EMX Royalty (TSX: EMX) is trading one lender for another, after borrowing $35 million from Franco-Nevada Corp (TSX: FNV), which it will use to pay off an outstanding loan with Sprott Private Resource Lending II.
The loan from Franco-Nevada consists of a senior secured term loan facility that is set to mature July 1, 2020. Interest on the debt is to be paid monthly, with the interest rate to be the three-month secured overnight financing rate, plus margin based on the firms ratio of net debt to adjusted EBITDA.
The additional margin is set to be in a range of 300 to 425 basis points, depending on that ratio. Based on the SOFR rate of 5.35% for June 20, that implies a current range of 8.35% to 9.60%.
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Comparatively, the Sprott credit facility that is being replaced contains an interest rate of 7%, and was set to mature on December 31, 2024, after EMX obtained a two year extension on the debt back in January 2022.
EMX is set to pay a commitment fee of 1.00% upon closing of the loan with Franco-Nevada, with the loan secured via general security over the assets of EMX and share pledges of certain subsidiaries.
The duo are said to have also jointly syndicated royalty purchases, and are “actively engaged” in a joint venture that is searching for new royalty opportunities.
EMX Royalty last traded at $2.44 on the TSX Venture.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
