Netflix refinances part of $59 billion loan with cheaper, long-term debt as it seeks to acquire Warner Bros
Streaming giant Netflix Inc is joining Warner Bros. by refinancing part of its $59 billion bridge loan with cheaper, long-term debt, according to a report by Bloomberg. Strengthened financial support for its bid to acquire Discovery Inc.
According to the application filed on Monday, Netflix, Warner Bros. It obtained a $5 billion revolving line of credit and two $10 billion delayed-term loans to refinance part of the bridge facility used for its tender. This leaves $34 billion for syndication, the report said.
In early December, Netflix reached a deal that valued Warner Bros. studio and broadcast assets are $82.7 billion. Following this, Paramount Skydance Corp., Warner Bros. launched a hostile takeover bid for , sparking a bidding war that would transform the entertainment industry no matter who won. Both proposals involve multibillion-dollar debt arrangements, making them some of the biggest deals of the past decade.
Last week, Warner Bros. urged its shareholders to reject Paramount’s offer and stick to their original deal with Netflix. The report stated that the studio described Paramount’s offer, which included a $54 billion debt commitment, as ‘low and inadequate’ and expressed concerns that the financing of the deal posed too much risk.
Although Netflix has the support of the Warner Bros. board, it faces regulatory and political challenges to complete the acquisition. Democratic Senator Elizabeth Warren of Massachusetts called the proposal “an anti-monopoly nightmare” while Netflix assured employees that the studios would not be closed.
What are bridge loans?
Bridging loans cover immediate financing needs and are often used by companies making acquisition offers. Usually, after a few weeks or months, they are replaced by more stable and affordable loans, often distributed among multiple lenders.
Although short-term, these loans allow banks to develop relationships with companies, paving the way for receiving instructions with higher payments in the future. Currently, with credit markets remaining stagnant, banks are competing intensely for the limited opportunities that arise.
Wells Fargo & Co., BNP Paribas SA and HSBC Holdings Plc are among the banks that provided unsecured bridge loans to Netflix.
Details of refinancing
The debt announced on Monday will be paid at different times. If the acquisition goes ahead, the revolving credit facility, which provides flexible borrowing and repayment, will mature in 2030 or within three years of completion of the deal, whichever comes first. Referring to the statement, the report stated that the maturities of the loans whose maturity was postponed were planned to be completed within two and three years, respectively.
He added that Netflix is expected to access capital markets to reduce its bridge loan and extend debt maturities.
The firm was reliant on the junk bond market in its early stages, but has secured more affordable financing after being upgraded to blue chip status in 2023.
