Paramount Sky (PSKY.US) has adjusted its bridge loan to $49 billion, with Bank of America and Citigroup bringing in 18 additional banks to participate.

Bank of America Corp and Citigroup Group have provided bridge loans in the tens of billions of dollars to support Paragon Sky (PSKY.US) in acquiring Warner Brothers Discovery (WBD.US), and have distributed them to a wider banking consortium. This is a key step in one of the largest merger and acquisition financings of the year. According to a document on Thursday, 18 lending institutions have purchased a portion of the total $49 billion debt. The financing was initially provided by Bank of America, Citigroup, and Apollo Global Management Inc, and was originally set at $54 billion. The document shows that another separate $3.5 billion one-year credit facility has been canceled. Deutsche Bank and Wells Fargo & Company are also listed as new participants in the consortium for permanent debt financing, which consists of two tranches of $25 billion loans with terms of three and five years, as well as a $50 billion five-year revolving credit facility. Before the syndication of debt and new financing arrangements were made, Paragon Sky reached an equity consortium agreement earlier this week with a Gulf region fund. This marks an important step towards the completion of the acquisition. Bridge loans are used to fill immediate financing gaps and are typically used by acquiring companies to prepare for their acquisition targets. They are usually replaced by permanent debt from more lenders in the weeks or months that follow. Although bridge loans have a short duration, they allow banks to establish connections with companies and potentially win higher-paying business in the future. Debt Sale The company plans to refinance the bridge loan through a combination of investment-grade bonds and junk bonds later on. This step may face challenges if the market continues to be volatile. The outbreak of the Middle East conflict previously triggered a sell-off in credit markets, and Wall Street banks had to make several adjustments when financing large deals, such as the buyout of the electronic arts industry and packaging company Sealed Air Corporation. As doubts lingered about the two-week US-Iran ceasefire agreement, the financial markets were stuck in a stalemate on Thursday. Borrowers typically opt for either investment-grade debt or junk bonds for acquisition financing, rather than a combination of both. This makes the transaction more complex and is expected to be marketed to a broader group of investors. According to Bloomberg, most of the debt financing will consist of investment-grade mortgage bonds, with Apollo's insurance business expected to subscribe to a significant portion. The high-stakes bidding war for Warner Brothers ended in February, with Paragon Sky raising its offer to $31 per share. Netflix, which had agreed to acquire most of Warner Brothers' business for $27.75 per share, refused to match this offer. After being rejected multiple times by Warner Brothers, Paragon Sky, led by CEO David Ellison, adjusted the offer terms. These terms include a personal guarantee of billions of dollars of equity from a trust fund established by Ellison's father, Larry Ellison, the chairman of Oracle Corporation. Larry Ellison is one of the wealthiest people in the world.