Item 1.01
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Entry into a Material Definitive Agreement.
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Indenture
On April 12, 2018, in connection with the previously announced offering (the Offering) and issuance by Targa Resources Partners LP
(the Partnership), and its wholly-owned subsidiary, Targa Resources Partners Finance Corporation (Finance Corp and, together with the Partnership, the Issuers) of $1,000,000,000 in aggregate principal amount of
the Issuers 5.875% senior unsecured notes due 2026 (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 April 12, 2018, 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 April 15, 2026, and interest is payable on the Notes semi-annually in arrears on each April 15 and October 15, commencing October 15, 2018. The Notes are guaranteed on a senior unsecured basis by the Guarantors.
At any time prior to April 15, 2021, the Issuers may redeem up to 35% of the Notes at a redemption price of 105.875% 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 April 15, 2021, 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 April 15, 2021, the Issuers may redeem some or all of the Notes at redemption prices (expressed as
percentages of principal amount) equal to 104.406% for the twelve-month period beginning April 15, 2021, 102.938% for the
twelve-month
period beginning April 15, 2022, 101.469% for the
twelve-month
period beginning April 15, 2023, and 100.000% beginning April 15, 2024, 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 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
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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
April 12, 2018, in connection with the issuance of the Notes, the Partnership entered into a Registration Rights Agreement among the Issuers, the Guarantors and Merrill Lynch, Pierce, Fenner & Smith Incorporated, 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 repay borrowings under its credit facilities and for general partnership purposes, which may include redemptions or repurchases of its
outstanding senior notes, repaying other indebtedness, working capital and funding capital expenditures and acquisitions. Because certain of the Initial Purchasers or their affiliates 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.
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.