Trinity Refinances Outstanding Debt, Renames Subsidiaries

TRIP Rail Holdings LLC (TRIP Holdings) and RIV 2013 Rail Holdings LLC (RIV 2013) will use the proceeds from the newly issued debt to “fully repay and redeem existing notes and fund expenses related to the refinancing,” Trinity reported.

As part of the refinancing, Trinity Rail Leasing 2012 LLC, a subsidiary of RIV 2013, will be renamed TRP 2021 LLC (TRP 2021). “TRP 2021 will issue an aggregate principal amount of $355 million of green-secured railcar equipment notes at a blended coupon of approximately 2.13% and a weighted average life of approximately 5.5 years at closing,” Trinity said. “The transaction will have a loan to value of 73.5% and will be secured by 6,350 railcars and their associated operating leases. Upon closing, the proceeds are expected to redeem the TRL 2012 secured railcar equipment notes which had $349 million outstanding at March 31, 2021 and carried a 3.59% interest rate.”

In addition, TRIP Rail Master Funding LLC, a subsidiary of TRIP Holdings, will be renamed Triumph Rail LLC (Triumph). “Triumph will also issue an aggregate principal amount of $560 million of green-secured railcar equipment notes at a blended coupon of approximately 2.20% and a weighted average life of approximately 5.3 years at closing,” Trinity noted. “The transaction will have a loan to value of 74.8% and will be secured by 11,004 railcars and their associated operating leases.”

Another subsidiary of TRIP Holdings, TRIP Railcar Co., LLC, has entered into a term loan agreement, Trinity reported. It is expected to “draw down approximately $330 million from its loan facility that will bear interest at LIBOR (or an alternate base rate), plus a facility margin of 1.85%. Together upon closing, the proceeds are expected to redeem TRMF’s secured railcar equipment notes, which had $877 million outstanding at March 31, 2021 and carried a blended average interest rate of 5.14%.”

Trinity said it anticipates that both securitizations and the associated term-loan agreement will close and fund on or about June 15, 2021. Collectively, Trinity noted that it maintains a 38% ownership in the partially owned subsidiaries, and the associated refinancings are expected to reduce interest expense by some $25 million to $30 million on an annualized basis. “During the second quarter, the company will incur approximately $12 million in costs related to redemption premiums and unamortized loan costs associated with the outstanding debt,” Trinity added.

“The significance of refinancing over $1 billion in debt at historically low interest rates speaks to the attractiveness of the asset class and the depth of the capital markets for high-performing rail securitizations,” Trinity EVP and Chief Financial Officer Eric Marchetto said. “We are also proud to be the first railcar lessor in North America to issue green bonds under Trinity’s leasing company Green Financing Framework, garnering new participation in the securitizations from firms with various ESG and sustainability mandates. These refinancings are part of Trinity’s strategic initiatives to improve our returns and drive shareholder value through lowering our cost of capital, and will result in the reduction of the Company’s cost of debt by 50 basis points.”

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