Target Hospitality, a provider of vertically integrated modular accommodations and value-added hospitality services, closed a new $660 million asset-based revolving credit facility. The facility significantly strengthens the company’s liquidity position, extends its debt maturity profile and enhances financial flexibility as Target continues to pursue an active commercial pipeline.
The facility replaces Target’s previous $175 million senior secured revolving credit facility, nearly quadrupling the company’s committed borrowing capacity to $660 million, subject to borrowing base availability, to support strategic growth initiatives and general corporate purposes. The facility has a five-year term maturing in July 2031 and includes an accordion feature providing for up to $190 million of incremental commitments, which could increase total committed borrowing capacity to $850 million, subject to lender commitments, customary conditions and borrowing base availability.
Borrowings under the new ABL facility are expected to bear interest at Term SOFR plus 2.25% to 3.00%, depending on the company’s total leverage ratio.
The new facility represents a reduction in borrowing costs of up to 250 basis points compared to the previous facility, lowering Target’s cost of capital, enhancing expected returns on incremental growth investments and supporting a disciplined balance sheet.
“The closing of our new ABL facility marks an important step in the evolution of Target’s capital structure,” Jason Vlacich, chief financial officer of Target Hospitality, said. “This facility significantly increases our committed capacity, extends our debt maturity profile and meaningfully lowers our cost of capital. The size of the commitments extended by both new and existing lenders, and the terms we secured, reflect the durability of our contracted revenue base and confidence in our growth strategy. Combined with internally generated cash flow, this facility provides substantial flexibility to capitalize on the largest commercial pipeline in our history across high-value end markets with durable, long-term demand, while maintaining a disciplined and resilient financial position.”
The ABL facility was arranged by JPMorgan Chase Bank acting as administrative agent, with JPMorgan Chase Bank, PNC Bank and Wells Fargo Bank serving as joint lead arrangers and joint bookrunners. Morgan Stanley and Huntington Bank served as documentation agents. Deutsche Bank AG and First National Bank of Omaha also participated as lenders in the facility.
