Item 1.01
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Entry into a Material Definitive Agreement.
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Indenture
On September 18, 2018, Fortress Transportation and Infrastructure Investors LLC (the “Company”) closed its previously announced private offering of $300.0 million aggregate principal amount of 6.50% senior unsecured notes due 2025 (the “Notes”). The Notes were issued pursuant to an indenture, dated as of September 18, 2018 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The Company is filing the Indenture as Exhibit 4.1 to this Current Report on Form 8-K.
The Notes are senior unsecured obligations of the Company, which rank equal in right of payment with all existing and future senior unsecured indebtedness of the Company and senior in right of payment to all existing and future subordinated indebtedness of the Company. The Notes will be effectively subordinated to all existing and future secured indebtedness of the Company to the extent of the value of the assets securing that indebtedness, and will be structurally subordinated to the liabilities of each subsidiary of the Company that does not guarantee the Notes. The Notes will not be guaranteed initially by any of the Company’s subsidiaries or any third party.
The Notes will bear interest at a rate of 6.50% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2019, to persons who are registered holders of the Notes on the immediately preceding March 15 and September 15, respectively.
The Indenture limits the ability of the Company and its restricted subsidiaries to, among other things, incur indebtedness, encumber their assets, make restricted payments, create dividend restrictions and other payment restrictions that affect the Company’s restricted subsidiaries, permit restricted subsidiaries to incur or guarantee certain indebtedness, enter into transactions with affiliates and sell assets, in each case subject to certain qualifications set forth in the Indenture.
In the event of a Change of Control (as defined in the Indenture), each holder of the Notes will have the right to require the Company to repurchase all or any part of that holder’s Notes at a purchase price of 101% of the principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to, but not including, the date of such repurchase.
The Notes will mature on October 1, 2025. Prior to October 1, 2021, the Company may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, plus a “make-whole” premium. On or after October 1, 2021, the Company may redeem some or all of the Notes at any time at declining redemption prices (in each case expressed as a percentage of the principal amount on the redemption date) equal to (i) 103.250% beginning on October 1, 2021, (ii) 101.625% beginning on October 1, 2022 and (iii) 100.000% beginning on October 1, 2023 and thereafter, plus, in each case, accrued and unpaid interest, if any, to, but not including, the applicable redemption date. In addition, at any time on or prior to October 1, 2021, the Company may redeem up to 40% of the aggregate principal amount of the Notes using net proceeds from certain equity offerings at a redemption price equal to 106.50% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.
The foregoing description of the Indenture does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Indenture, a copy of which is attached hereto as Exhibit 4.1 and incorporated herein by reference.
The Notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and, unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The Company intends to use a portion of the net proceeds from the offering to repay $125.0 million of outstanding borrowings under the Company’s credit agreement dated as of June 16, 2017, as amended, and to pay related fees and expenses, with the remainder to be used for general corporate purposes, including the funding of future investments.