Financing for US$2 billion worth of railcars to be provided over the next two years
TORONTO, Dec. 9, 2013 /CNW/ - Element Financial Corporation (TSX: EFN) ("Element" or "the Company"), one of North America's leading equipment finance companies, today announced that it has entered into a strategic alliance agreement (the "Agreement") with Dallas-based Trinity Industries, Inc. (NYSE:TRN) ("Trinity"), the leading railcar manufacturer and lessor in North America, to provide lease financing for up to US$2 billion worth of railcars over the next two years.
Under the terms of the Agreement, Element will be presented with preferred opportunities to enter into lease financings for a diversified fleet of railcars - including new railcars to be manufactured by Trinity, existing railcars from Trinity's lease fleet as well as secondary market purchases. The identification of railcar assets that meet Element's portfolio requirements will be based on various diversification criteria including limits on railcar type, use, lease duration, average age and credit quality of the lessee. Offers of qualifying railcar assets are to be made to Element on a quarterly basis for the duration of the Agreement and are subject to acceptance by Element. Trinity will also provide Element with advisory services and, in conjunction with Element, will act as servicer with responsibility for leasing sales, lease renewals, the provision of maintenance services and portfolio balancing in respect of the railcar lease portfolio.
"This agreement significantly advances Element's growth strategy by positioning us with North America's leading railcar manufacturer in a strategic alliance that is expected to substantially increase our current portfolio of finance assets over the next two years," noted Steven K. Hudson, Element's Chairman and CEO. "Railcar financing complements our other core equipment financing verticals by offering attractive yields, access to reliable and proven funding structures, efficient originating and operating costs and low credit losses backed by long life assets that are in high demand," added Mr. Hudson.
"We are excited to form this strategic alliance with Element, which shares Trinity's long-term view regarding the attractive nature of investing in leased railcars," said D. Stephen Menzies, Trinity Industries, Inc. Senior Vice President and the group president responsible for Trinity's railcar manufacturing and leasing businesses. "This agreement is an extension of the railcar financing relationship that Trinity has had with Element's senior leadership team which began more than two decades ago," added Mr. Menzies.
The inauguration of the Agreement will commence with Element's acquisition of approximately US$100 million of existing railcar assets currently under lease to a diversified Trinity customer base of US-based shippers and Class 1 railways. This initial financing and acquisition is expected to be completed on or before December 31, 2013, subject to customary conditions precedent, with the next tranche expected to close by the end of the first quarter of 2014.
About Element Financial Corporation
With total assets of approximately $2.7 billion, Element Financial Corporation is one of North America's leading equipment finance companies. Element operates across North America in three verticals of the equipment finance market - Element Capital provides large ticket equipment financing, Element Finance serves the mid-ticket equipment finance market and Element Fleet provides vehicle fleet leasing and management solutions.
About Trinity Industries, Inc.
Trinity Industries, Inc., headquartered in Dallas, Texas, is a diversified industrial company that owns market-leading businesses which provide products and services to the energy, transportation, chemical and construction sectors. Trinity reports its financial results in five principal business segments: the Rail Group, the Railcar Leasing and Management Services Group, the Inland Barge Group, the Construction Products Group, and the Energy Equipment Group. For more information, visit: www.trin.net.
This release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. Forward-looking statements in this release include those related to the expected financings under the Agreement, the anticipated increase in Element's finance assets in the future and the completion of the initial conveyance under the Agreement. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Element, including risks regarding the equipment finance industry, economic factors and many other factors beyond the control of Element. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
SOURCE: Element Financial Corporation
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