Paramount has launched a $44.4 billion debt offering to help finance its planned acquisition of Warner Bros. Discovery as the company awaits a federal judge’s decision on a settlement that could clear the final hurdle for the deal.
The David Ellison-led company began marketing the debt package on Monday, including investment-grade bonds and high-yield debt, as it prepares to fund the purchase of WBD.
In a filing with the US Securities and Exchange Commission, Paramount said the completion date of the acquisition remains uncertain because the merger depends on meeting or waiving conditions in the agreement.
The company set October 7 as a reference date for the debt offering.
Paramount has completed all other requirements for the transaction except approval of a proposed settlement in an antitrust lawsuit filed against the company by 12 state attorneys general led by California Attorney General Rob Bonta.
Ellison and Bonta announced the settlement last week, but US District Judge Araceli Martínez-Olguín did not approve it during a September 24 hearing.
The judge instead allowed time for opponents of the agreement to submit arguments, with responses due Monday. Paramount and the state attorneys general defended the settlement in their submissions.
The debt package includes about $32 billion in investment-grade financing issued in dollars and euros, alongside $12.4 billion in high-yield bonds, which typically carry higher interest costs.
Paramount said proceeds from the offering, combined with cash reserves, previously announced loans and equity financing, will be used to complete the Warner Bros. Discovery acquisition.
The company’s total debt financing plan stands at about $51.9 billion, including a $7.5 billion seven-year term loan that lenders began marketing last week.
Paramount has also arranged a $49 billion bridge loan as backup financing if permanent funding is not secured before the deal closes.
The company said it expects total cash payments to WBD shareholders to reach about $78 billion if the transaction closes on October 6. That figure includes the $31-per-share payment, additional fees and payments tied to WBD equity awards.
Paramount announced its WBD takeover plan in February, valuing the deal at about $80 billion in equity value and roughly $110 billion in enterprise value.
Warner Bros. Discovery reported about $34 billion in debt and $3.4 billion in cash as of June.
Paramount Skydance, with a market value of about $11.5 billion, is significantly smaller than WBD, which has a market value of about $77.4 billion.
After the acquisition, the combined company is expected to carry more than $80 billion in long-term debt as Paramount assumes WBD’s obligations and adds new borrowing to fund the deal.
The financing structure has raised concerns among critics because annual interest costs are expected to exceed $6 billion, while Ellison has targeted $6 billion in savings from combining the companies.
The equity financing includes up to $46.7 billion from the Lawrence J. Ellison Revocable Trust and $250 million from RedBird Capital.
However, subscription rights have been assigned to outside investors, including sovereign wealth funds from Saudi Arabia, Abu Dhabi and Qatar, as well as US investment bank LionTree.
The outside investors are expected to receive newly issued non-voting Paramount Class B shares after the deal closes.
Erizia Rubyjeana
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