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Executive Summary

Warner Bros. Discovery subsidiaries received requisite consents from holders of ~$18.2B in aggregate principal amount of 16 series of senior notes to amend indentures, extending the deadline to commence an exchange offer for junior lien secured notes from December 30, 2026 to March 4, 2027 (the 'End Date' under the Paramount Skydance merger agreement). The amendments also modify the terms of any post-closing exchange notes to remove restrictive covenants and align with the acquisition financing structure. Paramount will fund the $2.50 per $1,000 consent payment regardless of whether the acquisition closes.

Key Financial Metrics

Key Facts

• Consents received from holders of not less than a majority in aggregate principal amount of each series of notes, voting as one class.
• Consent solicitation expired at 5:00 PM NY time on May 26, 2026; supplemental indentures executed same day, operative upon payment date expected May 29, 2026.
• Exchange Offer Deadline extended from December 30, 2026 to the End Date of March 4, 2027 (as defined in the Merger Agreement), with a fallback to the later of December 30, 2026 or 90 days post-termination if the Merger Agreement is terminated.
• If the acquisition closes, the Junior Lien Exchange Notes will not include restricted debt prepayments or limitation on liens covenants, will be senior guaranteed by WBD and secured by assets junior to the Applicable Take-Out Facility.
• If the acquisition does not close, the Junior Lien Exchange Notes terms revert to those described in the June 9, 2025 offer to purchase, with modifications for the Principal Bridge Take-Out Facility or Take-Out Bonds.
• Consent payment of $2.50 per $1,000 principal amount will be paid by Paramount on behalf of the issuers; Paramount funds all consent solicitation costs regardless of acquisition completion.
• Aggregate principal amounts outstanding across all 16 series total approximately $18.2 billion; consent delivery rates ranged from 79.04% to 99.18%.
• Failure to commence or complete the exchange offer within 60 days triggers a $100 per $1,000 principal amount cash payment to holders.

Financial Impact

Consent payment of $2.50 per $1,000 principal on ~$18.2B in notes = ~$45.5M total, funded by Paramount. Potential $100/$1,000 cash payment (~$1.82B) if exchange offer not commenced/completed post-closing or post-termination.

Risk Factors

• Acquisition may not close by March 4, 2027 End Date, triggering fallback exchange offer terms with potentially different covenant protections.
• If exchange offer not commenced/completed within 60 days of closing or termination, WBD must pay $100/$1,000 (~$1.82B) in cash, increasing near-term cash outflow.
• Post-closing Junior Lien Exchange Notes will lack restrictive covenants (no limitation on liens, no restricted debt prepayments), reducing bondholder protections.
• Bridge facility (Non-Investment Grade Leveraged Bridge Loan Agreement) remains outstanding and may need to be refinanced if acquisition closes.

Market Snapshot

Investment Themes

Documents Analyzed

This report is based on 8 SEC documents filed with EDGAR.

US Market Status

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