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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 13, 2009
ROYALE ENERGY, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA | 000-22750 | 33-0224120 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
7676 Hazard Center Drive, Suite 1500
San Diego, CA 92108
(Address of principal executive office)
Issuer's telephone number: (619) 881-2800
Section 1 Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
On February 13, 2009, Royale Energy, Inc. entered into a loan agreement for a $15 million revolving line of credit with Texas Credit Bank, replacing its line of credit with Guaranty Bank, as described in the attached press release.
Advances under the credit agreement bear interest at an adjustable rate equal to the greater of Texas Credit Bank’s prime interest rate or the Federal Funds Rate, but no less than 3% per annum.
The loan agreement contains certain restrictive covenants, including a prohibition of payment of dividends on Royale’s stock (other than dividends paid in stock). The loan agreement contains covenants that, among other things, Royale must:
| • | Maintain a minimum ratio of earnings before interest, taxes, depreciation and amortization to interest expense of at lest 3.00 to 1.00; |
| • | Maintain a ratio of current assets to current liabilities of at least 1.00 to 1.00; and |
| • | Maintain a tangible net worth as of the close of each fiscal quarter of at least 75% of Royale’s tangible net worth on the loan closing date, plus 75% of positive quarterly net income thereafter. |
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
Exhibit 99.1 Press release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ROYALE ENERGY, INC. |
| |
Date: February 19, 2009 | /s/ Stephen M. Hosmer |
| Stephen M. Hosmer, Co-President, Co-Chief Executive Officer and Chief Financial officer |
