Coke Will Sell Some Assets of Columbia Unit

Coca-Cola said Tuesday that it plans to raise $750 million in cash by selling some financial assets from its entertainment businesses so that it can reinvest the money in higher return areas within its Columbia Pictures unit and other operations.

The Atlanta-based company said the “entertainment receivables” consist largely of the future rights to television and theatrical projects owned by Columbia. It did not say to whom it plans to the sell the assets, and company representatives could not be reached for further comment.

Coca-Cola said that, as is often the case in the entertainment industry, it had “generated large receivable balances and other value from contractual rights” involving exhibition of its theatrical and television properties during the three years since it acquired Columbia.

Owns Stake on Tri-Star

In addition to Columbia Pictures and Columbia Pictures Television, Coca-Cola owns a one-third interest in Tri-Star Pictures.

Coca-Cola said it expects proceeds of about $400 million to be received within two weeks and another $350 million will follow “a short time later.” The money will be used for high-return investments, to repay some of the company’s short-term debt and for a possible share repurchase later this year, the company said.

“The sizable funds generated by this activity enhance corporate flexibility and are in line with our stated strategy of constantly seeking ways to increase return on assets, which translates to improved return on equity,” said M. Douglas Ivester, Coca-Cola’s chief financial officer.

“Entertainment receivables and other contractual rights represent financial assets, not operating assets,” Ivester said. “Financial assets of this type are more appropriately carried by financial institutions, which have capital structures significantly different from that of our company.”

“Here they have these receivables locked up,” said Donald Lupa, an analyst with Duff & Phelps in Chicago. Converting the assets to cash “is just a ploy to get a better return,” he said.