Netflix Secures Revolving, Term Loans For Warner Bros Deal – Lines Up $25B In Fresh Credit

• Netflix finalized a $5 billion senior unsecured revolving credit agreement and arranged two senior unsecured delayed draw term loan facilities totaling $20 billion.
• The financing provides a more stable platform for Netflix to finalize its WBD acquisition.
• On December 5, Netflix announced a deal to acquire Warner Bros’ film and television studios, in a cash-and-stock transaction totaling $82.7 billion.

Netflix Inc. (NFLX) has secured a significant new financing structure to support its acquisition of Warner Bros. Discovery, Inc. (WBD), by replacing part of its previous bridge loan with a more stable funding structure for the high-profile deal.

On December 5, Netflix inked a deal with WBD to acquire Warner Bros., including its film and television studios, HBO, and HBO Max, in a cash-and-stock transaction totaling $82.7 billion. 

New Credit Facilities

On December 19, Netflix finalized a $5 billion Senior Unsecured Revolving Credit Agreement. The revolving facility can be used to cover the cash portion of the purchase price, pay related fees, refinance certain debts, and fund general corporate purposes.

In addition, Netflix arranged two Senior Unsecured Delayed Draw Term Loan facilities totaling $20 billion, one with a two-year term and the other with a three-year term. These loans also help finance the Warner Bros. acquisition, with the flexibility to repay early without penalty.

Netflix stock inched 0.6% higher in Monday’s premarket. On Stocktwits, retail sentiment around the stock remained in ‘bearish’ territory amid ‘normal’ message volume levels.  

Loan Terms And Flexibility

Both the revolving and term loans offer floating interest rates based on either an Alternate Base Rate plus margin or a Term SOFR rate plus margin. Conditions include maintaining a minimum earnings before interest, taxes, depreciation, and amortization (EBITDA)-to-interest ratio of 3.0:1 and restrictions on additional secured debt. 

The financing provides a more stable platform for Netflix to finalize its WBD acquisition while efficiently managing debt costs. In a latest development, Paramount Skydance Corp. (PSKY) confirmed that Oracle’s (ORCL) co-founder Larry Ellison has committed to personally guarantee $40.4 billion of the equity financing for the acquisition.

WBD’s board shot down Paramount’s proposal last week, citing red flags related to funding stability and deal structure.

NFLX stock has gained over 5% year-to-date. 

Also See: Why Did UniFirst Stock Surge 37% Pre-Market Today?

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