Outlook 'steady' for Lionsgate

Moody's forecasts 'adequate liquidity' for studio

TORONTO -- Moody's Investors Service on Tuesday assigned a stable outlook to indie studio Lionsgate.

Moody's assigned a B2 corporate family rating and B2 rating to Lionsgate debt, and a B1 rating to $250 million in senior secured notes that aim to help the Vancouver-based film and TV studio reduce borrowings under a $340 million revolving credit facility.

Moody's cited "the inherent volatility" of the theatrical film business and the "lackluster performance" of Lionsgate's film slates in recent years.

Despite heavy up-front film and TV production investment, the ratings agency expects EBITDA levels at Lionsgate to "continue to grow," leading to reduced debt levels and positive free cash flow by fiscal 2012.

Moody's also forecast "adequate liquidity" for Lionsgate over the next 12 months.

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