Lions Gate Entertainment Corp. said Friday that a wholly owned subsidiary will sell $236 million in senior secured second-priority notes in a private offering.
The TV and movie studio, with headquarters in Vancouver, British Columbia, Canada, and main operations in Santa Monica, said the expected net proceeds of $215 million will be used to repay a portion of its outstanding debt.
The notes will pay interest semi-annually at 10.25 percent per year and mature in November, 2016. The company expects to close the offering by next Wednesday.
Moody's Investors Services on Tuesday gave Lions Gate a "B2" debt rating, but rated the new notes a "B1" rating with an outlook of "stable."
The agency said the rating reflects the “inherent volatility of the theatrical production business and the lackluster performance of Lions Gate's film slates over the past year,” but there was "reasonable confidence that profitability will improve in the coming years as (the studio) refocuses its film slate on niches that have proven profitable.”
Lions Gate last week said it plans to expand its annual film slate from 11 to 14. The company also is expected to earn strong TV syndication revenues from popular shows such as “Weeds” and “Mad Men.”
Lions Gate shares were down 4 cents, or less than 1 percent, to $5.97 in midday trading on the New York Stock Exchange
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