North America Loan: Warner Bros Discovery’s US$17.5bn bridge loan
Splitting the difference
Warner Bros Discovery executed one of 2025's most notable liability management transactions, using the certainty of a US$17.5bn bridge loan commitment from JP Morgan to close a large notes tender offer ahead of its planned separation into two companies. In a year marked by ratings pressure and shifting market conditions, the deal stood out for its clarity of purpose, tight structuring and rapid execution.
The bridge loan was a central component of WBD’s capital reorganisation, supporting its split just three years after WarnerMedia and Discovery were combined in a US$43bn merger backed by US$41.5bn of bridge loans. The financing helped stabilise the process when the company was facing renewed ratings scrutiny.
WBD slipped from investment grade to a high-yield rating in the days after the tender offer announcement, but the senior secured bridge loan’s structure was attractive to lenders as it placed the facility ahead of more than US$30bn of unsecured debt.
“The size of the bridge allowed us to take out more than half the bonds that were being tendered for in cash, and above market prices. And helpfully, it was at a time when the former investment-grade debt was being downgraded to high-yield, so investment-grade portfolio holders had to sell,” said Lenny Carey, managing director in leveraged debt capital markets at JP Morgan, the original underwriter and lead bookrunner on the bridge loan.
Due to challenges in its linear television segment, S&P had already moved WBD into the high-yield bracket by the time the tender was announced. Moody’s and Fitch followed suit after the announcement, with the shift of WBD’s capital structure to approximately 50% secured from its then 100% unsecured basis given as one reason for their downgrades.
The sole underwrite by JP Morgan was announced in early June, and in less than three weeks the bank added 19 lenders to the commitment, closing the financing at US$17bn with an 18-month maturity. The quick turnaround was a testament to lender interest despite the company’s ratings transition and the complexity of the transaction.
The inclusion of language in the tender offer barring creditors from collectively boycotting any new debt issuance by the company, as well as the new secured bridge loan being senior to existing unsecured debt, raised some concerns among debt holders. Even so, the commitments contributed to 92% of the debt being redeemed.
The sole underwrite mandate helped maintain secrecy.
“The other thing that was very important was the risk of leaks. Had this leaked to the market, that would potentially have been an issue. The fact that we were able to do this derisks the whole concern about confidentiality,” said Vivek Lal, head of media and communications, leveraged finance, at JP Morgan.
The bridge loan features an escalating margin over SOFR as well as ratcheting duration fees. The full amount was borrowed on June 30 and remains in place, though competing bids submitted in December from Netflix and Paramount Skydance to acquire WBD, in whole or in part, are likely to supersede the planned split.