Warner Bros. (WBD) Stock: $15 Billion Loan Deal Priced Ahead of Paramount Merger

TLDR

• Warner Bros. Discovery has priced $15 billion in investment-grade loans — $13 billion and €1.72 billion — to replace a bridge facility tied to its Paramount Skydance acquisition.
• The loan was upsized twice, growing from roughly $10 billion, reflecting strong investor demand in credit markets.
• Both tranches priced at 99.75 cents on the dollar with margins 2.5 percentage points above benchmark.
• Investors buying at the discount could pocket a quick gain if the deal closes, since loans are typically repaid at par on ownership changes.
• The refinancing is a precursor to a broader ~$50 billion debt package from Bank of America and Citigroup to fund the full $110 billion merger.

Warner Bros. Discovery (WBD) stock edged up 0.74% on Wednesday as the company finalized terms on a $15 billion loan deal, setting the stage for its pending $110 billion merger with Paramount Skydance.

Warner Bros. Discovery, Inc., WBD

The deal includes a $13 billion dollar-denominated tranche and a €1.72 billion euro tranche — roughly $2 billion. Both priced at 99.75 cents on the dollar, with margins set at 2.5 percentage points above benchmark rates.

The loan was upsized twice this week. It started at approximately $10 billion before being raised on Tuesday and again on Wednesday following strong demand from institutional investors.

Proceeds will be used to refinance a $15 billion bridge loan already in place — short-term financing put in quickly when deals like this come together fast.

The JPMorgan-led bank group moved quickly to capitalize on favorable credit conditions, tightening price talk on Wednesday as investor appetite held firm.

Credit markets on both sides of the Atlantic are running hot. Despite macro uncertainty, corporate borrowers — both investment grade and high yield — are finding plenty of demand for new debt.

A Quick Trade for Investors

For buyers in the loan deal, the structure presents a potentially attractive near-term setup. Because loans are typically repaid at par when a company changes ownership, buying at 99.75 cents means investors may lock in a small but immediate gain if the Paramount deal closes as planned.

The acquisition was announced February 27 after a months-long bidding battle between Paramount and Netflix for Warner Bros. shareholders approved the transaction in April.

The WBD refinancing is separate from — and ahead of — a much larger debt package being put together to fund the full merger.

The Bigger Debt Picture

Bank of America and Citigroup are preparing to sell roughly $50 billion in debt to support the broader acquisition. That package is expected to include around $30 billion in investment-grade bonds, $12 billion in high-yield (junk) bonds, and $7.5 billion in loans.

That offering is described as one of the most highly anticipated debt sales of the year.

The $110 billion deal would combine two of Hollywood’s largest legacy media companies. The WBD loan deal, now fully priced, clears a key piece of the financing puzzle ahead of that larger transaction.

Commitments from investors were due Wednesday, with JPMorgan declining to comment on the specifics.

WBD stock was trading up 0.74% at the time of the deal’s pricing. Paramount Skydance (PSKY) was up 3.18% on the day.

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