The US president’s son-in-law. One of the largest alternative-asset managers. The CEO’s father who fleetingly commanded a fortune exceeding Elon Musk’s.
In a letter to the Warner Bros. board, Paramount Chief Executive Officer David Ellison said the financing partners his firm had lined up — which agreed to forgo governance rights — should help assure of its ability to clinch the deal.
“We are providing you with funds certain from one of the wealthiest families in the world, a domestic counterparty, while also eliminating any cross-conditionality, which should give WBD’s board complete comfort and certainty as to our ability to close in a timely fashion,” he wrote.
The latest financing package follows months of negotiations and reworked proposals as Paramount sought to win over Warner Bros. In all, Paramount made six overtures over 12 weeks. In one case, Ellison went to the Beverly Hills home of Warner Bros. CEO David Zaslav, the filing showed.
The iteration now on the table, submitted Dec. 4, includes a $54 billion so-called bridge loan split equally between Bank of America, Citigroup and Apollo. For the equity portion, the entirety will be guaranteed by the Ellison family and New York investment firm RedBird in “a radical simplification” of a previous plan after the Warner Bros. board expressed concerns, according to the filing.
His trust “has financial resources well in excess of what would be required to meet its commitments,” according to Paramount’s filing, citing 1.16 billion shares of Oracle worth about $252 billion. As of September he had already pledged about one-quarter of those as collateral against personal debt, according to the index.
That proposal from Dec. 1 also specified an $11.8 billion commitment from the Ellison family, a combined $24 billion from three Gulf-based sovereign wealth funds as well as pledges from RedBird and Affinity Partners. It wasn’t immediately clear from the filings on Monday whether those allocations had changed.
The PIF, Affinity Partners, L’imad and QIA have agreed to forgo any governance rights or board seats, which Paramount said would eliminate potential scrutiny from the US Committee on Foreign Investment in the United States.
Paramount’s debt package — secured by some of its assets — was designed with an eye on obtaining the combined company an investment-grade rating, according to people familiar with the matter who asked not to be identified discussing private information. Paramount is currently rated at BB+ by S&P Global Ratings, one level below investment grade, and BBB- by Fitch Ratings, which is on the cusp of junk.
Paramount’s interim Chief Financial Officer Andrew Warren said on a call Monday that the company expects ratings firms to grade the debt as investment grade, based on deleveraging plans in the roughly two years following the acquisition’s close. Chief Operating Officer Andy Gordon said about $17 billion of the $54 billion debt commitment is reserved to take out and extend an existing bridge loan that Warner Bros. already has.
