Summit Entertainment talks $500 million loan at Libor plus 525-550 bps

By Sara Rosenberg

New York, Feb. 1 - Summit Entertainment LLC launched its $500 million 41/2-year senior secured term loan (B1/B+) on Wednesday with talk of Libor plus 525 basis points to 550 bps with a 1.25% Libor floor and an original issue discount of 981/2, according to a market source.

There is 101 soft call protection for one year.

Commitments are due on Feb. 10.

J.P. Morgan Securities LLC, Barclays Capital Inc. and Jefferies & Co. are the bookrunners and lead arrangers on the loan that closed on Jan. 13 but has not yet been syndicated.

Amortization is quarterly installments equal to $13.75 million, with the balance due at maturity.

Covenants include a minimum liquidity ratio of 1.1 to 1, a minimum fixed-charge coverage ratio of 1.25 to 1 and limitations on overhead expenses.

Proceeds were used to refinance an existing term loan in connection with the company's acquisition by Lions Gate Entertainment Corp. for $412.5 million.

The majority of the purchase price was funded with Summit's cash on hand. Other funds came from $55 million of existing Lions Gate cash, $45 million of cash received from a newly issued series of Lions Gate convertible notes, $50 million of Lions Gate common stock and an additional $20 million of cash or stock to be issued at Lions Gate's option within 60 days.

Summit Entertainment is a Santa Monica, Calif.-based motion picture studio. Lions Gate is a Vancouver, B.C.-based filmed entertainment studio.

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