8-KMaterial AgreementsFinancial EventsExhibits & Filings

Targa Resources Corp. 8-K Report, Material Agreement (Oct 17, 2017)

Filed October 17, 2017For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) announced a significant financing event on October 17, 2017, through its subsidiary Targa Resources Partners LP (the "Partnership"). The company successfully issued $750 million in aggregate principal amount of 5% senior unsecured notes due in 2028. This offering was conducted in a private placement exempt from registration under the Securities Act, targeting qualified institutional buyers and non-U.S. persons. The proceeds from this issuance are earmarked for strategic capital allocation, including the redemption of outstanding 5% senior unsecured notes due 2018, reducing credit facility borrowings, and general corporate purposes such as other debt redemptions, working capital, and capital expenditures. The Indenture governing these new notes imposes several covenants restricting the Partnership's and its subsidiaries' ability to incur additional debt, pay distributions, make investments, incur liens, engage in affiliate transactions, merge, or sell assets. Notably, many of these restrictive covenants will be terminated if the notes achieve investment grade ratings from Moody's or S&P and no default is outstanding. The company also entered into a Registration Rights Agreement to facilitate the future tradability of these notes, with potential for additional interest payments if specific obligations are not met within prescribed timelines. The filing also confirms the company's use of proceeds, highlighting a proactive approach to managing its debt profile and funding future growth.

Key Highlights

  • 1Targa Resources Partners LP issued $750 million of 5% senior unsecured notes due 2028.
  • 2The notes were issued via a private placement under Rule 144A and Regulation S, exempt from SEC registration.
  • 3Proceeds will be used to redeem 2018 senior notes, reduce credit facility debt, and for general corporate purposes including capital expenditures.
  • 4The new Indenture includes covenants that restrict debt incurrence, distributions, investments, liens, affiliate transactions, mergers, and asset sales.
  • 5Many restrictive covenants in the Indenture can be removed if the notes achieve investment grade ratings from Moody's or S&P.
  • 6A Registration Rights Agreement was executed to allow for future exchange or registration of the notes.
  • 7The company may be required to pay additional interest if it fails to meet exchange or registration obligations within specified periods.

Frequently Asked Questions

This 8-K filing announces the entry into a material definitive agreement, specifically the Indenture for the issuance of $750 million in 5% senior unsecured notes due 2028 by Targa Resources Partners LP. It details the terms of the notes, the restrictions (covenants) imposed by the Indenture, and the use of proceeds.

The company plans to use the net proceeds to redeem its 5% senior unsecured notes due 2018, reduce borrowings under its credit facilities, and for general partnership purposes. These general purposes may include redeeming or repurchasing other outstanding notes, repaying other indebtedness, working capital, and funding capital expenditures and acquisitions.

The Indenture restricts the Partnership and its subsidiaries from incurring additional debt, paying distributions or repurchasing equity interests, making certain investments, incurring liens, entering into affiliate transactions, merging or consolidating, and transferring/selling assets. However, many of these covenants will terminate if the notes are rated investment grade by Moody's or S&P and no default is outstanding.

The Registration Rights Agreement ensures that investors who purchased the notes in the private placement can eventually trade them freely. Targa Resources will use commercially reasonable efforts to complete an exchange offer and, if necessary, file a shelf registration statement to allow for the resale of these notes, unless they become freely tradable sooner.