MGM says that it just closed its acquisition of Viacom and Lionsgate’s combined 80.9% interest in Epix — giving it full control over the premium network company — and raised its debt load to $2.1 billion after seeing stronger than expected interest in an offering to help finance the deals.
It raised its debt with a $1 billion, five-year revolving credit loan, plus a new $850 million five-year term loan.
The arrangements lower MGM’s interest to the benchmark London Interbank Offered Rate (LIBOR) plus 2%.
“The speed of execution, favorable terms and flexible structure of our credit facility, which was substantially oversubscribed, is indicative of MGM’s solid financial position and strong relationships with the financial community,” CEO Gary Barber says. The acquisition of Epix is “an important milestone in the continued growth trajectory of MGM.”
MGM Agrees To Pay $1B For Epix Shares Held By Paramount And Lionsgate
J.P. Morgan Chase led a syndicate of lenders who provided the new financing which they say was oversubscribed by more than 50%.
David Shaheen, who’s head of J.P. Morgan’s Entertainment banking team, calls the result “a testament to the quality of MGM’s management team and strategy.”
Moody’s Investor Service had raised some concerns in early April about the potential “spike in leverage” with MGM’s agreement to pay about $1 billion for Viacom and Lionsgate’s Epix shares. The firm had rated MGM debt at one notch below investment grade — making it too risky for many retirement plans and public institutions.
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