Paramount's Massive Debt Sale Powers Warner Merger Push

Paramount is selling a huge pile of debt. Forty-four point four billion dollars worth. The money goes toward buying Warner Bros Discovery. But a judge still needs to sign off. California's attorney general and eleven others sued over antitrust concerns. They reached a settlement last week. The judge said not so fast. She wants to hear objections first. Those were due today.

The debt package has two flavors. Thirty-two billion in investment-grade bonds. Twelve point four billion in junk bonds with higher rates. Banks say demand looks strong. Total borrowing could hit fifty-one point nine billion. There's also a forty-nine billion bridge loan waiting in the wings. If the deal closes around October seventh, Paramount pays Warner shareholders seventy-eight billion in cash. That includes a thirty-one dollar per share price plus fees.

Warner carries thirty-four billion in existing debt. Paramount is much smaller by market value. Eleven point five billion versus seventy-seven point four billion. The combined company would owe over eighty billion long-term. Yearly interest payments top six billion. That scares some observers. The boss David Ellison promises six billion in savings from combining operations.

Equity money comes from Larry Ellison's trust and RedBird Capital. But they're not paying directly. They passed their rights to outside investors. Saudi Arabia, Abu Dhabi, Qatar sovereign funds. Plus a US firm called LionTree. These investors get new nonvoting shares. The trust guarantees the funding comes through.