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Warner Bros. Discovery greenlit for split as bondholders back bold overhaul
Bondholders agreed to relax debt covenants that could have blocked the split, allowing WBD to push forward with a complex new capital structure.
The restructuring has triggered unease among some creditors. The split will concentrate most of the debt burden within the legacy cable business, leaving some bondholders exposed to higher risk.
Warner Bros. Discovery has cleared a major hurdle in its ambitious restructuring, securing overwhelming bondholder approval for a plan to split the company into two publicly traded entities, Reuters reported. The move, aimed at decoupling its high-growth studios and HBO Max streaming service from its declining cable TV business, comes even as the company grapples with a recent wave of credit rating downgrades to junk status.
As per the media reports, bondholders agreed to relax debt covenants that could have blocked the split, allowing WBD to push forward with a complex new capital structure. The greenlight also paves the way for WBD to buy back nearly half of its $37 billion debt—baggage inherited from its 2022 WarnerMedia-Discovery merger.
However, the restructuring has triggered unease among some creditors. The split will concentrate most of the debt burden within the legacy cable business, leaving some bondholders exposed to higher risk. Critics argue the move could saddle them with unsecured bonds and limited recourse in the event of default. A failed attempt by law firm Akin Gump to organize opposition only underscores how contentious the plan has been.
Despite support from up to 99% of certain bondholder groups, the downgrade to junk by Fitch, Moody’s, and earlier by S&P has already rattled markets. Long-dated Warner bonds slid slightly post-announcement, while shorter-term notes edged up. Investment-grade fund mandates have triggered forced selling, adding to the pressure.
As credit investors have until June 23 to tender their bonds, all eyes now turn to how the split will play out operationally and whether Warner Bros.
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