Targa seeks $466 million holdco term loan

By Sara Rosenberg

New York, Dec. 7 - Targa Resources Inc. is in market with a $466 million 71/2-year first-lien holdco term loan, according to a market source.

Credit Suisse, Deutsche Bank, Lehman Brothers and Merrill Lynch are the joint bookrunners on the deal that launched with a bank meeting on Thursday, with Credit Suisse and Deutsche the joint lead arrangers.

The term loan is talked at initial pricing of Libor plus 500 basis points, with an original issue discount of 94, the source said.

Once the existing opco term loan is repaid and this holdco loan receives subsidiary guarantees, pricing will drop down to Libor plus 300 bps.

The holdco term loan was underwritten and held by the lead banks back in August to fund a dividend payment. At that time, it was sized at $450 million, but now it's slightly larger because it includes the accretion over the time that it's been held by the banks.

The company decided to get the holdco term loan after it pulled a proposed $2.475 billion senior secured credit facility from market this summer since the financing was not available on acceptable terms.

The credit facility consisted of a $300 million six-year revolver (Ba3/B+) talked at Libor plus 225 bps, a $300 million seven-year synthetic letter-of-credit facility (Ba3/B+) talked at Libor plus 250 bps, a $1.525 billion seven-year first-lien term loan (Ba3/B+) talked at Libor plus 250 bps and a $350 million 71/2-year second-lien term loan (B3/CCC+) talked at Libor plus 575 bps.

In addition to funding a dividend, proceeds from the credit facility were going to be used to refinance existing bank debt and fund a tender offer for the company's $250 million of 8½% senior notes due 2013.

As a result of the credit facility being pulled, the company had to terminate the bond cash tender offer and related solicitation of consents.

Targa is a Houston-based midstream energy company.

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