Regis Replaces $300M Term Loan with Flexible Revolving Credit Facility

• Establishment of $300 million revolving credit facility
• Facility replaces early repaid $300 million syndicated term loan
• Three-year tenor with senior security over assets
• Backed by a syndicate of six major banks including CBA and HSBC
• Interest rates linked to BBSY plus margin based on leverage ratio

Strategic Financial Move

Regis Resources Limited (ASX: RRL) has announced the establishment of a $300 million revolving credit facility, marking a significant step in its financial strategy. This new facility follows the early repayment of its previous $300 million syndicated term loan, signalling a shift towards greater liquidity and operational flexibility.

The revolving credit facility, with a three-year tenor, provides Regis with a dynamic funding source that can be drawn down, repaid, and redrawn as needed. This flexibility is particularly valuable in the volatile natural resources sector, where capital needs can fluctuate with market conditions and project demands.

Robust Banking Syndicate

Backing this facility is a strong syndicate of six highly regarded banks: Commonwealth Bank of Australia, HSBC, Macquarie Bank, Natixis CIB, Royal Bank of Canada, and Westpac Banking Corporation. The diversity and calibre of these lenders underscore confidence in Regis’s business fundamentals and outlook.

Chief Financial Officer Anthony Rechichi highlighted the competitive terms and strong support from the banking partners, emphasizing the company’s solid financial position. The inclusion of multiple international and domestic banks also suggests a strategic approach to managing credit risk and maintaining access to diverse capital sources.

Terms and Covenants

The facility is secured by senior security over all assets of the borrower and guarantors, with some exclusions. Interest on drawn amounts is calculated at the BBSY rate plus a margin tied to Regis’s net leverage ratio, aligning borrowing costs with the company’s financial health.

Standard financial covenants apply, including interest cover ratio, net leverage ratio, minimum cash and bullion balance tests, and minimum reserves tests. These covenants are typical for facilities of this nature but will require ongoing monitoring to ensure compliance and maintain financial discipline.

Implications for Regis and Investors

This move to a revolving credit facility reflects Regis’s proactive approach to capital management, providing a buffer against market uncertainties and enabling agile responses to operational needs. It also signals to investors a commitment to maintaining strong liquidity and financial flexibility, which are critical in the mining sector’s cyclical environment.

While the announcement does not disclose specific financial metrics or utilization plans, the expanded banking syndicate and competitive terms bode well for Regis’s capacity to fund growth initiatives or weather potential downturns without compromising balance sheet strength.

Bottom Line?

Regis’s new credit facility sets the stage for enhanced financial agility amid evolving market conditions.

Questions in the middle?

• How will Regis deploy the revolving credit facility to support upcoming projects or operational needs?
• What are the specific margin rates tied to the net leverage ratio, and how might they fluctuate?
• Could the expanded banking syndicate lead to future financing opportunities or strategic partnerships?