Business Context and Reporting Period
This Form 8-K is a current report filed by Fortress Transportation and Infrastructure Investors LLC (FTAI) on September 12, 2019. The filing details the closing of a registered public offering of preferred shares and the associated amendments to the company's governing agreement.
Key Financial Metrics and Transaction Details
- Offering Size: 3,000,000 Series A Preferred Shares plus 450,000 shares pursuant to a full over-allotment exercise, totaling 3,450,000 shares.
- Security Type: 8.25% Series A Fixed-to-Floating Rate Cumulative Perpetual Redeemable Preferred Shares.
- Par Value: $0.01 per share.
- Redemption Price: $25.00 per share (standard redemption on or after September 15, 2024).
- Underwriters: Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, and Stifel, Nicolaus & Company, Incorporated.
Material Changes and Terms
The filing reports the entry into a material definitive agreement and material modifications to the rights of security holders. Key terms include:
- Distribution Rate: Fixed at 8.25% per annum from September 12, 2019, to September 15, 2024. Beginning September 15, 2024, the rate converts to a floating rate equal to Three-Month LIBOR plus 688.6 basis points.
- Seniority: The Series A Preferred Shares rank senior to common shares regarding distributions and liquidation rights.
- Redemption Options:
- Standard redemption at $25.00 per share on or after September 15, 2024.
- Early redemption at $25.50 per share following a Rating Event.
- Early redemption at $25.25 per share following a Tax Redemption Event or Change of Control.
- Change of Control Penalty: If a Change of Control occurs and the company does not redeem the shares within 31 days, the distribution rate increases by 5.00%.
- Voting Rights: Generally no voting rights, except if distributions are unpaid for six or more quarterly periods.
Guidance, Outlook, and Risks
The filing does not provide forward-looking financial guidance, revenue projections, or management commentary on operational outlook. The primary risks disclosed relate to the terms of the preferred shares, including the floating rate exposure after 2024 and the potential for increased distribution rates in the event of a Change of Control.
Investor Verification Checklist
- Verify the total gross proceeds from the offering by multiplying the 3,450,000 shares by the $25.00 redemption price (assuming issuance at par).
- Review the Second Amended and Restated Limited Liability Company Agreement (Exhibit 3.1) for full legal terms.
- Confirm the impact of the new preferred share issuance on the company's existing capital structure and common equity dilution.
- Monitor the company's credit rating to assess the risk of a "Rating Event" triggering early redemption at a premium.