Paramount Moves Ahead With $7.5 Billion Debt Raise, Part Of Package To Finance WBD Acquisition

Paramount has started syndication for a proposed senior secured term loan of $7.5 billion – a chunk of change it needs to fund the acquisition of Warner Bros. Discovery. It began the process after a legal settlement earlier this week paved the way for the merger to close.

Paramount intends to raise approximately $44.4 billion of additional secured debt plus previously announced financings and will “utilize the net proceeds of these borrowings, together with cash on hand and the net proceeds of the previously announced equity financing, to finance the purchase price for its previously announced acquisition of Warner Bros. Discovery and the repayment of certain existing debt,” the company said today.

On Monday, it settled an antitrust suit brought a group of 12 State Attorneys General led by California’s Rob Bonta. Bankers then started reaching out to investors ahead of the sale of what’s said to be $49 billion in total debt financing.

The judge in the case must approve the settlement.

That includes the $7.5 billion of investment-grade loans, which started moving forward today; about $30 billion of investment-grade bonds; and some $12 billion of second-lien bonds. Debt syndication is a collaborative process led by underwriters where a group of lenders pool resources to fund a large loan for one borrower – in this case Paramount.

Bank of America, Citigroup and Apollo underwrote the buyout debt package, one of the biggest ever and with many moving pieces, to fund the takeover.

The other half of the merger equation is equity, financing. Larry Ellison had personally committed to backstop over $40 billion in equity financing for the mega-deal, defrayed in large part by a trio of Middle Eastern sovereign wealth funds led by Saudi Arabia that agreed to come on as investors — and will wind up with hefty combined equity stake in the combined company.

A report in Semafor yesterday said Paramount was considering tapping Elon Musk and other wealthy individuals to join a syndicate of equity investors.