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Tallgrass to obtain new revolver at closing of common units IPO
By Toni Weeks
San Luis Obispo, Calif., March 28 - Tallgrass Energy Partners, LP intends to obtain a new five-year revolving credit facility at the closing of its initial planned offering of common units. Barclays Bank plc will be the administrative agent for the loan, which will be structured with a sublimit for letters of credit, a sublimit for swingline loans and an accordion feature.
Borrowings will bear interest at a reserve adjusted Libor rate plus an applicable margin. After the first full fiscal quarter following closing, the margin will be based on the company's leverage ratio.
The credit agreement will contain financial covenants that require the company to maintain a minimum fixed-charge coverage ratio of 2.00 to 1.00 and a maximum leverage ratio of 4.75 to 1.00, which may be increased by 0.50 to 1.00 for measurement periods following certain acquisitions.
The company's obligations under the credit facility will be guaranteed by the company and each of its existing and subsequently acquired or organized direct or indirect domestic subsidiaries and will be secured by a first-priority lien on substantially all of the present and acquired property owned by the company and each guarantor.
Initial borrowings will be used to retire remaining debt from Tallgrass Development, for revolving credit facility origination fees, to pay the structuring fee and offering expenses for the IPO and to reimburse Tallgrass Development for a portion of capital expenditures it made to purchase assets from Kinder Morgan.
The Overland Park, Kan., company owns, operates, acquires and develops midstream energy assets in North America.
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