Bankers, including Citigroup, Bank of America, and Apollo Global Management, are preparing to sell $49 billion in financing that will back Paramount Skydance Corp.'s $110 billion takeover of Warner Bros. Discovery Inc. This move comes after the deal successfully cleared a series of state-led antitrust lawsuits that had previously stalled the acquisition. The debt package, one of the largest buyout debt packages on record, garnered significant investor interest when it was initially underwritten earlier this year.
The $49 billion financing package is composed of approximately $30 billion in investment-grade bonds, $7.5 billion in investment-grade loans, and roughly $12 billion in second-lien bonds. This structure aims to attract a broader base of dollar and euro investors than typically seen in leveraged buyouts, as it combines both high-grade and junk debt. Notably, the debt structure is designed to protect Paramount from potential financial strain due to rising borrowing costs, placing the risk on lenders through uncapped interest rates.
The merger, which faced delays due to legal challenges, is now cleared to proceed. Regulatory approvals have been secured from nearly 70 jurisdictions, and the Federal Communications Commission and other federal agencies have signed off on the foreign financing involved. As part of the settlement agreements for the lawsuits, Paramount committed to investing an additional $1.5 billion in U.S. film productions over the next five years.
Bankers anticipate a quick sale of the debt once it is launched, aiming to utilize financial metrics from earlier in the year before they become outdated. Should the debt sale not be finalized before the deal closes, the underwriting banks will initially provide the debt, with Paramount paying them interest until the debt can be sold to investors. This acquisition will significantly consolidate the entertainment industry, giving Paramount control over two major Hollywood studios, two key streaming services, and numerous television channels like CBS and HBO.
Representatives for Warner Bros., Paramount, Apollo, Bank of America, and Citigroup did not immediately respond to requests for comment regarding the impending debt sale.
