Tallgrass Energy to launch $1.28 billion credit facility on Tuesday

By Sara Rosenberg

New York, Sept. 28 - Tallgrass Energy Partners LP will be holding a bank meeting on Tuesday morning to launch a $1,275,000,000 senior secured credit facility, according to a market source.

Barclays is the sole bookrunner on the deal and a joint lead arranger with Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and RBC Capital Markets LLC.

The facility consists of a $150 million five-year revolver, an $875 million six-year term loan and a $250 million six-year term loan that is delayed-draw for 18 months, the source said.

Proceeds, along with equity, will be used to help fund the acquisition of assets from Kinder Morgan Energy Partners LP and for working capital purposes.

Under the agreement, Tallgrass is buying Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming and Kinder Morgan's 50% interest in the Rockies Express Pipeline for a total cash consideration of about $1.8 billion.

Closing is expected in the fourth quarter, subject to Federal Trade Commission approval.

Senior secured and total leverage is 3.2 times and equity to total capitalization is about 53%.

Tallgrass, a midstream gas pipeline system, is owned by management, Kelso & Co. and a limited group of investors led by the Energy & Minerals Group, including Magnetar Capital. Kinder Morgan is a Houston-based pipeline transportation and energy storage company.

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