Item 1.01
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Entry into a Material Definitive Agreement.
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Indenture and 2024 Notes
On September 1, 2016, Tallgrass Energy Partners, LP (the Partnership), Tallgrass Energy Finance Corp. (the
Co-Issuer and together with the Partnership, the Issuers), the Guarantors named therein and U.S. Bank, National Association, as trustee, entered into an Indenture dated September 1, 2016 (the Indenture),
pursuant to which the Issuers issued $400,000,000 in aggregate principal amount of the Issuers 5.50% Senior Notes due 2024 (the 2024 Notes). The 2024 Notes are general unsecured senior obligations of the Issuers. The 2024 Notes are
unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnerships existing direct and indirect wholly owned subsidiaries (other than the Co-Issuer) and certain of the Partnerships future subsidiaries (the
Guarantors). The 2024 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers.
Interest and Maturity
The 2024 Notes will mature on September 15, 2024 and interest on the 2024 Notes is payable in cash semi-annually in arrears on each
March 15 and September 15, commencing March 15, 2017. Interest will be payable to holders of record on the March 1 and September 1 immediately preceding the related interest payment date, and will be computed on the basis of
a 360-day year consisting of twelve 30-day months.
Optional Redemption
At any time prior to September 15, 2019, the Issuers may on one or more occasions redeem up to 35% of the aggregate principal amount of
2024 Notes issued under the Indenture, upon not less than 30 or more than 60 days notice, at a redemption price of 105.50% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), in an amount not greater than the net cash proceeds of one or more equity offerings by the Partnership,
provided that:
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at least 65% of the aggregate principal amount of 2024 Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption (excluding 2024 Notes held by the Partnership and its
subsidiaries); and
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the redemption occurs within 180 days of the date of the closing of each such equity offering.
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Prior to September 15, 2019, the Issuers may redeem all or part of the 2024 Notes, upon not less than 30 or more than 60 days
notice, at a redemption price equal to the sum of:
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the principal amount thereof, plus
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the Make Whole Premium (as defined in the Indenture) at the redemption date, plus
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accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the
redemption date).
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On and after September 15, 2019, the Issuers may redeem all or a part of the 2024 Notes, upon not
less than 30 or more than 60 days notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, on the 2024 Notes redeemed to the applicable redemption date
(subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on September 15 of the
years indicated below:
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YEAR
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PERCENTAGE
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2019
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104.125
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%
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2020
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102.750
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%
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2021
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101.375
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%
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2022 and thereafter
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100.000
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%
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Change of Control
If a Change of Control Triggering Event (as defined in the Indenture) occurs, each holder of 2024 Notes may require the Partnership to
repurchase all or a portion of that holders 2024 Notes for cash at a price equal to 101% of the aggregate principal amount of the 2024 Notes repurchased, plus any accrued but unpaid interest on the notes repurchased, to the date of settlement
(subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the settlement date).
Certain Covenants
The
Indenture contains covenants that, among other things, limit the Partnerships ability and the ability of its restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue preferred units; (ii) create
liens to secure indebtedness; (iii) pay distributions on equity interests, repurchase equity securities or redeem subordinated securities; (iv) make investments; (v) restrict distributions, loans or other asset transfers from the
Partnerships restricted subsidiaries; (vi) consolidate with or merge with or into, or sell substantially all of the Partnerships properties to, another person; (vii) sell or otherwise dispose of assets, including equity
interests in subsidiaries; and (viii) enter into transactions with affiliates.
Events of Default
Upon a continuing event of default, the trustee or the holders of 25% of the principal amount of the 2024 Notes may declare the 2024 Notes
immediately due and payable, except that a default resulting from a bankruptcy or insolvency with respect to the Partnership or any restricted subsidiary of the Partnership that is a significant subsidiary or any group of its restricted subsidiaries
that, taken as a whole, would constitute a significant subsidiary of the Partnership, will automatically cause all 2024 Notes to become due and payable. Each of the following constitutes an event of default under the Indenture:
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default for 30 days in the payment when due of interest on the 2024 Notes;
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default in payment when due of the principal of, or premium, if any, on the 2024 Notes;
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failure by the Partnership to comply with the covenant relating to consolidations, mergers or transfers of all or substantially all of the Partnerships assets or failure by the Partnership to purchase notes when
required pursuant to the asset sale or change of control provisions of the Indenture;
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failure by the Partnership for 180 days after notice to comply with its reporting obligations under the Indenture;
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failure by the Partnership for 60 days after notice to comply with any of the other agreements in the Indenture;
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default under any mortgage, indenture or instrument governing any indebtedness for money borrowed or guaranteed by the Partnership or any of its restricted subsidiaries, if such default: (i) is caused by a failure
to pay principal, interest or premium, if any, on said indebtedness within any applicable grace period; or (ii) results in the acceleration of such indebtedness prior to its stated maturity, and, in each case, the principal amount of the
indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or acceleration of maturity, aggregates $75.0 million or more, subject to a cure provision;
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failure by the Partnership or any of its restricted subsidiaries to pay final non-appealeable judgments aggregating in excess of $75.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;
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any guarantee is held in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or any Guarantor, or any person acting on behalf of any Guarantor, denies or
disaffirms its obligations under its guarantee; and
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certain events of bankruptcy or insolvency described in the Indenture with respect to the Partnership, or any of the Partnerships restricted subsidiaries that is a significant subsidiary or any group of its
restricted subsidiaries that, taken as a whole, would constitute a significant subsidiary of the Partnership.
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The foregoing
description of the Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Indenture and the form of 5.50% Senior Note, which are filed with this Report as Exhibit 4.1 and Exhibit 4.2,
respectively, and are incorporated herein by reference.