Brian Zinchuk is editor and owner of Pipeline Online
Royal Helium, drilling near Ogema in 2021. Photo by Brian Zinchuk
SASKATOON – Royal Helium Ltd. announced on Dec. 21 that it has signed term sheets with the Business Development Bank of Canada and a Schedule 1 Bank, acting pari passu for a non-revolving credit facility in the amount of C$15,000,000. The loans bears interest at a rate of 3.00 per cent above the bank’s prime lending rate. Proceeds of the credit facility will be used for development and production facilities currently under construction for the Steveville helium field in Alberta. The Schedule 1 Bank will also provide a revolving demand operating loan of C$2,500,000 for working capital purposes with a floating interest rate of 2.00 per cent per annum above Prime.
Royal Helium is also announced that it has entered into an agreement with Eight Capital for a $5.5 million bought deal private placement of subscription receipts convertible debenture units (as discussed further below).
Royal Helium chief financial officer Jeff Sheppard said in a release, “We are pleased to have achieved this major milestone of being fully funded to first production, positioning Royal to deliver helium to our space exploration off-take partner in Q2 2023. Securing debt financing in the traditional bank market through a Canadian Schedule 1 bank and BDC at such favourable rates alongside the bought-deal financing not only enhances returns to shareholders but also validates the quality and economics of our Steveville project. Furthermore, this initial project financing will simplify Royal’s access to future production facility construction financing.”
The debt facilities, combined, are subject to a one-time C$87,500 fee and an annual fee of C$6,000. Under a floating rate option, loans drawn on the Credit Facility can be repaid at any time without penalty. The facilities will be secured by a general security agreement and is subject to customary loan covenants.
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Completion of the credit facility and operating line is subject to execution of definitive agreements and regulatory approvals and is expected to close in January 2023.
Bought Deal Convertible Debenture Private Placement
Royal Helium is also announced that it has entered into an agreement with Eight Capital, pursuant to which Eight Capital has agreed to purchase for resale, on a bought deal private placement basis, 5,500 non-transferable subscription receipts exchangeable into unsecured convertible debenture units of the company, with a maturity date of Dec. 31, 2025.
The net proceeds of the offering will be used to fund capital expenditures related to the Steveville production facilities and for general corporate purposes.
Royal’s previously announced project financing of US$20 million has been cancelled.
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