S&P rates Summit, loan B

Standard & Poor's said it assigned Summit Entertainment, LLC a B preliminary corporate credit rating and its proposed $800 million senior secured credit facilities a B preliminary issue-level rating with a 3 recovery rating, indicating the expectation of meaningful (50% to 70%) recovery in the event of a payment default.

The outlook is stable.

The proposed credit facilities consist of a $200 million five-year revolving credit facility and a $600 million seven-year term loan.

Proceeds will be used to repay existing credit facilities, to make a distribution to its members and for working capital and general corporate purposes, including the funding of film production and distribution costs.

The ratings reflect the company's short operating track record as a film producer, likely reliance on one film franchise for the majority of revenue over at least the next three years and an aggressive financial policy, S&P said.

The ratings also consider Summit's vulnerable business risk profile, narrow business focus and earnings volatility from the timing of hit movie releases, the agency said.

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