Moody’s gives Summit a ‘B’ grade

Investor guide gives shingle its first public rating

Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors.

Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday.

“We remain cautious about the sustainability of strong credit metrics beyond 2012, given the end of the ‘Twilight’ franchise, uncertainty about a replacement franchise and the volatile nature of the company’s business,” Moody’s said.

Summit’s proposing a $600 million, sever-year senior secured term loan and a $200 million, five-year senior secured revolving credit facility. It plans to use the funds to pay down existing debt from the $1 billion in debt and equity raised four years ago when Summit launched its effort to become a full-fledged production and distribution company.

S&P said its “stable” rating outlook “reflects our view that the company will be able to generate sufficient cash flow to meet principal amortization requirements and maintain an adequate cushion under its financial covenants over the intermediate term.” Moody’s also issued a “stable” outlook, which it said reflects a balance between an expectation of strong cash flow from the “Twilight” franchise and consequent debt reduction over the next few years, and an increase in risk over time with greater dependence on new, nonsequel-based films.

“A rating upgrade is unlikely in the near term based on the company’s relatively short history, small portfolio size and low visibility on the revenues in later years which bear higher risk,” Moody’s said. It added that it could upgrade if Summit pays down debt at a more rapid pace due to better-than-expected and consistent performance of new films and total leverage falls.

Moody’s also said a rating downgrade could occur if revenue and cash flow are significantly below expectations and the company is not on the projected pace for debt reduction.

Both gave “B” ratings to Summit’s debt. Moody’s said the B1 rating reflects the “inherent high risk” of the film biz and Summit’s dependence on new film production, recognizing its modest library.

Summit will open the fifth and final “Twilight” film Nov. 16, 2012 — nearly a full year after the fourth film — with the official title “The Twilight Saga: Breaking Dawn — Part 2.”

Summit saw success in the fall with “Red,” which grossed $90 million, and is exploring a sequel. Its 2011 releases include “Drive Angry,” “Source Code,” “The Beaver” and “Three Musketeers,” and it recently wrapped the Sam Worthington thriller “Man on a Ledge.”

More Film

  • No Merchandising. Editorial Use Only. No

    South Australia Uncaps Post-Production Rebate Scheme

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

  • Korea's Gang Dong-won to Star in

    Korea's Gang Dong-won to Star in Simon West’s ‘Tsunami LA’

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

  • Korea Box Office: 'Steel Rain' Defeats

    Korea Box Office: 'Steel Rain' Defeats 'Star Wars' to Dominate Weekend

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

  • netflix-the-little-prince

    Mediawan Closes In on Acquisition of Dimitri Rassam's ON Kids & Family

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

  • China Box Office: Local Titles 'Youth'

    China Box Office: Local Titles 'Youth' and 'Dunjia' Dominate Weekend

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

  • Star Wars: The Last Jedi

    Four Reasons Why 'Star Wars: The Last Jedi' Isn't One for the Ages

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

  • Mark Hamill and Ted Cruz Get

    Mark Hamill and Ted Cruz Get in Net Neutrality-Related Twitter Fight

    Summit Entertainment is planning to issue $800 million in new debt and, as a result, the mini-major has received its first debt ratings from Moody’s Investors Service and Standard & Poors. Both agencies expressed a mix of optimism and caution about Summit in analyses issued Wednesday. “We remain cautious about the sustainability of strong credit […]

More From Our Brands

Access exclusive content