8-KMaterial AgreementsFinancial EventsExhibits & Filings

Targa Resources Corp. 8-K Report, Material Agreement (Jul 3, 2018)

Filed July 3, 2018For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) announced on July 3, 2018, a significant restructuring of its credit facilities through two key amendments. The First Amendment to the Credit Agreement for Targa Resources Corp. extends the maturity date of its revolving credit facility to June 29, 2023, from February 26, 2020. It also reflects the full prepayment of term loans and adjusts applicable margins and commitment fees, with new terms in place until the delivery of Q2 2018 financial statements. Concurrently, Targa Resources Partners LP (the Partnership), a subsidiary, entered into a Third Amendment and Restatement Agreement to its credit facility. This new Partnership Credit Agreement establishes a revolving credit facility of up to $2.2 billion, with an option to increase it by $500 million, maturing on June 29, 2023. Notably, it includes provisions for the release of collateral upon achieving an 'Investment Grade Event' and modifies leverage ratio covenants, generally relaxing the total leverage ratio requirement to 5.50:1.00 (or 5.25:1.00 post-collateral release) while retaining certain limitations on senior leverage. These amendments collectively provide Targa with extended debt maturities and modified financial covenants, aimed at enhancing financial flexibility.

Key Highlights

  • 1Targa Resources Corp. extended the maturity of its corporate revolving credit facility to June 29, 2023.
  • 2The company's term loans have been fully prepaid.
  • 3Targa Resources Partners LP secured a new revolving credit facility of up to $2.2 billion, with potential for a $500 million increase.
  • 4The Partnership Credit Agreement has a maturity date of June 29, 2023.
  • 5Collateral may be released upon the occurrence of an 'Investment Grade Event' under the Partnership Credit Agreement.
  • 6Leverage ratio covenants were modified, with a higher total leverage ratio permitted (up to 5.50:1.00) and some restrictions on senior leverage removed, subject to certain conditions.

Frequently Asked Questions

The First Amendment to the Credit Agreement for Targa Resources Corp. primarily extends the maturity date of its revolving credit facility to June 29, 2023, providing the company with longer-term liquidity. It also confirms the full prepayment of outstanding term loans and adjusts associated interest margins and commitment fees.

The new Partnership Credit Agreement provides Targa Resources Partners LP with a revolving credit facility of up to $2.2 billion (with an option to increase by $500 million) maturing on June 29, 2023. It also introduces the concept of an 'Investment Grade Event' which can lead to the release of collateral, and modifies leverage covenants to offer greater flexibility.

The updated Partnership Credit Agreement generally increases the maximum permitted total leverage ratio to 5.50 to 1.00 before collateral release and 5.25 to 1.00 after. It also removes the requirement to maintain a maximum senior leverage ratio of 4.00 to 1.00, although certain restrictions remain for specific transactions like incurring second lien debt or acquisitions that would push the senior leverage ratio beyond 4.00 to 1.00, or if redeeming preferred units that would cause the ratio to exceed 3.50 to 1.00. This provides more flexibility in managing its debt levels.

Yes, the Partnership Credit Agreement restricts the Partnership's ability to make distributions of available cash to unitholders if a default or event of default exists or would result from such distribution. It also contains various covenants that may limit the Partnership's ability to incur indebtedness, grant liens, make investments, sell assets, and engage in affiliate transactions, subject to certain carve-outs.