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Coca-Cola is a behemoth in every right. That means big profits and financial implications with a multi-billion-dollar price tag.<\/p>\n
The company, which sells its eponymous drink pretty much in every part of the world, has been in a long-drawn dispute with tax authorities in the U.S. over a $16 billion charge that it could possibly owe.\u00a0<\/p>\n
While the full amount hasn\u2019t come due yet, Coca-Cola is preparing for the possible cost by selling \u20ac1 billion in new debt, the <\/em>Financial Times<\/em><\/a> reported Thursday.<\/p>\n The beverage company said last week that it\u2019s preparing to pay $6 billion over unpaid taxes and interest about 15 years ago following a U.S. tax court ruling<\/a>.\u00a0<\/p>\n Coca-Cola plans to issue two \u20ac500 million bonds and apply the proceeds to \u201cpotential payments\u201d in its dispute with the Internal Revenue Service (IRS).\u00a0<\/p>\n The company\u2019s \u201creverse Yankee<\/a>\u201d move, wherein U.S.-based companies raise money in Euro or Sterling bond markets, has become more common among companies looking for debt financing<\/a> avenues. It allows American companies to take advantage of central bank monetary policies in different regions. It could also be a useful tool if they have sprawling European operations and need financial in the local currency.<\/p>\n In recent years, bike company Harley Davidson and consumer giant Colgate-Palmolive have resorted to the reverse Yankee<\/a> route. Earlier this year, Johnson & Johnson opted for this method to raise \u20ac2.5 billion by tapping on lower borrowing costs<\/a> in Europe.<\/p>\n This form of bond issuance saw a major spike in 2019<\/a> when the European Central Bank\u2019s stimulus push impacted bond yields in Europe. By May, roughly \u20ac30 billion had been raised in EU bonds by U.S.-based companies, according to Bank of America research.\u00a0<\/p>\n This bodes well for Europe as investors in the region can be exposed to American companies without undertaking the U.S. dollar debt\u2019s risk, according to investment firm<\/a> T.Rowe Price.\u00a0<\/p>\n Coca-Cola raised \u20ac1 billion in Euro bonds earlier this year, along with $3 billion in U.S. dollar bonds, which were intended to finance a deal and help offset the IRS case charges.\u00a0\u00a0\u00a0<\/p>\n The U.S. court judgment found that the Atlanta, Georgia-based had made \u201castronomical levels\u201d of profits by operating in low-tax countries and keeping that away from the eyes of U.S. authorities. That has resulted in a potential $16 billion liability as Coca-Cola has manufacturing locations worldwide and is enough to nullify a year and a half\u2019s profits at the soft drinks giant.\u00a0<\/p>\n Coca-Cola plans to appeal the court\u2019s decision.\u00a0<\/p>\n Representatives at the company didn\u2019t immediately return Fortune<\/em>\u2019s request for comment.<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n<\/div>\n