Paramount has begun marketing a $44.4 billion debt offering to help finance its planned acquisition of Warner Bros. Discovery, moving ahead with the funding effort while a federal judge considers the final outstanding condition needed to complete the transaction.

The David Ellison-led company said in an SEC filing Monday that it has met every closing requirement except court approval of a proposed settlement resolving an antitrust lawsuit brought by 12 state attorneys general. California Attorney General Rob Bonta leads the group.

Paramount cautioned investors that timing remains unsettled. “The actual closing date of the acquisition is uncertain,” the company said, adding that the merger would be completed only after the conditions in the WBD merger agreement are satisfied or waived. Paramount used October 7 as a marker for purposes of the debt offering.

The court decision still pending

Ellison and Bonta unveiled their settlement agreement a week ago, but U.S. District Judge Araceli Martinez-Olguin did not approve it during a September 24 hearing. The judge instead allowed several days for opposition briefs.

Responses were due by noon PT Monday. Both Paramount and the attorneys general defended the proposed settlement as the court weighed whether to sign off on it. Until that happens, the judicial review remains the last hurdle standing between Paramount and the closing of the WBD acquisition.

Inside Paramount’s financing plan

The newly marketed $44.4 billion package includes approximately $32 billion of investment-grade debt denominated in dollars and euros. Another $12.4 billion equivalent is being offered through high-yield bonds, which carry higher interest rates.

Bank of America and Citigroup hosted calls Monday to market the debt. Those efforts were said to have attracted sufficient demand to cover the offering.

Paramount plans to combine the proceeds with cash on hand, previously announced term-loan borrowings and equity financing to pay for the acquisition. Its broader debt-financing transactions total $51.9 billion, including a $7.5 billion, seven-year Term B loan that lenders began marketing last week.

The company has also arranged a $49 billion bridge loan as contingent financing. That facility would be available if the permanent financing is not ready when the deal closes.

Using an assumed October 6 closing date, Paramount calculated that its total cash consideration to WBD common stockholders would be $78 billion. That figure includes the $31-per-share payment, approximately one week of a “ticking fee” beginning October 1 and about $1.1 billion payable at closing for vested WBD equity awards.

A smaller company taking on a larger target

Paramount announced the proposed WBD purchase in February, assigning it an equity value of roughly $80 billion and an enterprise value of approximately $110 billion. The equity value represents the cash going to WBD shareholders, while the enterprise value also accounts for debt and cash.

As of June, Warner had approximately $34 billion in debt and $3.4 billion in cash. Paramount Skydance, with a market capitalization of $11.5 billion, is substantially smaller than WBD, whose market capitalization stands at $77.4 billion.

The combined company is expected to carry more than $80 billion in long-term debt as Paramount assumes WBD’s obligations and adds borrowing used to finance the purchase. Annual interest costs will be well above $6 billion, a burden that has concerned critics of the transaction. Ellison has set a target of $6 billion in synergies across the merged operation.

Equity backers join the deal

The equity-financing plan includes up to $46.7 billion, plus ticking fees, from the Lawrence J. Ellison Revocable Trust and $250 million from RedBird Capital. However, both have assigned subscription rights to other parties, meaning they will not supply all of those amounts directly.

The participating outside investors include the sovereign wealth funds of Saudi Arabia, Abu Dhabi and Qatar, along with U.S. investment bank LionTree. Each is set to receive newly issued, nonvoting shares of Paramount Class B stock when the acquisition closes. The Lawrence J. Ellison Revocable Trust has committed to backstop the equity financing.

The Ellisons were also said to be considering Elon Musk and other wealthy individuals as possible equity investors, although no such additional investment was confirmed.

What Happens Next?

Paramount’s financing campaign can continue while Judge Martinez-Olguin reviews the proposed antitrust settlement and the responses submitted to the court. Despite the October dates used in Paramount’s calculations and offering materials, the company has emphasized that the acquisition’s actual closing date remains uncertain until the remaining condition is resolved.