Lionsgate has landed a $340 million credit facility in an extremely tough lending environment.
The mega-indie wrapped the five-year borrowing base pact led by JPMorgan with help from Wachovia Bank. It can be upped to $500 million and replaces the previous $215 million credit facility, also with JPMorgan.
Not only is the deal done, but the terms are more favorable than the previous go-round. Five years ago, the company secured a London interbank offered rate plus 2.75%; this time it’s 2.25%.
“When everybody said deals couldn’t get done, this shows that people are recognizing what we have created,” said company vice chairman Michael Burns. “We have diversified into so many areas and continue to have no corporate bank debt, more than a billion dollars in annual revenue and a good amount of cash.”
At the end of fiscal 2008, Lionsgate had $371 million in cash and cash equivalents. Long-term subordinate debt was locked in at a rate of 3.31%. The company plans to report fiscal first quarter results next month.
“It is a testament to Lionsgate’s senior management team, business plan, financial strength and track record of growth and success that this facility closed so quickly in the current market environment,” said Christa Thomas, managing director of JPMorgan. “The facility was actually oversubscribed, as participating banks saw Lionsgate’s unique vision for monetizing their content leadership.”
The last time around, the five-year term ended without Lionsgate tapping the credit facility. With cash flow generally strong and a $100 million cap on share buybacks, plans do not automatically call for major spending that would require use of the credit line.
Lionsgate has not hoarded its resources, however, spending more than $150 million to expand its reach over the past three years. Specific deals have included the acquisition of Redbus Film Distributors in the U.K., Mandate Pictures, a 42% investment in top male Web destination Break.com and a 43% investment in indie producer and distributor Roadside Attractions.
Last week, Lionsgate solidified ties with prolific film and TV creator Tyler Perry. It has a piece of “Mad Men,” the Emmy-nommed AMC series whose second season preemed Sunday. And it has another solid late-year film slate — new “Saw,” “Punisher” and “Transporter” installments, plus Oliver Stone’s “W.,” Bill Maher’s “Religulous” and drama “The Lucky Ones.”