Lions Gate Entertainment Corporation ( LGF ) -
producer and distributor of motion pictures for theatrical and
straight-to-video release, and television programming for cable and
broadcast networks - has recently announced a new five-year
revolving credit agreement with a consortium of world's leading
The new $800 million revolving credit line facility will help
Lions Gate enhance its financial flexibility and demonstrate its
healthy rapport with the financial communal. Moreover, management
said that the new facility signifies the importance of its
franchises and filmed entertainment library.
Lions Gate has also notified that the new facility has replaced
the earlier $340 million credit facility and this reflects the
growth of the company's borrowing base. The extended revolving
facility will assist the company to develop, implement its
strategic plans, and to focus on long-term financial goals.
The company has not mentioned any particular purpose for
utilizing the funds under the new credit facility.
Under a revolving credit facility, a company can borrow again
once it repays all the dues under the old credit facility. The
company may utilize this fund for general corporate purposes,
including repayment of outstanding commercial papers, working
capital and capital investment or acquisitions.
The company's production and distribution capacity is largely
benefited by Summit's film operations, which was acquired in
January 2012. In addition, it will help Lions Gate to emerge as a
leading international sales group by broadening its global
The company has announced several releases, such as Summit's
The Twilight Saga: Breaking Dawn- Part 2 ,
scheduled to release on November 16, 2012, and the next installment
of The Hunger Games franchise, The Hunger Games: Catching
Fire , will be released on November 22, 2013.
To grab its share of box office receipts, Lions Gate competes
with other major studios, such as Fox Entertainment Group,
Paramount Motion Pictures Group and Time Warner
Inc . ( TWX ).
Lions Gate retains a Zacks #3 Rank that translates into a Hold
rating over the next 1-3 months, reflecting the strategic endeavors
undertaken by the company to put itself on the right path and
correlates with our long-term 'Neutral' recommendation on the
LIONS GATE ETMT (LGF): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
To read this article on Zacks.com click here.