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Targa Resources closes $2.2 billion restated revolver due 2023
By Marisa Wong
Morgantown, W.Va., July 3 – Targa Resources Partners LP amended and restated its existing credit facility on June 29 for a $2.2 billion revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.
Bank of America, NA is administrative agent, collateral agent and swingline lender.
The revolver includes an option to increase the maximum aggregate principal amount by up to $500 million in the future and a swingline sub-facility of up to $100 million.
The facility matures on June 29, 2023.
The amended credit agreement provides for some changes to occur upon the occurrence of an investment-grade event, including the release of all security interests in all collateral at the request of the partnership.
Borrowings bear interest at Libor plus an applicable margin ranging from 125 basis points to 225 bps depending on the partnership’s ratio of consolidated funded indebtedness to consolidated EBITDA and, upon and after the collateral release date, from 112.5 bps to 175 bps, depending on non-credit-enhanced senior unsecured long-term debt ratings.
The company is required to pay a commitment fee of 25 bps to 37.5 bps based on the leverage ratio or, upon and after the collateral release date, 12.5 bps to 35 bps based on ratings.
The credit agreement requires the partnership to maintain a total leverage ratio of no more than 5.50 to 1 and, upon and after the collateral release date, 5.25 to 1 (or 5.50 to 1 during a specified acquisition period).
The amended agreement generally removes the requirement that the partnership maintain a maximum senior leverage ratio of no more than 4.00 to 1, except that the partnership may not incur second-lien debt or carry out an acquisition of, or investment in, any unrestricted subsidiary that would cause its senior leverage ratio to exceed 4.00 to 1, and the partnership may not redeem its preferred units if doing so would cause its senior leverage ratio to exceed 3.50 to 1.
The credit agreement also requires the partnership to maintain an interest coverage ratio of no less than 2.25 to 1.
Targa Resources is a Houston-based midstream energy company.
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