Paramount Skydance has entered a significant new stage of its proposed purchase of Warner Bros. D Discovery by launching a huge debt issue intending to fund a billion-dollar media merger deal. The firm revealed plans to raise about dollars44.4 billion in secured notes, among the biggest ever corporate bond in the entertainment industry.
This follows Paramount closing its debt portion to finance the planned purchase of Warner Bros. Discovery in a deal reportedly worth around dollars 110 billion. The package involves a mixture of bonds, cash, loans, and equity funding previously planned.
On September 28, Paramount Skydance disclosed that it intends to sell approximately $44.4 billion aggregate principal amount of the senior secured notes. Some of the securities will be U.S. dollar-dominated first-lien notes, and some will be dollar- and euro-dominated second-lien notes. These offerings are contingent on market conditions and other conditions to closing.
Based on the Bloomberg data published about US$32 billion of the issue will be raised through investment-grade debt with the rest, US$12.4 billion, from high-yield bonds. This investment-grade issue is pyramid into a series of maturities from two years to a maximum of 40 years.
The magnitude of the proposal is indicative of the vast amount of money needed to help one of the largest proposed media transactions of recent years.
The new bond issue is only one part of Paramount’s overall approach to financing. The company has launched syndication for a proposed $7.5 billion senior secured term loan. Paramount has said that the proceeds from the extra debt combined with cash on hand and receipts from announced financing will be used to fund the acquisition of Warner Bros. Discovery.
The total financing package is anticipated to include over $50 billion of new debt. The company is also relying on recently arranged equity financing as part of their overall funding mix. This milestone is mainly significant as the original acquisition of the forest scene calls for a significant capital inflow to close.
The proposed merger would unite two of the biggest entertainment groups. Warner Bros. Discovery owns the Warner Bros. Film and TV division, as well as the enormous collection of networks and streaming business under the ownersip of HBO and Discovery, whereas Paramount owns its film studio as well as CBS and its streaming platform, Paramount+
This would have resulted in a much larger entertainment company covering the areas of film, television, streaming, and other media businesses.
The transaction has begun to probe a number of regulatory and legal issues. Paramount disclosed at the beginning of this month that it had received a green light for transactions in 69 venues; litigation had but been holding up final approval.