Targa gets new $150 million revolver, $1.2 billion restated revolver

By Marisa Wong

Madison, Wis., Oct. 9 - Targa Resources Corp. entered into a credit agreement on Oct. 3 providing for a $150 million five-year revolving credit facility, according to an 8-K filed Tuesday with the Securities and Exchange Commission. Concurrently, Targa Resources Partners LP entered into a second amended and restated credit agreement for a $1.2 billion five-year revolving credit facility.

Targa Resources' new revolving credit facility may be increased by up to $100 million and has a $30 million swingline sub-facility.

The credit agreement matures on Oct. 3, 2017.

Interest is equal to Libor plus an applicable margin of 275 basis points to 350 bps based on the company's consolidated leverage ratio. The commitment fee ranges from 37.5 to 50 bps, also depending on the consolidated leverage ratio.

The credit agreement requires the company to maintain a consolidated leverage ratio of no more than 4.00 to 1.00 as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, beginning with the fiscal quarter ending Dec. 31.

In addition, the agreement restricts the company's ability to make dividends to shareholders if, on a pro forma basis after making those dividends, any default or event of default occurs or the company's consolidated leverage ratio exceeds 4.00 to 1.00.

The credit agreement also includes various other covenants and events of default.

Deutsche Bank Trust Co. Americas is the administrative agent for the new facility; Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc. are joint lead arrangers and joint bookrunners; Barclays Bank plc, Wells Fargo Bank, NA and RBS Securities Inc. are joint bookrunners; and Bank of America, NA and Wells Fargo Bank, NA are co-syndication agents. Barclays Bank plc and Royal Bank of Scotland plc are co-documentation agents.

Restated facility

Targa Resources Partners' credit agreement amends and restates its existing credit facility to provide for a $1.2 billion revolving credit facility due Oct. 3, 2017.

The revolving credit facility may be increased by up to $300 million and has a $100 million swingline sub-facility. The full amount of the revolving facility is available for the issuance of letters of credit.

Interest is equal to Libor plus 175 bps to 275 bps, and the commitment fee ranges from 30 bps to 50 bps. The applicable margin and commitment fee depend on the partnership's ratio of consolidated funded indebtedness to consolidated adjusted EBITDA.

The restated credit agreement restricts the partnership's ability to make distributions of available cash to unitholders if any default or an event of default exists or would result from such distributions.

The credit agreement also requires the partnership to

• Maintain a consolidated leverage ratio of no more than 5.50 to 1.00, determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, beginning with the fiscal quarter ended Sept. 30;

• Maintain a consolidated senior leverage ratio of no more than 4.00 to 1.00, determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, beginning with the fiscal quarter ended Sept. 30; and

• Maintain an interest coverage ratio of no less than 2.25 to 1.00, determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, beginning with the fiscal quarter ended Sept. 30.

In addition, the credit agreement contains various other covenants and events of default.

Bank of America is the administrative agent for the restated facility; Merrill Lynch, Wells Fargo Securities, LLC and RBS Securities are joint lead arrangers and co-book managers; Wells Fargo Bank and RBS are the co-syndication agents; and Deutsche Bank Securities and Barclays Bank are the co-documentation agents.

Targa Resources is a Houston-based provider of midstream natural gas and natural gas liquids services.

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