Discovery gets tenders for $1.52 billion notes in waterfall offer

Chicago, May 21 – Discovery, Inc. announced the early results of its waterfall tender offer for nine series of notes issued by wholly owned subsidiary Discovery Communications, LLC and its wholly owned subsidiary, Scripps Networks Interactive, Inc.

The maximum tender amount is $574,591,000, based on the $925,409,000 aggregate principal amount of notes tendered for the three series of notes under the any-and-all offer that was launched at the same time. The two amounts together equal the $1.5 billion cap the company had put in place for the two offers.

As of the early tender deadline of 5 p.m. ET on May 20 for the waterfall offer, noteholders have tendered $1,515,228,000 principal amount of notes.

Waterfall offer

Discovery Communications and Scripps received tenders for and will accept the indicated amounts of the following outstanding notes, listed in order of acceptance priority level:

• All accepted of the $45,662,000 principal amount tendered of the $54,088,000 3.5% senior notes due 2022 issued by Scripps (Cusip: 811065AF8), with pricing based on the 0.125% U.S. Treasury due April 30, 2022 and a fixed spread of 110 bps for a total consideration of $1,041.66 per $1,000 face amount of notes;

• All accepted of the $158,021,000 principal amount tendered of the $350 million 3.25% senior notes due 2023 issued by Discovery Communications (Cusip: 25470DAH2), with pricing based on the 0.25% U.S. Treasury due April 15, 2023 and a fixed spread of 120 bps for a total consideration of $1,051.30 per $1,000 face amount of notes;

• $370,908,000 accepted of the $782,160,000 tendered of the $1,166,773,000 2.95% senior notes due 2023 issued by Discovery Communications (Cusip: 25470DAQ2), with pricing based on the 0.25% U.S. Treasury due April 15, 2023 and a fixed spread of 110 bps for a total consideration of $1,044.01 per $1,000 face amount of notes;

• None accepted of the $343,011,000 tendered of the $450 million 3.8% senior notes due 2024 issued by Discovery Communications (Cusip: 25470DAM1), with pricing which would have been based on the 0.375% U.S. Treasury due April 30, 2025 and a fixed spread of 155 bps;

• None accepted of the $6,158,000 tendered of the $11.92 million 3.9% senior notes due 2024 issued by Scripps (Cusip: 811065AC5), with pricing which would have been based on the 0.375% U.S. Treasury due April 30, 2025 and a fixed spread of 175 bps; and

• None accepted of the $180,216,000 tendered of the $486,215,000 3.9% senior notes due 2024 issued by Discovery Communications (Cusip: 25470DBC2), with pricing which would have been based on the 0.375% U.S. Treasury due April 30, 2025 and a fixed spread of 175 bps.

The total consideration includes an early tender premium of $50 per $1,000 principal amount of notes tendered at or prior to 5 p.m. ET on May 20, the waterfall early tender deadline.

Because the maximum waterfall tender amount has been exceeded, no further notes will be accepted for purchase. The offer was originally set to expire at 11:59 p.m. ET on June 4.

Pricing for the total consideration was determined at 10 a.m. ET on May 21.

The companies will also pay accrued interest to but excluding the applicable settlement date, which is expected to be May 22 for early tendered notes.

Notes were to be accepted for purchase according to acceptance priority level.

Notes of a series are subject to proration if tenders exceed the waterfall offer cap.

Tenders could have been withdrawn under the waterfall offer at any time at or before 5 p.m. ET on May 20.

Any-and-all offer

As previously reported, as of 5 p.m. ET on May 13, the expiration of the any-and-all offer, holders had tendered the following:

• $304,717,000 of the $640 million outstanding 4.375% senior notes due 2021 (Cusip: 25470DAE9) for a total consideration of $1,034.21 per $1,000 of notes, with pricing based on the 0.125% U.S. Treasury due April 30, 2022 and a fixed spread of 100 bps;

• $328,102,000 of the $496 million outstanding 3.3% senior notes due 2022 (Cusip: 25470DAF6) for a total consideration of $1,039.94 per $1,000 of notes, with pricing based on the 0.125% U.S. Treasury due April 30, 2022 and a fixed spread of 110 bps; and

• $292.56 million of the $345,894,000 outstanding 3.5% senior notes due 2022 (Cusip: 25470DBA6) for a total consideration of $1,042.05 per $1,000 of notes, with pricing based on the 0.125% U.S. Treasury due April 30, 2022 and a fixed spread of 110 bps.

In addition, $2,541,000 of notes remain subject to guaranteed delivery procedures.

Pricing was determined at 2 p.m. ET on May 13.

The companies will also pay accrued interest to but excluding the settlement date, which is expected to be May 18.

Tenders may no longer be withdrawn under the any-and-all offer.

Other details

Both tender offers were subject to a financing condition. Discovery Communications priced $2 billion of new notes in two tranches on May 7.

J.P. Morgan Securities LLC (212 834-3424 or 866 834-4666), RBC Capital Markets, LLC (212 618-7843 or 877 381-2099) and Goldman Sachs & Co. LLC (212 357-1452 or 800 828-3182) are dealer managers for the tender offers.

D.F. King & Co., Inc. (866 864-7964 or 212 269-5550 for banks and brokers; disca@dfking.com; www.dfking.com/discovery) is the information and tender agent.

The global media company is based in Silver Spring, Md.

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