Warner Bros. Discovery, Inc. (WBD, Financial) has announced a significant financial development with the entry into a new multicurrency revolving credit agreement. This agreement, effective as of October 4, 2024, involves Discovery Communications, LLC (DCL) and several wholly-owned subsidiaries of WBD as borrowers, with Bank of America, N.A. serving as the administrative agent, swing line lender, and L/C issuer.
The newly established credit agreement replaces the previous $6 billion multicurrency revolving credit agreement dated June 9, 2021. The new facility maintains the same aggregate commitment of $6 billion and includes a $150 million sublimit for standby letters of credit. Additionally, DCL has the option to request an increase of up to $1 billion in aggregate commitments, subject to lender approval and certain conditions.
This senior revolving credit facility is unsecured and guaranteed by WBD, Scripps Networks Interactive, Inc., and WarnerMedia Holdings, Inc. The facility is designed to support general corporate purposes and allows borrowing in U.S. dollars and other specified foreign currencies. The loans will bear interest based on a floating rate, which may include Term SOFR, the Base Rate, EURIBOR, TIBOR, or SONIA, depending on the currency of borrowing, plus a margin that varies with WBD’s or DCL’s debt ratings.
The credit facility is available on a revolving basis until October 4, 2029, with options to extend the maturity by an additional 364 days, twice, subject to lender consent. Borrowers have the flexibility to prepay loans or reduce commitments without penalties, aside from customary breakage costs.
Warner Bros. Discovery's new credit agreement includes customary representations, warranties, and covenants, including limitations on liens, indebtedness, and transactions with affiliates. The agreement also imposes a limitation on mergers and asset dispositions. Furthermore, it requires DCL to maintain specific financial ratios, including a Consolidated Interest Coverage Ratio and a Consolidated Leverage Ratio, starting from the fiscal quarter ending December 31, 2024.
This strategic financial move by Warner Bros. Discovery aims to enhance the company's liquidity and financial flexibility, positioning it well for future growth and operational needs.
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