Business Context and Reporting Period
This Form 8-K, dated July 27, 2021, is filed by Fortress Transportation and Infrastructure Investors LLC (FTAI). The report discloses a significant capital transaction involving Jefferson Energy companies, a subsidiary of FTAI, in partnership with The Port of Beaumont Navigation District and The Port of Beaumont Industrial Development Authority.
Key Financial Metrics and Transaction Details
- Bond Offering: Intention to offer Series 2021 Bonds with an aggregate principal amount of approximately $425 million.
- Structure: Approximately $225 million in Series 2021A Dock and Wharf Facility Revenue Bonds and $200 million in Series 2021B Taxable Facility Revenue Bonds.
- Use of Proceeds: Funding for facility development, construction, and acquisition; refinancing subordinated indebtedness owed to FTAI; and funding reserve and interest accounts.
- Equity Investment: FTAI expects to contribute approximately $90 million in equity to Jefferson to support the project.
- Projected Performance (Post-Completion):
- Annual run-rate revenues: Approximately $170 million.
- Annual run-rate EBITDA: Approximately $100 million.
- Assumptions: 6.2 million barrels of storage capacity at 90% utilization.
Material Changes and Projected Outlook
The filing outlines a strategic expansion of Jefferson's infrastructure assets. The transaction is designed to refinance existing debt owed to FTAI and fund new storage facilities. Project completion is currently expected by the first half of 2023. The filing explicitly states that Jefferson is not providing forward-looking guidance for U.S. GAAP reported financial measures due to uncertainties regarding construction progress, potential cost overruns, and interest expenses.
Risks, Contingencies, and Management Commentary
- Non-Recourse Nature: The Series 2021 Bonds are special, limited obligations payable solely from the trust estate and collateral. They do not constitute indebtedness of the Port of Beaumont, the State of Texas, or any political subdivision, and no full faith and credit is pledged.
- Forward-Looking Uncertainties: There is no assurance that projects will be completed as expected. Risks include construction delays, cost overruns, changes in commodity prices, interest rates, and regulatory changes.
- Investor Eligibility: The offering is restricted to "qualified institutional buyers" under Rule 144A and "institutional accredited investors."
Key Facts for Investor Verification
- Verify the final terms and closing date of the $425 million Series 2021 Bond offering.
- Monitor the $90 million equity commitment from FTAI to Jefferson.
- Track construction progress against the target completion date of the first half of 2023.
- Assess the impact of the refinancing of subordinated indebtedness on FTAI's consolidated balance sheet.
- Review future filings for actual revenue and EBITDA performance against the projected $170 million and $100 million run-rates.