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TRINITY INDUSTRIES INC : Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Regulation FD Disclosure (form 8-K)

11/20/2020 | 04:09pm

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On November 19, 2020, Trinity Rail Leasing 2020 LLC, a Delaware limited
liability company ("TRL-2020") and a limited purpose, indirect wholly-owned
subsidiary of Trinity Industries, Inc. (the "Company"), owned by the Company
through the Company's direct wholly-owned subsidiary Trinity Industries Leasing
("TILC"), issued an aggregate principal amount of (i) $110,000,000
principal amount of TRL-2020's Series 2020-2 Class A-1 Secured Railcar Equipment
Notes (the "Class A-1 Notes"), (ii) $240,300,000 principal amount of TRL-2020's
Series 2020-2 Class A-2 Secured Railcar Equipment Notes (the "Class A-2 Notes"),
and (iii) $20,500,000 principal amount of TRL-2020's Series 2020-2 Class B
Secured Railcar Equipment Notes (the "Class B Notes") (the Class A-1 Notes, the
Class A-2 Notes, and the Class B Notes are, collectively, the "Notes"). The
Notes were issued pursuant to a Master Indenture, dated November 19, 2020 (the
"Indenture") between TRL-2020 and U.S. Bank National Association, as indenture
trustee, as supplemented by a Series 2020-2 Supplement dated November 19, 2020.
The Notes bear interest at fixed rates as follows: (i) the Class A-1 Notes at
1.83%, (ii) the Class A-2 Notes at 2.56%, and (iii) the Class B Notes at 3.69%.
The Notes are payable monthly, and have a stated final maturity date of November
19, 2050
Concurrently, TILC purchased (i) TRL-2020's Series 2020-2 Class R-1 Secured
Railcar Equipment Notes (the "Class R-1 Notes") and (ii) TRL-2020's Series
2020-2 Class R-2 Secured Railcar Equipment Notes (the "Class R-2 Notes") (the
Class R-1 Notes and the Class R-2 Notes are, collectively, the "Subordinated
The Notes and the Subordinated Notes are obligations of TRL-2020 only. The Notes
and the Subordinated Notes are secured by a portfolio of railcars and operating
leases thereon acquired and owned by TRL-2020 (the "Railcar Portfolio") and
other assets of TRL-2020. The Notes were offered and sold in a private placement
solely to qualified institutional buyers in reliance on Rule 144A of the
Securities Act of 1933, as amended (the "Securities Act"), and to persons who
are not U.S. persons in offers and sales that occur outside the United States in
reliance on Regulation S under the Securities Act, pursuant to a note purchase
agreement as described in the Company's Form 8-K filed October 23, 2020.
While the stated final maturity of the Notes is November 19, 2050, cash flow
from TRL-2020's assets will be applied, pursuant to the payment priorities of
the Indenture, so as to amortize the Notes to achieve monthly targeted principal
balances. If the cash flow assumptions used in determining the targeted balances
are met, it is anticipated that the Notes will be repaid well in advance of
their stated final maturity date. There can be no assurance, however, that such
cash flow assumptions will be realized. In addition, the Notes may be subject to
acceleration upon the occurrence of certain events of default under the
Indenture, including a failure to pay interest on the Notes, and a failure of
the Notes to amortize to the extent that, over time, the outstanding principal
balance of the Notes was to eventually exceed the sum of the depreciated value
of the Railcar Portfolio and the amounts on deposit in certain accounts of
TRL-2020. The decision whether to accelerate or exercise other remedies against
TRL-2020 and its assets will be under the control of holders representing a
majority of the senior class of the outstanding principal balance of the Notes
and, after payment in full of all of the Notes, holders representing a majority
of the outstanding principal balance of the Subordinated Notes.
TRL-2020 purchased the Railcar Portfolio directly from TILC and from TILC's
affiliate, TRIHC 2018 LLC ("TRIHC"), and Trinity Rail Leasing Warehouse Trust
("TRLWT"). Net proceeds received from the railcars acquired in connection with
the issuance of the Notes will be used to repay approximately $22.1 million of
borrowings under TRLWT's secured warehouse credit facility, to redeem in full
approximately $258.6 million of secured notes issued by TRIHC, and for general
corporate purposes.
As noted above, the Notes are solely the obligations of TRL-2020. TILC has,
however, entered into certain agreements relating to the transfer of the Railcar
Portfolio to TRL-2020 and the management and servicing of TRL-2020's assets.
These agreements contain certain representations, undertakings and indemnities
customary for asset sellers and service providers in transactions of this type.


Item 7.01 Regulation FD Disclosure.
In the November 19, 2020 investor day video webcast, the Company's management
discussed the outlook for its lease portfolio net investment. The Company would
like to clarify that the lease portfolio net investment is included within the
investing activities section of its Consolidated Statement of Cash Flows. The
Company would also refer investors to the appendix included within the investor
day materials, which were included as Exhibit 99.1 to the Company's Form 8-K
filed on November 19, 2020, for additional information regarding cash flow
The information in this item 7.01 is being furnished and shall not be deemed to
be filed for purposes of Section 18 of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), or otherwise be subject to the liabilities of
that section, nor shall it be deemed to be incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act.
Additionally, the submission of this report on Form 8-K is not an admission of
the materiality of any information in this report that is required to be
disclosed solely by Regulation FD.


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