Summary
Targa Resources Corp. (TRGP) has entered into a $1.5 billion unsecured term loan facility with Mizuho Bank, Ltd. This facility is specifically tied to the closing of the previously announced $3.55 billion acquisition of Lucid Energy Delaware, LLC ("Lucid"). The term loan is intended to be drawn in a single borrowing and, if the Lucid Acquisition does not close, the facility will not be drawn and the agreement will be terminated. The funding for the Lucid Acquisition will be a combination of this new term loan, proceeds from a recent $1.25 billion senior notes offering, and existing liquidity from their revolving credit facility.
Key Highlights
- 1Targa Resources secured a $1.5 billion unsecured term loan facility with Mizuho Bank.
- 2The term loan is contingent on the successful closing of the $3.55 billion acquisition of Lucid Energy Delaware, LLC.
- 3Funding for the Lucid acquisition will be a mix of the new term loan, $1.25 billion in senior notes, and available revolving credit.
- 4The term loan has an initial availability period ending September 14, 2022, extendable under specific conditions related to the Lucid acquisition closing.
- 5The facility bears interest based on either a Base Rate or Term SOFR, with applicable margins tied to Targa's debt rating.
- 6The agreement includes covenants requiring Targa to maintain a Consolidated Leverage Ratio of no more than 5.50 to 1.00.
- 7Dividend payments to stockholders may be restricted if an event of default exists or would result from such distribution.
Frequently Asked Questions
The primary purpose of this $1.5 billion unsecured term loan facility is to provide a portion of the funding necessary for Targa Resources' previously announced acquisition of Lucid Energy Delaware, LLC.
Yes, the obligations under the Term Loan Agreement are guaranteed by substantially all material wholly-owned domestic restricted subsidiaries of Targa Resources Corp., including Targa Resources Partners LP.
A significant covenant is the requirement to maintain a Consolidated Leverage Ratio of no more than 5.50 to 1.00, measured on a consolidated basis over four fiscal quarters. Additionally, there are restrictions on dividend payments to stockholders in the event of default.
If the Lucid acquisition does not close, Targa Resources will not draw upon the Term Loan Facility, and the Term Loan Agreement will be terminated. The facility is entirely contingent on the closing of that acquisition.