CALGARY, Alberta – Freehold Royalties Ltd. (“Freehold”) (TSX:FRU) announces that it has closed its previously announced acquisition of diversified, high quality, U.S. royalty assets (the “Acquired Assets”) for US$58 million (the “U.S. Royalty Transaction”). The Acquired Assets will play a key role in strengthening the resiliency of Freehold’s portfolio, enhancing the near-term and long-term sustainability of Freehold’s dividend and providing option value to return capital to shareholders through multiple years of free cash flow growth.
The Acquired Assets were partially funded by a previously closed bought deal financing whereby Freehold issued 9,856,000 subscription receipts (the “Subscription Receipts”) at a price of $4.80 per Subscription Receipt for gross proceeds of approximately $47.3 million, which included the full exercise of the over-allotment option granted to the underwriters.
Concurrent with the closing of the bought deal financing, the pension trust funds for employees of Canadian National Railway Company invested approximately $13.4 million in Freehold through the purchase of 2,791,667 Subscription Receipts also at a price of $4.80 per Subscription Receipt on a non-brokered private placement basis.
On closing of the U.S. Royalty Transaction, the net proceeds from the sale of the Subscription Receipts were released from escrow to Freehold to partially fund the purchase price for the Acquired Assets, with the remainder of the purchase price funded by drawing on existing credit facilities. In addition, as a result of and on closing of the U.S. Royalty Transaction and in accordance with the terms of the Subscription Receipts, each Subscription Receipt was exchanged for one common share of Freehold. Trading in the Subscription Receipts on the Toronto Stock Exchange is expected to be halted prior to market open on January 6, 2021 and the Subscription Receipts delisted following the market close on January 6, 2021.
Concurrent with the payment of Freehold’s regular monthly dividend, on January 15, 2021, each holder of Subscription Receipts of record on December 31, 2020 will also receive a dividend equivalent payment of $0.02 per Subscription Receipt.
Freehold reiterates its 2021 production guidance range of 10,000-10,500 boe/d, with the midpoint representing a 13% increase above Q3-2020 average production volumes. As oil prices have shown steady improvement since announcing the U.S. Royalty Transaction in November, Freehold has benefited from continued momentum in drilling activity both on its Canadian and U.S. royalty assets.
Freehold’s focus is on acquiring and managing oil and gas royalties.
Freehold’s common shares trade on the Toronto Stock Exchange in Canada under the symbol FRU.