Target Hospitality units obtain $125 million ABL revolver due 2023

By Angela McDaniels

Tacoma, Wash., March 21 – Several Target Hospitality Corp. subsidiaries entered into a $125 million senior secured asset-based revolving credit facility due Sept. 15, 2023 on March 15, according to an 8-K filing with the Securities and Exchange Commission.

Topaz Holdings LLC, Arrow Bidco, LLC, Target Logistics Management, LLC, RL Signor Holdings, LLC and each of their domestic subsidiaries are the borrowers.

Target Hospitality’s predecessor company was Platinum Eagle Acquisition Corp., a Los Angeles-based special-purpose acquisition company. Platinum acquired RL Signor Holdings and Target Logistics Management on March 15 and became Target Hospitality.

About $40 million of the proceeds from the new ABL revolver were used to finance a portion of the business combination.

The joint lead arrangers and joint bookrunners are Bank of America, NA, Barclays Bank plc, Credit Suisse Loan Funding LLC and Deutsche Bank Securities Inc. Bank of America is the administrative agent.

The initial interest rate is Libor plus 250 basis points. The margin ranges from 225 bps to 275 bps depending on excess availability levels.

The ABL revolver is subject to a borrowing base equal to the sum of (a) 85% of the net book value of the borrowers’ eligible accounts receivable plus (b) the lesser of 95% of the net book value of the borrowers’ eligible rental equipment and 85% of the net orderly liquidation value of the borrowers’ eligible rental equipment minus (c) customary reserves.

The ABL revolver has a $15 million sublimit for letters of credit and a $15 million sublimit for swingline loan borrowings.

The borrowers have the option to increase commitments under the ABL revolver in an aggregate amount not to exceed $75 million plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL revolver.

The ABL revolver requires the borrowers to maintain a minimum fixed charge coverage ratio of 1 to 1 and a maximum total net leverage ratio of 4 to 1 at any time when the excess availability under the ABL revolver is less than the greater of $15.63 million and 12.5% of the line cap, defined as the lesser of $125 million and the borrowing base.

Target Hospitality provides specialty rental and hospitality services in the United States, principally focused on the oil and gas, energy infrastructure and government sectors. It is based in the Woodlands, Texas.

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