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| TRN > SEC Filings for TRN > Form 8-K on 5-Nov-2009 | All Recent SEC Filings |
5-Nov-2009
Creation of a Direct Financial Obligation or an Obligation under an Off-Ba
On November 5, 2009, Trinity Rail Leasing VII LLC, a Delaware limited liability company ("TRL-VII") and a limited purpose, indirect wholly-owned subsidiary of Trinity Industries, Inc. (the "Company"), owned by the Company through the Company's wholly-owned subsidiary Trinity Industries Leasing Company ("TILC"), issued $238,262,640 in aggregate principal amount of Secured Railcar Equipment Notes, Series 2009-1 (the "Notes"). The Notes were issued pursuant to an Indenture, dated as of November 5, 2009 between TRL-VII and Wilmington Trust Company, as indenture trustee (the "Indenture Trustee"). The Notes bear interest at a fixed rate of 6.657% per annum, payable monthly, and have a stated final maturity date of November 16, 2039.
The Notes are obligations of TRL-VII only, secured by a portfolio of railcars and operating leases thereon acquired and owned by TRL-VII (the "Railcar Portfolio"), certain cash reserves, and other assets of TRL-VII. The Notes were sold to initial purchasers in an offering made under Rule 144A of the Securities Act of 1933 and Regulation S thereunder, pursuant to a note purchase agreement as described in the Company's filing under Form 8-K dated October 29, 2009 relating to the Entry into a Material Definitive Agreement.
While the stated final maturity of the Notes is November 16, 2039, cash flow from TRL-VII'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 final stated 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 were to eventually exceed the depreciated value of the Railcar Portfolio. The decision whether to accelerate or exercise other remedies against TRL-VII and its assets will be under the control of holders representing a majority of the outstanding principal balance of the Notes.
TRL-VII purchased a portion of the Railcar Portfolio directly from TILC, and purchased the remainder of the Railcar Portfolio from another indirect wholly-owned limited purpose finance subsidiary of TILC and the Company, Trinity Rail Leasing Warehouse Trust ("TRLWT"). TRLWT has used its sale proceeds to repay approximately $142.5 million of borrowings under TRLWT's secured warehouse credit facility, and TILC will use its sale proceeds for its general corporate purposes.
As noted above, the Notes are solely the obligations of TRL-VII. TILC has, however, entered into certain agreements relating to its own and TRLWT's transfer of the Railcar Portfolio to TRL-VII, and the management and servicing of TRL-VII's assets. These agreements contain certain representations, undertakings and indemnities customary for asset sellers and service providers in transactions of this type. The Company has entered into a Parent Undertaking Agreement in favor of TRL-VII and the Indenture Trustee in support of the performance obligations of TILC under these agreements.
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