KO
Coca Cola CO
NYSE
8-K: Coca-Cola Announces Multi-Billion Dollar Debt Offering
Sentiment:
Debt Offering Announcement
8 May 2024 5:07 PM
Coca-Cola has entered into agreements for a multi-billion dollar debt offering in both US dollars and Euros to raise capital for general corporate purposes.
Capital raise
The company is raising $3 billion through the issuance of US dollar-denominated notes.
The company is raising 1 billion through the issuance of Euro-denominated notes.
Summary
- The Coca-Cola Company has announced a public offering of debt securities in two tranches: one denominated in US dollars and the other in Euros.
- The US dollar offering includes $1 billion of 5.000% notes due 2034, $1.1 billion of 5.300% notes due 2054, and $900 million of 5.400% notes due 2064.
- The Euro offering consists of 500 million of 3.125% notes due 2032 and 500 million of 3.500% notes due 2044.
- The dollar notes offering is expected to close around May 13, 2024, and the euro notes offering is expected to close around May 14, 2024.
- The company intends to use the net proceeds for general corporate purposes, including working capital, capital expenditures, acquisitions, and debt repayment, as well as potential payments related to ongoing tax litigation with the IRS.
Sentiment
Score: 7
Explanation: The sentiment is moderately positive as the company is securing funding at reasonable rates, but there are risks associated with increased debt and ongoing litigation.
Positives
- The debt offerings provide Coca-Cola with significant capital for various corporate purposes.
- The company has secured funding at fixed interest rates, which provides predictability in financing costs.
- The offerings are being made under an existing shelf registration, which simplifies the process.
- The company has a strong credit rating, which allows it to secure favorable terms on its debt.
Negatives
- The company is taking on additional debt, which will increase its leverage.
- The interest payments on the new debt will increase the company's expenses.
- The company is using some of the proceeds to pay for potential tax litigation, which is not a productive use of capital.
Risks
- The company's ability to repay the debt depends on its future financial performance.
- Changes in interest rates could impact the company's cost of borrowing in the future.
- The ongoing tax litigation with the IRS could result in significant financial liabilities.
- There is a risk that the closing conditions for the offerings may not be met.
Future Outlook
The company intends to use the net proceeds from the offerings for general corporate purposes, which may include working capital, capital expenditures, acquisitions of or investments in businesses or assets and redemption and repayment of short-term or long-term borrowings, as well as for making any potential payments in connection with the company's ongoing tax litigation with the United States Internal Revenue Service.
Industry Context
This debt offering is consistent with the trend of large corporations taking advantage of favorable interest rates to raise capital for various purposes. Coca-Cola, as a well-established company, is able to access the debt markets at competitive rates.
Comparison to Industry Standards
- Coca-Cola's debt offering is comparable to other large, stable consumer goods companies that frequently tap the debt markets for funding.
- For example, PepsiCo has also issued debt in recent years to fund acquisitions and other corporate activities.
- The interest rates on Coca-Cola's notes are in line with current market rates for investment-grade corporate debt.
- The use of proceeds for general corporate purposes is a common practice among large corporations.
Stakeholder Impact
- Shareholders may see a short-term dilution of earnings per share due to the increased debt.
- Employees may benefit from the company's ability to invest in growth and operations.
- Customers will likely not be directly impacted by this debt offering.
- Suppliers may benefit from the company's continued financial stability.
- Creditors will have increased exposure to the company's debt.
Next Steps
- The Dollar Notes Offering is expected to close on or about May 13, 2024.
- The Euro Notes Offering is expected to close on or about May 14, 2024.
- The company will use the net proceeds for general corporate purposes.
Legal Proceedings
- The company intends to use some of the proceeds from the debt offerings for potential payments related to its ongoing tax litigation with the United States Internal Revenue Service.
Key Dates
- 2022-10-28: The company's shelf registration statement on Form S-3 was filed with the SEC.
- 2024-05-06: The Coca-Cola Company entered into the Dollar Notes Underwriting Agreement.
- 2024-05-07: The Coca-Cola Company entered into the Euro Notes Underwriting Agreement.
- 2024-05-08: Date of the 8-K report.
- 2024-05-13: Expected closing date for the Dollar Notes Offering.
- 2024-05-14: Expected closing date for the Euro Notes Offering.
Keywords
debt offering, notes, bonds, capital raise, underwriting agreement, Coca-Cola, corporate finance, fixed income, securities, Euro notes, Dollar notes
KO
Coca Cola CO
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
26 June 2025 11:33 AM
Current Report
- Operating income decreased by 12% in 2024, indicating a decline in core profitability.
- Net cash provided by operating activities significantly decreased by 41% due to the large IRS tax litigation payment, impacting liquidity.
- The company recorded substantial 'Other Operating Charges' including a $760 million impairment for the BodyArmor trademark and a $3,109 million remeasurement of the fairlife contingent consideration liability, indicating significant one-time or non-recurring negative impacts on profitability.
Delay expected
26 June 2025 11:33 AM
Current Report
- Certain initiatives included in the company's productivity and reinvestment program, primarily designed to further simplify and standardize the organization, have been delayed and will now be completed during 2025.
Worse than expected
1 May 2025 3:38 PM
Quarterly Report
- Net operating revenues decreased by 2% due to foreign currency fluctuations and strategic divestitures.
Delay expected
1 May 2025 3:38 PM
Quarterly Report
- Certain initiatives included in the productivity and reinvestment program, which are primarily designed to further simplify and standardize our organization, have been delayed and will be completed during 2025.
Worse than expected
29 April 2025 6:58 AM
Quarterly Report
- Net revenues declined 2% due to currency headwinds and refranchising, indicating worse performance than expected.
- Free cash flow was negative $5.5 billion due to a large contingent consideration payment, indicating worse performance than expected.
Worse than expected
20 February 2025 3:17 PM
Annual Results
- Operating income decreased by 12% due to higher commodity costs, selling, general and administrative expenses, other operating charges, the impact of refranchising, and unfavorable foreign currency exchange rate impact.
Worse than expected
24 October 2024 11:55 AM
Quarterly Report
- The company's operating income decreased by 23% in Q3 2024 compared to Q3 2023.
- The company's net operating revenues decreased by 1% in Q3 2024 compared to Q3 2023.
- The company recorded a $760 million impairment charge related to the BodyArmor trademark.
Worse than expected
23 October 2024 7:00 AM
Quarterly Report
- The company's net revenue declined by 1%, and operating income decreased by 23%, indicating worse than expected results.
- EPS declined by 7%, which is worse than expected.
- The company's cash flow from operations and free cash flow decreased due to a $6.0 billion payment to the IRS, which is worse than expected.
Capital raise
15 August 2024 4:10 PM
Debt Offering Announcement
- The Coca-Cola Company completed a public offering of 1 billion euros in aggregate principal amount of euro-denominated notes.
- The offering includes 500 million euros of 3.375% notes due in 2037 and 500 million euros of 3.750% notes due in 2053.
Capital raise
14 August 2024 4:14 PM
Debt Offering Announcement
- The Coca-Cola Company completed a public offering of $3 billion in senior notes.
- The offering included $750 million of 4.650% notes due in 2034, $1.5 billion of 5.200% notes due in 2055, and $750 million of 5.400% notes due in 2064.
- The company intends to use the net proceeds for general corporate purposes.
Capital raise
9 August 2024 4:24 PM
Debt Offering Announcement
- Coca-Cola is raising $3 billion through a debt offering.
- The offering is split into a US dollar-denominated offering and a euro-denominated offering.
- The US dollar offering includes $750 million of 4.650% notes due 2034, $1.5 billion of 5.200% notes due 2055, and $750 million of 5.400% notes due 2064.
- The euro offering includes 500 million of 3.375% notes due 2037 and 500 million of 3.750% notes due 2053.
Worse than expected
29 July 2024 3:54 PM
Quarterly Report
- Operating income decreased by 17% for the first six months of 2024, indicating a worse performance compared to the same period last year.
- The company recorded significant other operating charges of $2.943 billion for the first six months of 2024, negatively impacting profitability.
- The potential tax liability of $16 billion due to the ongoing dispute with the IRS is a significant financial risk.
Better than expected
23 July 2024 6:58 AM
Quarterly Report
- The company's organic revenue growth of 15% exceeded expectations.
- The company raised its full-year guidance for organic revenue growth to 9-10% and comparable EPS growth to 5-6%.
Capital raise
14 May 2024 4:08 PM
Debt Offering Announcement
- The Coca-Cola Company completed a public offering of €1 billion in Euro-denominated notes.
- The offering was split into two tranches: €500 million of 3.125% notes due in 2032 and €500 million of 3.500% notes due in 2044.
Capital raise
13 May 2024 4:13 PM
Debt Offering Announcement
- Coca-Cola completed a public offering of $3 billion in aggregate principal amount of U.S. dollar-denominated notes.
- The offering included three tranches with different maturities and interest rates.
- The proceeds will be used for general corporate purposes and potentially for tax litigation payments.
Capital raise
8 May 2024 5:07 PM
Debt Offering Announcement
- The company is raising $3 billion through the issuance of US dollar-denominated notes.
- The company is raising 1 billion through the issuance of Euro-denominated notes.
Worse than expected
2 May 2024 1:52 PM
Quarterly Report
- The company's operating income decreased by 36% due to a $760 million impairment charge related to the BodyArmor trademark and a $765 million charge related to the remeasurement of a contingent consideration liability for fairlife.
Worse than expected
30 April 2024 6:58 AM
Quarterly Report
- The company's reported operating income declined by 36%, significantly worse than expected due to substantial charges related to the fairlife acquisition and the BODYARMOR trademark impairment.
Better than expected
13 February 2024 6:57 AM
Quarterly and Annual Earnings Release
- Organic revenue growth exceeded expectations, demonstrating strong underlying business performance.
- Global unit case volume growth indicates continued demand for Coca-Cola products despite market challenges.
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