Law firm Milbank is reportedly working to bring together holders of Warner Bros. Discovery (NASDAQ:WBD) debt as investors weigh a proposed bond exchange linked to the media company’s planned merger with Paramount Skydance (NASDAQ:PSKY).
According to a Bloomberg report on Wednesday, Milbank held discussions with bondholders this week regarding a cooperation agreement that would allow creditors to negotiate collectively before the exchange offer expires on May 26.
Creditors Weigh Exchange Terms
The debt swap forms part of the financing structure for the roughly $110 billion transaction. Under the proposal, bondholders would exchange existing notes for newly issued securities backed by substantially all assets of the combined company.
Bloomberg reported that some investors have raised concerns over the economics of the offer, particularly because certain shorter-maturity bonds would receive enhanced coupon terms while some longer-dated debt would not.
Deadline Approaches
The offer comes as banks prepare a multibillion-dollar debt financing package to support the Paramount Skydance transaction. Bloomberg previously reported that lenders are expected to begin marketing roughly $49 billion of acquisition-related debt in the coming weeks.
Credit research firm CreditSights said bondholders may have limited time to coordinate a response because the exchange deadline falls during the Memorial Day holiday weekend, according to Bloomberg. The firm nevertheless recommended participation in the offer, citing potential risks for investors who choose not to exchange their holdings.
Warner Bros Discovery, Millbank and Paramount Skydance did not immediately respond to Benzinga‘s requests for comment.
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