Trinity Industries, Inc. Announces Pricing of Offering of $200.0 Million of Additional 7.750% Senior Notes Due 2028

Rhea-AI Summary

Trinity Industries announced the pricing of an additional $200 million of its 7.750% Senior Notes due 2028.

The offering is expected to close on June 5, 2024, subject to customary conditions. The proceeds, along with cash on hand and borrowings, will repay the company's 4.550% Senior Notes due 2024 and cover related expenses.

Sold at 102.50% of the principal amount plus accrued interest, the new notes will constitute a further issuance of the company's existing $400 million 7.750% Senior Notes due 2028, bringing the total to $600 million.

The notes are offered to qualified institutional buyers and non-U.S. persons under specific regulations and are not registered under the Securities Act of 1933.

Positive

• Pricing of additional $200 million of Senior Notes at 102.50% of principal.
• Offering expected to close on June 5, 2024.
• Use of proceeds to repay 4.550% Senior Notes due 2024.
• Increase in total 7.750% Senior Notes due 2028 to $600 million.
• Additional notes guaranteed by existing and future domestic subsidiaries.

Negative

• New notes not registered under the Securities Act of 1933.
• Reliance on exemptions could limit market liquidity.
• Interest rate on new notes is relatively high at 7.750%.
• Repayment of older, lower-interest 4.550% Senior Notes due 2024.

Financial Analyst

Trinity Industries, Inc. has announced a notable financial move by offering an additional $200.0 million of 7.750% Senior Notes due 2028. This adds to the $400.0 million already issued in June 2023, bringing the total to $600.0 million. Such a high yield rate of 7.750% suggests a premium to attract investors, hinting at perceived risk associated with the company.

Key Points:

• The new notes will be used to repay 4.550% Senior Notes due 2024, which might indicate an effort to manage interest costs over the long term, albeit at a higher rate in the short term.
• Offering price at 102.50% of principal indicates confidence in investor demand.
• Closure on June 5, 2024, contingent on customary conditions, is standard but worth monitoring for any delays or issues.

Implications:

• Short-term: Increased debt burden could weigh on liquidity and operational flexibility.
• Long-term: If the company utilizes the raised capital effectively, this could stabilize and potentially improve their financial health.
• Investors need to weigh the higher immediate interest cost against the strategic benefit of managing debt maturity.

It’s important to note the reliance on Rule 144A and Regulation S for the offering, limiting it to qualified institutional buyers and non-U.S. persons, minimizing dilution risk for retail investors.

Market Research Analyst

From a market perspective, the issuance of these additional Senior Notes underlines Trinity's strategic approach to debt management. With the notes being sold at 102.50% of principal amount, the company is showcasing market confidence and potentially robust investor demand.

Key Market Insights:

• Interest Rate Environment: In a climate where interest rates are generally on an upward trajectory, locking in a 7.750% yield could be seen as both a risk and a hedge against future rate hikes.
• Current Market Position: The use of proceeds to repay lower-yielding 4.550% notes suggests a trade-off strategy that may be aimed at optimizing debt structure.

Strategic Considerations:

• Investors should consider how the company's overall debt profile impacts its market valuation and the perceived risk of its securities.
• Monitoring future financial disclosures for performance against debt obligations will be critical in evaluating the effectiveness of this move.

Given the necessity for strategic debt management in industries reliant on substantial capital, this move could be a double-edged sword, potentially stabilizing near-term operations while increasing long-term interest obligations.

DALLAS--(BUSINESS WIRE)-- Trinity Industries, Inc. (“Trinity” or the “Company”) today announced that it has finalized the terms of its offering (the “Offering”) of an additional $200.0 million aggregate principal amount of its 7.750% Senior Notes due 2028 (the “Additional Notes”). Trinity anticipates that consummation of the offering will occur on June 5, 2024, subject to customary closing conditions. The Company intends to use the net proceeds from the Offering, together with cash on hand and/or borrowings under its corporate revolving credit facility, to (i) finance the repayment in full of its 4.550% Senior Notes due 2024 and (ii) pay related fees, costs, premiums and expenses in connection therewith and with the Offering. The Additional Notes will be sold at a price of 102.50% of the principal amount thereof plus accrued interest deemed to have accrued from January 15, 2024.

The Additional Notes will constitute a further issuance of the Company’s 7.750% Senior Notes due 2028 in the aggregate principal amount of $400.0 million, which were issued on June 30, 2023 (the “Existing Notes”). The Additional Notes will have identical terms and conditions (other than the original issue date, issue price, the first interest payment date and the first date from which interest will accrue) as the Existing Notes. Upon the completion of the Offering, the Company will have $600.0 million in aggregate principal amount of 7.750% Senior Notes due 2028 outstanding.

Each of the Company’s existing and future domestic subsidiaries that guarantees its existing corporate revolving credit facility and the Existing Notes is expected to guarantee the Additional Notes.

The Additional Notes and related guarantees being offered have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Additional Notes and related guarantees may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Additional Notes and related guarantees are being offered only to persons reasonably believed to be “qualified institutional buyers” in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act and it is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Additional Notes or any other securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward-Looking Statements

Some statements in this press release, 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 Trinity’s estimates, expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements, including, but not limited to, future financial and operating performance, future opportunities, the Offering and the use of proceeds therefrom, and any other statements regarding events or developments that Trinity believes or anticipates will or may occur in the future. Trinity uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “projected,” “outlook” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release and Trinity expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Trinity’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 present expectations, including, but not limited to, risks and uncertainties regarding economic, competitive, governmental and technological factors affecting Trinity’s operations, markets, products, services and prices, and such forward-looking statements are not guarantees of future performance. 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 Trinity’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by Trinity’s Quarterly Reports on Form 10-Q and Trinity’s Current Reports on Form 8-K.

About Trinity

Trinity Industries, Inc., headquartered in Dallas, Texas, owns businesses that are leading providers of rail transportation products and services in North America. Our businesses market their railcar products and services under the trade name TrinityRail®. The TrinityRail platform provides railcar leasing and management services; railcar manufacturing; railcar maintenance and modifications; and other railcar logistics products and services. Beginning January 1, 2024, Trinity reports its financial results in two reportable business segments: (1) Railcar Leasing and Services Group, formerly the Railcar Leasing and Management Services Group, and (2) Rail Products Group.

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Investor Contact

Leigh Anne Mann

Vice President, Investor Relations

Trinity Industries, Inc.

Investors: (214) 631-4420

Media Contact

Jack L. Todd

Vice President, Public Affairs

Trinity Industries, Inc.

Media Line: (214) 589-8909

Source: Trinity Industries, Inc.

FAQ

What is the amount and interest rate of the new Trinity Senior Notes?

Trinity is offering an additional $200 million of 7.750% Senior Notes due 2028.

When is the closing date for Trinity's Senior Notes offering?

The closing date is anticipated to be June 5, 2024.

How will Trinity use the proceeds from the Senior Notes offering?

The proceeds will repay the 4.550% Senior Notes due 2024 and cover related expenses.

What is the total principal amount of Trinity's 7.750% Senior Notes due 2028 after the new offering?

The total principal amount will be $600 million.

Are the additional Trinity Senior Notes registered under the Securities Act?

No, the additional notes are not registered under the Securities Act of 1933.