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Item 1.01
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Entry into a Material Definitive Agreement.
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On January 10, 2018, Fortress Transportation and Infrastructure Investors LLC (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) among the Company and Morgan Stanley & Co. LLC, Barclays Capital Inc. and Citigroup Global Markets Inc., as underwriters (collectively, the “Underwriters”). The following summary of certain provisions of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the complete Underwriting Agreement filed as Exhibit 1.1 hereto and incorporated herein by reference.
Pursuant to the Underwriting Agreement, subject to the terms and conditions expressed therein, the Company agreed to sell to the Underwriters an aggregate of 7,000,000 common shares (the “Shares”), par value $0.01 per share, representing limited liability company interests of the Company, in connection with a public offering (the “Offering”), at a price to the public of $18.65 per share (the “Offering Price”). In addition, the Company granted the Underwriters a 30-day option to purchase up to an additional 1,050,000 common shares at the Offering Price, less the underwriting discount (the “Underwriters’ Option”). The Shares were sold pursuant to a prospectus supplement, dated January 10, 2018, and related prospectus, dated February 24, 2017, each filed with the Securities and Exchange Commission (the “SEC”), relating to the Company’s automatic shelf registration statement on Form S-3 (File No. 333- 216247). In connection with the issuance of the Shares, Cravath, Swaine & Moore LLP provided the Company with the legal opinion attached to this Current Report on Form 8-K as Exhibit 5.1, which is incorporated by reference herein.
The Offering closed on January 16, 2018. Net proceeds received by the Company from the Offering were approximately $128 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the Offering for general corporate purposes, including the funding of future investments.
The Company has agreed to indemnify the Underwriters against certain liabilities, including certain liabilities under the Securities Act of 1933, as amended. If the Company is unable to provide the required indemnification, the Company has agreed to contribute to payments the Underwriters may be required to make in respect of those liabilities. In addition, the Underwriting Agreement contains customary representations, warranties and agreements of the Company.
Certain of the Underwriters and their affiliates have in the past provided, are currently providing and may in the future from time to time provide, investment banking and other financing, trading, banking, research, transfer agent and trustee services to the Company, its subsidiaries and its affiliates, for which they have in the past received, and may currently or in the future receive, fees and expenses. Certain affiliates of the Underwriters are lenders and serve other roles under the credit agreement, dated as of June 16, 2017, among the Company, certain lenders and issuing banks and JPMorgan Chase Bank, N.A., as administrative agent, and receive fees in connection with such roles.
Upon completion of the Offering, the Company granted to FIG LLC (the “Manager”) an option to purchase 700,000 of the Company’s common shares, representing 10% of the number of common shares issued and sold in the Offering, at an exercise price per share equal to the Offering Price (the “Manager Option”). If the Underwriters exercise the Underwriters’ Option, the Company will grant an additional option to the Manager to purchase a number of the Company’s common shares equal to 10% of the number of common shares issued and sold to the Underwriters in connection with such exercise, at an exercise price per share equal to the Offering Price (each, an “Additional Manager Option”). The Manager Option and the Additional Manager Options have been approved by the compensation committee of the Company’s board of directors to be granted pursuant to and in accordance with the terms of the Management and Advisory Agreement, dated as of May 20, 2015, among the Company, the Manager and the other parties thereto and the Fortress Transportation and Infrastructure Investors Nonqualified Stock Option and Incentive Award Plan (the “Incentive Plan”), each as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and the Form of Award Agreement described below.
In accordance with the terms of the Incentive Plan and the Form of Award Agreement, the Manager Option is, and any Additional Manager Option will be, fully vested as of the date of grant and will become exercisable as to 1/30 of the shares subject to the Manager Option or any Additional Manager Option, as applicable, on the first day of each of the 30 calendar months following the date of the grant, and will terminate on the tenth anniversary of the date of grant. In the event of a “change in control”, as defined in the Form of Award Agreement, or a termination of the services of the Manager to the Company, the Manager Option and any Additional Manager Option will immediately become fully exercisable. The foregoing description of the Manager Option and the Additional Manager Options does not purport to be complete and is qualified in its entirety by reference to the complete Form of Award Agreement filed as Exhibit 10.1 hereto and incorporated herein by reference.