8-KMaterial AgreementsRegulation FDOther Events+1

FTAI Aviation Ltd. 8-K Report, Material Agreement (Jun 8, 2021)

Filed June 8, 2021For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) announced a significant acquisition on June 8, 2021, through its indirect subsidiary Percy Acquisitions LLC. The company entered into a Membership Interest Purchase Agreement to acquire Transtar, LLC, the short-line railroad subsidiary of United States Steel Corporation, for $640 million in cash, subject to customary adjustments. This strategic move represents a substantial investment for FTAI, expanding its infrastructure portfolio into the rail sector. The acquisition is subject to customary closing conditions, including approval from the Surface Transportation Board (STB), and the financing for the transaction is expected to be funded through a senior unsecured bridge term loan facility of up to $650 million committed by Morgan Stanley and Barclays. The deal also includes ancillary agreements, such as a 15-year railway services agreement for Transtar to continue providing services to U.S. Steel facilities, ensuring operational continuity and a revenue stream post-acquisition.

Key Highlights

  • 1FTAI Aviation Ltd. is acquiring Transtar, LLC, a short-line railroad subsidiary of United States Steel Corporation, for $640 million cash.
  • 2The acquisition is being made through FTAI's indirect subsidiary, Percy Acquisitions LLC.
  • 3The transaction is subject to customary closing conditions, including Surface Transportation Board (STB) approval.
  • 4FTAI plans to finance the acquisition through a $650 million senior unsecured bridge term loan facility committed by Morgan Stanley and Barclays.
  • 5An integral part of the deal is a 15-year railway services agreement for Transtar to continue providing services to U.S. Steel facilities.
  • 6The Purchase Agreement includes customary representations, warranties, covenants, and indemnification provisions.
  • 7FTAI is required to pay a $32 million termination fee to the seller under specific circumstances, including failure to obtain STB approval or financing unavailability.

Frequently Asked Questions

This Form 8-K filing announces FTAI Aviation Ltd.'s entry into a material definitive agreement for the acquisition of Transtar, LLC, a short-line railroad subsidiary of United States Steel Corporation.

The cash purchase price for Transtar, LLC is $640 million, subject to certain customary adjustments as outlined in the Membership Interest Purchase Agreement.

Key closing conditions include obtaining final approval, authorization, or exemption from the Surface Transportation Board (STB), the absence of any injunctions or adverse governmental orders, accuracy of representations and warranties, and material compliance with covenants by both parties. The availability of debt financing is not a condition to closing.

FTAI intends to fund the acquisition through third-party debt financing, specifically a senior unsecured bridge term loan facility of up to $650 million committed by Morgan Stanley and Barclays Bank PLC.

Yes, an ancillary agreement, the Railway Services Agreement, will be entered into. Under this agreement, Transtar will continue to provide certain railway services to United States Steel Corporation's facilities for an initial term of 15 years, with potential for extensions.