<PAGE>
PROSPECTUS SUPPLEMENT Filed Pursuant to
(To Prospectus dated July 22, 1997) Rule 424(b)(2)
Registration No: 33-51449
$500,000,000
BellSouth Capital Funding Corporation
ONE HUNDRED YEAR 7.12% DEBENTURES, DUE JULY 15, 2097
Issued under a Support Agreement with
BellSouth Corporation
---------------
Interest payable January 15 and July 15
---------------
The Debentures will be redeemable prior to maturity, as a whole at any time
or in part from time to time, at the option of BellSouth Capital Funding
Corporation (the "Company") at a redemption price equal to the greater of
(i) 100% of the principal amount of such Debentures and (ii) the sum of
the present values of the Remaining Scheduled Payments (as defined
herein) discounted to the redemption date on a semiannual basis at the
Treasury Rate (as defined herein) plus 15 basis points, together in
either case with accrued interest to the date of the redemption. Upon
the occurrence of a Tax Event (as defined herein), the Company will
have the right (x) to shorten the maturity of the Debentures to the
extent required so that the interest paid on the Debentures will be
deductible for United States federal income tax purposes or (y)
under certain circumstances to redeem the Debentures in whole
(but not in part) at a redemption price equal to the greater of
(i) 100% of the principal amount of the Debentures and (ii) the
sum of the present values of the Remaining Scheduled Payments
discounted to the redemption date on a semiannual basis at
the Treasury Rate plus 25 basis points, together in either
case with accrued interest to the date of redemption. See
"Description of the Debentures--Optional Redemption" and
"--Conditional Right to Shorten Maturity."
The Debentures will be represented by one or more global securities
registered in the name of a nominee of The Depository Trust Company, as
depositary (the "Depositary"). Beneficial interests in the Debentures
will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary and its
participants. Except as described herein, Debentures in
definitive form will not be issued. The Debentures will trade
in the Depositary's Same-Day Funds Settlement System. All
payments of principal and interest on global securities
will be made by the Company in immediately available
funds. See "Description of the Debentures--Book-
Entry System."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSIONOR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
PRICE 100% AND ACCRUED INTEREST
---------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------------ -------------- -------------
<S> <C> <C> <C>
Per Debenture.................. 100.00% 1.00% 99.00%
Total.......................... $500,000,000 $5,000,000 $495,000,000
</TABLE>
- -------
(1) Plus accrued interest from July 15, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $300,000.
---------------
The Debentures are offered by the Underwriters named below, subject to prior
sale, when, as and if accepted by the Underwriters and subject to approval of
certain legal matters by Davis Polk & Wardwell, counsel for the Underwriters.
It is expected that delivery of the Debentures will be made on or about
July 25, 1997 through the book-entry facilities of the Depositary against
payment therefor in immediately available funds.
---------------
MORGAN STANLEY DEAN WITTER
LEHMAN BROTHERS
J. P. MORGAN & CO.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
July 22, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE DEBENTURES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
PROCEEDS OF THE OFFERING
The proceeds from the sale of the Debentures offered hereby (the
"Debentures") are expected to be as follows:
<TABLE>
<S> <C>
Gross Proceeds............................................. $500,000,000
Less--Underwriting Discounts and Commissions............... 5,000,000
Expenses................................................ 300,000
------------
Net Proceeds............................................ $494,700,000
============
</TABLE>
The Company intends to apply the net proceeds toward the permanent
refinancing of commercial paper and as described under "Use of Proceeds" in the
attached Prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
BellSouth Corporation ("BellSouth") and its consolidated subsidiaries for the
periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30 YEARS ENDED DECEMBER 31
---------------- ----------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
6.32x 7.32x 6.55x 4.24x 5.34x 2.98x 4.00x
</TABLE>
For the purpose of this ratio: (i) earnings have been calculated by adding
income before income taxes, gross interest expense, such portion of rental
expense representative of the interest factor on such rentals and equity in
losses from less-than-50%-owned investments (accounted for under the equity
method of accounting) less the excess of earnings over distributions from less-
than-50%-owned investments (accounted for under the equity method of
accounting); (ii) fixed charges are comprised of gross interest expense and
such portion of rental expense representative of the interest factor on such
rentals.
DESCRIPTION OF THE DEBENTURES
GENERAL
The Debentures will be issued under an Indenture dated as of August 1, 1992
(the "Indenture") among the Company, BellSouth Corporation ("BellSouth") and
The Bank of New York, as successor to Wachovia Bank of Georgia, N.A. (the
"Trustee"). Provisions of the Indenture are more fully described under
"Description of Securities" in the attached Prospectus to which reference is
hereby made.
The Debentures will mature on July 15, 2097. Interest on the Debentures will
accrue from July 15, 1997 and will be payable semiannually on each January 15
and July 15, beginning January 15, 1998, to the persons in whose names the
Debentures are registered at the close of business on the January 1 or July 1
prior to the payment date at the annual rate set forth on the cover page of
this Prospectus Supplement.
The principal of, and interest on, the Debentures are to be payable at the
office or agency of the Company in New York, New York (the "Paying Agent").
S-2
<PAGE>
CONDITIONAL RIGHT TO SHORTEN MATURITY
BellSouth intends to deduct interest paid on the Debentures for United States
federal income tax purposes. However, there have been proposed tax law changes
over the past year that, among other things, would have prohibited an issuer
from deducting interest payments on debt instruments with a maturity of more
than 40 years. While none of these proposals has become law, there can be no
assurance that similar legislation affecting BellSouth's ability to deduct
interest paid on the Debentures will not be enacted in the future or that any
such legislation would not have a retroactive effective date.
Upon the occurrence of a Tax Event (as defined below), the Company will have
the right to shorten the maturity of the Debentures to the minimum extent
required, in the opinion of nationally recognized independent tax counsel, such
that, after the shortening of the maturity, interest paid on the Debentures
will be deductible for United States federal income tax purposes or, if such
counsel is unable to opine definitively as to such a minimum period, the
minimum extent so required as determined in good faith by the Board of
Directors of the Company, after receipt of an opinion of such counsel regarding
the applicable legal standards. There can be no assurance that the Company
would not exercise its right to shorten the maturity of the Debentures upon the
occurrence of such a Tax Event or as to the period by which such maturity would
be shortened. In the event that the Company elects to exercise its right to
shorten the maturity of the Debentures on the occurrence of a Tax Event, the
Company will mail a notice of shortened maturity to each holder of the
Debentures by first-class mail not more than 60 days after the occurrence of
such Tax Event, stating the new maturity date of the Debentures. Such notice
shall be effective immediately upon mailing.
The Company believes that the Debentures should constitute indebtedness for
United States federal income tax purposes under current law and, in that case,
an exercise of its right to shorten the maturity of the Debentures would not be
a taxable event to Holders for such purposes. Prospective investors should be
aware, however, that the Company's exercise of its right to shorten the
maturity of the Debentures will be a taxable event to holders for United States
federal income tax purposes if the Debentures are treated as equity for United
States federal income tax purposes before the maturity is shortened, assuming
that the Debentures of shortened maturity are treated as debt for such
purposes.
"Tax Event" means that the Company shall have received an opinion of
nationally recognized independent tax counsel to the effect that, as a result
of (a) any amendment to, clarification of or change (including any announced
prospective amendment, clarification or change) in any law, or any regulation
thereunder, of the United States, (b) any judicial decision, official
administrative pronouncement, ruling (including any technical advice memorandum
or other private letter ruling), regulatory procedure, notice or announcement,
including any notice or announcement of intent to adopt or promulgate any
ruling, regulatory procedure or regulation (any of the foregoing, an
"Administrative or Judicial Action"), or (c) any amendment to, clarification of
or change in any official position with respect to, or any interpretation of
(including any position taken in any Internal Revenue Service audit or similar
proceeding), an Administrative or Judicial Action or a law or regulation of the
United States that differs from the theretofore generally accepted position or
interpretation, in each case, occurring on or after July 22, 1997, there is
more than an insubstantial increase in the risk that interest paid by the
Company on the Debentures is not, or will not be, deductible, in whole or in
part, by BellSouth for United States federal income tax purposes.
OPTIONAL REDEMPTION
The Debentures will be redeemable as a whole at any time or in part from time
to time, at the option of the Company, on not less than 30 or more than 60
days' notice mailed to holders thereof, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Debentures to be redeemed
and (ii) the sum of the present values of the Remaining Scheduled Payments
thereon, discounted to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15
basis points, together in either case with accrued interest on the principal
amount being redeemed to the date of redemption.
S-3
<PAGE>
In addition, if a Tax Event occurs and in the opinion of nationally
recognized independent tax counsel, there would, notwithstanding any shortening
of the maturity of the Debentures, be more than an insubstantial risk that
interest paid by the Company on the Debentures is not, or will not be,
deductible, in whole or in part, by BellSouth for United States federal income
tax purposes, the Company will have the right, within 90 days following the
occurrence of such Tax Event, to redeem the Debentures in whole (but not in
part), on not less than 30 or more than 60 days' notice mailed to holders of
the Debentures, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Debentures and (ii) the sum of the present values of
the Remaining Scheduled Payments thereon discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 25 basis points, together in either case with accrued
interest on the principal amount being redeemed to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Debentures. "Independent Investment Banker" means one of
the Reference Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer as of 3:30 p.m., New York City time on the
third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co. Incorporated,
Bear, Stearns & Co. Inc., Goldman, Sachs & Co., Lehman Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities Inc. and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefore another
nationally recognized investment banking firm that is a Primary Treasury
Dealer.
"Remaining Scheduled Payments" means, with respect to each Debenture to be
redeemed, the remaining scheduled payments of the principal thereof and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Debenture, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
On and after the redemption date, interest will cease to accrue on the
Debentures or any portion thereof called for redemption. On or before any
redemption date, the Company shall deposit with a paying agent (or the Trustee)
money sufficient to pay the redemption price of and accrued interest on the
Debentures to be redeemed on such date. If less than all the Debentures are to
be redeemed, the Debentures to be redeemed shall be selected by the Trustee by
such method as the Trustee shall deem fair and appropriate.
S-4
<PAGE>
BOOK-ENTRY SYSTEM
The Debentures will be represented by one or more global securities (the
"Global Security"). The Global Security will be deposited with, or on behalf
of, the Depositary and registered in the name of a nominee of the Depositary.
Except under circumstances described below, the Debentures will not be issuable
in definitive form.
Upon the issuance of the Global Security, the Depositary will credit on its
book-entry registration and transfer system the accounts of persons designated
by the Underwriters with the respective principal amounts of the Debentures
represented by the Global Security. Ownership of beneficial interests in the
Global Security will be limited to persons that have accounts with the
Depositary or its nominee ("participants") or persons that may hold interests
through participants. Ownership of beneficial interests in the Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depositary or its nominee (with respect to
interests of participants) and on the records of participants (with respect to
interests of persons other than participants). The laws of some states require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to
transfer beneficial interests in the Global Security.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Debentures represented by the Global
Security for all purposes under the Indenture. Except as provided below, owners
of beneficial interests in the Global Security will not be entitled to have
Debentures represented by the Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debentures in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Principal and interest payments on Debentures registered in the name of the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security. None of the
Company, the Trustee, any paying agent or the registrar for the Debentures will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial interests in the Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial interest.
The Company expects that the Depositary for the Debentures or its nominee,
upon receipt of any payment of principal or interest, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in the
Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor Depositary is not appointed by the Company within 90
days, the Company will issue Debentures in definitive form in exchange for the
entire Global Security. In addition, the Company may at any time and in its
sole discretion determine not to have the Debentures represented by the Global
Security and, in such event, will issue Debentures in definitive form in
exchange for the entire Global Security. In any such instance, an owner of a
beneficial interest in the Global Security will be entitled to physical
delivery in definitive form of Debentures represented by the Global Security
equal in principal amount to such beneficial interest and to have such
Debentures registered in its name. Debentures so issued in definitive form will
be issued as registered Debentures in denominations of $1,000 and integral
multiples thereof, unless otherwise specified by the Company.
Settlement for the Debentures will be made by the Underwriters in immediately
available funds. All payments of principal and interest on Global Securities
will be made by the Company in immediately available funds.
S-5
<PAGE>
UNDERWRITING
Under the terms of and subject to the conditions contained in an Underwriting
Agreement dated July 22, 1997, the Underwriters named below have severally
agreed to purchase from the Company, and the Company has agreed to sell to
them, the respective principal amount of the Debentures set forth below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ---------
<S> <C>
Morgan Stanley & Co. Incorporated.......................... $111,668,000
Lehman Brothers Inc. ...................................... 111,666,000
J.P. Morgan Securities Inc................................. 111,666,000
Bear, Stearns & Co. Inc.................................... 55,000,000
Goldman, Sachs & Co........................................ 55,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. 55,000,000
------------
Total................................................... $500,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriters' obligations is such
that they are committed to take and pay for all of the Debentures if any are
taken.
The Underwriters propose to offer the Debentures in part directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain dealers at such price less a
concession of .60% of their principal amount. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of .25% of the principal
amount of the Debentures to certain other dealers. After the initial public
offering, the offering price and other selling terms may be changed by the
Underwriters.
In order to facilitate the offering of the Debentures, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Debentures. Specifically, the Underwriters may overallot in connection
with the offering, creating a short position in the Debentures for their own
account. In addition, to cover overallotments or to stabilize the price of the
Debentures, the Underwriters may bid for, and purchase, the Debentures in the
open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the
Debentures in the offering, if the syndicate repurchases previously distributed
Debentures in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the Debentures above independent market levels. The
Underwriters are not required to engage in these activities, and may end any of
these activities at any time.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
S-6
<PAGE>
PROSPECTUS
$727,265,000
BELLSOUTH CAPITAL FUNDING CORPORATION
DEBT SECURITIES
ISSUED UNDER A SUPPORT AGREEMENT
WITH
BELLSOUTH CORPORATION
BellSouth Capital Funding Corporation (the "Company") may offer its debt
securities (the "Securities"), in one or more series, at such initial public
offering prices as will result in aggregate net proceeds to the Company of up
to U.S. $727,265,000 on terms to be determined at the time the Securities are
offered for sale. When a particular series of the Securities is offered, a
prospectus supplement ("Prospectus Supplement"), together with this
Prospectus, will be delivered setting forth the terms of the Securities,
including, where applicable, the specific designation, aggregate principal
amount, currency (including composite currencies such as the ECU),
denominations, maturity, rate of any interest (or manner of calculation
thereof) and time of payment thereof, whether the Securities are issuable in
registered form or bearer form or both, any redemption provisions, the initial
public offering price, the names of any underwriters, dealers or agents, any
compensation to such underwriters, dealers or agents and any other specific
terms in connection with the offering and sale of such series.
All of the Securities will have the benefit of a Support Agreement dated as
of October 15, 1987, as amended as of August 1, 1992 (the "Support
Agreement"), between the Company and BellSouth Corporation ("BellSouth"), the
parent company and sole shareholder of the Company. In the Support Agreement,
BellSouth has agreed to ensure the timely payment of principal, premium, if
any, and interest owed on the Securities; however, no holder of the Securities
will have recourse to or against the stock or assets of BellSouth
Telecommunications, Inc. (the "Telephone Company") or any interest of
BellSouth or the Company in the Telephone Company.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is July 22, 1997
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, BELLSOUTH OR ANY UNDERWRITER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR BELLSOUTH SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION.
AVAILABLE INFORMATION
BellSouth is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports and other information with the Securities and Exchange
Commission ("SEC"). Such reports, proxy statements and other information filed
by BellSouth can be inspected and copied at the public reference facilities of
the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, as well as at the following SEC Regional Offices: Room 1102, 13th
Floor, 7 World Trade Center, New York, NY 10048 and Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, IL 60661-2511. Such material
can also be inspected at the New York, Boston, Midwest, Pacific and
Philadelphia Stock Exchanges. Copies can be obtained from the SEC by mail at
prescribed rates. Requests should be directed to the SEC's Public Reference
Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549. Copies of the above documents which have been electronically filed
through the Electronic Data Gathering, Analysis and Retrieval system are
publicly available through the Securities and Exchange Commission's website
(http://www.sec.gov).
The Company is not subject to the informational filing requirements of the
SEC, and no documents have been or will be filed by the Company under the
Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by BellSouth with the SEC (File No.
1-8607) and are incorporated herein by reference:
(1) BellSouth's Annual Report on Form 10-K for the year ended December 31,
1996.
(2) BellSouth's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
(3) BellSouth's Current Reports on Form 8-K for January 23, April 21, July 1
and July 9, 1997.
All documents filed by BellSouth pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of any series of Securities shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such documents.
COPIES OF THE ABOVE DOCUMENTS (EXCLUDING EXHIBITS) MAY BE OBTAINED UPON
REQUEST WITHOUT CHARGE FROM THE OFFICE OF THE COMPTROLLER OF BELLSOUTH, 1155
PEACHTREE STREET, N.E., 15G03, ATLANTA, GEORGIA 30309-3610 (TELEPHONE NUMBER
404-249-2945).
2
<PAGE>
BELLSOUTH CAPITAL FUNDING CORPORATION
The Company was incorporated in 1987 under the laws of the State of Georgia
and has its principal executive offices at 1155 Peachtree Street, N.E.,
Atlanta, Georgia 30309-3610 (telephone number 404-249-2000). The Company is a
wholly-owned subsidiary of BellSouth.
The Company's purpose is engaging in financing activities that will provide
funds for use by BellSouth in connection with its own diversification and in
support of the activities of the subsidiaries of BellSouth ("Diversified
Subsidiaries") other than the Telephone Company but including such
subsidiaries of the Telephone Company whose operations are not subject to
regulation by tariff. The Company will raise funds through the offering and
sale of debt securities (the "Securities") in the United States, European and
other overseas markets and lend the proceeds to BellSouth or the Diversified
Subsidiaries. The Company will not engage in any separate business operations.
On October 14, 1987, the SEC issued an order exempting the Company from the
provisions of the Investment Company Act of 1940 (the "1940 Act"), provided
that the Company complies with the provisions of Rule 3a-5 under such Act and
that the Securities remain entitled to the benefits of the Support Agreement.
See "Support Agreement" and "Use of Proceeds."
SUPPORT AGREEMENT
Pursuant to the Support Agreement, BellSouth has agreed to cause the Company
to maintain a positive tangible net worth as determined in accordance with
generally accepted accounting principles. The Support Agreement also provides
that BellSouth shall own, directly or indirectly, all the outstanding voting
capital stock of the Company throughout the term of the Support Agreement.
If the Company is unable to pay when due the principal, interest or premium,
if any, owed on any of the Securities, BellSouth shall provide funds to the
Company to assure that the Company will be able to pay when due such
principal, interest or premium, if any. The Support Agreement provides that in
the event of any default by BellSouth in meeting its obligations under such
Support Agreement or in the event of default by the Company in the timely
payment of principal, interest or premium, if any, owed on any Securities,
holders of Securities or a trustee acting on their behalf shall be entitled to
proceed directly against BellSouth, except that no holder of Securities or
trustee acting on their behalf will have recourse to or against the stock or
assets of the Telephone Company or any interest of BellSouth or the Company in
the Telephone Company. Dividends declared and paid to BellSouth by the
Telephone Company, which in 1996 aggregated approximately $1.6 billion, are
not subject to this limitation. BellSouth's non-Telephone Company net book
assets, which would also be available to holders of Securities under the
Support Agreement, aggregated approximately $5.6 billion at June 30, 1997.
Neither BellSouth nor the Company will be able to amend or terminate the
Support Agreement so as to adversely affect the rights of holders of
Securities without the written consent of all the holders of the then
outstanding Securities maturing in more than one year. The holders of
Securities maturing in less than one year shall have the benefit of the
Support Agreement without giving effect to any such amendment or termination
until the Securities held by them have been retired.
BELLSOUTH CORPORATION
BellSouth was incorporated in 1983 under the laws of the State of Georgia
and has its principal executive offices at 1155 Peachtree Street, N.E.,
Atlanta, Georgia 30309-3610 (telephone number 404-249-2000).
The Telephone Company serves, in the aggregate, approximately two-thirds of
the population and one-half of the territory within Alabama, Florida, Georgia,
Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and
Tennessee. The primary businesses conducted by the Diversified Subsidiaries
are wireless and international communications services and advertising and
publishing products.
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USE OF PROCEEDS
The net proceeds from the sale of the Securities will be used to provide
funds for the Diversified Subsidiaries and in connection with the
diversification activities of BellSouth.
The Company will remit to BellSouth or the Diversified Subsidiaries the cash
or cash equivalents raised by the Company as soon as practicable after receipt
thereof, but in no event later than six months after the Company receives such
cash or cash equivalents. In the interim, the Company will invest any funds
held by it only in securities permitted by Rule 3a-5(a)(6) of the SEC under
the 1940 Act.
DESCRIPTION OF SECURITIES
The following description sets forth certain general terms and provisions of
the Securities of any series to which any Prospectus Supplement may relate.
The particular terms and provisions of the series of Securities offered by a
Prospectus Supplement, and the extent to which such general terms and
provisions described below may apply thereto, will be described in the
Prospectus Supplement relating to such series.
The Securities are to be issued under an Indenture dated as of August 1,
1992 among the Company, BellSouth and The Bank of New York, as successor to
Wachovia Bank of Georgia, N.A. (the "Trustee").
The following summaries of certain provisions of the Securities, the
Indenture and the Support Agreement do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all
provisions of the Indenture and the Support Agreement, including the
definitions therein of certain terms. Particular sections of the Indenture
which are relevant to the discussion are cited parenthetically. Capitalized
terms used in this Prospectus which are defined in the Indenture shall have
the same meaning herein as in the Indenture. The term "principal" when used
herein includes, when appropriate, the premium, if any, on any series of
Securities.
GENERAL
The Indenture does not limit the amount of Securities which may be issued
thereunder, and additional debt securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by, or
pursuant to, a resolution of the Company's Board of Directors, by a Company
Order signed by two Officers of the Company or by a supplemental indenture.
Reference is made to the Prospectus Supplement for the following terms of the
particular series or issue of Securities being offered hereby: (i) the title
of the Securities of the series; (ii) if denominated in other than United
States dollars, the currency of payment of the principal of and interest on
the Securities of the series; (iii) any limit upon the aggregate principal
amount of the Securities of the series; (iv) the date or dates on which the
principal of the Securities of the series will mature; (v) the rate or rates
(or manner of calculation thereof), if any, at which the Securities of the
series will bear interest, the date or dates from which any such interest will
accrue and on which such interest will be payable, and, with respect to
Securities of the series in registered form, the record date for the interest
payable on any interest payment date and the basis upon which interest shall
be calculated if other than that of a 360-day year of twelve 30-day months;
(vi) the place or places where the principal of and interest on the Securities
of the series will be payable; (vii) any redemption or sinking fund
provisions; (viii) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which will be payable upon
declaration of acceleration of the maturity thereof; (ix) whether the
Securities of the series will be issuable in registered (and if so, whether
such securities will be issuable as registered global Securities) or bearer
form or both, any restrictions applicable to the offer, sale or delivery of
Securities in bearer form ("Unregistered Securities") and whether, and the
terms upon which, Unregistered Securities will be exchangeable for Securities
in registered form ("Registered Securities") and vice versa; (x) if and under
what circumstances the Company will pay additional amounts on the Securities
of the series held by a person who is not a United States person in respect of
taxes or similar charges withheld or deducted and, if so, whether the Company
will have the option to redeem such Securities rather than pay such additional
amounts; (xi) any index used to determine the amount of payments of principal
of and interest on the Securities of the series; (xii) any depositary (a
"Depositary") with respect to the
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Securities of such series; and (xiii) any additional provisions or other
special terms not inconsistent with the provisions of the Indenture, including
any terms which may be required by or advisable under United States laws or
regulations or advisable in connection with the marketing of Securities of
such series. (Sections 2.01 and 2.02.)
Unless otherwise indicated in the Prospectus Supplement, Registered
Securities will be issued in denominations of $1,000 and integral multiples
thereof, and Unregistered Securities will not be offered, sold or delivered in
the United States or to United States persons in connection with their
original issuance. Any special federal income tax considerations applicable to
Unregistered Securities will be described in the Prospectus Supplement
relating thereto.
To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Indenture, interest on Unregistered Securities
will be payable only against presentation and surrender of the coupons for the
interest installments evidenced thereby as they mature at a paying agency of
the Company located outside of the United States. (Section 2.05(c).) The
Company will maintain a paying agent outside the United States to which the
Unregistered Securities may be presented for payment and will provide the
necessary funds therefor to such paying agent upon reasonable notice. (Section
2.04.)
Registration of transfer of Registered Securities may be requested upon
surrender thereof at any agency of the Company maintained for such purpose and
upon fulfillment of all other requirements of such agent. Unregistered
Securities and the coupons related thereto will be transferable by delivery.
(Section 2.08.) To the extent not described herein, principal and interest
will be payable, and the transfer of Registered Securities of a particular
series will be registrable, in the manner described in the Prospectus
Supplement relating to such series.
Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus
Supplement relating to such Original Issue Discount Securities. "Original
Issue Discount Security" means any Security which provides for an amount less
than the stated principal amount thereof to be due and payable upon
declaration of acceleration of the maturity thereof or upon the occurrence and
continuation of an event of default. (Section 1.01.)
REGISTERED GLOBAL SECURITIES
The Registered Securities of a series may be issued in the form of one or
more fully registered global Securities (a "Registered Global Security") that
will be deposited with a Depositary or with a nominee for a Depositary
identified in the Prospectus Supplement relating to such series. In such case,
one or more Registered Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding Registered Securities of the series to be represented by such
Registered Global Security or Securities. Unless and until it is exchanged in
whole or in part for Securities in definitive registered form, a Registered
Global Security may not be transferred except as a whole by the Depositary for
such Registered Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Securities to be represented by a Registered Global Security
will be described in the Prospectus Supplement relating to such series.
BellSouth anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Securities
represented by such Registered Global Security to the accounts of persons that
have accounts with such Depositary ("participants"). The accounts to be
credited shall be designated by any underwriters or agents
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participating in the distribution of such Securities. Ownership of beneficial
interests in a Registered Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in such Registered Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained
by the Depositary for such Registered Global Security (with respect to
interests of participants) or persons that hold interests through participants
(with respect to interests of persons other than participants) in accordance
with the procedures of the Depositary.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Securities represented by such Registered Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such
Securities in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Principal and interest payments on Securities represented by a Registered
Global Security registered in the name of a Depositary or its nominee will be
made to such Depositary or its nominee, as the case may be, as the registered
owner of such Registered Global Security. None of the Company, BellSouth, the
Trustee or any paying agent for such Securities will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in such Registered Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that the Depositary for any Securities represented by a
Registered Global Security, upon receipt of any payment of principal or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Registered Global Security as shown on the records of
such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names" and will be the responsibility of such
participants.
If the Depositary for any Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary and a
successor Depositary is not appointed by the Company or BellSouth within 90
days, the Company will issue such Securities in definitive form in exchange
for such Registered Global Security. In addition, the Company may at any time
and in its sole discretion determine not to have any of the Securities of a
series represented by one or more Registered Global Securities and, in such
event, will issue Securities of such series in definitive form in exchange for
all of the Registered Global Security or Securities representing such
Securities.
EXCHANGE OF SECURITIES
Registered Securities may be exchanged for an equal aggregate principal
amount of Registered Securities of the same series and date of maturity in
such authorized denominations as may be requested upon surrender of the
Registered Securities at an agency of the Company maintained for such purpose
and upon fulfillment of all other requirements of such agent.
To the extent permitted by the terms of a series of Securities authorized to
be issued in registered form and unregistered form, Unregistered Securities
may be exchanged for an equal aggregate principal amount of Registered or
Unregistered Securities (containing identical terms and provisions) of the
same series and date of maturity in such authorized denominations as may be
requested upon surrender of the bearer Securities with all unpaid coupons
relating thereto (except as may otherwise be provided in the Securities) at an
agency of the Company maintained for such purpose and upon fulfillment of all
other requirements of such agent. (Section 2.08(b).) As of the date of this
Prospectus, it is expected that the terms of a series of Securities will not
permit Registered Securities to be exchanged for Unregistered Securities.
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LIEN ON ASSETS
If at any time the Company mortgages, pledges or otherwise subjects to any
lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as hereinafter provided, the Company will secure the
outstanding Securities, and any other obligations of the Company which may
then be outstanding and entitled to the benefit of a covenant similar in
effect to this covenant, equally and ratably with the indebtedness or
obligations secured by such mortgage, pledge or lien, for as long as any such
indebtedness or obligation is so secured. The foregoing covenant does not
apply to the creation, extension, renewal or refunding of purchase-money
mortgages or liens, or to the making of any deposit or pledge to obtain the
benefits of any 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. (Section 4.02.)
Neither the Indenture nor the Support Agreement restricts BellSouth from
pledging or otherwise encumbering any of its assets.
SUCCESSOR ENTITIES
Neither the Company nor BellSouth may consolidate with or merge into, or
transfer or lease its property and assets substantially as an entirety to,
another entity unless the successor entity is a United States corporation and,
in the case of the Company, assumes all the obligations of the Company under
the Securities and any coupons related thereto and the Indenture and, in the
case of BellSouth, assumes all the obligations of BellSouth under the
Indenture and the Support Agreement. Thereafter, except in the case of a
lease, all such obligations of the Company or BellSouth, as the case may be,
shall terminate. (Sections 5.01 and 5.02.)
BellSouth or a subsidiary thereof may assume the payment of the principal of
and interest on all Securities and any coupons and the performance of every
covenant of the Indenture on the part of the Company. Upon such assumption,
BellSouth or such subsidiary shall have the same rights and obligations as the
Company under the Indenture, and the Company shall be released from its
liability thereunder. (Section 5.03.)
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default"
with respect to a series of Securities: (i) default in the payment of interest
on any Security of such series for 90 days; (ii) default in the payment of the
principal of any Security of such series; (iii) failure by the Company or
BellSouth for 90 days after notice to it to comply with any of its other
agreements with respect to the Securities of such series set forth in the
Indenture in any supplemental indenture under which the Securities of that
series may have been issued (other than covenants relating only to other
series) or in the Support Agreement; and (iv) certain events of bankruptcy or
insolvency of the Company. A payment default with respect to one series is not
a default with regard to any other series of Securities issued pursuant to the
Indenture. (Section 6.01.) If an Event of Default occurs with respect to the
Securities of any series, and is continuing, the Trustee or the Holders of at
least 25% in principal amount of all of the outstanding Securities of that
series may declare the principal (or, if the Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of, and any accrued interest on,
all the Securities of that series to be due and payable. Securities of all
other series will be unaffected. Upon such declaration, such principal (or, in
the case of Original Issue Discount Securities, such specified amount) and
interest will become due and payable immediately. (Section 6.02.)
Securityholders may not enforce the Indenture, the Securities or the Support
Agreement, except as provided in the Indenture and the Support Agreement.
(Section 6.06.) The Trustee may require indemnity satisfactory to it
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before it enforces the Indenture, the Securities or the Support Agreement.
(Section 7.01(e).) Subject to certain limitations, holders of a majority in
principal amount of the Securities of each series affected may direct the
Trustee in its exercise of any trust power with respect to Securities of that
series. (Section 6.05.) The Trustee may withhold from Securityholders notice
of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests.
(Section 7.05.)
AMENDMENT AND WAIVER
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented by the Company, BellSouth and the Trustee with the
consent of the Holders of a majority in principal amount of the outstanding
Securities of each series affected by the amendment or supplement, and
compliance with any provision may be waived with the consent of the Holders of
a majority in principal amount of outstanding Securities of each series
affected by such waiver. However, without the consent of each Securityholder
affected, an amendment or waiver may not (i) reduce the amount of Securities
whose holders must consent to an amendment or waiver; (ii) reduce the rate of
or change the time for payment of interest on any Security; (iii) reduce the
principal of, or change the fixed maturity of, any Security; (iv) waive a
default in the payment of the principal of or interest on any Security; (v)
make any security payable in money other than that stated in the Security;
(vi) impair the right to institute suit for the enforcement of any payment on
or with respect to any Securities; or (vii) amend or terminate the Support
Agreement to the detriment of the Securityholders. (Section 9.02.)
The Indenture may be amended or supplemented without the consent of any
Securityholder (i) to cure any ambiguity, defect or inconsistency in the
Indenture or in the Securities of any series; (ii) to secure the Securities
under the circumstances set forth under "Liens on Assets" set forth above;
(iii) to provide for the assumption of all the obligations of the Company or
BellSouth, as the case may be, under the Securities and any coupons related
thereto and the Indenture in connection with a merger, consolidation or
transfer or lease of the Company's or BellSouth's property and assets
substantially as an entirety as provided for in the Indenture; (iv) to provide
for the assumption by BellSouth or a subsidiary thereof of all obligations of
the Company under the Securities and any coupons related thereto and the
Indenture; (v) to provide for the issuance of, and establish the form, terms
and conditions of, a series of Securities or to establish the form of any
certifications required to be furnished pursuant to the terms of the Indenture
or any series of securities; (vi) to provide for uncertificated Securities in
addition to or in place of certificated Securities; (vii) to add to rights of
Securityholders or surrender any right or power conferred on the Company; or
(viii) to make any change that does not adversely affect the rights of any
Securityholder. (Section 9.01.)
CONCERNING THE TRUSTEE
BellSouth and certain of its affiliates maintain banking relationships in
the ordinary course of business with the Trustee and certain of its
affiliates.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through dealers, (iv) through
underwriters or (v) through a combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions either (i) at a fixed price or prices, which may be
changed, (ii) at market prices prevailing at the time of sale, (iii) at prices
related to such prevailing market prices or (iv) at negotiated prices.
Offers to purchase Securities may be solicited directly by the Company or by
agents designated by the Company from time to time. Any such agent, which may
be deemed to be an underwriter as that term is defined in the Securities Act
of 1933, as amended (the "Securities Act"), involved in the offer or sale of
the Securities
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in respect of which this Prospectus is delivered will be named, and any
commissions payable by the Company to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment (ordinarily five business days or less).
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer, which may be deemed to be an underwriter as
that term is defined in the Securities Act, may then resell such Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
If an underwriter or underwriters are utilized in the sale, the Company and
BellSouth will execute an underwriting agreement with such underwriters at the
time of sale to them and the names of the underwriter will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales
of the Securities in respect of which the Prospectus is delivered to the
public.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company and BellSouth, to
indemnification against certain civil liabilities, including liabilities under
the Securities Act.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date or
dates. Institutions with which such contracts may be made include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (a)
the purchase of the Securities shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject and (b)
if the Securities are also being sold to underwriters, the Company shall have
sold to such underwriters the Securities not sold for delayed delivery. The
underwriters, dealers and such other persons will not have any responsibility
in respect of the validity or performance of such contracts.
LEGAL OPINIONS
Walter H. Alford, Executive Vice President and General Counsel of BellSouth,
is passing upon the legality of the Securities for the Company. Mr. Alford may
be deemed to beneficially own 32,495 shares of BellSouth Common Stock,
including interests through various BellSouth employee benefit plans.
On behalf of dealers, underwriters or agents, Davis Polk & Wardwell is
passing upon certain legal matters in connection with the offering of the
Securities.
EXPERTS
The financial statements of BellSouth included in its Annual Report on Form
10-K for the year ended December 31, 1996, and incorporated by reference
herein, have been audited by Coopers & Lybrand L.L.P., independent
accountants, to the extent and for the periods indicated in their report
relating to such financial statements, which is also incorporated by reference
herein, and have been so included in reliance upon the report of Coopers &
Lybrand L.L.P., given upon their authority as experts in auditing and
accounting.
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