Item 1.01
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Entry into a Material Definitive Agreement.
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Fourth Amended and Restated Credit Agreement
On June 29, 2018, Targa Resources Partners LP (the Partnership) entered into the Third Amendment and Restatement
Agreement (the Restatement Agreement) to effectuate the Fourth Amended and Restated Credit Agreement (the Credit Agreement) with Bank of America, N.A., as Administrative Agent, Collateral Agent and Swing Line Lender, and the
lenders party thereto. The Credit Agreement amends and restates the Partnerships 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 Credit Agreement) and a swing line
sub-facility
of up to $100,000,000. The Credit Agreement matures on
June 29, 2023.
The 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 Partnerships option, at (a) the highest of Bank of Americas 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 Partnerships 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 Partnerships
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 Partnerships
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 Partnerships
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 Partnerships 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 Partnerships
non-credit-enhanced
senior unsecured long-term debt ratings), in each case times the actual daily unused portion of
the revolving credit facility.
The Credit Agreement requires the Partnership to maintain a total leverage ratio (the ratio of
consolidated indebtedness to the Partnerships consolidated adjusted EBITDA, in each case as defined in the 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 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 Partnerships
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 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 Credit Agreement restricts the Partnerships ability to make distributions of available cash to unitholders if a default or an event
of default (as defined in the Credit Agreement) exists or would result from such distribution. In addition, the Credit Agreement contains various covenants that may limit, among other things, the Partnerships 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 Partnerships 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).
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The description of the Credit Agreement is qualified in its entirety by reference to the Credit
Agreement, a copy of which is attached as Exhibit A to the Restatement Agreement 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 Partnership and certain of the Partnerships 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.