Targa launches $700 million facility at Libor plus 400 to 425 bps

By Sara Rosenberg

New York, Dec. 8 - Targa Resources Inc. launched its $700 million senior secured credit facility on Tuesday with price talk of Libor plus 400 basis points to 425 bps, according to a company presentation.

The facility includes a $150 million four-and-a-half-year revolver and a $550 million six-and-a-half-year term loan B.

The term loan B has a 2% Libor floor and is being offered at an original issue discount of 98½ to 99, a market source said.

The revolver has a 75 bps unused fee.

Deutsche Bank, Credit Suisse and Citadel are the leads on the deal.

Proceeds will be used to refinance the company's $250 million 8½% senior unsecured notes due 2013, its existing senior secured term loan due 2012 and a portion of Targa Resources Investments Inc.'s holdco loan due 2015.

The new facility will replace the company's existing $250 million senior secured revolver and $50 million senior secured synthetic letter-of-credit facility.

Pro forma net leverage at Targa and the holdco is 4.4 times, stand-alone net leverage is 3.1 times and interest coverage is 4.3 times.

Covenants include maximum total leverage of 5.75 times in 2010 and 2011, stepping down to 5.50 times in 2012 and 5.25 times in 2013 and thereafter, and a minimum interest coverage ratio of 1.50 times.

Commitments are due on Dec. 16 with closing targeted for late this month.

Targa is a Houston-based provider of midstream natural gas and natural gas liquid services.

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