Coca-Cola Agrees to Increase Stake in Tri-Star Pictures

Tri-Star Pictures announced Thursday that its largest shareholder has agreed to increase its stake, paying a premium over the market price to invest another $50 million in the 5-year-old entertainment company.

If approved by Tri-Star’s board next week, a subsidiary of Coca-Cola Co. will acquire 3.3 million new shares of common stock at $15 per share. The new shares would increase Coca-Cola’s ownership interest to 29.3%, up from 23.4% on a fully diluted basis.

The news spurred trading in Tri-Star shares, which closed at $11.375, up $1.375, in over-the-counter trading, with 530,300 shares changing hands.

‘Vote of Confidence’

Tri-Star Chairman Victor A. Kaufman “indicated that he feels it’s a very big vote of confidence. He’s feeling very happy,” said Harold Vogel, a securities analyst at Merrill Lynch.

New York-based Tri-Star said it intends to use the proceeds to reduce bank debt, accelerate in-house production of motion pictures and expand Loews Theaters, the recently acquired movie theater chain.

Lewis J. Korman, Tri-Star’s senior executive vice president, said the company not only gained an equity infusion and the enhanced commitment by Coca-Cola, but tried to minimize any “disruption of the stock market.” New offerings in the past have depressed Tri-Star’s price, Korman said.

Kaufman, noting that the company already has a net worth of $250 million, said Tri-Star is in “very strong financial” shape. “This is just to help (the company) grow.”