TARGA RESOURCES CORP. (NYSE:TRGP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

First Amendment to Credit Agreement

On June29, 2018, Targa Resources Corp. (the “Company”) entered into the First Amendment to Credit Agreement (the “First Amendment”) among the Company, the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent and collateral agent. The First Amendment amends the terms of that certain Credit Agreement (the “Credit Agreement”), dated as of February27, 2015, among the Company, each lender from time to time party thereto and Bank of America, N.A. as administrative agent, collateral agent, swing line lender and letter of credit issuer. Among other amendments to the Credit Agreement, the First Amendment (a)removes certain lenders from the Credit Agreement and includes other new lenders, (b)extends the maturity date of the revolving credit facility from February26, 2020, to June29, 2023, (c)memorializes the prior prepayment in full of term loans (the “Term Loans”) by the Company, (d)sets the applicable margin for Revolving Loans until the delivery of financial statements for the quarter ending June30, 2018 to, at the Company’s option, 1.75% for LIBOR loans or 0.75% for base rate loans and (e)sets the commitment fee for Revolving Loans until the delivery of financial statements for the quarter ending June30, 2018 to 0.375%,

The foregoing description of the First Amendment is qualified in its entirety by reference to the First Amendment, a copy of which is filed as Exhibit 10.1 to this Form 8-K and is incorporated in this Item 1.01 by reference.

Certain of the lenders or their respective affiliates have performed investment banking, financial advisory and commercial banking services for the Company and certain of the Company’s affiliates, for which they have received customary compensation, and they may continue to do so in the future. In addition, certain of the lenders or their respective affiliates hold positions in the Company’s common stock.

Fourth Amended and Restated Credit Agreement

On June29, 2018, Targa Resources Partners LP (the “Partnership”), a subsidiary of the Company, entered into the Third Amendment and Restatement Agreement (the “Restatement Agreement”) to effectuate the Fourth Amended and Restated Credit Agreement (the “Partnership Credit Agreement”) with Bank of America, N.A., as Administrative Agent, Collateral Agent and Swing Line Lender, and the lenders party thereto. The Partnership Credit Agreement amends and restates the Partnership’s existing credit facility to provide for a revolving credit facility in an initial aggregate principal amount up to $2,200,000,000 (with an option to increase such maximum aggregate principal amount by up to $500,000,000 in the future, subject to the terms of the Partnership Credit Agreement) and a swing line sub-facility of up to $100,000,000. The Partnership Credit Agreement matures on June29, 2023.

The Partnership Credit Agreement provides for, among other things, certain 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.

The revolving credit facility bears interest at the Partnership’s option, at (a)the highest of Bank of America’s prime rate, the federal funds rate plus 0.5% and the one-month LIBOR rate plus 1.0% (subject in each case to a floor of 0.0%), plus an applicable margin (i)before the collateral release date, ranging from 0.25% to 1.25% dependent on the Partnership’s ratio of consolidated funded indebtedness to consolidated adjusted EBITDA and (ii)upon and after the collateral release date, ranging from 0.125% to 0.75% dependent on the Partnership’s non-credit-enhanced senior unsecured long-term debt ratings, or (b)LIBOR plus an applicable margin (i)before the collateral release date, ranging from 1.25% to 2.25% dependent on the Partnership’s ratio of consolidated funded indebtedness to consolidated adjusted EBITDA and (ii)upon and after the collateral release date, ranging from 1.125% to 1.75% dependent on the Partnership’s non-credit-enhanced senior unsecured long-term debt ratings.

The Partnership is required to pay a commitment fee equal to an applicable rate ranging from (a)before the collateral release date, 0.25% to 0.375% (dependent on the Partnership’s ratio of consolidated funded indebtedness to consolidated adjusted EBITDA) and (b)upon and after the collateral release date, 0.125% to 0.35% (dependent on the Partnership’s non-credit-enhanced senior unsecured long-term debt ratings), in each case times the actual daily unused portion of the revolving credit facility.

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The Partnership Credit Agreement requires the Partnership to maintain a total leverage ratio (the ratio of consolidated indebtedness to the Partnership’s consolidated adjusted EBITDA, in each case as defined in the Partnership Credit Agreement), determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, of no more than (a)before the collateral release date, 5.50 to 1.00 and (b)upon and after the collateral release date, 5.25 to 1.00 (or 5.50 to 1.00 during a specified acquisition period). The Partnership Credit Agreement generally removes the requirement that the Partnership maintain a maximum senior leverage ratio (the ratio of consolidated indebtedness, excluding indebtedness arising in connection with certain unsecured debt and debt under any permitted receivables financing, to consolidated adjusted EBITDA) of no more than 4.00 to 1.00, except that the Partnership may not incur second lien indebtedness or consummate an acquisition of, or investment in, any unrestricted subsidiary that would cause the Partnership’s senior leverage ratio to exceed 4.00 to 1.00 and the Partnership may not redeem its preferred units if doing so would cause its senior leverage ratio to exceed 3.50 to 1.00. The Partnership Credit Agreement also requires the Partnership to 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. For any four-fiscal quarter period during which a material acquisition or disposition occurs, the total leverage ratio and interest coverage ratio will be determined on a pro forma basis as though such event had occurred as of the first day of such four-fiscal quarter period.

The Partnership Credit Agreement restricts the Partnership’s ability to make distributions of available cash to unitholders if a default or an event of default (as defined in the Partnership Credit Agreement) exists or would result from such distribution. In addition, the Partnership Credit Agreement contains various covenants that may limit, among other things, the Partnership’s ability to incur indebtedness, grant liens, make investments, repay or amend the terms of certain other indebtedness, merge or consolidate, sell assets, and engage in transactions with affiliates (in each case, subject to the Partnership’s right to incur indebtedness or grant liens in connection with, and convey accounts receivable as part of, a permitted receivables financing, the aggregate principal of which shall not exceed $400,000,000).

The description of the Partnership Credit Agreement is qualified in its entirety by reference to the Partnership Credit Agreement, a copy of which is attached as Exhibit A to the Restatement Agreement filed as Exhibit 10.2 to this Form 8-K and is incorporated in this Item 1.01 by reference.

Certain of the lenders or their respective affiliates have performed investment banking, financial advisory and commercial banking services for the Partnership and certain of the Partnership’s affiliates, for which they have received customary compensation, and they may continue to do so in the future. The Partnership has entered into derivative financial transactions with affiliates of Bank of America, N.A., and certain of the other lenders on terms it believes to be customary in connection with these transactions.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.

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Targa Resources Corp. Exhibit
EX-10.1 2 d689840dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “First Amendment”),…
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About TARGA RESOURCES CORP. (NYSE:TRGP)

Targa Resources Corp., through its general and limited partner interests in Targa Resources Partners LP (the Partnership), is a provider of midstream natural gas and natural gas liquid (NGL) services in the United States. The Partnership is engaged in the business of gathering, compressing, treating, processing and selling natural gas and storing, fractionating, treating, transporting, terminaling and selling NGLs, NGL products, and gathering, storing and terminaling crude oil and refined petroleum products. The Partnership operates in two divisions: Gathering and Processing, and Logistics and Marketing. The Gathering and Processing division consists of two segments: Field Gathering and Processing, and Coastal Gathering and Processing. The Logistics and Marketing division consists of two segments: Logistics Assets, and Marketing and Distribution.