Targa Resources Corp. (TRGP, Financial) has announced the pricing of a significant $2 billion senior notes offering, a strategic financial maneuver aimed at bolstering the company's capital structure and funding pivotal transactions. The offering comprises two tranches: $1 billion in 5.550% Senior Notes due 2035 and another $1 billion in 6.125% Senior Notes due 2055. These notes are fully and unconditionally guaranteed on a senior unsecured basis by certain subsidiary guarantors.
The proceeds from this offering are earmarked for several strategic purposes. A substantial portion will be utilized to repurchase all outstanding preferred equity in Targa Badlands LLC, the entity managing Targa's North Dakota assets, for approximately $1.8 billion in cash. This transaction is expected to close in the first quarter of 2025, with an effective date of January 1, 2025, subject to customary closing conditions.
In addition to funding the Badlands Transaction, Targa Resources plans to use the remaining proceeds for general corporate purposes. These include repaying borrowings under its unsecured commercial paper note program, other indebtedness, capital expenditures, and potential investments in its subsidiaries. Notably, the closing of the offering is not contingent upon the completion of the Badlands Transaction, providing Targa with flexibility in its financial planning.
The underwriting agreement for this offering was entered into with BofA Securities, Inc., MUFG Securities Americas Inc., RBC Capital Markets, LLC, and Wells Fargo Securities, LLC, among others. These underwriters and their affiliates have previously provided investment banking and financial advisory services to Targa Resources and may continue to do so, potentially benefiting from the proceeds used to repay indebtedness.
This strategic financial initiative underscores Targa Resources' commitment to optimizing its capital structure and enhancing shareholder value through prudent financial management and strategic investments.
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