Skydance said the NYSE reduced its reference price by $0.19, using the warrants’ $2.20 closing price and the proportion of eligible shares.
- Based on Tuesday’s prices, about $1 billion in warrant value kept combined equity value unchanged at $46.6 billion.
- Skydance distributed about 470.75 million warrants and full cash exercise at $12 would raise $5.65 billion.
- Following its Warner Bros. Discovery acquisition, Skydance has $78.9 billion in pro forma net debt.
Skydance Corp. (SKYD) shares rose 0.3% overnight heading into Thursday after the company clarified a warrant-related price adjustment that accompanied the previous session’s selloff.
SKYD stock closed Wednesday at $7.06, down about 22% and marking its worst day in over five months. Shares are also down 23% for the week, on track to post their steepest weekly decline in more than three years.
Skydance Explains Warrant Price Adjustment
Skydance said that the NYSE reduced the stock’s reference price by $0.19368, from about $9.27 to $9.07, based on the warrants’ official Tuesday closing price of $2.20.
Shares entitled to receive warrants represented a little over 9% of the company’s 5 billion outstanding Class B shares. Based on Tuesday’s closing prices, Skydance said that the adjustment would reduce the value of its common shares from $46.6 billion to $45.6 billion. The separately traded warrants would account for about $1 billion, keeping combined equity value unchanged at $46.6 billion.
Skydance’s Warrants And Debt Load In Focus
Skydance issued about 470.75 million warrants on Tuesday, giving eligible holders one for each Class B share held as of Oct.5. Each initially permits the purchase of one share for $12 and is scheduled to expire on Oct.13, 2036, subject to earlier-expiration provisions.
Regular warrant trading began on Wednesday under “SKYD WS,” alongside the common stock’s ex-dividend date. Full cash exercise at $12 would raise $5.65 billion and add about 470.75 million common shares.
The distribution followed Skydance’s acquisition of Warner Bros. Discovery last week, bringing together Paramount and Warner Bros. studios, Paramount+ and HBO Max, CBS and CNN. The company also changed its ticker from PSKY to SKYD and moved its listing to the NYSE.
Skydance’s pro forma net debt totals $78.9 billion. The company targets at least $6 billion in annual synergies within three years and more than $10 billion in annual free cash flow by 2030.
Selling in Skydance’s bonds has also dragged on the broader market for newly issued investment-grade debt. New issues trailed JPMorgan’s high-grade index by 27 basis points over the 10 days through Oct.8, Bloomberg reported. Excluding Skydance, they would have outperformed by four basis points.
How Do Retail Traders Feel About SKYD?
On Stocktwits, retail sentiment for SKYD slipped to ‘bearish’ from ‘neutral’ levels a day ago amid a 339% jump in 24-hour message volumes.
One user said, “100% manipulation under the veil of warrant ex-dividend. Something big is about to happen. Get ready.”
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Another user said, “$SKYD Combo value now $9.37. Not bad. Maybe the stock will start heading up soon.”
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SKYD stock has declined 47% year-to-date.
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