Lionsgate Credit Rating Upgraded by Moody's

Lionsgate Official Logo - H 2012

Lionsgate Official Logo - H 2012

The ratings agency followed rival Standard & Poor's and boosted the mini-studio to Ba3 from B1 to reflect "increased financial flexibility" on a lower debt burden.

TORONTO – Moody's Investors Service has followed rival Standard & Poor’s and upgraded the corporate rating for Lionsgate.

In a report Thursday, the ratings agency raised the mini-studio to Ba3 from B1 to reflect Lionsgate’s “increased financial flexibility over the next three years and our belief that it has the capacity and willingness to sustain such flexibility in the longer term.”

STORY: Lionsgate Credit Rating Upgraded on Reduced Debt 

S&P similarly cited Lionsgate’s reduced debt load after last year’s Summit Entertainment acquisition as grounds for predicting better cash flow and profitability down the road.

“We believe the company has highly visible and significant free cash flows of well over $150 million per year through fiscal 2016, driven by the high probability of success of the remaining three films in the Hunger Games series, as well as significant contracted revenues (including those from foreign output deals and television licensing deals) which are reflected in its backlog of $1.1 billion at 3/31/13,” Moody’s analysts John Diaz and Neil Begley wrote in their investors note.

Moody’s added that Lionsgate is “well positioned” to reduce its debt load further over the next few years “to withstand the longer term possibility of under-performance” due to the volatility of the film business.