Paramount/Skydance trims takeover debt

Paramount Skydance just changed the plumbing on its Warner Bros. Discovery takeover before the house is even built. In an April 9 filing, it cut the deal’s long-term debt commitments to $49 billion from $54 billion and dropped a separate $3.5 billion credit line. (variety.com) The deal itself is enormous: Paramount agreed on February 27 to buy Warner Bros. Discovery for about $110 billion to $111 billion, paying Warner Bros. Discovery shareholders $31 a share in cash. The companies said they still expect the merger to close in the third quarter of 2026, if regulators and Warner Bros. Discovery shareholders approve it. (paramount.com) (wmbdradio.com) This is what “restructuring the financing” means in plain English: the buyer is swapping part of a short-term bridge loan for longer-lasting bank debt before the closing date. Bridge loans are the emergency cash that lets a takeover sign first and refinance later. (bloomberg.com) The new package includes two $2.5 billion term loans, one maturing in three years and one in five years, plus a new $5 billion revolving credit facility. At the same time, the banks sold pieces of the financing to a wider club of 18 lenders instead of leaving so much risk with the original backers. (bloomberg.com) (variety.com) The original debt commitments came from Bank of America, Citigroup, and Apollo, and this week’s syndication spread that exposure out across more banks. Deutsche Bank and Wells Fargo were among the lenders added to the permanent financing group. (paramount.com) (bloomberg.com) (variety.com) Paramount has also been trying to shrink the amount it needs to borrow by raising more equity. Earlier in April, it said sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi, along with LionTree Investment Fund, had agreed to invest nearly $24 billion, including roughly $10 billion from Saudi Arabia’s Public Investment Fund. (variety.com) That matters because the combined company is still set to start life with a very heavy balance sheet. Reuters reported Paramount said in March that the post-merger company would carry net debt of just under $80 billion, after Paramount ended last year with $10.36 billion in net debt and Warner Bros. Discovery ended with $29 billion. (wmbdradio.com) The strategy behind the merger is scale. Paramount told investors the combined group would pair franchises like Mission: Impossible, Top Gun, and SpongeBob SquarePants with Warner Bros. Discovery properties like Harry Potter, Game of Thrones, and the DC Universe, while promising at least 30 theatrical films a year. (paramount.com) The catch is that giant media mergers are not won on movie posters alone. They are won in bond markets, bank meetings, and shareholder votes, and Paramount’s next hard date is Warner Bros. Discovery’s special shareholder meeting on April 23. (variety.com) So the April 9 debt shuffle is less a victory lap than a stress test. Paramount is showing lenders, regulators, and shareholders that it can keep a $111 billion takeover funded even while credit markets stay jumpy and the closing is still months away. (bloomberg.com) (wmbdradio.com)