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Wednesday, 3 August 2011

3rd UPDATE: Coca-Cola To Offer $2 Billion In Notes To Fund Exchange Offer

Adds launch levels in fifth paragraph.)


Coca-Cola Co. (KO) said it plans to offer $2 billion of senior notes as the beverage company aims to raise proceeds to fund an exchange offer of several series of notes.

The company intends to sell $1 billion of notes due in 2016 and another $1 billion to mature in 2021, saying the proceeds would be used to fund an exchange offer of up to $2 billion of notes issued by a subsidiary, Coca-Cola Refreshments USA Inc.

The maturity dates of the exchange offer vary from as early as 2012 to as late as 2036. The early participation payment per $1,000 principal amount of old notes accepted for exchange was generally set at $40, although it was $10 for two series of notes due in 2012.

The exchange offer expires at midnight EDT on Aug. 30, unless otherwise extended. A number of companies are using the record-low interest-rate environment to cut borrowing costs, although Coca-Cola didn't detail why it was launching the offer.

Both tranches launched at the narrow end of price guidance, suggesting good demand. The five-year notes launched with a risk premium of 57 basis points over Treasurys and the 10-year notes with a risk premium of 72 basis points over Treasurys.

Pricing is expected later Wednesday.

Leading the debt sale are BNP Paribas SA (BNPQY, BNP.FR), Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS).

This is the first time Coca-Cola has issued debt this year, according to data provider Dealogic. The company's last debt offering was for $4.5 billion in November 2010.

The deal has been rated Aa3 by Moody's Investors Service and A+ by Standard & Poor's.

Last month, Coca-Cola reported its second-quarter earnings rose 18%, boosted by the company's recent bottler acquisition and strong volume growth overseas. But results were muted closer to home due to the struggling economy.

Shares were up 1.4% to $68 in recent trading.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

--Nicole Hong contributed to this article.

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