8-KMaterial AgreementsFinancial EventsOther Events+1

Targa Resources Corp. 8-K Report, Material Agreement (Aug 21, 2020)

Filed August 21, 2020For Securities:TRGP

Summary

Targa Resources Corp. (TRGP), through its subsidiary Targa Resources Partners LP, has filed an 8-K detailing the issuance of $1 billion in 4 7/8% senior unsecured notes due 2031. This offering, exempt from SEC registration requirements and placed with qualified institutional and non-U.S. buyers, aims to refinance existing debt. Specifically, a portion of the proceeds will be used for a cash tender offer to purchase outstanding 6 3/4% Senior Notes due 2024, with any remaining 2024 Notes to be redeemed. The remaining proceeds will reduce borrowings under the company's senior secured revolving credit facility, strengthening its liquidity position. The new notes are guaranteed by certain subsidiaries and are subject to covenants that can be eased if the notes achieve investment-grade ratings from major credit agencies.

Key Highlights

  • 1Targa Resources Partners LP issued $1 billion of 4 7/8% senior unsecured notes due 2031.
  • 2The issuance was conducted under exemptions from SEC registration, targeting qualified institutional buyers and non-U.S. persons.
  • 3Proceeds will fund a cash tender offer for the 6 3/4% Senior Notes due 2024 and redeem any remaining 2024 Notes.
  • 4Remaining net proceeds will be used to reduce borrowings under the company's senior secured revolving credit facility.
  • 5The new notes are guaranteed by certain subsidiaries of Targa Resources Partners LP.
  • 6The indenture includes covenants restricting debt incurrence, distributions, investments, liens, affiliate transactions, mergers, and asset sales.
  • 7Key covenants may be terminated if the notes achieve investment-grade ratings from Moody's or S&P and no default exists.

Frequently Asked Questions

The primary purpose of the $1 billion issuance of 4 7/8% senior unsecured notes due 2031 is to refinance existing debt. A portion of the proceeds will be used to fund a tender offer for the company's 6 3/4% Senior Notes due 2024, and any remaining proceeds will reduce borrowings under Targa's senior secured revolving credit facility, thereby improving the company's overall financial structure and liquidity.

Yes, the indenture includes several restrictive covenants that limit Targa Resources Partners LP and certain subsidiaries from incurring additional debt, paying distributions on equity, making certain investments, incurring liens, entering into affiliate transactions, merging or consolidating, and selling assets. However, many of these covenants may be terminated if the new notes receive an investment-grade rating from Moody's or S&P and no default is ongoing.

The net proceeds from the sale of the new notes will be used for two main purposes: first, to fund a cash tender offer for Targa Resources Partners LP's outstanding 6 3/4% Senior Notes due 2024 and to redeem any 2024 Notes not purchased in the tender offer; and second, to reduce borrowings under the company's senior secured revolving credit facility. This indicates a focus on debt management and optimizing the company's capital structure.

This issuance extends Targa Resources' debt maturity profile by introducing $1 billion in notes due in 2031. It also involves the early retirement of the 2024 Notes, effectively shifting a portion of the company's debt repayment further into the future and potentially lowering near-term interest expenses.