Moody's Considering Debt Rating Upgrade For Lionsgate After Summit Takeover

Kristen Stewart First Twilight Premiere - P 2012
Vince Bucci/Getty Images

Kristen Stewart First Twilight Premiere - P 2012

The positive response to the indie studio's $412.5 million takeover follows a similar greenlight from rival agency Standard & Poor's.

TORONTO - Moody's Investors Service on Friday said it was considering a rating upgrade for Lionsgate Entertainment after its $412.5 million leveraged takeover of Summit Entertainment.

The ratings agency cited Lionsgate’s acquisition of the Twilight franchise and its future cash flows as grounds for optimism about the indie studio’s future market performance and position.

“We believe the acquisition has potential positive credit implications for Lionsgate, and during the review, we will assess its strategic and financial impact,” Moody’s said in a statement.

The takeover will offset the risk of Lionsgate’s own release slate, the agency added.

“We believe it could result in significant cost savings and will help diversify Lionsgate's revenue stream by adding the successful Twilight franchise which has highly visible cash flow through 2013,” Moody’s wrote in its note.

Rival ratings agency Standard & Poor’s earlier in the week also pointed to a possible upgrade of Lionsgate’s debt ratings after it swallowed Summit Entertainment.