8-KRegulation FD

FTAI Aviation Ltd. 8-K Report, Regulation FD Disclosure (Jun 27, 2022)

Filed June 27, 2022For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) announced via an 8-K filing on June 27, 2022, the commencement of a $500.0 million offering of senior secured notes due 2027 by its subsidiary, FTAI Infrastructure LLC, as part of a planned spin-off. This offering is directly linked to the proposed distribution of FTAI Infrastructure Inc. common stock to FTAI shareholders. The proceeds from the notes, along with a concurrent $300.0 million preferred stock issuance, will be distributed to FTAI to reduce its existing debt. Following the spin-off, FTAI Infrastructure Inc. will house FTAI's entire infrastructure business, which includes Ports and Terminals, Railroads, and Energy Transition segments. The company provided an optimistic outlook for its infrastructure segment, projecting potential annual Adjusted EBITDA exceeding $200 million within the next two to three years. This growth is driven by the full integration of Transtar LLC, expansion at Jefferson and Repauno terminals, and capacity increases at the Long Ridge power plant. The filing details the preliminary terms of the Series A Senior Preferred Stock offering, highlighting a significant dividend rate and certain control provisions and covenants designed to protect preferred shareholders, along with warrants to be issued to management and investors.

Key Highlights

  • 1FTAI Infrastructure is launching a $500 million senior secured notes offering due 2027, contingent on market conditions and a planned spin-off.
  • 2The spin-off involves distributing shares of FTAI Infrastructure Inc. (formerly FTAI Infrastructure LLC) to FTAI shareholders.
  • 3Proceeds from the notes and a $300 million preferred stock issuance will be used by FTAI to pay down existing debt.
  • 4FTAI Infrastructure's business lines include Ports and Terminals, Railroads, and Energy Transition.
  • 5Projected annual Adjusted EBITDA for the infrastructure business is over $200 million in the next 2-3 years, driven by strategic growth initiatives.
  • 6Key growth drivers include Transtar ($100M+ EBITDA potential), Jefferson (~$80M EBITDA potential), Repauno (~$10M EBITDA potential), and Long Ridge (~$45M annualized EBITDA potential with $15M incremental).
  • 7Preliminary terms for the Series A Preferred Stock include a high dividend rate (minimum 12% or yield-based) and covenants that restrict FTAI Infrastructure's actions to protect preferred holders.

Frequently Asked Questions

The primary purpose of the $500 million senior secured notes offering is to raise capital in connection with the planned spin-off of FTAI's infrastructure business into a separate entity, FTAI Infrastructure Inc. The proceeds, combined with the preferred stock issuance, will be used by the parent company, FTAI, to reduce its existing debt.

The spin-off is the proposed distribution of all outstanding shares of common stock of FTAI Infrastructure Inc. to the existing shareholders of FTAI Aviation Ltd. FTAI Infrastructure Inc. will, after the spin-off, hold all of FTAI's infrastructure business, which includes Ports and Terminals, Railroads, and Energy Transition assets.

FTAI projects that its infrastructure business, as FTAI Infrastructure Inc., has the potential to generate annual Adjusted EBITDA exceeding $200 million within the next two to three years. This is a forward-looking estimate based on current development plans and asset utilization.

The Series A Preferred Stock is expected to have a significant dividend rate (at least 12% per annum or a yield-based rate plus 2%) and includes provisions for PIK (payment-in-kind) dividends in the first two years. It also has protective features for holders, including mandatory redemption upon certain events (like change of control) and covenants that limit FTAI Infrastructure's ability to incur debt, pay dividends, sell assets, and take other actions without preferred holder consent or notification.