Banks have finished selling about $52 billion of debt to fund Paramount Skydance’s purchase of Warner Bros Discovery. The money comes at a high cost for the US media company, Moneyweb reported.
Paramount sold $30 billion of US dollar investment-grade debt. It also sold junk bonds worth about $12.4 billion and $9.46 billion of loans. This is according to people familiar with the deal.
The longest bond in the deal is a blue-chip note that will be repaid in 2066. It will pay investors a yield of almost 9%.
The debt sale was delayed for months. Court cases stopped Paramount from completing its Warner deal sooner. Two legal settlements finally cleared the way for the offering.
The wait has made the loans more expensive. Borrowing now, and not three months ago, will cost the company hundreds of millions of dollars more in interest each year. Fears about rising prices around the world have pushed up borrowing rates.
The investment-grade bonds were sold in eight parts. The extra yield investors earn over US government Treasuries became smaller during the sale. Still, three of these notes will pay more than 8%.
That is rare for this type of debt. Only two US investment-grade notes issued this year have paid such high yields, according to data compiled by Bloomberg.
Apollo Global Management, Bank of America and Citigroup led the offering.
On the junk bond side, Paramount sold $11.4 billion of US dollar bonds in three parts. It also sold a euro note worth €885 million, or about $1 billion, which runs for five years.
Prices for the junk bonds stayed mostly in line with early talks, a separate person said. A 10-year US dollar note was sold at a yield of about 9.13%. The five-year euro note was priced at 7%.
Paramount had earlier dropped plans for an eight-year euro high-yield bond. On Tuesday, it cut the investment-grade bond sale by $2 billion. It raised the loan part of the funding by the same amount.
As a result, the company raised $8.5 billion through a US dollar loan. Its first plan was to raise $6.5 billion this way.
Paramount also raised €850 million, or about $963 million, through a euro loan. The loans carry an interest rate of 2.75 percentage points above their benchmark rates.
The bonds and loans were first expected to be sold around the middle of the year. The plan was put on hold while the Warner deal faced legal challenges.
Paramount agreed to buy Warner Bros Discovery in a $110 billion deal. It beat Netflix in a bidding war for the company. The deal will create one of the biggest entertainment groups in the world.
Apollo, Bank of America and Citigroup gave Paramount the first round of funding for the Warner purchase. They then sold the debt on to a group of 18 banks.
Source: this article is based on reporting by Moneyweb. Image: Moneyweb. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.