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NEW YORK - Warner Bros. Discovery, Inc. (NASDAQ: WBD) has initiated a significant debt reduction effort, offering to repurchase up to $14.6 billion of its outstanding notes through its subsidiaries. With total debt standing at $37.4 billion as of Q1 2025, according to InvestingPro data, this comprehensive buyback program includes a consent solicitation process to amend terms related to the debt.
The tender offers target various series of notes with staggered priority levels and are subject to caps that limit the total amount that can be repurchased from each series. Notably, the offers are structured to incentivize early participation by offering an "Early Tender Premium" to holders who act before the designated early deadline.
The consent solicitation seeks approval from note holders to modify the governing indentures, which may enhance the company’s financial flexibility. Participation in the consent process may yield additional payments to consenting holders, with the potential amounts depending on the series of notes and the level of participation.
To be eligible for the full consideration, including the early tender premium, note holders must tender their notes by the early deadline, which is 5:00 p.m. New York City time on a date to be determined, unless extended or terminated at Warner Bros. Discovery’s discretion. The final deadline for the offers is set for July 9, 2025, at 5:00 p.m. New York City time, with the same conditions for extension or termination.
The total consideration for each series of notes will be calculated based on fixed spreads over corresponding reference treasury securities or interpolated rates, with specific pricing to be determined on a date following the early deadline.
The initiative is part of Warner Bros. Discovery’s broader strategy to streamline its capital structure and reduce debt following the merger that created the media and entertainment giant. With a current ratio of 0.84 and short-term obligations exceeding liquid assets, the company’s move reflects its proactive management of liabilities in a dynamic market environment. InvestingPro analysis indicates the stock is currently undervalued, with a strong free cash flow yield of 18%. Discover more insights about WBD and 1,400+ other stocks with InvestingPro’s comprehensive Research Reports.
The offers and consent solicitations are being managed by J.P. Morgan Securities LLC and J.P. Morgan Securities plc, serving as lead dealer managers, with Evercore Group L.L.C. acting as co-dealer manager. Legal counsel for the transaction is provided by Kirkland & Ellis LLP for the issuer and Simpson Thacher & Bartlett LLP for the dealer managers.
This announcement is based on a press release statement and is intended for informational purposes only. It does not constitute an offer to purchase or a solicitation of an offer to sell securities. Note holders are advised to review the full terms and conditions outlined in the Offer to Purchase and Consent Solicitation Statement and consult with their financial and legal advisors. For investors seeking deeper analysis, InvestingPro offers extensive financial metrics and 10 additional exclusive ProTips about Warner Bros. Discovery’s financial health, valuation, and market position.
In other recent news, Warner Bros. Discovery announced plans to divide into two independent publicly traded companies, aiming to enhance strategic focus and flexibility. This separation will create a Streaming & Studios company and a Global Networks company, with completion expected by mid-2026. The company has also revealed a rebranding of its streaming platform, Max, back to HBO Max, following significant growth in its streaming business. This move is part of a strategy to focus on high-quality content and expand its global subscriber base. Meanwhile, S&P Global Ratings downgraded Warner Bros. Discovery’s credit rating to ’BB+’ due to weakening credit metrics, though the company maintains a stable outlook by balancing declines in linear networks with growth in streaming and studios. BofA Securities reiterated a Buy rating for Warner Bros. Discovery, expressing confidence in the company’s valuable assets despite some financial challenges. Raymond James adjusted its financial outlook, lowering the stock target from $13.00 to $12.00, while maintaining an Outperform rating, citing a stronger-than-expected adjusted EBITDA but a revenue shortfall. The analyst noted the potential for a rebound in the Studios segment and highlighted the company’s strong asset portfolio.
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