EMX Royalty Announces That It Has Entered into Credit Agreement for a $35 Million Loan with Franco-Nevada Corporation
EMX Royalty has entered into a credit agreement with a subsidiary of Franco-Nevada for a $35 million loan. The loan will repay the existing $34.66 million debt to Sprott Private Resource Lending II and support general working capital. The loan is a senior secured term loan facility maturing on July 1, 2029, with interest based on the company's debt-to-EBITDA ratio.
This agreement strengthens EMX's relationship with Franco-Nevada, a key shareholder, and a partner in royalty purchases and ventures. The loan includes provisions for a 1% commitment fee, voluntary prepayments up to $10 million annually without penalty, and security agreements over EMX's assets. Certain covenants restrict additional indebtedness and encumbrances and require subsidiary guarantees.
- Secured $35 million loan, enhancing liquidity.
- Strengthened partnership with Franco-Nevada, a key shareholder.
- Flexible prepayment terms up to $10 million annually without penalty.
- Incurs new debt with interest rates tied to the debt-to-EBITDA ratio.
- 1% commitment fee payable on the principal amount.
- Restrictions on additional indebtedness and encumbrances.
Insights
The announcement of EMX Royalty Corporation securing a $35 million loan from Franco-Nevada Corporation to refinance existing debt has significant implications for the company's financial health. This debt refinancing will replace the existing balance of $34.66 million owed to Sprott Private Resource Lending II with a new loan maturing in 2029. This move can be seen as a strategic effort to manage debt more effectively and potentially reduce interest expenses.
Key points to consider:
Interest Rate Structure: The interest rate linked to the three-month SOFR plus a variable margin based on EMX's net debt to adjusted EBITDA ratio offers flexibility but also exposes the company to interest rate fluctuations. Retail investors should note that a higher net debt to EBITDA ratio will result in higher interest rates, which could impact net income.
Loan Maturity: With a maturity date set for July 1, 2029, EMX has a long-term horizon to manage this debt, potentially providing stability and reducing short-term financial pressure.
Prepayment Terms: The option to prepay up to $10 million annually without penalty is a favorable term, offering flexibility to reduce debt faster if cash flows permit.
Overall, this financial maneuver aims to enhance liquidity and financial stability, which can be viewed positively. However, investors should watch for interest rate risk and the company's operational performance to ensure they can manage debt levels effectively.
From a broader market perspective, the credit agreement between EMX Royalty and Franco-Nevada is indicative of strong industry ties and confidence from a significant player. Franco-Nevada's involvement as a lender and shareholder suggests a high level of trust and strategic alignment, which can be reassuring for investors.
Market Positioning: EMX's ability to secure favorable loan terms highlights its solid standing within the industry. This relationship with Franco-Nevada, particularly the joint ventures and royalty syndications, could open more opportunities for growth and diversification in revenue streams.
Strategic Partnerships: The collaboration between EMX and Franco-Nevada on royalty purchases and ventures signals strengthening market dynamics and potential for future projects. This partnership could lead to shared resources, expertise and enhanced market leverage.
Investors should consider the strategic benefits of this credit agreement, which go beyond immediate financial implications. The alliance with Franco-Nevada could drive long-term value creation and market competitiveness for EMX.
Vancouver, British Columbia--(Newsfile Corp. - June 20, 2024) - EMX Royalty Corporation (NYSE American: EMX) (TSXV: EMX) (FSE: 6E9) (the "Company" or "EMX") is pleased to announce it has entered into a credit agreement (the "Credit Agreement") with a wholly-owned subsidiary (the "Lender") of Franco-Nevada Corporation (NYSE: FNV) (TSX: FNV) ("Franco-Nevada") to borrow
The Company is pleased to further develop its working relationship with Franco-Nevada. In addition to the Loan arrangement, EMX and Franco-Nevada have jointly syndicated royalty purchases (e.g., Caserones) and are actively engaged in a joint venture seeking new royalty financing opportunities. Franco-Nevada is also a key EMX shareholder.
Credit Agreement - The Loan is structured as a
| Ratio of Net Debt / Adjusted EBITDA: | Applicable Interest Rate (per annum): |
| < 1.00:1 | Term SOFR plus 300 basis points |
| >= 1.00:1 and <1.50:1 | Term SOFR plus 325 basis points |
| >= 1.50:1 and <2.00:1 | Term SOFR plus 350 basis points |
| >= 2.00:1 and <3.00:1 | Term SOFR plus 375 basis points |
| >= 3.00:1 | Term SOFR plus 425 basis points |
On closing, the Company will pay a commitment fee equal to
The Loan will be secured by a general security agreement over the assets of EMX and share pledges by certain of EMX's subsidiaries, with the Lender retaining the ability, at any time, to designate certain material subsidiaries of the Company to be guarantors of the Loan and provide similar security. Certain covenants under the Credit Agreement, including restrictions on incurring indebtedness and encumbrances, shall apply to the Company and its subsidiaries. Closing and the advance of the Loan are subject to customary conditions precedent, including the delivery of the above-noted security.
All amounts referred to herein are to United States dollars.
About EMX - EMX is a precious and base metals royalty company. EMX's investors are provided with discovery, development, and commodity price optionality, while limiting exposure to risks inherent to operating companies. The Company's common shares are listed on the NYSE American Exchange and TSX Venture Exchange under the symbol "EMX". Please see www.EMXroyalty.com for more information.
About Franco-Nevada - Franco-Nevada Corporation is the leading gold-focused royalty and streaming company with the most diversified portfolio of cash-flow producing assets. Its business model provides investors with gold price and exploration optionality while limiting exposure to cost inflation. Franco-Nevada is debt free and uses its free cash flow to expand its portfolio and pay dividends. It trades under the symbol "FNV" on both the Toronto and New York stock exchanges.
For further information contact:
David M. Cole
President and CEO
Phone: (303) 973-8585
Dave@EMXroyalty.com
Isabel Belger
Investor Relations
Phone: +49 178 4909039
IBelger@EMXroyalty.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release
Forward-Looking Statements
This news release may contain "forward-looking statements" that reflect the Company's current expectations and projections about its future results. These forward-looking statements may include statements regarding the expected timing for the closing of the Loan, the satisfaction of the conditions of closing of the Loan and the expected use of proceeds from the Loan, or other statements that are not statements of fact. When used in this news release, words such as "estimate," "intend," "expect," "anticipate," "will", "believe", "potential" and similar expressions are intended to identify forward-looking statements, which, by their very nature, are not guarantees of the Company's future operational or financial performance, and are subject to risks and uncertainties and other factors that could cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and factors may include, but are not limited to the Company being unable to satisfy the conditions of closing of the Loan or being unable comply with the covenants under the Credit Agreement, including the repayment of any amounts owing under the Loan, and other factors.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, including the risks and uncertainties identified in this news release, and other risk factors and forward-looking statements listed in the Company's MD&A for the quarter ended March 31, 2024 (the "MD&A"), and the most recently filed Annual Information Form ("AIF") for the year ended December 31, 2023, actual events may differ materially from current expectations. More information about the Company, including the MD&A, the AIF and financial statements of the Company, is available on SEDAR+ at www.sedarplus.ca and on the SEC's EDGAR website at www.sec.gov.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/213593
FAQ
What is the purpose of EMX Royalty's $35 million loan agreement with Franco-Nevada?
When does EMX Royalty's loan from Franco-Nevada mature?
What are the interest terms for EMX Royalty's $35 million loan from Franco-Nevada?
Are there any prepayment options for EMX Royalty's loan?
What security does Franco-Nevada hold for the $35 million loan to EMX Royalty?
