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NEW YORK - Warner Bros. Discovery, Inc. (WBD), currently valued at $26.87 billion in market capitalization, announced Tuesday the pricing terms for cash tender offers by its subsidiaries to purchase substantially all of their outstanding notes and debentures. According to InvestingPro data, the entertainment giant carries $37.4 billion in total debt, making this tender offer a significant step in its debt management strategy.
The tender offers, conducted by Discovery Communications, WarnerMedia Holdings, Warner Media, and Historic TW, include specific total consideration amounts for each $1,000 or €1,000 principal amount of notes validly tendered by the June 23 early tender deadline. With a current ratio of 0.84, InvestingPro analysis indicates that WBD’s short-term obligations exceed its liquid assets, highlighting the strategic importance of this debt restructuring initiative.
Due to high participation rates, several note series will be subject to proration. For Pool 1 Notes, the company will accept all tendered 4.900% Senior Notes due 2026 and 1.90% Senior Notes due 2027, while the 3.755% Senior Notes due 2027 will be accepted at approximately 68% of tendered amounts.
For Pool 2 Notes, both the 4.302% Senior Notes due 2030 and 4.693% Senior Notes due 2033 will be prorated at approximately 58%. In Pool 3, the 3.950% Senior Notes due 2028 will be accepted at approximately 20% of tendered amounts.
The company plans to settle all accepted notes on June 30, 2025, subject to satisfaction of certain conditions, including a financing condition.
Holders whose notes were not fully accepted due to proration may be eligible to receive amended notes providing options for additional cash payments or Junior Lien Exchange Notes, according to the terms outlined in the offer documents.
J.P. Morgan Securities is serving as lead dealer manager for the offers, with Evercore Group as co-dealer manager.
The article is based on a company press release statement.
In other recent news, Warner Bros. Discovery has announced several significant developments. The company is moving forward with its strategic reorganization, planning to split into two publicly traded entities: Streaming & Studios and Global Networks. This separation is anticipated to enhance focus and shareholder value. As part of this transition, Warner Bros. Discovery has signed new employment agreements with top executives, including CEO David Zaslav and CFO Gunnar Wiedenfels, to ensure leadership continuity. These agreements include revised compensation packages, with Zaslav’s focusing more on long-term equity incentives.
Additionally, Warner Bros. Discovery has disclosed its intention to exercise an early settlement right related to its cash tender offers, aiming for completion by June 30, 2025, contingent upon necessary consents and conditions. The company has also been downgraded by Fitch Ratings to ’BB+’ due to concerns about reduced diversification and elevated leverage post-separation. Fitch has placed the ratings on Watch Negative, indicating potential further downgrades depending on the final capital structure.
UBS has maintained its Neutral rating on Warner Bros. Discovery, with a price target of $9.00, acknowledging the company’s reorganization plans. Warner Bros. Discovery is also initiating a debt tender offer to reduce its gross debt, supported by a $17.5 billion bridge loan. The company aims to retain a 20% equity stake in the Streaming & Studios segment, which it plans to sell to decrease leverage further. These recent developments reflect Warner Bros. Discovery’s efforts to streamline operations and improve its financial position amidst industry challenges.
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