Royal Gold gets $1 billion expanded revolving facility due 2022

By Marisa Wong

Morgantown, W.Va., June 6 – Royal Gold, Inc. announced it entered into a new $1 billion five-year revolving credit facility on June 2. The new facility due June 2022 replaces Royal Gold’s prior $650 million credit facility set to mature in March 2021.

Royal Gold repaid the prior facility using a combination of cash on hand of $50 million and a borrowing under the new facility of $250 million, leaving $750 million of availability under the new facility, according to a Friday press release.

Bank of Nova Scotia, HSBC Bank USA, NA, Canadian Imperial Bank of Commerce, Bank of America, NA, Goldman Sachs Bank USA, Bank of Montreal, National Bank Financial and Royal Bank of Canada are lenders for the new loan. Agents include Scotiabank, HSBC and CIBC as co-lead arrangers and joint bookrunners, Scotiabank as administrative agent, HSBC as syndication agent and CIBC as documentation agent.

The facility includes an accordion of up to $250 million, which allows the company to increase aggregate commitments to $1.25 billion.

The interest rate is substantially similar to the old facility, Libor plus 125 basis points to 275 bps, depending on the company’s leverage ratio, according to an 8-K filing with the Securities and Exchange Commission.

Commitment fees for the new facility range from 25 bps to 55 bps, also depending on the leverage ratio.

The credit agreement requires the company to maintain a minimum interest coverage ratio of 3 to 1 and a maximum leverage ratio of 3.5 to 1, stepping up to 4 to 1 for two quarters after an acquisition of $250 million or more.

“Royal Gold currently has no additional capital commitments, and all cash going forward will be available for acquisitions, debt reduction and dividends. Over the last 90 days, we have paid down $95 million in debt, including the $50 million [just] announced,” Tony Jensen, president and chief executive officer, commented in the press release.

“It is also prudent to always be prepared for future opportunities. We continually evaluate our capital structure, and this expanded credit facility reflects a company of our size. We genuinely appreciate the strong financial support from our expanded banking syndicate.”

Royal Gold is a precious metals royalty and stream company based in Denver.

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