Item 1.01
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Entry into a Material Definitive Agreement.
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Indenture
On October 17, 2017, in connection with the previously announced offering (the Offering) and issuance by Targa Resources
Partners LP (the Partnership), a subsidiary of Targa Resources Corp., and its wholly-owned subsidiary, Targa Resources Partners Finance Corporation (Finance Corp and, together with the Partnership, the Issuers) of
$750,000,000 in aggregate principal amount of the Issuers 5% senior unsecured notes due 2028 (the Notes), the Partnership entered into an Indenture (the Indenture), among the Issuers, certain subsidiary guarantors named
therein (the Guarantors) and U.S. Bank National Association, as trustee (the Trustee).
On October 17, 2017,
the Notes were issued pursuant to the Indenture in a transaction exempt from the registration requirements under the Securities Act. The Notes were resold within the United States only to qualified institutional buyers in reliance on Rule 144A under
the Securities Act, and outside the United States only to non-U.S. persons in reliance on Regulation S under the Securities Act.
The
Notes will mature on January 15, 2028, and interest is payable on the Notes semi-annually in arrears on each January 15 and July 15, commencing July 15, 2018. The Notes are guaranteed on a senior unsecured basis by the
Guarantors.
At any time prior to January 15, 2021, the Issuers may redeem up to 35% of the Notes at a redemption price of 105.000%
of the principal amount of the Notes redeemed plus accrued and unpaid interest to the redemption date, in an amount not greater than the proceeds of certain equity offerings so long as the redemption of such Notes occurs within 180 days of
completing such equity offering and at least 65% of the aggregate principal amount of the Notes remain outstanding after such redemption. Prior to January 15, 2023, the Issuers may redeem some or all of the Notes for cash at a redemption price
equal to 100% of their principal amount plus an applicable make whole premium and accrued and unpaid interest, if any, to the redemption date. On and after January 15, 2023, the Issuers may redeem some or all of the Notes at redemption prices
(expressed as percentages of principal amount) equal to 102.500% for the twelve-month period beginning January 15, 2023, 101.667% for the twelve-month period beginning January 15, 2024, 100.833% for the twelve-month period beginning
January 15, 2025 and 100.000% beginning January 15, 2026, plus accrued and unpaid interest to the redemption date.
The
Indenture restricts the Partnerships ability and the ability of certain of its subsidiaries to: (i) incur additional debt; (ii) pay distributions on, or repurchase, equity interests; (iii) make certain investments;
(iv) incur liens; (v) enter into transactions with affiliates; (vi) merge or consolidate with another company; and (vii) transfer and sell assets. These covenants are subject to a number of important exceptions and
qualifications. If at any time when the Notes are rated investment grade by either of Moodys Investors Service, Inc. or S&P Global Ratings and no Default (as defined in the Indenture) has occurred and is continuing, many of such covenants
will terminate and the Partnership and its subsidiaries will cease to be subject to such covenants. The Indenture provides that each of the following is an Event of Default: (i) default for 30 days in the payment when due of interest on, or
liquidated damages, if any, with respect to, the Notes; (ii) default in the payment when due of the principal of, or premium, if any, on the Notes; (iii) failure by the Partnership or any Guarantor to make a change of control offer or an
asset sale offer within the requisite time periods, to consummate a purchase of Notes when required under the Indenture or to comply with certain covenants relating to merger, consolidation or sale of assets; (iv) failure by the Partnership to
comply for 90 days after notice with the provisions of the Indenture relating to periodic reports of the Partnership as required by the Securities Exchange Act of 1934; (v) failure by the Partnership or any Guarantor to comply for 60 days after
written notice with any of the other agreements in the Indenture; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the
Partnership or any of the Partnerships restricted subsidiaries (or the payment of which is guaranteed by the Partnership or any of its restricted subsidiaries), if that default: (a) is caused by a failure to pay principal of, or interest
or premium, if any, on such indebtedness prior to the expiration of the grace period provided in such indebtedness on the date of such default (a Payment Default); or (b) results in the
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acceleration of such indebtedness prior to its stated maturity, and, in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness
under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates in excess of 3.0% of the Partnerships consolidated net tangible assets, provided, however, that if, prior to any acceleration of the
Notes, (a) any such Payment Default is cured or waived, (b) any such acceleration of such indebtedness is rescinded, or (c) such indebtedness is repaid during the 30 day period commencing upon the end of any applicable grace period
for such Payment Default or the occurrence of such acceleration of such indebtedness, as applicable, any default or event of default (but not any acceleration of the Notes) caused by such Payment Default or acceleration of such indebtedness shall
automatically be rescinded, so long as such rescission does not conflict with any judgment, decree or applicable law; (vii) failure by either Issuer or any of the Partnerships restricted subsidiaries to pay final judgments aggregating in
excess of 3.0% of the Partnerships consolidated net tangible assets, which judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any subsidiary guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its guarantee of the
Notes; and (ix) certain events of bankruptcy or insolvency described in the Indenture with respect to the Issuers or any of the Partnerships significant subsidiaries or any group of restricted subsidiaries that, taken as a whole, would
constitute a significant subsidiary. In the case of an Event of Default described in the preceding clause (ix), all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and
is continuing, the Trustee or the holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
Registration Rights Agreement
On
October 17, 2017, in connection with the issuance of the Notes, the Partnership entered into a Registration Rights Agreement among the Issuers, the Guarantors and Citigroup Global Markets Inc., as representative of the several initial
purchasers of the Notes (the Initial Purchasers). Pursuant to the Registration Rights Agreement, unless the restrictive legend has been removed from the Notes and the Notes are freely tradable pursuant to Rule 144 under the Securities
Act as of the 370th day following the issuance of the Notes, the Issuers and the Guarantors will (1) use commercially reasonable efforts to consummate an exchange offer and (2) if required, have a shelf registration statement declared
effective with respect to resales of the Notes. The Issuers and the Guarantors are required to pay additional interest if they fail to comply with their obligations to exchange or register the Notes within the specified time periods.
Relationships
The Initial
Purchasers or their respective affiliates have performed investment banking, financial advisory and commercial banking services for the Partnership and certain of its affiliates, for which they have received customary compensation, and they may
continue to do so in the future. The Partnership intends to use the net proceeds from the Offering to redeem its 5% senior unsecured notes due 2018 (2018 Notes), reduce borrowings under its credit facilities, and for general partnership
purposes, which may include redemptions or repurchases of its other outstanding notes, repaying other indebtedness, working capital and funding capital expenditures and acquisitions. Because certain of the Initial Purchasers or their affiliates
(i) may be holders of (or manage accounts that hold) the 2018 Notes that the Partnership will redeem with the net proceeds from the Offering and (ii) are lenders under the Partnerships credit facilities, such Initial Purchasers and
affiliates may receive a portion of the proceeds from the Offering. The Partnership has entered into swap transactions with certain of the Initial Purchasers and has agreed to pay these counterparties a fee in an amount the Partnership believes to
be customary in connection with these transactions. U.S. Bancorp Investments, Inc., one of the Initial Purchasers, is an affiliate of the Trustee.
The descriptions set forth above in this Item 1.01 are qualified in their entirety by the Indenture and the Registration Rights
Agreement, which are filed herewith as Exhibits 4.1 and 4.2, respectively, and are incorporated herein by reference.