Item 1.01 Entry into a Material Definitive Agreement.
Note Purchase Agreement
On May 19, 2022, Trinity Industries Leasing Company (“TILC”), TRIP Rail Holdings LLC (“TRIP Holdings”), Tribute Rail Holdings LLC (“Tribute Holdings”), and Tribute Rail LLC (“Tribute Rail”) entered into a Note Purchase Agreement dated May 19, 2022 (the “Note Purchase Agreement”) with Wells Fargo Securities LLC, Credit Suisse Securities (USA) LLC, BofA Securities, Inc., Deutsche Bank Securities Inc., and Morgan Stanley & Co. LLC (the “Purchasers”). TILC is a wholly-owned subsidiary of Trinity Industries, Inc. (the “Company”); the equity members of TRIP Holdings are TILC (owner of 42.6% of the equity interests) and other unrelated investors; Tribute Holdings is a wholly-owned subsidiary of TRIP Holdings and Tribute Rail is a wholly-owned subsidiary of Tribute Holdings.
The Note Purchase Agreement provides for the issuance and sale of (i) an aggregate principal amount of $290.0 million of Tribute Rail’s Series 2022-1 Class A Green Secured Railcar Equipment Notes (the “Class A Notes”) and (ii) an aggregate principal amount of $37.0 million of Tribute Rail’s Series 2022-1 Class B Green Secured Railcar Equipment Notes (the “Class B Notes”) (the Class A Notes and the Class B Notes are, collectively, the “Notes”) to the Purchasers. The Class A Notes will bear interest at a fixed rate of 4.76%, will be payable monthly, and will have a stated final maturity date of May 17, 2052. The Class B Notes will bear interest at a fixed rate of 5.75%, will be payable monthly, and will have a stated final maturity date of May 17, 2052. The Notes will be obligations of Tribute Rail only, secured by (among other things) approximately 6,466 railcars and operating leases thereon, which Tribute Rail is purchasing from TRIP Railcar Co., LLC (“TRIP Railcar”), a wholly-owned subsidiary of TRIP Holdings. The Note Purchase Agreement contains customary representations, warranties, covenants and closing conditions for a transaction of this type. The Note Purchase Agreement also contains provisions pursuant to which TILC, TRIP Holdings, Tribute Holdings, and Tribute Rail agree to hold harmless and indemnify the Purchasers against damages under certain circumstances, which are customary for a transaction of this type.
The issuance and sale of the Notes are part of an asset-backed securitization which, subject to satisfaction of a variety of customary conditions precedent, is scheduled to close on or about May 25, 2022. The Company can give no assurance that the transaction will close on that date or at all.
The Purchasers are expected to resell the Notes pursuant to Rule 144A of the Securities Act of 1933 and Regulation S thereunder. The Notes have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold within the United States or to U.S. persons, except to qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A and to certain persons in offshore transactions in reliance on Regulation S under the Securities Act. This filing shall not constitute an offer to sell or a solicitation of an offer to purchase the Notes or any other securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.
TRIP Railcar is expected to use the proceeds from the sale of the railcars and related leases to Tribute Rail to repay in full all amounts currently outstanding under its Term Loan Agreement dated May 18, 2021 (the “Loan Agreement”) among TRIP Railcar, as borrower, TILC, TRIP Holdings, the lenders party thereto (the “Lenders”), Credit Suisse AG, New York Branch, as agent for the Lenders, and U.S. Bank National Association, as collateral agent and depositary. As of the date hereof, the amount outstanding under the Loan Agreement is approximately $319.4 million.
Forward-Looking Statements
Some statements in this Current Report on Form 8-K, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about the Company’s estimates, expectations, beliefs, intentions or strategies for the future, including the expected closing of the issuance of the Notes. The assumptions underlying these forward-looking statements include, but are not limited to, future financial and operating performance, future opportunities and any other statements regarding events or developments that the Company believes or anticipates will or may occur in the future, including the potential financial and operational impacts of the COVID-19 pandemic. Forward-looking statements speak only as of the date hereof, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to risks and uncertainties regarding economic, competitive, governmental, and technological factors affecting the Company’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. In particular, the closing of the issuance of the Notes is subject to general market and other conditions, which in turn are subject to a broad range of risks and uncertainties that could affect the Company, and there are no assurances that the closing will be completed when expected or at all. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and “Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by the Company’s Quarterly Reports on Form 10-Q, and the Company’s Current Reports on Form 8-K.