Trinity Industries’ partially-owned lease subsidiaries, TRIP Rail Holdings and RIV 2013 Rail Holdings, entered into agreements to refinance more than $1.2 billion in outstanding debt. Proceeds from the newly issued debt will be used to fully repay and redeem existing notes and to fund expenses related to the refinancing.

“We are pleased to announce the refinancing of the partially-owned lease subsidiaries’ capital structure,” Eric Marchetto, executive vice president and CFO of Trinity Industries, said. “The significance of refinancing over $1 billion in debt at historically low interest rates speaks to the attractiveness of the asset class and the depth of the capital markets for high-performing rail securitizations. We are also proud to be the first railcar lessor in North America to issue green bonds under Trinity’s leasing company green financing framework, garnering new participation in the securitizations from firms with various ESG and sustainability mandates. These refinancings are part of Trinity’s strategic initiatives to improve our returns and drive shareholder value through lowering our cost of capital and will result in the reduction of the company’s cost of debt by 50 basis points. Trinity is the leading issuer of asset-back[ed] railcar securitizations, and this was an important financing for Trinity and our investment partners.”

As part of the refinancing, Trinity Rail Leasing 2012 (TRL 2012), a subsidiary of RIV 2013, will be renamed TRP 2021 and will issue an aggregate principal amount of $355 million of green secured railcar equipment notes at a blended coupon of approximately 2.13% and a weighted average life of approximately 5.5 years at closing. The transaction will have a loan to value of 73.5% and will be secured by 6,350 railcars and their associated operating leases. Upon closing, the proceeds are expected to redeem the TRL 2012 secured railcar equipment notes, which had $349 million outstanding at March 31 and carried a 3.59% interest rate.

TRIP Rail Master Funding (TRMF), a subsidiary of TRIP Holdings, will be renamed Triumph Rail and also will issue an aggregate principal amount of $560 million of green secured railcar equipment notes at a blended coupon of approximately 2.2% and a weighted average life of approximately 5.3 years at closing. The transaction will have a loan to value of 74.8% and will be secured by 11,004 railcars and their associated operating leases. Additionally, TRIP Railcar Co., another subsidiary of TRIP Holdings, entered into a term loan agreement and is expected to draw down approximately $330 million from its loan facility that will bear interest at LIBOR (or an alternate base rate) plus a facility margin of 1.85%. Together, upon closing, the proceeds are expected to redeem TRMF’s secured railcar equipment notes, which had $877 million outstanding at March 31 and carried a blended average interest rate of 5.14%.

Both securitizations and the associated term loan agreement are expected to close and fund on or about June 15. Collectively, Trinity Industries maintains a 38% ownership in the partially-owned subsidiaries, and the associated refinancings are expected to reduce interest expense by approximately $25 million to $30 million on an annualized basis. During the second quarter, Trinity Industries will incur approximately $12 million in costs related to redemption premiums and unamortized loan costs associated with the outstanding debt.

As of March 31, Trinity Industries’ income tax receivable balance was $441 million, primarily due to the effects of the change in tax loss carryback provisions in the CARES Act. The company also received a $207 million income tax refund associated with the tax loss carryback for the 2019 tax year.