Target Hospitality Corp. Enters $660M Asset‑Based Revolving Credit Facility

What Happened

• Target Hospitality Corp. (through Arrow Bidco, LLC and certain subsidiaries) announced on July 24, 2026 that it entered into a new ABL Credit Agreement providing an asset‑based revolving credit facility with aggregate commitments up to $660 million, maturing five years after the closing date. On the closing date the borrower drew $65.7 million to pay off the prior credit facility (which was terminated) and to cover fees and expenses. The company issued a related press release on July 27, 2026.

Key Details

• Facility size and optional increase: $660 million initial revolving commitments with an option to increase total commitments up to $850 million subject to conditions.
• Pricing: Borrowings can be at Adjusted Term SOFR, Adjusted Daily Simple SOFR, or an Alternate Base Rate plus margins initially 2.50% for Term Benchmark/RFR and 1.50% for Alternate Base Rate; margins will later vary by Total Leverage Ratio (Term/RFR: 2.25%–3.00%; Alternate Base: 1.25%–2.00%).
• Borrowing base and liquidity features: Availability equals the lesser of the Aggregate Revolving Commitment and a Borrowing Base that includes (examples) 85% of eligible accounts receivable, up to 95%/80% rules for rental equipment, 100% of Qualified Cash (capped), plus letters of credit capacity up to $100M and a $50M swingline.
• Security and covenants: Facility is senior secured by substantially all assets and guaranteed by the company and material subsidiaries; key covenants include a minimum fixed charge coverage ratio of 2.50:1.00, maximum first‑lien secured leverage ratio of 3.00:1.00 (stepping to 2.50:1.00 from Sept. 30, 2028), and maximum total leverage ratio of 4.00:1.00, tested quarterly.

Why It Matters

• This refinancing replaces Target’s prior credit facility and provides committed liquidity tied to the company’s receivables, equipment and cash, which supports working capital, capital expenditures and general corporate needs. The facility’s leverage‑based pricing and financial covenants are important metrics investors should watch because they affect borrowing costs, available liquidity and the company’s flexibility to pay dividends, incur debt, or make acquisitions. The full ABL Credit Agreement and a press release are attached as exhibits to the 8‑K.