Paramount Skydance Launches $44.4 Billion Notes Offering to Help Fund WBD Acquisition

Paramount Skydance launched an offering of approximately $44.4 billion in secured notes on Monday as it assembles permanent financing for its planned acquisition of Warner Bros. Discovery. The proposed debt sale is one of several funding sources Paramount intends to use for the cash purchase, alongside cash on hand, previously announced term loans and equity financing.

The company said the offering will include U.S. dollar-denominated senior secured first-lien notes and U.S. dollar- and euro-denominated senior secured second-lien notes. Paramount has not yet set the principal amount of each series, interest rates, currency mix or maturities. Those terms, and the completion of the offerings, remain subject to market and other conditions.

The $44.4 billion sale is part of a broader financing plan

Paramount said net proceeds from the new notes are intended to help fund the WBD purchase price and repay certain existing debt. The company is marketing the securities to qualified institutional buyers under Rule 144A of the Securities Act and to non-U.S. persons outside the United States under Regulation S. Except for registration rights attached to the first-lien notes, the securities are not being registered under the Securities Act.

The size of Monday’s launch should not be read as a final cash contribution of exactly $44.4 billion to the acquisition. The figure refers to the approximate aggregate principal amount Paramount intends to offer. Net proceeds will depend on the final pricing and terms, while the mix of first-lien and second-lien debt has not yet been disclosed publicly. Paramount also said completion of the notes offerings is not a condition to closing the WBD acquisition.

The launch follows another financing step announced on September 24, when Paramount began syndication of a proposed $7.5 billion senior secured incremental Term B facility. At that time, the company said it expected to raise about $44.4 billion of additional secured debt beyond that facility and previously announced financing. Monday’s notes launch puts that additional debt plan into the market, although final pricing and allocation across the individual series are still to be determined.

Paramount’s original February financing framework was larger than any single debt issuance. When the companies signed their agreement, Paramount said the acquisition was backed by $47 billion of equity funding from the Ellison Family and RedBird Capital Partners and $54 billion of debt commitments from Bank of America, Citigroup and Apollo. The debt commitments included $15 billion intended to backstop WBD’s existing bridge facility and $39 billion of incremental new debt. A separate $3.5 billion bridge facility to backstop Paramount’s revolving credit facility was excluded from that $54 billion figure.

Paramount agreed to pay $31 a share in cash for WBD

The February 27 agreement calls for Paramount to acquire all outstanding WBD shares for $31.00 per share in cash. Paramount said at signing that the terms implied approximately $81 billion of equity value and $110 billion of enterprise value for WBD. The legal structure uses a merger subsidiary that will merge into WBD, leaving Warner Bros. Discovery as a wholly owned Paramount subsidiary if the acquisition closes.

WBD shareholders approved the merger agreement at a special meeting on April 23. Paramount also announced a series of competition clearances during the year, including approvals in the United States, European Union and United Kingdom. The acquisition has nevertheless remained pending into late September, past the original expectation that it would close during the third quarter.

The agreement includes an additional payment if closing extends beyond September 30. WBD shareholders are entitled to a $0.25-per-share amount for each quarter after that date, calculated daily until closing. With September 30 approaching, the financing work is occurring close to the point at which that additional payment begins to accrue if the acquisition is still outstanding.

Paramount has also been working on WBD’s existing debt alongside its own new financing. Earlier in the year it launched cash tender offers for certain WBD notes and exchange offers that would replace specified WBD securities with new Paramount debt. Those efforts are separate from the $44.4 billion offering announced Monday, but they form part of the broader balance-sheet work surrounding the acquisition.

Final debt pricing will shape the post-acquisition balance sheet

The missing terms of the notes sale matter because the interest rates and maturity schedule will determine how much financing cost Paramount carries after closing. First-lien debt generally has a higher claim on pledged collateral than second-lien debt, while the planned euro-denominated portion adds another currency component to the capital structure. Paramount has not yet disclosed enough detail to calculate a final annual interest burden from Monday’s launch.

When the acquisition was announced, management projected a net debt-to-EBITDA ratio of 4.3 times at closing on a basis that included its expected cost savings. Paramount also said it saw a path to investment-grade credit metrics within three years. Those figures are management targets, not realized results, and the eventual leverage profile will depend on the financing terms, operating performance and the extent to which anticipated cost savings are achieved.

The company’s February materials estimated more than $6 billion of annual synergies from the acquisition. Paramount has since told ratings agencies that it intends to reduce net debt to adjusted EBITDA below 3.75 times by fiscal 2028 and below 3.0 times by fiscal 2029. Those deleveraging goals raise the importance of the price and maturity profile of the debt being placed now because the enlarged company would begin with a substantial borrowing load.

For now, Monday’s announcement marks the launch rather than the completion of the $44.4 billion notes sale. Investors still do not have the final coupon rates, maturities, exact first-lien and second-lien allocations or euro-versus-dollar split. Paramount’s next financing disclosure should provide those details if the notes are successfully priced, while the acquisition itself remains subject to its remaining closing requirements.