirement System......................... $ 2,500,000
400 "P" Street
Sacramento, CA 95814
Transatlantic Reinsurance Co.......................................... $ 2,200,000
80 Pine Street
7th Floor
New York, NY 10005
American Home Assurance Co............................................ $ 1,800,000
c/o AIGGIC
175 Water Street
25th Floor
New York, NY 10038
Lord, Abbett & Co.*................................................... $ 16,050,000
The GM Building
767 5th Avenue
New York, NY 10153
Salomon Brothers Asset Management*.................................... $ 37,750,000
7 World Trade Center
38th Floor
New York, NY 10048
Banque et Caisse d'Epargne de l'Etat, Luxembourg...................... $ 5,000,000
c/o Swiss American Securities Inc.
12 East 49(th) Street
49(th) Floor
New York, NY 10017
Continental Casualty Company.......................................... $120,000,000
333 S. Wabash Avenue
CNA Plaza--23 South
Chicago, IL 60685
Ohio Farmers Insurance Company........................................ $ 2,000,000
One Park Circle
P.O. Box 5001
Westfield Center, OH 44251-5001
Westfield Insurance Company........................................... $ 2,000,000
One Park Circle
P.O. Box 5001
Westfield Center, OH 44251-5001
</TABLE>
- ------------------------
* As investment manager for various institutional investors, no one of which
owns more than 1% of the outstanding principal amount of the Notes.
40
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES
NAME AND ADDRESS OF BENEFICIALLY OWNED
SELLING NOTEHOLDER AND TO BE SOLD
- ---------------------------------------------------------------------- --------------------
<S> <C> <C>
Westfield National Insurance Company................................................... $ 1,000,000
One Park Circle
P.O. Box 5001
Westfield Center, OH 44251-5001
Transamerica Insurance Corp............................................................ $ 1,000,000
1150 South Olive Street
T27-01
Los Angeles, CA 90015
Transamerica Occidental Life Insurance Co.............................................. $ 5,000,000
1150 South Olive Street
T27-01
Los Angeles, CA 90015
Transamerica Life Insurance & Annuity Co............................................... $ 7,000,000
1150 South Olive Street
T27-01
Los Angeles, CA 90015
Goldman Sachs International............................................................ $ 6,285,000
10 Hanover Square
11th Floor
New York, NY 10005
Goldman Sachs and Company............................................. $ 3,357,000
10 Hanover Square
11th Floor
New York, NY 10005
Merrill Lynch International Limited................................... $ 10,000
101 Hudson Street
10th Floor
Jersey City, NJ 07302-3997
Guyasuta Investment Advisors*......................................... $ 850,000
Suite 2734
500 Grant Street
Pittsubrgh, PA 15219
Mackay-Shields Financial Corp.*....................................... $ 4,000,000
9 West 57th Street
33rd Floor
New York, NY 10019
Income Research & Management*......................................... $ 9,230,000
One Federal Street
23rd Floor
Boston, MA 02110
Security Insurance Company of Hartford................................ $ 2,000,000
Investment Department
9 Farm Springs Road
Farmington, CT 06032-2526
</TABLE>
- ------------------------
* As investment manager for various institutional investors, no one of which
owns more than 1% of the outstanding principal amount of the Notes.
41
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES
NAME AND ADDRESS OF BENEFICIALLY OWNED
SELLING NOTEHOLDER AND TO BE SOLD
- ---------------------------------------------------------------------- --------------------
<S> <C> <C>
Davis Convertible Securities Fund...................................................... $ 3,300,000
124 E. Marcy Street
Santa Fe, NM 87501
Lutheran Brotherhood................................................................... $ 3,000,000
625 Fourth Avenue South--MS 1010
Minneapolis, MN 55415
Lutheran Brotherhood Income Fund....................................................... $ 750,000
c/o Lutheran Brotherhood
625 Fourth Avenue South--MS 1010
Minneapolis, MN 55415
LB Series Fund, Inc., Income Portfolio................................................. $ 1,250,000
c/o Lutheran Brotherhood
625 Fourth Avenue South--MS 1010
Minneapolis, MN 55415
Travelers Investment Group*............................................................ $ 20,000,000
One Tower Square, 10 PB
Hartford, CT 06183-2030
Capital Research & Management*......................................................... $ 21,250,000
135 South State College Boulevard
Attn: RIS
Brea, CA 92821
Delaware Management Group*............................................................. $ 1,000,000
2005 Market Street--34th Floor
One Commerce Square
Philadelphia, PA 19103
Mega Life & Health Insurance........................................................... $ 1,100,000
c/o LaSalle Bank N.A.
Suite 1811, Attn: Willis Robinson
135 South LaSalle Street
Chicago, IL 60603
Baldwin & Lyons....................................................... $ 400,000
1000 N. Water Street
Milwaukee, WI 53202
</TABLE>
- ------------------------
* As investment manager for various institutional investors, no one of which
owns more than 1% of the outstanding principal amount of the Notes.
42
<PAGE>
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees, donees or successors, may sell the notes directly to purchasers or
through underwriters, broker-dealers or agents. Selling holders or the
purchasers may compensate underwriters, broker-dealers or agents with discounts,
concessions or commissions. These discounts, concessions or commissions may be
in excess of those customary in the types of transactions involved.
Holders may sell the notes in one or more transactions at fixed prices, at
prevailing Market Prices at the time of sale, at prices related to the
prevailing Market Prices, at varying prices determined at the time of sale, or
at negotiated prices. Holders may effect the sales in transactions (which may
involve crosses or block transactions): (1) on any national securities exchange
or quotation service on which the notes may be listed or quoted at the time of
sale; (2) in the over-the-counter market; (3) in transactions otherwise than on
exchanges or services or in the over-the-counter market; (4) through the writing
of options (whether the options are listed on an options exchange or otherwise);
or (5) through the settlement of short sales. In connection the sale of notes,
selling holders may enter into hedging transactions with broker-dealers or other
financial institutions. Broker-dealers or financial institutions may in turn
engage in short sales of the notes and deliver the securities to close out such
short positions, or loan or pledge the notes to broker-dealers that may in turn
sell these securities.
The aggregate proceeds to the selling holders from the sale of the notes
offered by them under this prospectus will be the purchase price of such notes
less any discounts and commissions. Each of the selling holders may accept and,
together with their agents from time to time, reject, in whole or in part, any
proposed purchase of notes to made directly or through agents. We will not
receive any of the proceeds from this offering.
We do not intend to list the notes for trading on any national securities
exchange or on the Nasdaq National Market. A trading market may not develop for
the notes.
In order to comply with the securities laws of some states, if applicable,
the notes may be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the notes may not be sold unless
they have been registered or qualified for sale or an exemption from
registration or qualification requirements is available and complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes may be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933. Selling holders who are
"underwriters" with the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling holder
may not sell any notes and may not transfer, devise, or gift such securities by
other means not described in this prospectus.
To the extent required, the specific notes to be sold, the names of the
selling holders, the respective purchases prices and the public offering prices,
the names of any agent, dealer or underwriter, and any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
We have entered into a Registration Rights Agreement for the benefit of the
holders of the notes to register their notes under applicable federal and state
securities laws under certain circumstances and at certain times. The
Registration Rights Agreement provides for the cross-indemnification of the
selling holders, Bell Atlantic and us and each of our directors, officers and
controlling persons against
43
<PAGE>
certain liabilities in connection with the offer and sale of the notes,
including liabilities under the Securities Act.
LEGAL OPINIONS
The validity of the Bell Atlantic Corporation Common Stock to be issued in
connection with the Registration Statement will be passed upon by P. Alan
Bulliner, Esq., Associate General Counsel and Corporate Secretary of Bell
Atlantic Corporation. As of June 30, 1999, Mr. Bulliner owned beneficially
24,504 shares of the Common Stock of Bell Atlantic and held 139,157 options to
purchase shares of the Common Stock of Bell Atlantic. As of such date, he also
had approximately 58 shares credited to his account under the Bell Atlantic
Employee Stock Ownership Plan, approximately 4,012 shares credited to his
account under the Bell Atlantic Savings Plan for Salaried Employees, and
approximately 271 shares credited to his account under the Bell Atlantic Senior
Management Income Deferral Plan.
EXPERTS
The consolidated financial statements and consolidated financial statement
schedule incorporated in this prospectus and in the registration statement by
reference to the Annual Report on Form 10-K of Bell Atlantic Corporation for the
year ended December 31, 1998 have been so incorporated in reliance on the report
(which contains an explanatory paragraph stating that, in 1996, the Company
changed its method of accounting for directory publishing revenues and expenses)
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of such firm as experts in auditing and accounting.
The consolidated financial statements included in GTE Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998, incorporated in this
prospectus by reference to the Joint Proxy Statement and Prospectus of Bell
Atlantic and GTE Corporation, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report thereon dated
January 28, 1999, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said reports.
44
<PAGE>
------------------------
We have not authorized anyone to give you any information or to make any
representations about the transactions we discuss in this Prospectus other than
those contained herein or in the documents we incorporate herein by reference.
If you are given any information or representations about these matters that is
not discussed or incorporated in this Prospectus, you must not rely on that
information. This Prospectus is not an offer to sell or a solicitation of an
offer to buy securities anywhere or to anyone where or to whom we are not
permitted to offer or sell securities under applicable law. The delivery of this
Prospectus does not, under any circumstances, mean that there has not been a
change in our affairs since the date hereof. It also does not mean that the
information in this Prospectus or in the documents we incorporate herein by
reference is correct after this date.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
About this Prospectus.................................................................. 2
How to Obtain Information about Bell Atlantic.......................................... 2
How to Obtain Information about Telecom Corporation of New Zealand Limited............. 3
Prospectus Summary..................................................................... 4
Risk Factors........................................................................... 8
Use of Proceeds........................................................................ 11
Ratio of Earnings to Fixed Charges..................................................... 11
Description of the Notes............................................................... 12
Registration Rights.................................................................... 32
Certain United States Federal Income Tax Considerations................................ 33
Selling Holders........................................................................ 38
Plan of Distribution................................................................... 43
Legal Opinions......................................................................... 44
Experts................................................................................ 44
</TABLE>
------------------------
$2,455,000,000
5.75% SENIOR EXCHANGEABLE NOTES DUE 2003
BELL ATLANTIC FINANCIAL SERVICES, INC.
ISSUER
BELL ATLANTIC CORPORATION
SUPPORT PROVIDER
---------------------
PROSPECTUS
---------------------
August 31, 1999
