8-KMaterial AgreementsOther EventsExhibits & Filings

Targa Resources Corp. 8-K Report, Material Agreement (Aug 17, 2020)

Filed August 17, 2020For Securities:TRGP

Summary

Targa Resources Corp.'s subsidiary, Targa Resources Partners LP, announced on August 11, 2020, the pricing of a significant debt offering. The company successfully priced $1 billion in aggregate principal amount of 4.875% senior unsecured notes due 2031. The offering, which resulted in net proceeds of approximately $992.2 million, is a strategic move to strengthen the company's financial position and manage its existing debt. The net proceeds from this offering are earmarked for two primary purposes: a concurrent cash tender offer to repurchase existing 6 3/4% Senior Notes due 2024 and to pay associated fees and expenses, with any remaining 2024 Notes to be redeemed. The remaining funds will be used to reduce outstanding borrowings under the company's senior secured revolving credit facility. This debt refinancing initiative demonstrates Targa Resources' commitment to optimizing its capital structure and managing its near-term debt maturities.

Key Highlights

  • 1Targa Resources Partners LP priced $1 billion of 4.875% senior unsecured notes due 2031.
  • 2The offering is expected to generate net proceeds of approximately $992.2 million.
  • 3Proceeds will be used to fund a cash tender offer for 6 3/4% Senior Notes due 2024 and to redeem any remaining 2024 Notes.
  • 4Remaining proceeds will be applied to reduce borrowings under the company's senior secured revolving credit facility.
  • 5This debt issuance and repurchase plan aims to manage Targa's debt maturity profile and capital structure.
  • 6The Purchase Agreement includes customary representations, warranties, and indemnification provisions.
  • 7Affiliates of the initial purchasers have existing relationships with Targa, including providing financial services and potentially holding the notes subject to the tender offer.

Frequently Asked Questions

The primary purpose of the offering is to refinance Targa Resources' debt. Specifically, the proceeds are intended to fund a tender offer to purchase the company's outstanding 6 3/4% Senior Notes due 2024, and to pay associated fees and expenses. Any 2024 Notes not repurchased in the tender offer will be redeemed. The remaining funds will be used to reduce borrowings under the company's revolving credit facility.

The new notes are senior unsecured notes with an aggregate principal amount of $1,000,000,000, bearing a fixed interest rate of 4.875% per annum, and maturing in 2031. They were priced at par, meaning they were sold at 100% of their face value.

This offering is a proactive debt management strategy. By issuing new, longer-dated debt and retiring older, higher-coupon debt (the 2024 Notes), Targa Resources aims to improve its debt maturity profile and potentially reduce its overall interest expense. Using proceeds to pay down the revolving credit facility also improves liquidity and reduces reliance on its credit lines.

The filing notes that affiliates of the initial purchasers have provided various financial services to Targa and may continue to do so. Additionally, some affiliates may be lenders under Targa's credit facilities or holders of the 2024 Notes that are subject to the tender offer. While the relationships are disclosed and described as customary, investors should be aware of these interconnections.