UPDATE 1-US studio Summit to hire M. Stanley -source

* Summit Ent. close to hiring Morgan Stanley - source

* Looking to expand, possibly recapitalize
(Adds comment from source, background on companies)

By Sue Zeidler

LOS ANGELES, Sept 29 (Reuters) - Summit Entertainment LLC,
the studio behind hit teen vampire movie "Twilight," is close
to hiring Morgan Stanley to help it expand through
acquisitions, capital raising or by bringing in a financial
partner, a source familiar with the matter said on Tuesday.

The source said Stuart Epstein, Morgan Stanley's global
head of media mergers and acquisitions group, is likely to be
Summit's point person. The news was first reported by the New
York Post, which also said the studio may look into buying
Metro-Goldwyn-Mayer Inc [MGMYR.UL] or The Weinstein Co.

Summit, Morgan Stanley and Weinstein were not available to
comment. MGM declined comment.

The source, who spoke on condition of anonymity, told
Reuters that Summit may be looking to expand into new areas
such as television.

Summit Entertainment, which releases 10 to 12 films a year,
was established as a studio in April 2007 when Robert Friedman,
former vice chairman and chief operating officer of Viacom
Inc's VIAb.N Paramount Pictures Motion Picture Group, and
Patrick Wachsberger closed a financing deal led by Merrill
Lynch and a consortium of investors.

Wachsberger had previously served as CEO and president of
the original Summit Entertainment LP, which for about 15 years
specialized in selling films in overseas markets for third
parties.

Under the terms of the Merrill Lynch-led deal, Summit
Entertainment has access to more than $1 billion for
development, production, acquisition, marketing and
distribution of filmed entertainment across all media.

The studio is best known for "Twilight," which was released
in November 2008 and has grossed more than $380 million
worldwide. The second installment of the franchise, "The
Twilight Saga: New Moon," will be released on Nov. 20 and a
third "Twilight" film is slated for release in June 2010.

Weinstein finally has a hit on its hands with "Inglourious
Basterds" which has grossed about $231.2 million worldwide, but
about one-fourth of the privately held studio's 70 films
released since 2005 have reportedly earned $1 million or less.

MGM last month replaced its chief executive, Harry Sloan,
with a team that includes a turnaround expert and its
production boss, Mary Parent, as the storied Hollywood studio
grapples with looming payments on $3.7 billion of debt, which
stems from a 2005 buyout of the firm.

MGM has a renowned film library, home to James Bond movies
and other gems, but has been struggling to create new hits amid
a faltering economy and shrinking DVD market.

In May, MGM hired investment bank Moelis & Co to help
refinance its debt and said it was talking with a steering
committee of 140 creditors. Last week, MGM said discussions
with lenders are one step of many in a proactive and ongoing
process to correct its balance sheet and position the company
to fulfill its business objectives.
(Reporting by Sue Zeidler, editing by Matthew Lewis)