Lionsgate has paid off a $500 million loan it took out as part of its acquisition of Summit four years before it matures, the studio said Thursday.
The news sent Lionsgate's stock soaring to $16.18 in late-afternoon trading; a jump of 3.52 percent.
The move was made possible, after Lionsgate closed a different five-year, $800 million credit facility in September. That move gave Lionsgate a borrowing base with more favorable terms. It carries with it interest rates of roughly 3 percent whereas the earlier term loan had interest rates of 7 percent.
Lionsgate expects the move to save it roughly $12 million annually in interest payments, according to an individual with knowledge of the financing.
Lionsgate used the term loan to finance its leveraged buyout of Summit in January. That $412.5 million deal brought Lionsgate, the studio behind "The Hunger Games," under the same roof as Summit, the team behind "Twilight." Together, the two studios have ambitions to be the major force in young adult entertainment.
Thus far, things have gone according to plan. "The Hunger Games" generated just shy of $700 million worldwide when it opened last spring and the final installment of The "Twilight" franchise, "Breaking Dawn — Part 2," hits theaters next month.
And now its balance sheet looks a lot cleaner. Lionsgate's principal balance of about $299.2 million along with interest and legal fees have been paid in full, the studio said in a filing with the Securities and Exchange Commission.
The loan had been set to mature on Sept. 7, 2016, and the deal initially called for Lionsgate to repay the loan in quarterly installments of $13.75 million.
