Targa Resources Corp. Prices $1.0 Billion Offering of Senior Notes

Rhea-AI Summary

Targa Resources Corp. (NYSE: TRGP) has announced the pricing of a $1.0 billion public offering of 5.500% Senior Notes due 2035. The notes are priced at 99.943% of their face value, with the offering expected to close on August 9, 2024. Targa plans to use the net proceeds for general corporate purposes, including:

• Repaying borrowings under its commercial paper note program
• Repaying the remaining $500.0 million of its prior $1.5 billion unsecured term loan facility due July 2025
• Potential repayment of other indebtedness
• Capital expenditures
• Additions to working capital
• Investments in subsidiaries

The offering is made pursuant to an effective shelf registration statement filed with the SEC.

Positive

• Successful pricing of a large $1.0 billion senior notes offering
• Proceeds will be used to repay existing debt, potentially improving the company's debt structure
• Funds can be allocated for capital expenditures and working capital, supporting growth initiatives

Negative

• Increase in long-term debt with the new $1.0 billion senior notes
• Potential increase in interest expenses due to the 5.500% interest rate on the new notes

Financial Analyst

Targa Resources' $1.0 billion senior notes offering at 5.500% is a strategic move to refinance existing debt and bolster its financial position. The pricing at 99.943% of face value indicates strong investor confidence. This offering allows Targa to extend its debt maturity profile to 2035, potentially reducing near-term refinancing risks.

The company's plan to use proceeds for repaying commercial paper and the terminated term loan facility demonstrates prudent debt management. This could lead to improved financial flexibility and potentially lower interest expenses. However, investors should note that while this offering doesn't immediately increase Targa's overall debt burden, it doesn't reduce it either.

The timing of this offering is noteworthy, as it capitalizes on the current interest rate environment before potential future rate hikes. This proactive approach to capital management could position Targa favorably in the competitive midstream energy sector.

Market Research Analyst

Targa's successful $1 billion note offering signals robust demand for energy infrastructure debt, reflecting investor confidence in the sector's stability and Targa's credit quality. The 5.500% coupon rate is competitive in the current market, balancing attractive yields for investors with manageable costs for Targa.

This offering could potentially impact Targa's credit ratings positively, as it demonstrates strong market access and proactive liability management. Improved credit metrics could lead to lower borrowing costs in the future, enhancing Targa's competitive position in the capital-intensive midstream sector.

Investors should monitor how Targa allocates the proceeds beyond debt repayment. Any investments in growth projects or working capital could signal management's outlook on future market opportunities and operational expansion plans, potentially influencing the company's long-term value proposition.

HOUSTON, Aug. 06, 2024 (GLOBE NEWSWIRE) -- Targa Resources Corp. (“Targa” or the “Company”) (NYSE: TRGP), announced today the pricing of an underwritten public offering (the “Offering”) of $1.0 billion aggregate principal amount of its 5.500% Senior Notes due 2035 at a price to the public of 99.943% of their face value. The Offering is expected to close on August 9, 2024, subject to the satisfaction of customary closing conditions.

The Company expects to use the net proceeds from the Offering for general corporate purposes, including to repay borrowings under its commercial paper note program, a portion of which were incurred to repay the remaining $500.0 million outstanding under its prior $1.5 billion unsecured term loan facility due July 2025, which was terminated in May 2024. Other general corporate purposes may include repayment of other indebtedness, capital expenditures, additions to working capital and investments in its subsidiaries.

This Offering is being made pursuant to an effective shelf registration statement and prospectus filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) and may be made only by means of a prospectus and prospectus supplement related to such Offering meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”). This announcement shall not constitute an offer to sell or a solicitation of an offer to buy any of these securities, except as required by law.

About Targa Resources Corp.

Targa Resources Corp. (NYSE: TRGP) is a leading provider of midstream services and is one of the largest independent midstream infrastructure companies in North America. The Company owns, operates, acquires, and develops a diversified portfolio of complementary domestic midstream infrastructure assets and its operations are critical to the efficient, safe and reliable delivery of energy across the United States and increasingly to the world. The Company’s assets connect natural gas and natural gas liquids (“NGL(s)”) to domestic and international markets with growing demand for cleaner fuels and feedstocks. The Company is primarily engaged in the business of: gathering, compressing, treating, processing, transporting, and purchasing and selling natural gas; transporting, storing, fractionating, treating, and purchasing and selling NGLs and NGL products, including services to liquified petroleum gas exporters; and gathering, storing, terminaling, and purchasing and selling crude oil.

The principal executive offices of Targa Resources Corp. are located at 811 Louisiana, Suite 2100, Houston, TX 77002 and their telephone number is 713-584-1000.

Forward-Looking Statements

Certain statements in this release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, are forward-looking statements, including the expected closing date and use of proceeds from the offering. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the Company’s control, which could cause results to differ materially from those expected by management of the Company. Such risks and uncertainties include, but are not limited to those described more fully in the Company’s filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company does not undertake an obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact the Company's investor relations department by email at InvestorRelations@targaresources.com or by phone at (713) 584-1133.

Sanjay Lad
Vice President, Finance & Investor Relations

William Byers
Chief Financial Officer

Jennifer Kneale
President – Finance and Administration

FAQ

What is the size and interest rate of Targa Resources Corp's (TRGP) new senior notes offering?

Targa Resources Corp. (TRGP) has priced a $1.0 billion offering of 5.500% Senior Notes due 2035.

When is the expected closing date for Targa Resources Corp's (TRGP) senior notes offering?

The senior notes offering by Targa Resources Corp. (TRGP) is expected to close on August 9, 2024, subject to customary closing conditions.

How does Targa Resources Corp (TRGP) plan to use the proceeds from its senior notes offering?

Targa Resources Corp (TRGP) plans to use the proceeds for general corporate purposes, including repaying commercial paper borrowings, repaying a portion of its term loan facility, potential repayment of other debt, capital expenditures, working capital additions, and investments in subsidiaries.

What is the pricing of Targa Resources Corp's (TRGP) new senior notes relative to their face value?

Targa Resources Corp's (TRGP) new senior notes are priced at 99.943% of their face value.