(Dec 22): Netflix Inc has refinanced part of a US$59 billion ($76.1 billion) bridge loan to support its potential acquisition of Warner Bros Discovery Inc.
The streaming giant secured a US$5 billion revolving credit facility and two US$10 billion delayed-draw term loans to refinance part of the bridge facility it took out for its Warner Bros bid, according to a filing on Monday. That leaves US$34 billion for syndication.
Netflix agreed to a deal in early December that values Warner Bros’ studio and streaming assets at US$82.7 billion. Paramount Skydance Corp subsequently launched a hostile takeover offer, sparking a bidding war that will reshape the entertainment industry regardless of the winner. The rival bids entail multi-billion-dollar debt deals that rank among the largest in the past decade.
Warner Bros last week advised its shareholders to reject the Paramount bid in favour of its original agreement with Netflix. Warner Bros described Paramount’s offer for the entire company, which includes US$54 billion in debt commitments, as “inferior and inadequate,” and said the deal’s financing was too risky.
While Netflix has the support of Warner Bros’ board, it faces regulatory and political hurdles to get the acquisition over the line. Democratic Senator Elizabeth Warren of Massachusetts has branded the bid as an “anti-monopoly nightmare,” and Netflix has moved to reassure staff that it won’t result in studio closures.
Bridge loans
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Wells Fargo & Co, BNP Paribas SA and HSBC Holdings Plc are among the banks that provided Netflix with the unsecured bridge loan.
Bridge loans plug immediate financing gaps and are commonly used by companies preparing buyout bids. They’re typically replaced weeks or months later by more permanent and cheaper debt.
In Netflix’s case, the firm plans to tap capital markets to further reduce its bridge facility and extend its debt maturities. When it does, the debt will likely be rated investment grade since Netflix carries an A3 debt grade by Moody’s Ratings and A by S&P Global Ratings.
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Netflix relied on the junk-bond market in the early days of its business, but gained access to cheaper financing when it was upgraded to blue-chip status in 2023.
Uploaded by Magessan Varatharaja
