MGM Borrows $2.1 Billion to Finance Epix Deal, Grow Company

The mini-major studio closed its deal to acquire the premium cable network Thursday

Last Updated: May 11, 2017 @ 1:00 PM

Metro-Goldwyn-Mayer has raised $2.1 billion in new debt that will allow the company to finance its $1 billion purchase of premium cable network Epix and pursue other growth opportunities, the company announced Thursday.

The new debt package arranged by J.P. Morgan Chase with a syndicate of lenders includes a $1 billion five-year revolving credit facility (which comes with another optional $250 million in available financing) and a new $850 million five-year term loan. The financing, which the company said was oversubscribed by 50 percent, lowers the company’s borrowing costs and allows it to pursue its “strategic growth initiatives.”

It also provides MGM with the necessary funding for its $1 billion acquisition of the 80.9 percent of Epix the studio did not previously own, which was formerly held by Viacom and Lionsgate.  That deal also closed Thursday, giving MGM sole control of Epix’ four linear TV channels, which are available through traditional and digital distributors. Epix’s movie library has a combined gross of $4 billion, and the channel also airs original series such as the Golden Globe-nominated “Graves.”

“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,” Gary Barber, MGM’s Chairman and Chief Executive Officer, said in a statement. “I would like to thank all of our lenders for their tremendous support of MGM and our acquisition of Epix. This transformative transaction is an important milestone in the continued growth trajectory of MGM.”

“The overwhelming support from MGM’s financing syndicate is a testament to the quality of MGM’s management team and strategy,” David Shaheen, Head of J.P. Morgan’s Entertainment banking team, said in the statement. “This transaction builds on the continued success the company has achieved over the last several years.”