8-KMaterial AgreementsFinancial EventsExhibits & Filings

Targa Resources Corp. 8-K Report, Material Agreement (Apr 16, 2018)

Filed April 16, 2018For Securities:TRGP

Summary

This 8-K filing by Targa Resources Corp. (TRGP) on April 16, 2018, primarily concerns the entry into a material definitive agreement related to a significant debt issuance. Specifically, Targa Resources Partners LP (the Partnership), a subsidiary of TRGP, and its wholly-owned subsidiary, Targa Resources Partners Finance Corporation, issued $1 billion in aggregate principal amount of 5.875% senior unsecured notes due 2026. The filing details the Indenture governing these notes, outlining the terms of maturity, interest payments, and redemption provisions. It also specifies covenants that restrict the Partnership's ability to incur additional debt, pay distributions, make investments, and engage in other significant financial activities, though these restrictions can be lifted if the notes achieve investment-grade ratings. Furthermore, the report includes a Registration Rights Agreement that ensures the notes will either be exchanged for registered notes or a shelf registration statement will be declared effective within a specified timeframe to allow for their resale, with provisions for additional interest payments if these obligations are not met. The net proceeds from this offering are earmarked for repaying borrowings under credit facilities and for general corporate purposes, which may include debt reduction, working capital, and capital expenditures. Investors should note the interplay between the note issuance, the associated covenants, and the company's financial flexibility.

Key Highlights

  • 1Targa Resources Partners LP issued $1 billion of 5.875% senior unsecured notes due 2026.
  • 2The notes are governed by a new Indenture, detailing terms, interest payments, and redemption options.
  • 3The Indenture includes covenants that restrict the Partnership's financial activities, such as incurring additional debt and paying distributions.
  • 4These restrictive covenants may be terminated if the notes achieve an investment-grade rating from major credit agencies.
  • 5A Registration Rights Agreement mandates efforts to register or exchange the notes for resale, with penalties for non-compliance.
  • 6Proceeds from the note offering will be used to repay credit facility borrowings and for general corporate purposes, including potential debt repurchases and capital expenditures.

Frequently Asked Questions

This 8-K filing announces Targa Resources Partners LP's entry into a material definitive agreement, specifically an Indenture and a Registration Rights Agreement, related to the issuance of $1 billion in aggregate principal amount of 5.875% senior unsecured notes due 2026. It details the terms and conditions of these notes and associated agreements.

The net proceeds from the offering are intended to be used to repay borrowings under the Partnership's credit facilities and for general partnership purposes. These purposes may include the redemption or repurchase of outstanding senior notes, repayment of other indebtedness, working capital, and funding capital expenditures and acquisitions.

The Indenture imposes several restrictions on Targa Resources Partners LP and certain subsidiaries, including limitations on incurring additional debt, paying distributions on equity interests, making certain investments, incurring liens, entering into affiliate transactions, merging or consolidating, and transferring assets. However, many of these covenants will terminate if the notes receive an investment-grade rating and no default is occurring.

The Registration Rights Agreement requires the Issuers to use commercially reasonable efforts to consummate an exchange offer or have a shelf registration statement declared effective for the resale of the notes, unless they are already freely tradable. Failure to meet these obligations within specified timeframes will result in the Issuers paying additional interest, providing an incentive for timely compliance and facilitating liquidity for noteholders.