Lionsgate expects $300 million of deleveraging from combination funds

By Devika Patel

Knoxville, Tenn., Jan. 5 – Lions Gate Entertainment Corp. plans to raise $350 million through the combination of its television studio and motion picture group segments with Screaming Eagle Acquisition Corp., which will be used to de-lever.

The combination will create Lionsgate Studios Corp., a separately traded public company.

The approximately $350 million of gross proceeds Lionsgate expects to raise includes $175 million of PIPE financing already committed by leading mutual funds and other investors.

“Lionsgate Studios will raise $350 million of gross proceeds, including $175 million from marquee PIPE investors, with the remainder from cash held in Screaming Eagle,” chief financial officer James W. Barge said on the company’s Thursday conference call to discuss the combination.

“We will use the transaction proceeds to de-lever.

“One of the benefits of this transaction is that it results in over $300 million of deleveraging without impacting our existing corporate debt structure, including the availability of our $1.25 billion revolving credit facility.

“Lionsgate Studio’s pro forma allocated net corporate debt is anticipated to be approximately $1.4 billion at the close of the transaction,” he said.

As a result of the transaction, which values Lionsgate Studios at an enterprise value of about $4.6 billion, 87.3% of the total shares of Lionsgate Studios are expected to continue to be held by Lionsgate, while Screaming Eagle shareholders are expected to own about 12.7% of the combined company.

As previously reported, the company announced the combination in December.

Lionsgate is expected to maintain its current corporate debt structure in this transaction.

The business combination is expected to settle in the spring of 2024.

Net proceeds from the transaction are expected to be used to enhance Lionsgate’s balance sheet and facilitate strategic initiatives, including those related to the eOne business, the acquisition of which is scheduled to close by calendar year-end.

Based in Santa Monica, Calif., Lions Gate Entertainment, doing business as Lionsgate, is an American-Canadian entertainment company.

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