Business Context and Reporting Period
This Form 8-K filing by Targa Resources Corp. (the "Registrant") reports on events occurring on April 5, 2018. The filing primarily concerns Targa Resources Partners LP (the "Partnership"), a subsidiary of the Registrant, entering into a material definitive agreement to issue senior unsecured notes.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Partnership agreed to issue and sell $1,000,000,000 in aggregate principal amount of 5.875% senior unsecured notes due 2026.
- Pricing: The notes were priced at par.
- Net Proceeds: Expected net proceeds to the Partnership are $992,250,000.
- Underwriter: Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as the representative of the initial purchasers.
- Revenue/Profit/Cash Flow: This filing does not provide specific revenue, profit, cash flow, or margin data for the reporting period.
Material Changes and Use of Proceeds
The primary material change is the execution of the Purchase Agreement for the $1 billion note offering. The Partnership intends to use the net proceeds for the following purposes:
- Repaying borrowings under its credit facilities.
- General partnership purposes, which may include:
- Redemptions or repurchases of outstanding senior notes.
- Repaying other indebtedness.
- Working capital.
- Funding capital expenditures and acquisitions.
Because certain initial purchasers or their affiliates are lenders under the Partnership's credit facilities, they may receive a portion of the proceeds.
Management Commentary, Risks, and Contingencies
The filing notes that the initial purchasers or their affiliates have provided and may continue to provide investment banking, financial advisory, and commercial banking services to the Partnership for customary compensation. Additionally, the Partnership has entered into swap transactions with certain initial purchasers and agreed to pay customary fees in connection with these transactions. The filing incorporates by reference press releases regarding the commencement and pricing of the offering but does not contain specific management commentary on operational outlook or risks beyond standard legal disclosures regarding the offering.
Important Facts for Investor Verification
- Verify the final closing date and actual net proceeds received from the $1 billion note offering.
- Confirm the specific allocation of proceeds between debt repayment, capital expenditures, and general partnership purposes.
- Review the full text of the Purchase Agreement (Exhibit 10.1) for covenants and redemption terms associated with the 5.875% notes due 2026.
- Assess the impact of the new debt issuance on the Partnership's leverage ratios and interest coverage.