Banks Proceed with $6.2 Billion Warner Bros. Debt Repayment Ahead of Merger

Warner Bros. Discovery Secures $6.2 Billion in Leveraged Loans Ahead of Paramount Acquisition

A group of banks led by JPMorgan Chase & Co. has initiated a multi-billion dollar leveraged loan sale for Warner Bros. Discovery Inc. as the company takes advantage of favorable credit markets to reduce its debt ahead of its acquisition by Paramount Skydance Corp.

The offering consists of two tranches: a $5 billion US dollar facility and a €1 billion ($1.16 billion) portion. The seven-year debt will help refinance an existing temporary credit facility, according to a person with knowledge of the matter. The proposed financing comes ahead of the $110 billion consolidation of two of Hollywood's largest legacy media companies, a deal which both Moody's Ratings and S&P Global Ratings have said will spike leverage at the combined entity.

Warner Bros. is capitalizing on strong demand in credit markets that has helped a number of deals negotiate better pricing, as investor appetite outpaces new supply. According to a Moody's report on Tuesday, the new loan contains a change-of-control clause that triggers a full repayment if that condition is met. Warner Bros. said in April it expects its deal with Paramount to close in the third quarter. The pair agreed to combine in February, after Paramount beat out Netflix Inc. following a months-long bidding war.

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A representative for JPMorgan declined to comment. Representatives for Warner Bros. didn't have an immediate comment.

Separately, bankers are preparing to sell $49 billion of debt to back the acquisition, Bloomberg reported earlier on Tuesday. A premarketing process is expected to launch as soon as the next couple of weeks, people familiar with the matter said.

A lender call is scheduled for Wednesday and commitments are due on May 27. If the loans are fully repaid when the acquisition closes within months as expected, the mechanics of the deal are still likely compelling, according to another person familiar with the matter. The loan has a sixth month so-called soft call protection of 101 cents, meaning buyers get 2 cents upon its refinancing in addition to the coupon.

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Warner Bros.' latest $6.2 billion transaction follows a series of refinancings over the past year. When the company announced plans to split itself in half in June 2025, it said separately that it had a $17.5 billion bridge facility provided by JPMorgan. Warner Bros. subsequently replaced that initial bridge facility with another roughly $15 billion financing, a piece of which is being addressed by today's new loan. Bridge financings are typically more expensive than longer-term loans.

S&P and Moody's both assigned the lowest investment-grade rating to the loans on Tuesday, citing the debt's senior position in the capital structure. The agencies maintained the highest junk rating on Warner Bros. S&P anticipates downgrading the entity once the acquisition closes, saying the deal will likely "significantly raise leverage."