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Item 1.01
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Entry into a Material Definitive Agreement.
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On June 2, 2017, Royal Gold, Inc.
(“Royal Gold” or “Company”) entered into a Revolving Facility Credit Agreement (“New Credit Agreement”),
among Royal Gold as borrower, a wholly owned subsidiary of Royal Gold as guarantor, and the Bank of Nova Scotia (“BNS”),
as administrative agent, and BNS, HSBC Bank USA, National Association (“HSBC”), Canadian Imperial Bank of Commerce
(“CIBC”), Bank of America, N.A., Goldman Sachs Bank USA, The Bank of Montreal, National Bank Financial, and Royal Bank
of Canada, as lenders. Other agents under the New Credit Facility include BNS, HSBC and CIBC as Co-Lead Arrangers and Joint Bookrunners,
HSBC as Syndication Agent and CIBC as Documentation Agent.
The New Credit Facility provides Royal
Gold with a five year, $1.0 billion revolving line of credit with an accordion of up to $250 million, which, subject to satisfaction
of certain conditions and receipt of additional commitments from existing or new lenders, allows the Company to increase the aggregate
commitments under the facility to $1.25 billion.
The New Credit Agreement replaces Royal
Gold’s $650 million revolving credit facility under the Sixth Amended & Restated Revolving Credit Agreement, dated as
of January 29, 2014 (as amended), among Royal Gold, as borrower, certain subsidiaries of Royal Gold, as guarantors, and HSBC, as
agent, and HSBC, BNS, CIBC, Goldman and BofA, as lenders (“Prior Credit Facility”).
Royal Gold repaid the Prior Credit Facility
using a combination of cash on hand (approximately $50 million) and a borrowing under the New Credit Facility (approximately $250
million), leaving $750 million of availability under the New Credit Facility.
Features of the New Credit Facility include:
(1) a $350 million increase in maximum aggregate commitments over the Prior Credit Facility from $650 million to $1.0 billion;
(2) a final maturity of June 2022 as compared to March 2021 under the Prior Credit Facility; (3) a $250 million accordion
feature, which allows the Company to increase commitments under the facility, subject to satisfaction of certain conditions and
receipt of additional commitments from existing or new lenders, to an aggregate commitment amount of up to $1.25 billion; (4) commitment
fees on undrawn amounts ranging from 0.25% per annum to 0.55% per annum based on the Company’s leverage ratio (as defined
therein); (5) an interest rate, as selected by the Company, based on the Company’s leverage ratio, which rates range
from either (i) LIBOR + 1.25% per annum to LIBOR + 2.75% per annum or (ii) “base rate” plus an applicable margin of
0.25% per annum to 1.75% per annum, where “base rate” is equal to the greatest of (A) the applicable annual interest
rate charged by BNS for U.S. Dollar loans, (B) the aggregate of the Federal Funds Effective Rate (as defined therein) plus 0.5%
per annum and (C) LIBOR for an interest period of one month plus 1.0% per annum; (6) a minimum interest coverage ratio (as
defined therein) of 3.0 to 1.0, and (7) a maximum leverage ratio (as defined therein) of 3.5 to 1.0, increasing to 4.0 to
1.0 for two quarters following completion of a material permitted acquisition of $250 million or more (as further defined therein).
The obligations of Royal Gold under the
New Credit Facility are secured by pledges of the Company’s direct and indirect subsidiaries representing a minimum of 85%
of the Company’s consolidated total assets and consolidated total revenues.
The New Credit Agreement contains customary
covenants limiting the ability of Royal Gold and its subsidiaries to, among other things, incur debt or liens, dispose of assets,
enter into transactions with affiliates, make certain investments or consummate certain acquisitions, such as mergers. It also
contains customary events of default (as defined therein). Upon the occurrence of an event of default (unless otherwise waived),
the administrative agent, with the approval and instructions of at least the majority of the lenders (other than defaulting lenders
(as defined therein)), may terminate the New Credit Facility and declare all indebtedness under the New Credit Agreement immediately
due and payable.
The foregoing description of the New Credit
Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the New Credit
Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by
reference.