Tallgrass Energy Partners has increased its revolving credit facility from $850 million to $1.1 billion, and has an option to further increase the revolving credit facility by up to an additional $400 million of commitments to $1.5 billion. The option may be exercised by TEP within six months of the closing of the facility, which was effective Nov. 24, 2015, and concurrent with or after the acquisition of at least an additional 10 percent interest in Pony Express. As of Sept. 30, 2015, TEP had $696 million drawn on its revolving credit facility.
The following is an excerpt from Tallgrass' 8-K report filed with the SEC:
Item 1.01. Entry into a Material Definitive Agreement.
On November 24, 2015, Tallgrass Energy Partners, LP (the “Partnership”) and certain of its subsidiaries entered into Amendment No. 2 (the “Amendment”) to the Credit Agreement dated as of May 17, 2013 with Barclays Bank PLC, as administrative agent, and a syndicate of lenders (the “Credit Agreement”).
The Amendment modifies certain provisions of the Credit Agreement to, among other things, (i) increase the amount of the revolving credit facility to $1.1 billion and (ii) provide for a $400 million committed accordion feature (the “Committed Increase Commitments”).
The Partnership has a one-time option, exercisable on or prior to May 24, 2016, to exercise all or a portion of the Committed Increase Commitments if, among other things, the Partnership, on or before such date, acquires at least an additional 10% equity interest in Tallgrass Pony Express Pipeline, LLC, which owns and operates the Pony Express System, an approximately 764-mile crude oil pipeline commencing in Guernsey, Wyoming, and terminating in Cushing, Oklahoma.
The Committed Increase Commitments will be reduced on a dollar for dollar basis by the principal amount of any senior notes that are issued by the Partnership prior to the first to occur of the date the Partnership exercises its option for the Committed Increase Commitments and May 24, 2016.
“The increase in our credit facility and the additional committed option are indicative of the conservative and flexible capital structure that TEP has built,” said TEP President and CEO David G. Dehaemers Jr. “As of Sept. 30, 2015, our debt/EBITDA ratio was approximately 2.6x and we have consistently said that our long term debt/EBITDA ratio will target investment grade levels of between 3.0x to 4.0x. This credit facility will provide TEP with additional financing flexibility to continue to grow the partnership and its distributions, even during periods of capital market volatility. This gives us additional financial capacity to execute on our long-term plans and enables us to be patient when the capital markets are unreasonably shortsighted.”
Tallgrass Energy Partners, LP is a publicly traded, growth-oriented limited partnership formed to own, operate, acquire and develop midstream energy assets in North America. TEP currently provides natural gas transportation and storage services for customers in the Rocky Mountain and Midwest regions of the United States through its Tallgrass Interstate Gas Transmission and Trailblazer Pipeline systems. It provides crude oil transportation to customers in Wyoming, Colorado and the surrounding regions through its membership interest in Tallgrass Pony Express Pipeline.