Business Context and Reporting Period
This Form 8-K, dated January 29, 2020, is filed by Fortress Transportation & Infrastructure Investors LLC (FTAI) regarding its subsidiary, Jefferson Energy companies ("Jefferson"). The filing serves as an amendment to a report filed on January 17, 2020, correcting the item tag from Item 8.01 to Item 7.01 (Regulation FD Disclosure). The report details the pricing of a private offering of Series 2020 Bonds in conjunction with The Port of Beaumont Navigation District of Jefferson County, Texas.
Key Financial Metrics
The filing focuses on debt issuance rather than consolidated operating results for FTAI. Key financial figures include:
- Total Bond Offering: $263,980,000 aggregate principal amount.
- Series 2020A Bonds: $184,920,000 (Dock and Wharf Facility Revenue Bonds).
- $53,520,000 maturing Jan 1, 2035 at 3.625% fixed interest.
- $131,400,000 maturing Jan 1, 2050 at 4.00% fixed interest.
- Series 2020B Bonds: $79,060,000 (Taxable Facility Revenue Bonds) maturing Jan 1, 2025 at 6.00% fixed interest.
- Projected Facility Performance (Jefferson):
- Annual run-rate revenues: $130 million to $150 million.
- Annual run-rate EBITDA: $70 million to $80 million.
- Assumptions: 4.3 million barrels storage capacity, 80-85% utilization.
Consolidated revenue, profit, cash flow, and liquidity metrics for FTAI are not provided in this filing.
Material Changes and Use of Proceeds
The primary material event is the finalization of bond pricing for Jefferson. The net proceeds from the offering are intended to:
- Refund, redeem, and defease certain existing indebtedness.
- Pay for or reimburse costs of development, construction, and acquisition of facilities.
- Fund reserve and funded interest accounts related to the Series 2020 Bonds.
- Cover issuance costs.
The closing is expected on or before February 11, 2020, subject to limited conditions.
Guidance, Outlook, and Risks
Jefferson expects project completion by the fourth quarter of 2020. However, the filing explicitly states that Jefferson is not providing forward-looking guidance for U.S. GAAP reported financial measures or a quantitative reconciliation to GAAP measures. This is due to the inability to predict with reasonable certainty the outcome of significant items, including:
- Development and construction progress and timing.
- Potential cost overruns.
- Interest expense.
- Revenues related to projects under development.
The bonds are special, limited obligations of The Port of Beaumont Navigation District and do not constitute indebtedness of the State of Texas, Jefferson County, or any political subdivision. They are secured solely by the trust estate and collateral pledged.
Investor Verification Checklist
- Verify the closing of the $263.98 million bond offering on or before February 11, 2020.
- Confirm the actual utilization rates and storage capacity (4.3 million barrels) achieved by Jefferson facilities post-construction.
- Monitor the realization of the projected $130-$150 million annual run-rate revenue and $70-$80 million EBITDA.
- Review subsequent filings for updates on the defeasance of existing indebtedness using the bond proceeds.
- Assess the impact of construction cost overruns or delays on the projected financial performance.