10:03 AM EST, 12/10/2024 (MT Newswires) -- Freehold Royalties Ltd. ( FRHLF ) was at last look down 3.8% in early Tuesday trade after it announced that, as a result of excess demand, it has agreed with the syndicate of underwriters to increase the size of its prior announced bought-deal equity financing from $125.1 million to $150 million.

Tuesday's statement noted the underwriters have agreed to purchase for resale to the public, on a bought-deal basis, a total of 11.5 million common shares of Freehold at a price of $13.00 per common share for gross proceeds of near $150.0 million. It said the underwriters will have an option to purchase up to an additional 15% of the upsized common shares issued under the equity financing at a price of $13.00 per common share to cover over-allotments and for market stabilization purposes exercisable in whole or in part at any time until 30 days after closing.

As previously announced, the statement noted, Freehold has entered into a definitive agreement with a private seller to acquire mineral title and royalty interests in the core of the Midland Basin in Texas for approximately $216 million, net of estimates for exchange rate and customary closing adjustments. As part of the acquisition, Freehold has the option to acquire up to an additional $65 million of interest in the acquired assets, on the same terms and conditions. With the additional proceeds from the upsize of the equity financing, Freehold will acquire near $22 million of additional interest in the acquired assets (an increase of 10%, for a total of $238 million), subject to the closing conditions of the acquisition. As a result of the upsize, Freehold estimates 2025 production from the acquired assets to be 1,375 to 1,475 boe/d (approximately 61% light oil, 20% natural gas liquids and 19% natural gas) representing approximately $34 million in 2025 estimated net royalty revenue (net of production and ad valorem taxes) based on US$70/bbl WTI, with limited tax burden in the near term.

It is anticipated that Freehold will fund the acquisition with net proceeds of the equity financing and Freehold's existing credit facilities. Closing of the financing is not conditional on the closing of the acquisition. In the event that the acquisition does not close, the net proceeds from the financing will be used to fund general corporate purposes including repayment of amounts outstanding under the company's credit facilities.

Completion of the equity financing is subject to customary closing conditions, including the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange. Closing of the Equity Financing is expected to occur on December 13 , 2024.

FRU was last seen down $0.52 or 3.8% at $13.12.

Price: 13.18, Change: -0.47, Percent Change: -3.44