Item 1.01. Entry into a Material Definitive Agreement
On June 7, 2021, Percy Acquisitions LLC (“Holdco”), an indirect subsidiary of Fortress
Transportation and Infrastructure Investors LLC (the “Company”), entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with United States Steel Corporation (the “Seller”), pursuant to which, among other things, Holdco will purchase
100% of the equity interests of the Seller’s wholly owned short-line railroad subsidiary, Transtar, LLC (“Transtar”) from the Seller, for a cash purchase price of $640
million, subject to certain customary adjustments set forth in the Purchase Agreement (the “Transaction”).
The Purchase Agreement contains customary representations, warranties, and covenants by the parties, including, among others, covenants (a) by the Seller regarding the
conduct of Transtar’s business during the period between the execution of the Purchase Agreement and closing of the Transaction, (b) by the Seller and Transtar to effect certain asset transfer and corporate restructuring transactions, (c) by Holdco
to file a Notice of Exemption with the Surface Transportation Board (“STB”) for the final approval, authorization or exemption, as applicable, of the Transaction and (d)
by Holdco and the Seller regarding the efforts of the parties to cause the Transaction to be completed. In addition, Holdco and the Seller each agree to indemnify the other party from and after the closing of the Transaction for losses arising from
certain breaches under the Purchase Agreement and damages for certain other matters as further described in the Purchase Agreement.
The consummation of the Transaction is subject to certain customary closing conditions, including, among others, (a) the final approval, authorization or exemption, as
applicable, of the Transaction by the STB, (b) the absence of any order or applicable law adopted after the date of the Purchase Agreement enjoining, prohibiting or rendering illegal the consummation of the Transaction, (c) the absence of any
pending legal proceeding commenced by a governmental authority seeking to enjoin, prohibit or render illegal the consummation of the Transaction or impose certain material regulatory concessions on Holdco or Transtar and its subsidiaries, (d) the
absence of any order or applicable law adopted after the date of the Purchase Agreement imposing certain material regulatory concessions on Holdco or Transtar and its subsidiaries, (e) the accuracy of each party’s representations and warranties
contained in the Purchase Agreement (subject to certain materiality qualifiers) and (f) each party’s performance and compliance in all material respects with their respective obligations and covenants under the Purchase Agreement. Holdco intends to
obtain third party debt financing to fund the purchase price and has provided the Seller with customary financing commitment letters, however, Holdco’s receipt of such financing is not a condition to closing of the Transaction.
Either Holdco or the Seller may exercise certain customary termination rights under the Purchase Agreement. As described in the Purchase Agreement, in certain
circumstances, Holdco will be required to pay the Seller a termination fee of $32 million if (a) the parties are unable to consummate the Transaction due to a failure to obtain approval, authorization or exemption, as applicable, of the Transaction
by the STB or (b) Holdco fails to consummate the closing of the Transaction on the date it should have otherwise occurred because Holdco’s debt financing is not available.
In connection with the closing of the Transaction, the Seller, on the one hand, and Transtar or Holdco (or their respective affiliates), on the other hand, will enter
into certain ancillary agreements including, among others, a transition services agreement and a railway services agreement (the “Railway Services Agreement”). Under the
Railway Services Agreement, for an initial term of 15 years from and after the closing of the Transaction, and subject to periodic 10-year extensions thereafter at the Seller’s discretion, with minimum volume commitments for the first five years,
Transtar will continue to provide the Seller with certain services at the Seller’s facilities in and around Gary, Indiana, Pittsburgh, Pennsylvania, Fairfield, Alabama, Ecorse, Michigan, Lorain, Ohio and Lone Star, Texas, including but not limited
to: railcar maintenance and repair services, locomotive maintenance, inspection and repair services, maintenance-of-way services, car management services, and rail and material handling services.
In connection with the Purchase Agreement, the Company entered into a debt commitment letter (the “Commitment
Letter”), dated as of June 7, 2021, with Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”) and Barclays Bank PLC (“Barclays” and, together with Morgan Stanley, the “Commitment Parties”), pursuant to which the Commitment Parties have
committed to provide the Company with a senior unsecured bridge term loan facility (the “Bridge Facility”) in an aggregate principal amount of up to $650 million in order
to finance the Transaction and pay fees and expenses related thereto. The funding of the Bridge Facility is subject to the satisfaction of customary conditions, including (i) the execution and delivery of definitive documentation with respect to
the Bridge Facility in accordance with the terms set forth in the Commitment Letter and (ii) the consummation of the Transaction in accordance with the Purchase Agreement.
The summary of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of Exhibit 10.1 filed herewith,
which is incorporated herein by reference.
The Purchase Agreement has been filed as an exhibit to provide investors and security holders with information regarding its terms and is not intended to provide any
factual information about Holdco, Transtar or the Seller. The representations, warranties and covenants in the Purchase Agreement were made only for the purpose of the Purchase Agreement and solely for the benefit of the parties to the Purchase
Agreement as of specific dates. Such representations, warranties and covenants may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, may or
may not have been accurate as of any specific date, and may be subject to important limitations and qualifications (including exceptions thereto set forth in any schedules agreed to by the contracting parties) and may therefore not be complete. The
representations, warranties and covenants in the Purchase Agreement may also be subject to standards of materiality applicable to the contracting parties that may differ from those applicable to investors. Investors should not rely on the
representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Holdco, Transtar or the Seller or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.