(Alliance News) - Duke Royalty Ltd on Monday said it entered into a new GBP100 million credit facility agreement with Fairfax Financial Holdings Ltd for a five-year term.
The Europe and North America-focused alternative capital solutions provider said the new credit facility would replace its existing GBP55 million term and revolving facilities.
The initial drawdown of the new facility is expected to occur in mid-to-late January 2023, coinciding with the expiry of existing credit facilities. As a result, the new facility is set to expire in January 2028 with a bullet repayment on the expiry date and no amortisation payments during the term.
The interest rate will be equal to Sterling Overnight Index Average plus 5.0% per year, improving on Duke Royalty's existing rate of SONIA plus 7.3%.
As part of the agreement, Duke Royalty will issue 41.6 million warrants to Fairfax with a five-year maturity and strike price of 45 pence.
Duke Royalty said the new facility would provide it with a significant amount of additional liquidity.
"The upsizing of the new credit facility will allow Duke to accelerate its growth and deployment schedule without any near-term equity dilution. More strategically, Fairfax and Duke believe our partnership can benefit more businesses looking for long-term, flexible capital solutions by increasing Duke's capital base and diversification, as well as benefit Duke's shareholders through higher free cash flow per share," said Duke Royalty Chief Executive Officer Neil Johnson.
Shares in Duke Royalty were down 0.8% to 36.62p each in London on Monday afternoon.
By Greg Rosenvinge, Alliance News reporter
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