Tallgrass Energy Partners, LP (NYSE:TEP) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
Purchase Agreement
On May11, 2017, Tallgrass Energy Partners, LP (the Partnership),
Tallgrass Energy Finance Corp., a wholly owned subsidiary of the
Partnership (the Co-Issuer and together with the Partnership, the
Issuers), and certain of the Partnerships existing direct and
indirect wholly owned subsidiaries (other than the Co-Issuer, the
Guarantors), entered into a purchase agreement (the Purchase
Agreement) with Credit Suisse Securities (USA) LLC, as
representative of the several initial purchasers named therein
(the Initial Purchasers), to which the Issuers agreed to sell an
additional $350,000,000 in aggregate principal amount of the
Issuers 5.50% Senior Notes due 2024 (the Additional Notes), and
the Guarantors agreed to provide the guarantees of the Additional
Notes. The Additional Notes were offered as additional notes to
the Partnerships existing $400 million aggregate principal amount
of 5.50% Senior Notes due 2024 that the Issuers issued in a
private placement that closed on September1, 2016 (the September
2016 Notes and, together with the Additional Notes, the Notes).
The Additional Notes were offered and sold in a transaction
exempt from the registration requirements under the Securities
Act of 1933, as amended (the Securities Act). The Additional
Notes are expected to be sold by the Initial Purchasers to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act.
The Purchase Agreement contains customary representations and
warranties of the parties and indemnification and contribution
provisions under which the Issuers and the Guarantors, on one
hand, and the Initial Purchasers, on the other, have agreed to
indemnify each other against certain liabilities, including
liabilities under the Securities Act, and customary conditions to
closing, obligations of the parties and termination provisions.
The Initial Purchasers and certain of their affiliates are full
service financial institutions engaged in various activities,
which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage
activities. The Initial Purchasers and certain of their
affiliates have, from time to time, performed, and may in the
future perform, various commercial and investment banking and
financial advisory services for the Partnership and its
affiliates, for which they received or may in the future receive
customary fees and expenses. In particular, affiliates of the
Initial Purchasers are lenders under the Partnerships revolving
credit facility.
Indenture and Notes
On September 1, 2016, the Issuers, the Guarantors named therein
and U.S. Bank National Association, as trustee, entered into an
Indenture dated as of September 1, 2016 (as supplemented, the
Indenture), governing the terms of the Notes. The Notes are
general unsecured senior obligations of the Issuers. The Notes
are unconditionally guaranteed jointly and severally on a senior
unsecured basis by the Guarantors and certain of the Partnerships
future subsidiaries. The Notes rank equal in right of payment
with all existing and future senior indebtedness of the Issuers,
and senior in right of payment to any future subordinated
indebtedness of the Issuers.
Interest and Maturity
The Notes will mature on September 15, 2024 and interest on the
Notes is payable in cash semi-annually in arrears on each March
15 and September 15, which commenced March 15, 2017 for the
September 2016 Notes and will commence September 15, 2017 for the
Additional Notes. Interest will be payable to holders of record
on the March 1 and September 1 immediately preceding the related
interest payment date, and will be computed on the basis of a
360-day year consisting of twelve 30-day months.
Optional Redemption
At any time prior to September 15, 2019, the Issuers may on one
or more occasions redeem up to 35% of the aggregate principal
amount of Notes issued under the Indenture, upon not less than 30
or more than 60 days notice, at a redemption price of 105.50% of
the principal amount of the Notes redeemed, plus accrued and
unpaid interest, if any, to the redemption date (subject to the
right of holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to
the redemption date), in an amount not greater than the net cash
proceeds of one or more equity offerings by the Partnership,
provided that:
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at least 65% of the aggregate principal amount of Notes issued under the Indenture (excluding Notes held by the Partnership and its subsidiaries) remains outstanding immediately after the occurrence of such redemption; and |
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the redemption occurs within 180 days of the date of the closing of each such equity offering. |
Prior to September 15, 2019, the Issuers may on any one or more
occasions redeem all or part of the Notes, upon not less than 30
or more than 60days notice, at a redemption price equal to the
sum of:
| the principal amount of the Notes redeemed, plus |
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the Make Whole Premium (as defined in the Indenture) at the redemption date, plus |
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accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date). |
On and after September 15, 2019, the Issuers may on any one or
more occasions redeem all or a part of the Notes, upon not less
than 30 or more than 60days notice, at the redemption prices
(expressed as percentages of principal amount) set forth below,
plus accrued and unpaid interest, if any, on the Notes redeemed
to the applicable redemption date (subject to the right of
holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the
redemption date), if redeemed during the twelve-month period
beginning on September 15 of the years indicated below:
|
YEAR |
PERCENTAGE | |||
| 104.125 | % | |||
| 102.750 | % | |||
| 101.375 | % | |||
|
2022 and thereafter |
100.000 | % |
The Issuers may also redeem all (but not a portion of) the Notes
under certain circumstances if 90% or more of the aggregate
principal amount of the outstanding Notes are purchased in
connection with a change of control or alternate offer.
Change of Control
If a Change of Control Triggering Event (as defined in the
Indenture) occurs, each holder of Notes may require the
Partnership to repurchase all or a portion of that holders Notes
for cash at a price equal to 101% of the aggregate principal
amount of the Notes repurchased, plus any accrued but unpaid
interest on the notes repurchased, to the date of settlement
(subject to the right of holders of record on the relevant record
date to receive interest due on an interest payment date that is
on or prior to the settlement date).
Certain Covenants
The Indenture contains covenants that, among other things and
subject to certain exceptions, limit the Partnerships ability and
the ability of its restricted subsidiaries to: (i) incur, assume
or guarantee additional indebtedness or issue disqualified stock;
(ii)create liens to secure indebtedness; (iii)pay distributions
on equity interests, repurchase equity securities or redeem
subordinated debt; (iv)make investments; (v)restrict
distributions, loans or other asset transfers from the
Partnerships restricted subsidiaries; (vi)consolidate with or
merge with or into, or sell substantially all of the Partnerships
properties to, another person; (vii)sell or otherwise dispose of
assets, including equity interests in subsidiaries; and
(viii)enter into transactions with affiliates.
Events of Default
Upon a continuing event of default, the trustee or the holders of
25% of the principal amount of the Notes may declare the Notes
immediately due and payable, except that a default resulting from
certain bankruptcy or insolvency related events with respect to
the Partnership or any restricted subsidiary of the Partnership
that is a significant subsidiary or any group of its restricted
subsidiaries that, taken as a whole, would constitute a
significant subsidiary of the Partnership, will automatically
cause all Notes to become due and payable. Each of the following
constitutes an event of default under the Indenture:
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default for 30 days in the payment when due of interest on the Notes; |
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default in payment when due of the principal of, or premium, if any, on the Notes; |
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failure by the Partnership to comply with the covenant relating to consolidations, mergers or transfers of all or substantially all of the Partnerships assets or failure by the Partnership to purchase notes when required to the asset sale or change of control provisions of the Indenture; |
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failure by the Partnership for 180 days after notice to comply with its reporting obligations under the Indenture; |
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failure by the Partnership for 60 days after notice to comply with any of the other agreements in the Indenture; |
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default under any mortgage, indenture or instrument governing any indebtedness for money borrowed or guaranteed by the Partnership or any of its restricted subsidiaries, if such default: (i) is caused by a failure to pay principal, interest or premium, if any, on said indebtedness within any applicable grace period; or (ii) results in the acceleration of such indebtedness prior to its stated maturity, and, in each case, the principal amount of the indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or acceleration of maturity, aggregates $75.0 million or more, subject to a cure provision; |
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failure by the Partnership or any of its restricted subsidiaries to pay final non-appealeable judgments aggregating in excess of $75.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; |
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any guarantee is held in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or any Guarantor, or any person acting on behalf of any Guarantor, denies or disaffirms its obligations under its guarantee; and |
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certain events of bankruptcy or insolvency described in the Indenture with respect to the Partnership, or any of the Partnerships restricted subsidiaries that is a significant subsidiary or any group of its restricted subsidiaries that, taken as a whole, would constitute a significant subsidiary of the Partnership. |
The foregoing descriptions of the Indenture and Purchase
Agreement do not purport to be complete and are qualified in
their entirety by reference to the full text of the Indenture and
the form of 5.50% Senior Note, which are incorporated herein by
reference to the Partnerships Current Report on Form 8-K dated
September 1, 2016, and to the Purchase Agreement, which is filed
with this Current Report on Form 8-K as Exhibit 1.1 and is
incorporated herein by reference.
| Item2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by Item 2.03 relating to the Notes, the
Indenture and the Purchase Agreement is contained in Item 1.01 of
this Current Report on Form 8-K above and is incorporated herein
by reference.
| Item9.01. | Financial Statements and Exhibits. |
| (d)Exhibits. |
|
EXHIBIT NUMBER |
DESCRIPTION |
|
| 1.1 |
Purchase Agreement, dated May11, 2017, among the Partnership, the Co-Issuer, the Guarantors named therein and Credit Suisse Securities (USA) LLC, as representative to the Initial Purchasers named therein. |
|
| 4.1 |
Indenture, dated as of September 1, 2016, among Tallgrass Energy Partners, LP, Tallgrass Energy Finance Corp., the Guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Tallgrass Energy Partners, LPs Current Report on Form 8-K filed on September 1, 2016). |
|
| 4.2 |
Form of 5.50% Senior Note (Included as Exhibit A in Exhibit 4.1). |
About Tallgrass Energy Partners, LP (NYSE:TEP)
Tallgrass Energy Partners, LP owns, operates, acquires and develops midstream energy assets in North America. The Company operates through three segments: Crude Oil Transportation & Logistics, which includes the ownership and operation of a crude oil pipeline system; Natural Gas Transportation & Logistics, which includes the ownership and operation of Federal Energy Regulatory Commission (FERC)-regulated interstate natural gas pipelines and integrated natural gas storage facilities, and Processing & Logistics, which includes 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 liquid (NGLs). It operates the Sterling Terminal near Sterling, Colorado. It also operates Buckingham Terminal in northeast Colorado. It has interest in the Deeprock Development Terminal in Cushing, Okla. Tallgrass Energy Partners, LP (NYSE:TEP) Recent Trading Information
Tallgrass Energy Partners, LP (NYSE:TEP) closed its last trading session down -0.92 at 49.45 with 101,795 shares trading hands.