Paramount’s Blockbuster Debt Sale for WBD Takeover Hits the Market With $7.5B Loan 

Paramount Skydance has kicked off the syndication process for its highly anticipated $52 billion debt package to fund its takeover of Warner Bros. Discovery, or WBD, in one of the largest leveraged buyout financings on record that could draw strong demand from the hot primary market.

A lender call was held this morning by lead arranger Citi for a new $7.5 billion cross-border term loan B, which is the first of several debt offerings expected for the total debt financing.

The seven-year loan will be split between a $6.5 billion dollar first lien tranche and a $1 billion-equivalent euro tranche. Price talk on the offering is set at SOFR+275 bps-300 bps and 99.5 OID, with commitments due Wednesday, Sept. 30, at 9 a.m. ET for the euro tranche and 12 p.m. ET for the dollar tranche.

The offering comes days after Paramount reached a settlement on Sept. 21 with California and other states, including the Writers Guild Trade Union, which had sued to block the proposed $110 billion acquisition of WBD. Although underwriting for the massive debt package began in February when the acquisition was announced, premarketing for the deal had been on hold since the lawsuit began in July.

Proceeds from the total $52 billion debt financing, alongside an equity investment and cash on hand, will be used to fund the $81.1 billion equity purchase price of WBD and refinance WBD’s outstanding $14.7 billion secured term loan, according to documents reviewed by Octus. The acquisition is also backed by a $3.5 million backstop of Paramount’s existing revolver issued in April. The contours of the proposed transaction are in line with those outlined during the Warner Bros. consent solicitation this May.

In addition to the proposed $7.5 billion loan, permanent financing is expected to include $32 billion of new first lien secured debt, including the company’s recently issued term loans A-1 and A-2 and $12.4 billion of newly issued second lien debt. The capital structure will also include $12.7 billion of second lien secured exchange notes, $14.6 billion rolled existing Paramount Global unsecured notes, $2.6 billion rolled existing WBD unsecured notes and $0.7 billion rolled existing finance leases, according to documents viewed by Octus. Bank of America and Apollo have also provided debt commitments, alongside Citi.

The new loan is expected to receive strong demand in the leveraged loan market, said investors who pointed to its scale, earnings power and broad set of global media assets spanning streaming, studios and consumer products.

Paramount executives said on the lender call that the company plans to keep the combined assets intact, believing that the advantage of broadcast network, linear assets and scaled streaming together will work in Paramount’s favor. The company also said the credit documentation is market standard for an acquisition of this credit quality, in reference to covenant protections against potential future divestitures, sources told Octus.

The Ellison family, RedBird Capital Partners and other financial partners, such as Public Investment Fund, L’Imad Holding, Qatar Investment Authority and LionTree, are also investing $47 billion of equity in the transaction, at a formula-based price with a $12 per share floor. Paramount Skydance stock closed at $10.18 today, according to Koyfin.

The company is marketing the combined entity off of a combined annual revenue for the LTM period ended June 2026 of $65.2 billion and combined adjusted EBITDA of $18.7 billion, including $6 billion of estimated synergies. The synergies are expected to be realized within three years after close.

The $6 billion target drew numerous questions in a Q&A portion, sources noted. However, one investor said he believes the target is tied to real operations and expressed confidence in its feasibility given Paramount exceeded its synergy goals since the Skydance merger in 2025. The synergy target plan consists of consolidating streaming technology stacks and cloud providers, including Paramount+ and HBO Max, as well as optimizing real estate and corporate overhead. Paramount said on the call that the acquisition settlement from the recent lawsuit will not affect the synergy plan, as the company did not plan to sell the Hollywood movie lots. It also expects no labor reductions in its synergy calculations.

A prior Octus analysis highlighted the company’s “starting position” of high pre-synergy leverage, reliance on the declining linear TV business and negative pro forma free cash flow. Octus analysis also highlights concerns with the company’s floated $6 billion synergies assumption, noting the potential cost of implementing the synergies as well as the potential dis-synergies from consolidating streaming platforms that have meaningful customer overlap and higher sports rights payments.

After the transaction, the combined company net leverage would be 6.5x pre-synergies and 4.4x after synergies, according to company documentation.

On the call, Paramount said it designed the capital structure and equity investment to meet its objective of investment-grade credit metrics and a net leverage of 3x by 2029. The company said that it has not contemplated any significant strategic transactions prior to achieving investment-grade metrics, and added that deleveraging may be accelerated via additional equity or divestitures. Paramount plans to maintain the dividend of 20 cents per share annually, subject to board determination prior to closing.

Paramount plans to maintain ample liquidity through an expected new $5 billion RCF and $5 billion of cash on the balance sheet at close, sources added.

On a pro forma scale, the combined company will have over $30 billion of combined content spending and over 200 million subscribers.

Paramount brings a large platform along with core strengths in creative execution and technology, investors noted. They highlighted the direct-to-consumer platform anchored by marquee live sports, such as the NFL, UFC, UEFA and March Madness, and the plan to keep the assets intact.

The combined entity will also feature several influential pieces of current and prior Hollywood IP, including “The Godfather,” “South Park,” “Harry Potter” and “Game of Thrones.” It will oversee both CBS News and CNN and several legacy linear TV networks.

The company believes that the integration extends the life of its linear business, currently the largest cash flow generator, while accelerating streaming synergies through the convergence of three large platforms: HBO Max, Paramount+ and Pluto. The company expects to be a content juggernaut, noting that its underlying business model expects a new movie in theaters every 11 days and a new movie on streaming sites every 90 days after, according to sources.

Paramount holds Ba3 / BB / BB+ corporate credit ratings from Moody’s Ratings, S&P Global Ratings and Fitch Ratings, respectively. The proposed $7.5 billion loan received a Ba1 / BBB- / BBB- facility rating.

The remaining debt for the financing, including a high-yield bond offering, is expected in the coming days.

As reported earlier today, the California district court overseeing the company’s settlement is expected to issue an order on the proposed consent decree that memorialized the settlement in “due course.” Among other things, the court directed parties to respond to a letter filed by U.S. Sen. Cory Booker, D-N.J., by Monday, Sept. 28, at 3 p.m. ET.

An estimate of the company’s pro forma capital structure, based on data disclosed as part of the May consent solicitation, is shown below, with leverage figures cited on a pre-synergy basis:
 

Citi declined to comment.