WBD · 10-Q · 2026Q2 · Full report

Junior Lien Exchange Obligation

Warner Bros. Discovery, Inc. · 2026-08-06 · Importance 42 · Surprise 42 · In source text

Warner Bros. Discovery must cause subsidiaries to conduct a junior lien exchange offer for certain DGH and DCL senior notes under the PSKY Merger Agreement. The deadline to commence the offer was extended to March 4, 2027, subject to extension or earlier termination of the merger agreement. If the offer is not commenced by the applicable deadline or completed within 60 days, WBD would owe participating noteholders $100 per $1,000 principal amount, with an aggregate obligation of approximately $1.5 billion. PSKY delivered a Specified Request on May 19, 2026 and may be required to fund an alternative payment of up to $1.528 billion.

Key facts

• PSKY may deliver one Specified Request prior to October 15, 2026 requesting WBD to (i) effectuate a consent solicitation to eliminate or modify the Junior Lien Exchange Offer obligation, (ii) effectuate the Junior Lien Exchange Offer, or (iii) make a payment of $100 per $1,000 principal amount (the Amended Notes Payment Amount) not to exceed $1,528 million in the aggregate. source
• If the Junior Lien Exchange Offer is not commenced by the Exchange Offer Deadline or is not completed within 60 days of commencement, WBD will be required to pay a one-time cash payment of $100 per $1,000 principal amount or €100 per €1,000 principal amount to each participating holder, equal to an aggregate amount of approximately $1.5 billion. source
• Larry J. Ellison and an affiliated trust guaranteed $45.72 billion of the aggregate Merger Consideration in favor of WBD. source
• Termination under specified circumstances will require WBD to pay PSKY a termination fee of $3.0 billion and reimburse PSKY for any payment made by PSKY in connection with WBD’s obligation to complete the Junior Lien Exchange Offer up to $1,528 million and the Netflix Termination Fee. source
• On May 19, 2026 the Issuers commenced the 2026 Consent Solicitations to adopt Proposed Amendments to Existing WBD Indentures to, among other things, extend the deadline to commence the Junior Lien Exchange Offer and modify terms of future junior lien notes. source
• On May 19, 2026 PSKY commenced PSKY Tender Offers and PSKY Exchange Offers for certain notes issued by the Issuers, with settlement to occur promptly after expiration and on or promptly following the closing date of the PSKY Merger; the offers are subject to consummation of the PSKY Merger. source
• On May 27, 2026 the Issuers received required consents in the 2026 Consent Solicitations and entered into supplemental indentures amending the Existing WBD Indentures; PSKY paid the consent payments and related fees and expenses on the Issuers’ behalf in accordance with the PSKY Merger Agreement. source
• PSKY delivered the Specified Request to the Company on May 19, 2026 in connection with the 2026 Consent Solicitations. source

Impact estimates