Tallgrass Energy GP, LP (NYSE:TEGP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.
| Entry into a Material Definitive Agreement. |
On June 2, 2017, Tallgrass Energy Partners, LP (“TEP”) entered
into a $1,750 million Second Amended and Restated Credit Agreement
with Wells Fargo Bank, National Association, as administrative
agent and collateral agent, and a syndicate of lenders (the
“Amended Credit Agreement”). The Amended Credit Agreement amends
and restates TEP’s existing revolving credit facility.
into a $1,750 million Second Amended and Restated Credit Agreement
with Wells Fargo Bank, National Association, as administrative
agent and collateral agent, and a syndicate of lenders (the
“Amended Credit Agreement”). The Amended Credit Agreement amends
and restates TEP’s existing revolving credit facility.
The Amended Credit Agreement extends the maturity date of TEP’s
existing revolving credit facility from May 13, 2018 to June 2,
2022. In addition, the Amended Credit Agreement, among other
things, (i) immediately provides TEP more flexibility by reducing
the interest rate and relaxing certain covenants under the existing
revolving credit facility, including by increasing certain
applicable limits and baskets and (ii) provides that, if and when
TEP achieves certain specified credit ratings (including an
investment grade rating by at least one ratings agency), the liens
securing the Amended Credit Agreement will be automatically
released, certain restrictive covenants will be significantly
relaxed or cease to apply and the applicable margin for both base
rate and reserve adjusted Eurodollar rate loans and the commitment
fee on the unused committed amount will be reduced by specified
amounts. Thereafter, if TEP were to be downgraded to certain credit
ratings, TEP and the subsidiary guarantors would be required to
regrant liens on substantially all of their assets and the
provisions of certain of the restrictive covenants would be
restored.
existing revolving credit facility from May 13, 2018 to June 2,
2022. In addition, the Amended Credit Agreement, among other
things, (i) immediately provides TEP more flexibility by reducing
the interest rate and relaxing certain covenants under the existing
revolving credit facility, including by increasing certain
applicable limits and baskets and (ii) provides that, if and when
TEP achieves certain specified credit ratings (including an
investment grade rating by at least one ratings agency), the liens
securing the Amended Credit Agreement will be automatically
released, certain restrictive covenants will be significantly
relaxed or cease to apply and the applicable margin for both base
rate and reserve adjusted Eurodollar rate loans and the commitment
fee on the unused committed amount will be reduced by specified
amounts. Thereafter, if TEP were to be downgraded to certain credit
ratings, TEP and the subsidiary guarantors would be required to
regrant liens on substantially all of their assets and the
provisions of certain of the restrictive covenants would be
restored.
As of June 2, 2017, TEP had borrowed $1,243 million under the
Amended Credit Agreement. The remaining commitments under the
Amended Credit Agreement are available for capital expenditures and
permitted acquisitions, to provide for working capital requirements
and for other general partnership purposes. The Amended Credit
Agreement has an accordion feature that will allow TEP to increase
the available revolving borrowings under the facility by up to an
additional $250 million, subject to TEPs receipt of increased or
new commitments from lenders and satisfaction of certain other
conditions. In addition, the Amended Credit Agreement includes a
sublimit up to $60 million for swing line loans and a sublimit up
to $75 million for letters of credit.
Amended Credit Agreement. The remaining commitments under the
Amended Credit Agreement are available for capital expenditures and
permitted acquisitions, to provide for working capital requirements
and for other general partnership purposes. The Amended Credit
Agreement has an accordion feature that will allow TEP to increase
the available revolving borrowings under the facility by up to an
additional $250 million, subject to TEPs receipt of increased or
new commitments from lenders and satisfaction of certain other
conditions. In addition, the Amended Credit Agreement includes a
sublimit up to $60 million for swing line loans and a sublimit up
to $75 million for letters of credit.
TEPs obligations under the Amended Credit Agreement, as well as
obligations under certain interest rate protection and other
hedging arrangements, are (i) guaranteed by TEP and each of its
existing and subsequently acquired or organized direct or indirect
wholly-owned domestic subsidiaries, subject to TEPs ability to
designate certain of its subsidiaries as Unrestricted Subsidiaries
and (ii) secured by a first priority lien on substantially all of
the present and after acquired property owned by TEP and each
guarantor (other than real property interests related to TEPs
pipelines).
obligations under certain interest rate protection and other
hedging arrangements, are (i) guaranteed by TEP and each of its
existing and subsequently acquired or organized direct or indirect
wholly-owned domestic subsidiaries, subject to TEPs ability to
designate certain of its subsidiaries as Unrestricted Subsidiaries
and (ii) secured by a first priority lien on substantially all of
the present and after acquired property owned by TEP and each
guarantor (other than real property interests related to TEPs
pipelines).
The Amended Credit Agreement contains various covenants and
restrictive provisions that, among other things, limit or restrict
TEPs ability (as well as the ability of TEPs restricted
subsidiaries) to incur or guarantee additional debt, incur certain
liens on assets, dispose of assets, make certain distributions,
including distributions from available cash, if a default or event
of default under the Amended Credit Agreement then exists or would
result therefrom, change the nature of TEPs business, engage in
certain mergers or make certain investments and acquisitions, enter
into non arms-length transactions with affiliates and designate
certain subsidiaries as Unrestricted Subsidiaries, and also
requires maintenance of a consolidated leverage ratio of not more
than 5.00 to 1.00 (which will be increased to 5.50 to 1.00 for
certain measurement periods following the consummation of certain
acquisitions), a consolidated senior secured leverage ratio of not
more than 3.75 to 1.00 and a consolidated interest coverage ratio
of not less than 2.50 to 1.00.
restrictive provisions that, among other things, limit or restrict
TEPs ability (as well as the ability of TEPs restricted
subsidiaries) to incur or guarantee additional debt, incur certain
liens on assets, dispose of assets, make certain distributions,
including distributions from available cash, if a default or event
of default under the Amended Credit Agreement then exists or would
result therefrom, change the nature of TEPs business, engage in
certain mergers or make certain investments and acquisitions, enter
into non arms-length transactions with affiliates and designate
certain subsidiaries as Unrestricted Subsidiaries, and also
requires maintenance of a consolidated leverage ratio of not more
than 5.00 to 1.00 (which will be increased to 5.50 to 1.00 for
certain measurement periods following the consummation of certain
acquisitions), a consolidated senior secured leverage ratio of not
more than 3.75 to 1.00 and a consolidated interest coverage ratio
of not less than 2.50 to 1.00.
Borrowings under the Amended Credit Agreement will bear interest,
at TEPs option, at either (a) a base rate, which will be a rate
equal to the greatest of (i) the prime rate, (ii) the U.S. federal
funds rate plus 0.5% and (iii) a one-month reserve adjusted
Eurodollar rate plus 1.00%, in each case, plus an applicable
margin, or (b) a reserve adjusted Eurodollar rate, plus an
applicable margin. Swing line loans will bear interest at the base
rate, plus an applicable margin. During the quarterly period ended
June 30, 2017, for borrowings bearing interest based on the base
rate, the applicable margin will be 0.75%, and for loans bearing
interest based on the reserve adjusted Eurodollar rate, the
applicable margin will be 1.75%. After that date, the applicable
margin will range from 0.50% to 1.50% for base rate borrowings and
1.50% to 2.50% for reserve adjusted Eurodollar rate borrowings,
based upon TEPs total leverage ratio. The unused portion of the
Amended Credit Agreement will be subject to a commitment fee, which
will initially be 0.300%, and after June 30, 2017, will range from
0.250% to 0.500%, based on TEPs total leverage ratio. If and when
TEP achieves the specified credit ratings, the applicable margin
will range from 0.125% to 1.00% for base rate borrowings and 1.125%
to 2.00% for reserve adjusted Eurodollar rate borrowings, based
upon TEPs credit rating.
at TEPs option, at either (a) a base rate, which will be a rate
equal to the greatest of (i) the prime rate, (ii) the U.S. federal
funds rate plus 0.5% and (iii) a one-month reserve adjusted
Eurodollar rate plus 1.00%, in each case, plus an applicable
margin, or (b) a reserve adjusted Eurodollar rate, plus an
applicable margin. Swing line loans will bear interest at the base
rate, plus an applicable margin. During the quarterly period ended
June 30, 2017, for borrowings bearing interest based on the base
rate, the applicable margin will be 0.75%, and for loans bearing
interest based on the reserve adjusted Eurodollar rate, the
applicable margin will be 1.75%. After that date, the applicable
margin will range from 0.50% to 1.50% for base rate borrowings and
1.50% to 2.50% for reserve adjusted Eurodollar rate borrowings,
based upon TEPs total leverage ratio. The unused portion of the
Amended Credit Agreement will be subject to a commitment fee, which
will initially be 0.300%, and after June 30, 2017, will range from
0.250% to 0.500%, based on TEPs total leverage ratio. If and when
TEP achieves the specified credit ratings, the applicable margin
will range from 0.125% to 1.00% for base rate borrowings and 1.125%
to 2.00% for reserve adjusted Eurodollar rate borrowings, based
upon TEPs credit rating.
The Amended Credit Agreement contains certain events of default,
including, but not limited to, the failure to pay any principal,
interest or fees when due, failure to satisfy any covenant,
material inaccuracy of representations or warranties, impairment of
liens or invalidity of guarantees, cross-defaults to other material
debt, insolvency, certain bankruptcy proceedings, change of
control, liquidation, material money judgment, material events
related to the Employee Retirement Income Security Act of 1974 and
certain amendments or modifications to the limited partnership
agreement of TEP. Upon the occurrence and during the continuation
of an event of default, the lenders may, among other things,
terminate their revolving loan commitments, accelerate and declare
the outstanding loans to be immediately due and payable, charge TEP
with additional
including, but not limited to, the failure to pay any principal,
interest or fees when due, failure to satisfy any covenant,
material inaccuracy of representations or warranties, impairment of
liens or invalidity of guarantees, cross-defaults to other material
debt, insolvency, certain bankruptcy proceedings, change of
control, liquidation, material money judgment, material events
related to the Employee Retirement Income Security Act of 1974 and
certain amendments or modifications to the limited partnership
agreement of TEP. Upon the occurrence and during the continuation
of an event of default, the lenders may, among other things,
terminate their revolving loan commitments, accelerate and declare
the outstanding loans to be immediately due and payable, charge TEP
with additional
interest in the amount of 2.00% per annum>plus the rate
otherwise applicable to such amounts and exercise remedies against
TEP and the collateral.
otherwise applicable to such amounts and exercise remedies against
TEP and the collateral.
Tallgrass Energy GP, LP (“TEGP”), a Delaware limited partnership,
is the managing member of and therefore controls Tallgrass Equity,
LLC (“Tallgrass Equity”). Tallgrass Equity, in turn, controls TEP
through the direct ownership of 50% of Tallgrass MLP GP, LLC (“TEP
GP”), TEPs general partner. As a result, under generally accepted
accounting principles, TEGP consolidates Tallgrass Equity, TEP GP,
TEP, and TEPs subsidiaries. TEGP has no operations outside of its
indirect ownership interests in TEP.
is the managing member of and therefore controls Tallgrass Equity,
LLC (“Tallgrass Equity”). Tallgrass Equity, in turn, controls TEP
through the direct ownership of 50% of Tallgrass MLP GP, LLC (“TEP
GP”), TEPs general partner. As a result, under generally accepted
accounting principles, TEGP consolidates Tallgrass Equity, TEP GP,
TEP, and TEPs subsidiaries. TEGP has no operations outside of its
indirect ownership interests in TEP.
The foregoing summary of the Amended Credit Agreement is not
complete and is qualified in its entirety by reference to the full
text of the Amended Credit Agreement, which is filed as Exhibit 10
to this Current Report on Form 8-K and incorporated in this Item
1.01 by reference.
complete and is qualified in its entirety by reference to the full
text of the Amended Credit Agreement, which is filed as Exhibit 10
to this Current Report on Form 8-K and incorporated in this Item
1.01 by reference.
From time to time, certain of the lenders have provided, or may in
the future provide, various investment banking, commercial banking,
financial advisory, brokerage and other services to TEP and its
affiliates for which services they have received, and may in the
future receive, customary fees and expense reimbursement. The
lenders and their affiliates may, from time to time, engage in
transactions with and perform services for TEP in the ordinary
course of their business for which they may receive customary fees
and reimbursement of expenses.
the future provide, various investment banking, commercial banking,
financial advisory, brokerage and other services to TEP and its
affiliates for which services they have received, and may in the
future receive, customary fees and expense reimbursement. The
lenders and their affiliates may, from time to time, engage in
transactions with and perform services for TEP in the ordinary
course of their business for which they may receive customary fees
and reimbursement of expenses.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The description of the Amended Credit Agreement provided above
under Item 1.01 is incorporated in this Item 2.03 by reference.
under Item 1.01 is incorporated in this Item 2.03 by reference.
| Item 7.01. | Regulation FD Disclosure. |
On June 5, 2017, TEP issued a press release announcing that it had
entered into the Amended Credit Agreement. A copy of this press
release is furnished with this Form 8-K as Exhibit 99.1 and
incorporated into this Item 7.01 by reference.
entered into the Amended Credit Agreement. A copy of this press
release is furnished with this Form 8-K as Exhibit 99.1 and
incorporated into this Item 7.01 by reference.
In addition, on June 5, 2017, TEP issued a press release stating
that TEP, through its subsidiaries Tallgrass Terminals, LLC and
Tallgrass Pony Express Pipeline, LLC, was announcing an agreement
with Saddle Butte Pipeline to develop the Tallgrass Grasslands
Terminal. A copy of this press release is furnished with this Form
8-K as Exhibit 99.2 and incorporated into this Item 7.01 by
reference.
that TEP, through its subsidiaries Tallgrass Terminals, LLC and
Tallgrass Pony Express Pipeline, LLC, was announcing an agreement
with Saddle Butte Pipeline to develop the Tallgrass Grasslands
Terminal. A copy of this press release is furnished with this Form
8-K as Exhibit 99.2 and incorporated into this Item 7.01 by
reference.
The information in this Item 7.01 of Form 8-K, including the
accompanying Exhibits 99.1 and 99.2, shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934
(the “Exchange Act”), or otherwise subject to the liability of
such section, nor shall such information be deemed incorporated by
reference in any filing under the Securities Act of 1933 or the
Exchange Act, regardless of the general incorporation language of
such filing, except as shall be expressly set forth by specific
reference in such filing.
accompanying Exhibits 99.1 and 99.2, shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934
(the “Exchange Act”), or otherwise subject to the liability of
such section, nor shall such information be deemed incorporated by
reference in any filing under the Securities Act of 1933 or the
Exchange Act, regardless of the general incorporation language of
such filing, except as shall be expressly set forth by specific
reference in such filing.
| Item 9.01. | Financial Statements and Exhibits |
(d) Exhibits
| EXHIBIT NUMBER | | DESCRIPTION |
| | | |
| 10.1 | | Second Amended and Restated Credit Agreement, dated June 2, 2017, by and among Tallgrass Energy Partners, LP, Wells Fargo Bank, National Association, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LPs Current Report on Form 8-K filed on June 5, 2017). |
| | | |
| 99.1 | | Press release issued by Tallgrass Energy Partners, LP, dated June 5, 2017 (Amended Credit Agreement). Furnished solely for purposes of Item 7.01 of this Form 8-K. |
| | | |
| 99.2 | | Press release issued by Tallgrass Energy Partners, LP, dated June 5, 2017 (Tallgrass Grasslands Terminal). Furnished solely for purposes of Item 7.01 of this Form 8-K. |
About Tallgrass Energy GP, LP (NYSE:TEGP)
Tallgrass Energy GP, LP is a limited partnership company. The Company, through Tallgrass Energy Partners, LP (TEP), provides crude oil transportation to customers in Wyoming, Colorado, and the surrounding regions through Pony Express. Its business segments include Crude Oil Transportation & Logistics Segment, which is engaged in the ownership and operation of a crude oil pipeline system; Natural Gas Transportation & Logistics Segment, which is engaged in ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities, and Processing & Logistics Segment, which is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities, the provision of water business services primarily to the oil and gas exploration and production industry and the transportation of natural gas liquids (NGL). The Company, through TEP, owns and operates natural gas processing plants in Casper and Douglas.
