Duke Royalty Limited (AIM: DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce that it has entered into a new £30 million revolving facility agreement with its existing provider, Honeycomb Investment Trust PLC (the “New Credit Facility”), on improved terms.
The New Credit Facility replaces the previous £15 million facility agreement, assumed by Duke as part of its acquisition of Capital Step announced on 4 February 2019. The increased facility will support Duke in delivering its growth strategy by providing access to additional capital, at a reasonable cost, without relying solely on equity markets. It is also expected to improve shareholder returns by minimising cash drag after equity placings.
The material terms relating to the New Credit Facility are as follows:
· Revolving credit facility of £30 million, increased from the current level of £15 million
· Five-year term, expiring in September 2024, straight line amortization beginning in year four
· Interest rate equal to LIBOR plus 7.25% per annum, which represents an improvement of 225bps on the previous rate of 9.5%
· Uncommitted accordion facility – subject to a loan to value threshold, with a larger equity base, the New Credit Facility could increase up to £50 million
Neil Johnson, CEO of Duke Royalty, said:
“We have achieved our stated goal of increasing our credit facility on better terms. This will provide Duke with a lower average cost of debt, an increased maturity profile and improved covenants over the inherited facility from Capital Step.
“We are also pleased that the increase in the facility enables Duke to continue investing in new identified royalty partners and to make additional follow-ons to existing royalty partners, which are already under discussion, to pursue their strategic objectives.”