Warner Bros. Discovery Announces Early Results and Upsize of Previously Announced Cash Tender Offer

Rhea-AI Summary

Warner Bros. Discovery (WBD) announced early results and an increase in its cash tender offer for outstanding notes, raising the aggregate purchase price to approximately $2.615 billion. This allows for acceptance of principal amounts in the top 11 priority levels. The early tender deadline was May 22, 2024, and the offer expires on June 7, 2024, with the settlement date expected on June 12, 2024. Notes with the lowest priority level (12) are not expected to be accepted. The offer includes an early tender premium of $30 per $1,000 principal amount of notes accepted.

Positive

• Increased aggregate purchase price to $2.615 billion, reflecting higher investor interest.
• Early tender premium of $30 per $1,000 principal amount incentivizes early participation.
• Acceptance of notes up to priority level 11 shows strong demand management.

Negative

• Notes with priority level 12 not being accepted could disappoint some investors.
• Aggregate tender cap may limit participation for those tendering after the early deadline.
• No withdrawal rights post-early deadline may concern potential tenderers.

Financial Analyst

The announcement from Warner Bros. Discovery regarding the early results and upsize of the cash tender offer is a significant financial maneuver. A cash tender offer is a company's offer to purchase some or all of shareholders' shares at a specified price. This typically happens at a premium over the current market price. The upsize to $2.615 billion indicates strong participation interest, reflecting investor confidence. The acceptance of notes up to Acceptance Priority Levels 1 to 11 ensures a broad range of debt maturities are being addressed, which can be beneficial for longer-term financial stability. From an investor's perspective, the increase in the Aggregate Tender Cap implies that Warner Bros. Discovery is focused on optimizing its debt structure, which could reduce future interest expenses and improve cash flows.

The early tender premium of $30 per $1,000 principal amount provides an extra incentive for noteholders, likely driving the high participation rate. The move to retire debt implies better management of financial obligations and may positively impact future earnings by reducing interest obligations. However, this strategy's success will hinge on the effective use of remaining capital and maintaining liquidity. Notably, the terms of the tender offer and the strategic timing till the expiration date suggest a well-calibrated approach to financial management.

Market Research Analyst

Warner Bros. Discovery's cash tender offer and its subsequent upsize can be seen as a strategic move to restructure the company's debt portfolio effectively. This type of financial move often signals a company's intent to leverage prevailing market conditions to optimize its capital structure. By retiring higher-cost debt, the company can lower its overall interest obligations, potentially freeing up capital for other strategic investments or operational needs.

This initiative might be particularly significant in the context of the media and entertainment industry, where substantial capital is necessary for content creation and distribution channels. The willingness to pay an early tender premium further underscores the urgency and importance the company places on this debt restructuring effort. For retail investors, this is an indicator of proactive financial management. However, they should monitor how the company balances its growth investments versus debt repayments. The success of this tender offer will be reflected in the company's ability to manage its capital expenditures and maintain healthy operating margins moving forward.

NEW YORK, May 23, 2024 /PRNewswire/ -- Warner Bros. Discovery, Inc. ("Warner Bros. Discovery" or the "Company") today announced the early results of the previously announced cash tender offer (the "Tender Offer") by its wholly-owned subsidiaries, Warner Media, LLC, Discovery Communications, LLC and WarnerMedia Holdings, Inc. (each, an "Issuer" and together, the "Issuers") for the outstanding notes in the order of priority listed in the table below (together, the "Notes"). The Company also announced that the aggregate purchase price of the Notes that the Issuers intend to purchase in the Tender Offer is increased from the previously announced amount to an aggregate purchase price (excluding accrued and unpaid interest) of approximately $2.615 billion (the "Aggregate Tender Cap") of the Notes, an amount sufficient to accept in full the principal amount of Notes in Acceptance Priority Levels 1 to 11 tendered at or prior to 5:00 p.m., New York City time, on May 22, 2024, the early tender deadline for the Tender Offer (the "Early Tender Deadline"). Except as described in this press release, all other terms of the Tender Offer as described in the Offer to Purchase, dated May 9, 2024 (the "Offer to Purchase"), remain unchanged. Capitalized terms used but not defined in this press release have the meanings given to them in the Offer to Purchase. The Issuers do not expect to accept for purchase any Notes with Acceptance Priority Level 12.

The Tender Offer was announced on May 9, 2024 and is being made pursuant to the Offer to Purchase. According to information provided by the Tender and Information Agent for the Tender Offer, the following table presents the aggregate principal amount of each series of Notes that were validly tendered and not validly withdrawn as of the Early Tender Deadline.

Issuer	Title of Security	Aggregate Principal Amount Outstanding	CUSIP	Acceptance Priority Level (1)	Principal Amount Tendered and Accepted for Purchase
Discovery Communications, LLC	3.900% Senior Notes due 2024	$483,810,000	25470DBC2	1	$198,764,000
Scripps Networks Interactive, Inc	3.900% Senior Notes due 2024	$11,920,000	811065AC5	1	$1,036,000
Discovery Communications, LLC	4.000% Senior Notes due 2055	$1,643,454,000	25470DBL2 25470DBK4 U25478AH8	2	$1,139,625,000
Discovery Communications, LLC	4.650% Senior Notes due 2050	$959,344,000	25470DBH1	3	$656,796,000
Discovery Communications, LLC	4.950% Senior Notes due 2042	$284,940,000	25470DAG4	4	$53,366,000
Discovery Communications, LLC	4.875% Senior Notes due 2043	$514,735,000	25470DAJ8	5	$282,111,000
Discovery Communications, LLC	5.200% Senior Notes due 2047	$1,250,000,000	25470DAT6	6	$595,429,000
Discovery Communications, LLC	5.300% Senior Notes due 2049	$750,000,000	25470DBG3	7	$453,219,000
Warner Media, LLC	4.650% Global Notes due 2044	$12,817,000	887317AU9	8	$1,730,000
Warner Media, LLC	4.850% Global Notes due 2045	$17,017,000	887317AX3	9	$12,184,000
Warner Media, LLC	4.900% Global Notes due 2042	$21,215,000	887317AP0	10	$2,682,000
Warner Media, LLC	5.350% Global Notes due 2043	$31,893,000	887317AS4	11	$2,053,000
WarnerMedia Holdings, Inc	5.050% Senior Notes due 2042	$4,500,000,000	55903VBD4 55903VAN3 U55632AG5	12	-

(1)	Subject to the Aggregate Tender Cap and proration, the principal amount of each series of Notes that is purchased in the Tender Offer will be determined in accordance with the applicable Acceptance Priority Level (in numerical priority order with 1 being the highest Acceptance Priority Level and 12 being the lowest).

The Issuers' obligation to accept for purchase and to pay for the Notes validly tendered and not validly withdrawn pursuant to the Tender Offer is subject to the satisfaction or waiver, in the Issuers' discretion and subject to applicable law, of certain conditions, which are more fully described in the Offer to Purchase, including a financing condition which was satisfied on May 17, 2024.

Notes not accepted for purchase will be promptly credited to the account of the registered holder of such Notes with The Depository Trust Company

The consideration paid in the Tender Offer for each series of Notes that are validly tendered and not validly withdrawn and accepted for purchase will be determined in the manner described in the Offer to Purchase by reference to a fixed spread over the yield to maturity of the applicable Reference U.S. Treasury Security specified in the Offer to Purchase (the "Total Consideration"). Holders of Notes that are validly tendered and not validly withdrawn at or prior to the Early Tender Deadline and accepted for purchase are eligible to receive the applicable Total Consideration, which includes an early tender premium of $30.00 per $1,000 principal amount of the Notes accepted for purchase (the "Early Tender Premium").

Because the aggregate purchase price of Notes validly tendered and not validly withdrawn as of the Early Tender Deadline is expected to exceed the Aggregate Tender Cap, the Company will accept for purchase Notes subject to the Acceptance Priority Levels and proration as described in the Offer to Purchase, so as not to exceed the Aggregate Tender Cap, and holders who validly tender Notes following the Early Tender Deadline, but on or before the expiration of the Tender Offer at 5:00 p.m., New York City time, on June 7, 2024 (the "Expiration Time") will not have any of their Notes accepted for purchase.

The Total Consideration will be determined at 9:00 a.m., New York City time on May 23, 2024 (the "Price Determination Time").

Payments for Notes purchased will include accrued and unpaid interest, if any, from and including the last interest payment date applicable to the relevant series of Notes up to, but not including, the settlement date for such Notes accepted for purchase.

The settlement date for Notes that are validly tendered and accepted for purchase is expected to be June 12, 2024, three business days following the Expiration Time. In accordance with the terms of the Tender Offer, the withdrawal deadline was 5:00 p.m., New York City time, on May 22, 2024. As a result, tendered Notes may no longer be withdrawn, except in certain limited circumstances where additional withdrawal rights are required by law (as determined by the Issuers).

The complete terms and conditions of the Tender Offer are set forth in the Offer to Purchase, along with any amendments and supplements thereto, which holders are urged to read carefully before making any decision with respect to the Tender Offer. The Issuers have retained Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and MUFG Securities Americas Inc. to act as the Lead Dealer Managers, and Scotia Capital (USA) Inc. and Truist Securities, Inc. to act as the other Dealer Managers in connection with the Tender Offer. Copies of the Offer to Purchase may be obtained from D.F. King & Co., Inc., the Tender and Information Agent for the Tender Offer, by phone at +1 (212) 269-5550 (banks and brokers) or +1 (800) 791-3319 (all others), by email at WBD@dfking.com or online at www.dfking.com/WBD. Questions regarding the Tender Offer may also be directed to the Lead Dealer Managers as set forth below:

Lead Dealer Managers:
Deutsche Bank Securities Inc. 1 Columbus Circle New York, NY 10019 Attn: Liability Management Group Toll-Free: (866) 627-0391 Collect: (212) 250-2955	J.P. Morgan Securities LLC 383 Madison Avenue New York, NY 10179 Collect: (212) 834-4045 Toll-Free: (866) 834-4666	MUFG Securities Americas Inc. 1221 Avenue of the Americas, 6th Floor New York, NY 10020 U.S.: +1 (212) 405-7481 U.S. Toll-Free: +1 (877) 744-4532

This press release must be read in conjunction with the Offer to Purchase. This press release and the Offer to Purchase contain important information which should be read carefully before any decision is made with respect to the Tender Offer. If you are in any doubt as to the contents of this press release or the Offer to Purchase or the action you should take, you are recommended to seek your own legal, business, tax or other advice, including as to any tax consequences, immediately from your broker, bank manager, solicitor, accountant or other independent financial or legal adviser. Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, commercial bank, trust company or other nominee or intermediary must contact such entity if it wishes to participate in the Tender Offer. None of the Issuers, the Tender and Information Agent or any of the Dealer Managers, nor any director, officer, employee, agent or affiliate of any such person, is acting for any holder of Notes, or will be responsible to any holder of Notes for providing any protections which would be afforded to its clients or for providing advice in relation to the Tender Offer, and accordingly none of the Tender and Information Agent or any of the Dealer Managers, nor any director, officer, employee, agent or affiliate of any such person, assumes any responsibility for the accuracy of any information concerning any of the Issuers, the Company or the Notes or any failure by any of the Issuers to disclose information with regard to the Issuers, the Company or the Notes which is material in the context of the Tender Offer and which is not otherwise publicly available. 

To the extent permitted by applicable law and whether or not the Tender Offer is consummated, the Company or any of its subsidiaries or affiliates, including the Issuers, may from time to time following the Expiration Time acquire any Notes that remain outstanding in the open market, in privately negotiated transactions, through one or more additional tender offers, one or more exchange offers or otherwise, or may redeem Notes pursuant to the terms of the indentures governing them. Any future purchases or redemptions may be on the same terms or on terms that are more or less favorable to holders of Notes than the terms of the Tender Offer. Any future purchases or redemptions by the Company or any of its subsidiaries or affiliates will depend on various factors existing at that time. There can be no assurance as to which, if any, of these alternatives (or combinations thereof) the Company or any of its affiliates will choose to pursue in the future. The effect of any of these actions may directly or indirectly affect the price of any Notes that remain outstanding after the consummation or termination of the Tender Offer.

This press release is neither an offer to purchase nor a solicitation of an offer to sell any securities. The Tender Offer is being made only by, and pursuant to the terms of, the Offer to Purchase. The Tender Offer does not constitute an offer to buy or the solicitation of an offer to sell Notes in any jurisdiction in which such offer or solicitation is unlawful. The Tender Offer is void in all jurisdictions where it is prohibited. In those jurisdictions where the securities, blue sky or other laws require the Tender Offer to be made by a licensed broker or dealer, the Tender Offer shall be deemed to be made on behalf of the Issuers by the Dealer Managers or one or more registered brokers or dealers licensed under the laws of such jurisdiction. None of the Issuers, the Tender and Information Agent, the Dealer Managers or any trustee for the Notes is making any recommendation as to whether holders should tender Notes in response to the Tender Offer. Holders must make their own decision as to whether to tender any of their Notes, and, if so, the principal amount of Notes to tender.

About Warner Bros. Discovery:

Warner Bros. Discovery (NASDAQ: WBD) is a leading global media and entertainment company that creates and distributes the world's most differentiated and complete portfolio of branded content across television, film, streaming and gaming. Available in more than 220 countries and territories and 50 languages, Warner Bros. Discovery inspires, informs and entertains audiences worldwide through its iconic brands and products including: Discovery Channel, Max, discovery+, CNN, DC, TNT Sports, Eurosport, HBO, HGTV, Food Network, OWN, Investigation Discovery, TLC, Magnolia Network, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, Warner Bros. Motion Picture Group, Warner Bros. Television Group, Warner Bros. Pictures Animation, Warner Bros. Games, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies, Discovery en Español, Hogar de HGTV and others. For more information, please visit www.wbd.com.

This press release contains certain "forward-looking statements." These forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties and on information available to the Company as of the date hereof. The Company's actual results could differ materially from those stated or implied, due to risks and uncertainties associated with its business, which include the risks related to the acceptance of any tendered Notes, the expiration and settlement of the Tender Offer, the satisfaction of conditions to the Tender Offer, whether the Tender Offer will be consummated in accordance with the terms set forth in the Offer to Purchase or at all and the timing of any of the foregoing, as well as the risk factors disclosed in the Company's Annual Report on Form 10-K, filed with the SEC on February 23, 2024, and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 9, 2024. Forward-looking statements in this release include, without limitation, statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future, and can be identified by forward-looking words such as "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

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SOURCE Warner Bros. Discovery, Inc.

FAQ

What is the new aggregate purchase price for Warner Bros. Discovery's tender offer?

The new aggregate purchase price is approximately $2.615 billion.

When did the early tender deadline for Warner Bros. Discovery's tender offer pass?

The early tender deadline passed on May 22, 2024.

What is the expiration date of Warner Bros. Discovery's tender offer?

The expiration date is June 7, 2024.

Will Warner Bros. Discovery accept notes with priority level 12 in the tender offer?

No, notes with priority level 12 are not expected to be accepted.

What is the early tender premium offered by Warner Bros. Discovery?

The early tender premium is $30 per $1,000 principal amount of notes accepted.