Discovery raises $30 billion in mega debt sale to fund pending WarnerMedia merger

Discovery on Wednesday, secured $30 billion of senior unsecured notes in a debt offering to raise funds for its merger with WarneMedia.

The sale of the notes – in 11 tranches with a range of maturities and interest rates – is expected to be completed on or around March 15. The money is being raised by an entity created within A&T, and the net proceeds will be used by another, called Spinco, to fund a special cash payment to the telecommunications giant. The Notes will initially be guaranteed by AT&T then, post-merger, by the new Discovery of Warner Bros. and its subsidiaries.

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The offering is one of the largest in the company’s history and was reportedly oversubscribed.

This is part of the complex transaction first unveiled in May and which is close to closing, with the second half of April looking good. Discovery shareholders must formally approve the merger and are expected to do so at a special meeting of shareholders on Friday. Next, it’s a technical issue related to AT&T’s separation of its media and entertainment business.

When the Discovery transaction closes, AT&T shareholders will own 71% of Warner Bros. Discovery. They will receive 0.24 shares of Warner Bros. Discovery for each AT&T stock held. So a holder of four shares of AT&T would end up with about one share of Warner Bros. Discovery. Then there could be some short-term volatility in Warner Bros. stock. Discovery – WBD ticker – depending on what new holders choose to do with the stock.

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John A. Bogar