Delaware | | | |
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification Number) |
Title of each class to be so registered | | | Name of each exchange on which each class is to be registered |
Common Stock, par value $0.01 per share | | | The Nasdaq Capital Market |
Large accelerated filer | | | ☐ | | | Accelerated filer | | | ☐ |
Non-accelerated filer | | | ☒ | | | Smaller reporting company | | | ☐ |
| | | | Emerging growth company | | | ☒ |
* | The registrant is currently a Delaware limited liability company named FTAI Infrastructure LLC. Prior to the closing of this transaction, the registrant will be converted to a Delaware corporation and change its name to FTAI Infrastructure Inc. |
Exhibit Number | | | Exhibit Description |
2.1† | | | Form of Separation and Distribution Agreement between FTAI Infrastructure LLC and Fortress Transportation and Infrastructure Investors LLC. |
3.1† | | | Form of Certificate of Incorporation of FTAI Infrastructure Inc. |
3.2† | | | Form of Bylaws of FTAI Infrastructure Inc. |
4.1† | | | Specimen Common Stock Certificate of FTAI Infrastructure Inc. |
10.1† | | | Form of Management Agreement between FTAI Infrastructure Inc. and FIG LLC. |
10.2† | | | Form of Indemnification Agreement by and between FTAI Infrastructure Inc. and its directors and officers. |
10.3† | | | Form of FTAI Infrastructure Inc. Nonqualified Stock Option and Incentive Award Plan. |
10.4† | | | Form of Award Agreement pursuant to the FTAI Infrastructure Inc. Nonqualified Stock Option and Incentive Award Plan. |
10.5† | | | Form of Registration Rights Agreement among FTAI Infrastructure Inc., FIG LLC and Fortress Transportation and Infrastructure Master GP LLC. |
10.6 | | | Engineering, Procuring and Construction Agreement dated as of February 15, 2019, between Long Ridge Energy Generation LLC and Kiewit Power Constructors Co. (incorporated by reference to Exhibit 10.17 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 3, 2019). |
10.7 | | | Purchase and Sale of Power Generation Equipment and Related Services Agreement dated as of February 15, 2019, between Long Ridge Energy Generation LLC and General Electric Company (incorporated by reference to Exhibit 10.18 of Fortress Transportation and Infrastructure Investors LLC's Quarterly Report on Form 10-Q, filed on May 3, 2019). |
10.8 | | | First Lien Credit Agreement dated as of February 15, 2019, among Ohio River PP Holdco LLC, Ohio Gasco LLC, Long Ridge Energy Generation LLC, the lenders and issuing banks from time to time party thereto, and Cortland Capital Market Services LLC, as administrative agent (incorporated by reference to Exhibit 10.19 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 3, 2019). |
10.9 | | | Second Lien Credit Agreement dated as of February 15, 2019, among Ohio River PP Holdco LLC, Ohio Gasco LLC, Long Ridge Energy Generation LLC, the lenders from time to time party thereto, and Cortland Capital Market Services LLC, as administrative agent (incorporated by reference to Exhibit 10.20 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 3, 2019). |
10.10 | | | Credit Agreement, dated as of February 11, 2020, among Jefferson 2020 Bond Borrower LLC, as the borrower and Fortress Transportation and Infrastructure Investors LLC, acting through one or more affiliates, as the lender (incorporated by reference to Exhibit 10.15 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 1, 2020). |
10.11 | | | Senior Loan Agreement, dated as of February 1, 2020, between Port of Beaumont Navigation District of Jefferson County, Texas, as issuer and Jefferson 2020 Bond Borrower LLC, as borrower (incorporated by reference to Exhibit 10.16 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 1, 2020). |
10.12 | | | Deed of Trust, Security Agreement, Financing Statement and Fixture Filing, dated February 1, 2020, from Jefferson 2020 Bond Borrower LLC, as grantor, and Jefferson 2020 Bond Lessee LLC, as grantor, to Ken N. Whitlow, as Deed of Trust Trustee for the benefit of Deutsche Bank National Trust Company, as beneficiary (incorporated by reference to Exhibit 10.17 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 1, 2020). |
Exhibit Number | | | Exhibit Description |
10.13 | | | Amended and Restated Lease and Development Agreement, effective as of January 1, 2020, by and between Port of Beaumont Navigation District of Jefferson County, Texas, as lessor, and Jefferson 2020 Bond Lessee LLC, as lessee (incorporated by reference to Exhibit 10.18 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on May 1, 2020). |
10.14 | | | Membership Interest Purchase Agreement, dated June 7, 2021, by and between United States Steel Corporation and Percy Acquisition LLC (incorporated by reference to Exhibit 10.1 of Fortress Transportation and Infrastructure Investors LLC’s Current Report on Form 8-K, filed on June 8, 2021). |
10.15 | | | Railway Services Agreement, dated July 28, 2021, by and among United States Steel Corporation, Transtar, LLC, Delray Connecting Railroad Company, Fairfield Southern Company, Inc., Gary Railway Company, Lake Terminal Railroad Company, Texas & Northern Railroad Company and Union Railroad Company, LLC (incorporated by reference to Exhibit 10.22 of Fortress Transportation and Infrastructure Investors LLC’s Quarterly Report on Form 10-Q, filed on July 29, 2021). |
21.1† | | | List of Subsidiaries of FTAI Infrastructure Inc. |
99.1* | | | Information Statement of FTAI Infrastructure Inc., subject to completion, dated February 4, 2022. |
* | Filed herewith. |
† | To be filed by amendment. |
| | FTAI Infrastructure LLC | |||||||
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| | By: | | | |||||
| | | | Name: | | | Kevin Krieger | ||
| | | | Title: | | | Secretary |
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• | In connection with the spin, FTAI Infrastructure is expected to raise at least $500 million of debt financing and up to an additional $300 million of debt or equity financing, or a combination thereof, the proceeds of which will be distributed to FTAI in connection with the spin-off (the “New Financing”). |
• | Fortress Worldwide Transportation and Infrastructure General Partnership (the “Partnership”) will establish the desired parent holding entity for the Infrastructure Subsidiaries. To accomplish this, among other transactions: |
○ | FTAI Energy Holdings LLC (which we refer to as “Jefferson”) will sell 100% of a subsidiary that holds aviation assets (which we refer to as “Air OpCo1”) to a subsidiary of FTAI that holds aviation assets (which we refer to as “Chromalloy”) in exchange for a note with an aggregate principal amount equal to (the “Chromalloy Note”); |
○ | The Partnership will divide into Aviation Holdco LLC (which we refer to as “Aviation Holdco”) and Infrastructure Holdco LLC (which we refer to as “Infrastructure Holdco”), with Infrastructure Holdco being a wholly-owned subsidiary of Aviation Holdco. Pursuant to the division, Aviation Holdco will be allocated the Aviation Subsidiaries, and Infrastructure Holdco will be allocated FTAI Infrastructure, the Infrastructure Subsidiaries and any other assets and liabilities related to the infrastructure business; |
○ | FTAI Infrastructure will convert to a Delaware corporation, FTAI Infrastructure Inc.; |
○ | Infrastructure Holdco will contribute 100% of the interests in Jefferson to FTAI Infrastructure; and |
○ | Infrastructure Holdco will merge into FTAI Infrastructure, with the latter surviving. |
• | Aviation Holdco will distribute 100% of the shares of FTAI Infrastructure to FTAI and Fortress Transportation and Infrastructure Master GP LLC (the “Master GP”) pro rata in accordance with FTAI and the Master GP's interests in Aviation Holdco, and FTAI will distribute to FTAI shareholders one share of FTAI Infrastructure per share of FTAI, representing FTAI’s entire interest in FTAI Infrastructure. Following the separation, FTAI shareholders will own % of FTAI Infrastructure and the Master GP will hold approximately % of FTAI Infrastructure, and the Master GP will not have any further rights to any additional economics of FTAI Infrastructure, other than the shares it will own following this spin-off. |
• | Following the separation, FTAI will continue to remain obligated under its existing debt agreements, which includes 6.50% senior notes due 2025, 9.75% senior notes due 2027, 5.50% senior notes due 2028, and a revolving credit agreement, and will retain the Aviation Subsidiaries; and FTAI Infrastructure will hold (i) the Infrastructure Subsidiaries and (ii) the Chromalloy Note. |
(1) | We will be externally managed by FIG LLC, an affiliate of Fortress Investment Group LLC, or Fortress, a leading global investment management firm. Fortress Transportation and Infrastructure Master GP LLC, or Master GP, is an affiliate of Fortress and prior to the spin-off was a partner of Fortress Worldwide Transportation and Infrastructure General Partnership. Following, the transaction, Master GP will only have an ownership interest in the Company as described below. |
(2) | Following the spin-off: (i) Master GP will own shares of common stock of FTAI Infrastructure, or % of the total shares outstanding following the spin-off, and the Master GP will not have any further rights to any additional economics of FTAI Infrastructure, (ii) Principal Holdings I LP will hold 748,644 shares of FTAI Infrastructure, or % of the total shares outstanding following the spin-off , and (iii) our Manager will own [•] options to purchase shares of common stock of FTAI Infrastructure. Principal Holdings I LP is a subsidiary of Fortress Investment Group LLC. |
• | Creates two independent companies, each with the opportunity to pursue growth through the execution of distinctly different business plans. We and FTAI’s board of directors believe that having two independent companies with distinct investment profiles will maximize the strategic focus and financial flexibility of each company to grow and return capital to stockholders. We and FTAI’s board of directors believe that the two businesses, each with a clear focus, strong, independent boards of directors, and strengthened balance sheets, will create greater shareholder value as two companies than as one. |
• | Enhances investor transparency, better highlights the attributes of both companies, and provides investors with the option to invest in one or both companies. The separation will provide each shareholder the opportunity to make an individual allocation of capital to one or both of the two differentiated businesses, each with a distinct investment risk/return profile. In addition, we and FTAI’s board of directors believe the separation will make FTAI Infrastructure and FTAI more competitive and appealing to a broader investor audience moving forward, providing them with the opportunity to invest in two companies with compelling value propositions and distinct investment strategies. Investors can increase their allocation to FTAI Infrastructure or to FTAI, depending on their preference. |
• | Tailored capital structure and financing options. Each company will have the flexibility to create a capital structure tailored to its needs, and each may be able to attain more favorable financing terms separately. In addition, tailored capital structures will facilitate each company’s ability to pursue acquisitions, possibly using common stock, and other strategic alliances. |
• | Stock ownership. We believe the conversion of FTAI Infrastructure to a Delaware corporation and the subsequent spin-off of FTAI Infrastructure will make it easier for both domestic and international investors to own its stock and help simplify shareholders’ tax reporting, which we expect should provide for significant growth potential for our shareholders. In addition, FTAI’s subsequent restructuring from a publicly traded partnership to a corporation is also expected to provide for significant growth potential for FTAI’s shareholders. |
• | Anticipated benefits of the separation may not be realized. Following the separation, FTAI Infrastructure and FTAI will be independent companies. FTAI Infrastructure and/or FTAI may not be able to achieve some or all of the benefits that it expects to achieve as a company independent from the other in the time it expects, if at all. |
• | There may be disruptions to the business as a result of the separation. The actions required to separate FTAI Infrastructure and FTAI could disrupt FTAI Infrastructure’s and FTAI’s operations after the separation. The separation and distribution may divert management’s time and attention, which could have a material adverse effect on the business, results of operations, financial condition and cash flows. |
• | Costs of the Separation. FTAI Infrastructure and FTAI will incur costs in connection with the transition to being separate public companies that include accounting, tax, legal and other professional service costs. In addition, FTAI Infrastructure and FTAI will incur costs in connection with operating as separate, stand-alone public companies that the combined company otherwise shared, such as expenses associated with reporting and compliance as public companies and separate management and incentive fees, working capital requirements, overhead, insurance, financing and other operating costs, as well the potentially higher cost of capital as separate companies. |
• | There may be conflicts between FTAI Infrastructure and FTAI. There may be, or there may be the appearance of, conflicts of interest in FTAI Infrastructure’s relationship with FTAI. We expect certain directors to overlap at least at the outset and we expect that, if and to the extent matters come before the board as to which there is a conflict between the two companies, that the companies would take appropriate steps so that decisions with respect to such matters are made by disinterested and independent directors. The agreements between FTAI and us, if any, generally will not limit or restrict FTAI or its affiliates from engaging in any business or managing other entities that engage in business of the type conducted by us. Actual, potential, or perceived conflicts could give rise to investor dissatisfaction, settlements with stockholders, litigation, or regulatory inquiries or enforcement actions. |
Type | | | Description |
Management Fee | | | We will pay a management fee equal to 1.5% per annum of our gross equity, which will be calculated and payable monthly in arrears in cash. Gross equity is generally the equity invested by FTAI as of the distribution date, plus total net proceeds from stock offerings, plus certain capital contributions to subsidiaries, less capital distributions (calculated without regard to depreciation and amortization) and repurchases of common stock. |
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Incentive Compensation | | | Under the terms of the Management Agreement, our Manager will be entitled to an incentive fee (the “Incentive Fee”), in an amount to be determined prior to the spin-off. |
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Reimbursement of Expenses | | | We will pay all of our operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The expenses required to be paid by us include, but are not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, costs and expenses incurred in contracting with third parties (including affiliates of the Manager), the costs of printing and mailing proxies and reports to our stockholders, costs incurred by the Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that is used by us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent. |
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| | We will pay or reimburse the Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants. The Manager is responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Manager’s employees, rent for facilities and other “overhead” expenses; we will not reimburse the Manager for these expenses. | |
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Termination Fees | | | If we terminate the Management Agreement, we will generally be required to pay the Manager a termination fee. The termination fee is equal to the amount of the management fee during the 12 months immediately preceding the date of the termination. In addition, an Incentive Fee will be payable to the Manager if the Manager is removed due to the termination of the Management Agreement in certain specified circumstances. The Incentive Fee is an amount equal to . |
• | We have no operating history as an independent company and may not be able to successfully execute our business strategy, generate sufficient revenue to make or sustain distributions to our stockholders or meet our contractual commitments. |
• | The financial information included in this Information Statement may not be indicative of the results we would have achieved as a separate stand-alone company and are not a reliable indicator of our future performance or results. |
• | A pandemic, including the coronavirus disease (“COVID-19”), could have an adverse impact on our business, financial condition, and results of operations. |
• | Uncertainty relating to macroeconomic conditions may reduce the demand for our assets, limit our ability to obtain additional capital to finance new investments, or refinance existing debt, or have other unforeseen negative effects. |
• | The industries in which we operate have experienced periods of oversupply during which lease rates and asset values have declined, particularly during the most recent economic downturn, and any future oversupply could materially adversely affect our results of operations and cash flows. |
• | There can be no assurance that any target returns will be achieved. |
• | Contractual defaults may adversely affect our business, prospects, financial condition, results of operations and cash flows by decreasing revenues and increasing storage, positioning, collection, recovery and lost equipment expenses. |
• | If we acquire a high concentration of a particular type of asset, or concentrate our investments in a particular sector, our business, prospects, financial condition, results of operations and cash flows could be adversely affected by changes in market demand or problems specific to that asset or sector. |
• | We may not generate a sufficient amount of cash or generate sufficient free cash flow to fund our operations or repay our indebtedness. |
• | We are dependent on our Manager and other key personnel at Fortress and may not find suitable replacements if our Manager terminates the Management Agreement or if other key personnel depart. |
• | There are conflicts of interest in our relationship with our Manager. |
• | Our directors have approved a broad asset acquisition strategy for our Manager and will not approve each acquisition we make at the direction of our Manager. In addition, we may change our strategy without a stockholder vote, which may result in our acquiring assets that are different, riskier or less profitable than our current assets. |
• | Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our assets. |
• | Our Manager’s due diligence of potential asset acquisitions or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations. |
• | We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from FTAI. |
• | Our agreements with FTAI may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties. |
• | The ownership by some of our executive officers and directors of common shares, options, or other equity awards of FTAI may create, or may create the appearance of, conflicts of interest. |
• | We may compete with affiliates of or entities managed by our Manager, including FTAI, which could adversely affect our and their results of operations. |
• | We will share certain key directors and officers with FTAI, which means those officers will not devote their full time and attention to our affairs and the overlap may give rise to conflicts. |
• | We expect to incur indebtedness in connection with the separation from FTAI, and the degree to which we will be leveraged could cause a material adverse effect on our business, financial condition, results of operations and cash flows. |
• | The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders. |
• | There can be no assurance that the market for our stock will provide you with adequate liquidity. |
• | Substantial sales of common stock may occur in connection with the distribution, which could cause our stock price to decline. |
• | We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors. |
• | Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price. |
• | Your percentage ownership in our company may be diluted in the future. |
What is FTAI Infrastructure Inc. and why is FTAI separating its business and distributing FTAI Infrastructure common stock? | | | FTAI Infrastructure LLC, a Delaware limited liability company and subsidiary of FTAI, was formed on December 13, 2021, and will convert to FTAI Infrastructure Inc., a Delaware corporation, to hold, directly or indirectly, all of FTAI's infrastructure business, comprised of (i) the Jefferson Terminal, a multi-modal crude oil and refined products terminal in Beaumont, Texas, (ii) Repauno, a deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities, (iii) Long Ridge, an equity method investment in a multi-modal terminal located along the Ohio River with multiple industrial development opportunities, including a power plant, (iv) Transtar, comprising five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities, (v) Aleon and Gladieux, an equity method investment in two ventures developing battery and metal recycling technology, (vi) KRS, a tank car cleaning and repair business, (vii) Clean Planet USA, a green-tech company that is developing recycling facilities to process traditionally non-recyclable waste plastics in key North American markets, (viii) FYX, an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries, (ix) CarbonFree, a business that develops technologies to capture carbon dioxide from industrial emissions sources and (x) Containers, which consists of containers that are owned and leased. As part of the spin-off, these infrastructure businesses will be contributed to or merged into a new holding company which will result in the infrastructure business being considered the predecessor of the newly formed FTAI Infrastructure. Following the completion of the spin-off, FTAI plans to undertake a merger transaction, subject to shareholder approval, pursuant to which FTAI will merge with and into a corporate subsidiary of FTAI and FTAI shareholders will receive stock in a corporation that holds the Aviation Subsidiaries. The separation of FTAI Infrastructure from FTAI and the distribution of FTAI Infrastructure common stock are intended to create two independent companies, enhance investor transparency, better highlight the attributes of both companies and allow for tailored capital structure and financing options. FTAI and FTAI Infrastructure expect that the separation will result in enhanced long-term performance of each business for the reasons discussed in the section entitled “Our Spin-Off from FTAI—Reasons for the Spin-Off.” In connection with the spin-off transaction, FTAI is being treated as the accounting spinnor, consistent with the legal form of the transaction. |
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Why am I receiving this document? | | | You are receiving this document because you are a holder of FTAI common shares on the record date for the distribution and, as such, will be entitled to receive shares of FTAI Infrastructure common stock upon completion of the transactions described in this Information Statement. We are sending you this document to inform you about the spin-off and to provide you with information about FTAI Infrastructure and its business and operations upon completion of the spin-off. |
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Who is entitled to receive the distribution and what will they receive? | | | Holders of FTAI common shares as of , 2022, the record date of the spin-off, will be entitled to receive shares of our common stock. For each FTAI common share held on the record date, FTAI common shareholders will receive one share of FTAI Infrastructure common stock. |
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| | Immediately after the distribution, holders of FTAI common shares as of the record date will hold all of the outstanding shares of our common stock. Based on the number of FTAI common shares outstanding on , 2022, FTAI expects to distribute approximately shares of our common stock in the spin-off. |
Why is the spin-off of FTAI Infrastructure structured as a distribution? | | | FTAI believes that a distribution of our common stock is an efficient way to separate our assets from the rest of FTAI’s portfolio and that the spin-off will create benefits and value for us and FTAI. For more information on the reasons for the spin-off, see “Our Spin-Off from FTAI—Reasons for the Spin-Off.” |
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What business will FTAI Infrastructure engage in after the spin-off? | | | FTAI Infrastructure will continue to focus on investments in infrastructure assets. For more detail on FTAI Infrastructure’s business, see “Business.” |
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When will the distribution occur? | | | We expect that FTAI will distribute the shares of our common stock on , 2022 to holders of record of FTAI common shares on , 2022, subject to certain conditions described under “Our Spin-Off from FTAI—Conditions to the Distribution.” |
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What do I need to do to receive my shares of FTAI Infrastructure common stock? | | | As long as you hold FTAI common shares as of the record date, you will not need to take any action to receive common stock of FTAI Infrastructure in the distribution. You will not be required to make any payment, surrender or exchange your FTAI common shares or take any other action to receive your shares of our common stock. No shareholder approval of the distribution is required or sought. We are not asking you for a proxy, and you are requested not to send us a proxy. However, if you sell FTAI common shares in the “regular-way” market through the distribution date, you will also be selling your right to receive shares of FTAI Infrastructure common stock in the distribution. For more information, see “Our Spin-Off from FTAI—Market for Common Stock—Trading Between the Record Date and Distribution Date” in this Information Statement. Following the distribution, shareholders whose shares are held in book-entry form may request that their shares of FTAI Infrastructure common stock held in book-entry form be transferred to a brokerage or other account at any time, without charge. |
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What will govern my rights as an FTAI Infrastructure stockholder? | | | Your rights as an FTAI Infrastructure stockholder will be governed by Delaware law, as well as our certificate of incorporation and our bylaws. There are no material changes in stockholder rights between the stockholder rights at FTAI and FTAI Infrastructure. A description of these rights is included in this Information Statement under the heading “Description of Our Capital Stock.” |
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Will I be taxed on the shares of FTAI Infrastructure common stock that I receive in the distribution? | | | In general, for U.S. federal income tax purposes, your receipt of FTAI Infrastructure common stock is not expected to be taxable. However, the tax consequences to you of the spin-off will depend on your individual situation, and certain shareholders may be subject to different consequences than those described herein. You are urged to consult with your tax advisor as to the particular tax consequences of the distribution to you, including the applicability of any U.S. federal, state, local and non-U.S. tax laws. For more information, see “U.S. Federal Income Tax Consequences of the Spin-Off,” included elsewhere in this Information Statement. |
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Can FTAI decide to cancel the distribution of the common stock even if all the conditions have been met? | | | Yes. Although the distribution is subject to the satisfaction or waiver of certain conditions, see “Our Spin-Off from FTAI—Conditions to the Distribution” included elsewhere in this Information Statement, FTAI has the right not to complete the distribution if at any time prior to the distribution date (even if all of the conditions are satisfied), its board of directors determines, in its sole discretion, that the distribution is not in the best interests of FTAI or that market conditions are such that it is not advisable to separate FTAI Infrastructure from FTAI. |
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| | The conditions to the distribution are that: (i) our registration statement on Form 10, of which this Information Statement is a part, shall have become effective under the Exchange Act, and no stop order relating to the registration statement shall be in effect; (ii) all other actions and filings necessary or appropriate under applicable federal or state securities laws and state blue sky laws in connection with the transactions shall |
| | have been taken; (iii) an independent appraisal firm or firms acceptable to FTAI shall have delivered one or more opinions to the board of directors of FTAI confirming the solvency and financial viability of FTAI and FTAI Infrastructure after consummation of the distribution, and such opinions shall be acceptable to FTAI in form and substance in FTAI’s sole discretion and such opinions shall not have been withdrawn or rescinded; (iv) the listing of our common stock on the Nasdaq shall have been approved, subject to official notice of issuance; (v) the Restructuring Transactions shall have been completed; (vi) the ancillary agreements shall have been executed and delivered by each of FTAI and us, as applicable, and no party to any of the ancillary agreements will be in material breach of any such agreement; (vii) any material governmental and third-party approvals shall have been obtained and be in full force and effect; and (viii) no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect. We cannot assure you that all of the conditions will be satisfied or waived. In addition, if the separation is completed and FTAI’s board of directors waives any such condition, such waiver could have a material adverse effect on FTAI’s and FTAI Infrastructure’s respective business, financial condition or results of operations, including, without limitation, as a result of illiquid trading due to the failure of FTAI Infrastructure common stock to be accepted for listing, litigation relating to any preliminary or permanent injunctions that sought to prevent the consummation of the separation, or the failure of FTAI or FTAI Infrastructure to obtain any required regulatory approvals. As of the date hereof, the board of directors of FTAI does not intend to waive any of the conditions described herein and would only consider such a waiver if it determined that such action was in the best interests of FTAI and its stockholders. | |
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| | The fulfillment of the above conditions will not create any obligation on behalf of FTAI to effect the separation. Until the separation has occurred, FTAI has the right to terminate the separation, even if all the conditions have been satisfied, if the board of directors of FTAI determines, in its sole discretion, that the separation is not in the best interests of FTAI and its stockholders or that market conditions or other circumstances are such that the separation of FTAI Infrastructure and FTAI is no longer advisable at that time. | |
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Does FTAI Infrastructure plan to pay dividends? | | | We intend to make regular quarterly dividends to holders of our common stock out of assets legally available for this purpose, subject to satisfactory financial performance and approval by our board of directors. However, our ability to pay dividends is subject to a number of risks and uncertainties, including actual results of operations, liquidity and financial condition restrictions under Delaware law, our financial condition, our taxable income, our operating expenses and other factors our directors may deem relevant. As such, there can be no assurance regarding whether we will pay dividends in the future. For more information, see “Dividend Policy” included elsewhere in this Information Statement. |
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How will distributions from FTAI Infrastructure be treated for U.S. federal income tax purposes? | | | For U.S. federal income tax purposes, distributions from FTAI Infrastructure following the spin-off are generally expected to be treated as dividends to the extent paid out of FTAI Infrastructure’s current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, with any excess dividends treated as return of capital to the extent of the stockholder’s basis (thereby reducing that basis) and as capital gain from the sale of FTAI Infrastructure stock thereafter. Such dividends are generally expected to be treated as “qualified dividend income” in the case of non-corporate holders and as eligible for the dividends received deduction in the case of corporate holders, in each case subject to holding period and other requirements. |
| | Non-U.S. stockholders may be subject to 30% withholding tax on distributions to the extent of FTAI Infrastructure's earnings and profits, subject to potential reduction by treaty. |
| | Because FTAI Infrastructure is expected to be a U.S. real property holding corporation, withholding may be required equal to 15% of any distribution to a non-U.S. stockholder that exceeds FTAI Infrastructure’s earnings and profits if either FTAI Infrastructure common stock is not then treated as regularly traded on an established securities market. Non-U.S. stockholders should consult their own tax advisors with respect to the tax consequences and reporting requirements related to distributions and gains under the tax laws of the United States and of their jurisdiction of residence. For more information, see “U.S. Federal Income Tax Considerations,” included elsewhere in this Information Statement. | |
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Will FTAI Infrastructure have any debt? | | | Yes. We expect to enter into the New Financing, which is expected to raise at least $500 million of debt financing and up to an additional $300 million of debt or equity financing, or a combination thereof, the proceeds of which will be distributed or otherwise transferred to FTAI in connection with the spin-off, under a credit agreement with . FTAI Infrastructure may also seek other forms of financing. In addition, certain of our subsidiaries will continue to be obligated under a revolving credit facility (the “DRP Revolver”) that provides for revolving loans in the aggregate amount of $25.0 million and the Tax Exempt Series 2020 Bonds. For additional information relating to our planned financing arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” included elsewhere in this Information Statement. |
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What will the spin-off cost? | | | FTAI intends to incur pre-tax costs of approximately $ million to $ million in connection with the spin-off. |
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How will the spin-off affect my tax basis and holding period in FTAI common shares? | | | Your tax basis in FTAI common shares held at the time of the distribution generally will be reduced (but not below zero) by FTAI’s tax basis immediately prior to the distribution in the FTAI Infrastructure common stock received by you. Your holding period for such FTAI common shares will not be affected by the distribution. FTAI may not be able to advise stockholders of the tax basis of the distributed shares until after the spin-off occurs. For more information, see “U.S. Federal Income Tax Consequences of the Spin-Off,” included elsewhere in this Information Statement. |
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What will my tax basis and holding period be for common stock of FTAI Infrastructure that I receive in the distribution? | | | Your tax basis in FTAI Infrastructure common stock received in the spin-off will generally be equal to the lesser of (i) FTAI’s basis in such stock on the distribution date, and (ii) your tax basis in FTAI common shares immediately prior to the distribution. FTAI may not be able to advise stockholders of its basis in FTAI Infrastructure common stock until after the spin-off occurs. |
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| | Your holding period in FTAI Infrastructure common stock received in the spin-off will generally equal FTAI’s holding period in FTAI Infrastructure common stock, which may be divided into blocks. For more information, see “U.S. Federal Income Tax Consequences of the Spin-Off,” included elsewhere in this Information Statement. | |
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What will be the relationships between FTAI and FTAI Infrastructure following the spin-off? | | | Before the spin-off, we will enter into a Separation and Distribution Agreement to effect the spin-off. This agreement will provide for the allocation between us and FTAI of FTAI’s assets, liabilities and obligations attributable to periods prior to the spin-off. We cannot assure you that this agreement will be on terms as favorable to us as agreements with independent third parties. For more information, see “Certain Relationships and Related Party Transactions” included elsewhere in this Information Statement. |
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Will I receive physical certificates representing shares of FTAI Infrastructure common stock following the spin-off? | | | No. Following the spin-off, neither FTAI nor FTAI Infrastructure will be issuing physical certificates representing shares of FTAI Infrastructure common stock. Instead, FTAI, with the assistance of American Stock Transfer & Trust Company, LLC (“AST”), the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. The distribution agent will mail you a book-entry account statement that reflects your shares of |
| | FTAI Infrastructure common stock, or your bank or brokerage firm will credit your account for the shares. A benefit of issuing stock electronically in book-entry form is that there will be none of the physical handling and safekeeping responsibilities that are inherent in owning physical stock certificates. | |
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| | You should consult with your financial advisors, such as your stockbroker, bank or tax advisor. Neither FTAI nor FTAI Infrastructure makes any recommendations on the purchase, retention or sale of FTAI common shares or the FTAI Infrastructure common stock to be distributed. | |
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What if I want to sell my FTAI common shares or my FTAI Infrastructure common stock, and where will I be able to trade shares of FTAI Infrastructure common stock? | | | If you decide to sell any shares before the distribution, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your FTAI common shares, the FTAI Infrastructure common stock you will receive in the distribution, or both. There is not currently a public market for FTAI Infrastructure’s common stock. FTAI Infrastructure intends to list our common stock on the Nasdaq under the symbol “ .” We anticipate that trading in shares of our common stock will begin on a “when-issued” basis on or shortly before the record date and will continue through the distribution date and that “regular-way” trading in shares of our common stock will begin on the first trading day following the distribution date. If trading begins on a “when-issued” basis, you may purchase or sell our common stock up to and including through the distribution date, but your transaction will not settle until after the distribution date. If the distribution is cancelled, your transaction will not settle and will have to be disqualified. For more information, see “Our Spin-Off from FTAI—Market for Common Stock—Trading Between the Record Date and Distribution Date” included elsewhere in this Information Statement. |
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Will the number of FTAI common shares I own change as a result of the distribution? | | | No. The number of FTAI common shares you own will not change as a result of the distribution. |
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What will happen to the listing of FTAI common shares? | | | Nothing. It is expected that after the distribution of FTAI Infrastructure common stock, FTAI common shares will continue to be traded on the New York Stock Exchange under the symbol “FTAI.” |
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Will the distribution affect the market price of my FTAI shares? | | | Yes. As a result of the distribution, we expect the trading price of FTAI common shares immediately following the distribution to be lower than immediately prior to the distribution, because the trading price will no longer reflect the value of FTAI Infrastructure’s assets. Furthermore, until the market has fully analyzed the value of FTAI without FTAI Infrastructure’s assets, the price of FTAI common shares may fluctuate significantly. In addition, although FTAI believes that over time following the spin-off, the common shares and stock of the separated companies should have a higher aggregate market value than the combined company, on a fully distributed basis and assuming similar market conditions pre- and post-spin-off, there can be no assurance in this regard. It is possible that the combined trading prices of FTAI common shares and FTAI Infrastructure common stock after the distribution may be equal to or less than the trading price of FTAI common shares before the distribution. |
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Are there risks to owning FTAI Infrastructure common stock? | | | Yes. Our business is subject to a variety of risks that are described in the “Risk Factors” section of this Information Statement beginning on page 21. We encourage you to read that section carefully. |
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Where can FTAI shareholders get more | | | Before the distribution, if you have any questions relating to the distribution, you should contact: |
information? | | | |
| | Fortress Transportation & Infrastructure Investors LLC Investor Relations 1345 Avenue of the Americas, 45th Floor New York, NY 10105 Tel: (212) 798-6100 www.ftandi.com | |
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| | After the spin-off, if you have any questions relating to our common stock, you should contact: | |
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| | FTAI Infrastructure Inc. 1345 Avenue of the Americas, 45th Floor New York, NY 10105 Tel: (212) 798-6100 www. .com |
Distributing company | | | Fortress Transportation & Infrastructure Investors LLC. | ||||||
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| | After the distribution, FTAI will not own any shares of our common stock. | |||||||
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Distributed company | | | FTAI Infrastructure. | ||||||
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| | We are a Delaware limited liability company and, prior to the spin-off, a subsidiary of FTAI. Upon our conversion and the distribution, we will be an independent, publicly traded Delaware corporation. | |||||||
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Distribution ratio | | | Each holder of FTAI common shares will receive one share of our common stock for each FTAI common share held on , 2022. | ||||||
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Distributed securities | | | All of FTAI Infrastructure’s shares of common stock that are owned by FTAI, which will be % of FTAI Infrastructure common stock outstanding immediately prior to the distribution. | ||||||
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Record date | | | The record date for the distribution is the close of business on , 2022. | ||||||
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Distribution date | | | The distribution date is , 2022. | ||||||
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Distribution | | | On the distribution date, FTAI, with the assistance of AST, the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. You will not be required to make any payment, surrender or exchange your FTAI common shares or take any other action to receive your shares of our common stock. If you sell FTAI common shares in the “regular-way” market through the distribution date, you will be selling your right to receive shares of FTAI Infrastructure common stock in the distribution. Registered stockholders will receive additional information from the distribution agent shortly after the distribution date. Following the distribution, stockholders whose shares are held in book-entry form may request that their shares of FTAI Infrastructure common stock be transferred to a brokerage or other account at any time, without charge. Beneficial stockholders that hold shares through brokerage firms will receive additional information from their brokerage firms shortly after the distribution date. | ||||||
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Conditions to the distribution | | | The distribution of our common stock is subject to the satisfaction of the following conditions: | ||||||
| | | | • | | | our registration statement on Form 10, of which this Information Statement is a part, shall have become effective under the Exchange Act, and no stop order relating to the registration statement shall be in effect; | ||
| | | | • | | | all other actions and filings necessary or appropriate under applicable federal or state securities laws and state blue sky laws in connection with the transactions shall have been taken; | ||
| | | | • | | | an independent appraisal firm or firms acceptable to FTAI shall have delivered one or more opinions to the board of directors of FTAI confirming the solvency and financial viability of FTAI and FTAI Infrastructure after consummation of the distribution, and such opinions shall be acceptable to FTAI in form and substance in FTAI’s sole discretion and such opinions shall not have been withdrawn or rescinded; | ||
| | | | • | | | the FTAI Infrastructure common stock to be distributed in the separation shall have been accepted for listing on the Nasdaq, subject to |
| | | | | | compliance with applicable listing requirements; | |||
| | | | • | | | the Restructuring Transactions shall have been completed; | ||
| | | | • | | | the ancillary agreements shall have been executed and delivered by each of FTAI and us, as applicable, and no party to any of the ancillary agreements will be in material breach of any such agreement; | ||
| | | | • | | | any material governmental and third-party approvals shall have been obtained and be in full force and effect; and | ||
| | | | • | | | no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect. | ||
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| | We cannot assure you that all of the conditions will be satisfied or waived. In addition, if the separation is completed and FTAI’s board of directors waives any such condition, such waiver could have a material adverse effect on FTAI’s and FTAI Infrastructure’s respective business, financial condition or results of operations, including, without limitation, as a result of illiquid trading due to the failure of FTAI Infrastructure common stock to be accepted for listing, litigation relating to any preliminary or permanent injunctions that sought to prevent the consummation of the separation, or the failure of FTAI or FTAI Infrastructure to obtain any required regulatory approvals. As of the date hereof, the board of directors of FTAI does not intend to waive any of the conditions described herein and would only consider such a waiver if it determined that such action was in the best interests of FTAI and its stockholders. | |||||||
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| | The fulfillment of the above conditions will not create any obligation on behalf of FTAI to effect the separation. Until the separation has occurred, FTAI has the right to terminate the separation, even if all the conditions have been satisfied, if the board of directors of FTAI determines, in its sole discretion, that the separation is not in the best interests of FTAI and its stockholders or that market conditions or other circumstances are such that the separation of FTAI Infrastructure and FTAI is no longer advisable at that time. | |||||||
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| | We intend to list our common stock on the Nasdaq under the ticker symbol . We anticipate that on or prior to the record date for the distribution, trading of our common stock will begin on a “when-issued” basis and will continue up to and including the distribution date. See “Our Spin-Off from FTAI—Market for Common Stock—Trading Between the Record Date and Distribution Date” included elsewhere in this Information Statement. | |||||||
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Stock exchange listing | | | It is expected that after the distribution of FTAI Infrastructure common stock, FTAI common shares will continue to be traded on the New York Stock Exchange under the symbol “FTAI.” |
Distribution agent | | | AST. | ||||||
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| | Following the spin-off, you will hold shares in a U.S. corporation. All of the net income attributable to FTAI Infrastructure will be subject to U.S. federal (and state and local) corporate income taxes, which we do not anticipate will have a material impact on stockholder returns because such assets were held in corporate subsidiaries of FTAI prior to the spin-off. | |||||||
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Tax considerations | | | You should consult your tax advisor as to the particular tax consequences of the distribution to you, including the applicability of any U.S. federal, state, local and non-U.S. tax laws with respect to distributions from a U.S. corporation to you and with respect to sale or other transfers of stock in a U.S. corporation. For more information, see “U.S. Federal Income Tax Considerations,” included elsewhere in this Information Statement. | ||||||
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Separation and Distribution Agreement | | | Before the distribution, we will enter into the Separation and Distribution Agreement to effect the spin-off. This agreement will provide for the allocation between us and FTAI of FTAI’s assets, liabilities and obligations (including tax-related assets and liabilities) attributable to periods prior to our spin-off from FTAI. For a discussion of this and other arrangements, see “Certain Relationships and Related Party Transactions” included elsewhere in this Information Statement. | ||||||
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Equitable adjustment of options in connection with the distribution | | | In connection with the distribution, each FTAI option held as of the date of the distribution by our Manager or by the directors, officers, employees, service providers, consultants and advisors of our Manager will be converted into an adjusted FTAI option and a new FTAI Infrastructure option. The exercise price of each adjusted FTAI option and FTAI Infrastructure option will be set to collectively maintain the intrinsic value of the FTAI option immediately prior to the distribution and to maintain the ratio of the exercise price of the adjusted FTAI option and the FTAI Infrastructure option, respectively, to the fair market value of the underlying shares as of the distribution. The terms and conditions applicable to each FTAI Infrastructure option will be substantially similar to the terms and conditions otherwise applicable to the FTAI option as of the date of distribution. The grant of such FTAI Infrastructure options will not reduce the number of shares of our common stock otherwise available for issuance under the Plan (as defined below). | ||||||
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• | the financial results in this Information Statement do not reflect all of the expenses we will incur as a public company; |
• | the working capital requirements and capital for general corporate purposes for our assets were satisfied prior to the spin-off as part of FTAI’s corporate-wide cash management policies. FTAI is not required, and does not intend, to provide us with funds to finance our working capital or other cash requirements, so we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements; and |
• | our cost structure, management, financing and business operations will be significantly different as a result of operating as an independent public company. These changes result in increased costs, including, but not limited to, fees paid to our Manager, legal, accounting, compliance and other costs associated with being a public company with equity securities traded on the Nasdaq. |
• | deterioration of worldwide, regional or national economic conditions and activity, which could adversely affect demand for our services; |
• | disruptions to our operations as a result of the potential health impact, such as the availability and efficacy of vaccines, on our employees and crew, and on the workforces of our customers and business partners; |
• | disruptions to our business from, or additional costs related to, new regulations, directives or practices implemented in response to the pandemic, such as travel restrictions, increased inspection regimes, hygiene measures (such as quarantining and physical distancing) or increased implementation of remote working arrangements; |
• | potential reduced cash flows and financial condition, including potential liquidity constraints; |
• | reduced access to capital, including the ability to refinance any existing obligations, as a result of any credit tightening generally or due to continued declines in global financial markets, including to the prices of publicly traded securities of us, our peers and of listed companies generally; and |
• | potential deterioration in the financial condition and prospects of our customers, joint venture partners or business partners, or attempts by customers or third parties to invoke force majeure contractual clauses as a result of delays or other disruptions. |
• | general demand for the type of assets that we purchase; |
• | general macroeconomic conditions, including market prices for commodities that our assets may serve; |
• | geopolitical events, including war, prolonged armed conflict and acts of terrorism; |
• | outbreaks of communicable diseases and natural disasters; |
• | governmental regulation; |
• | interest rates; |
• | the availability of credit; |
• | restructurings and bankruptcies of companies in the industries in which we operate, including our customers; |
• | manufacturer production levels and technological innovation; |
• | manufacturers merging or exiting the industry or ceasing to produce certain asset types; |
• | retirement and obsolescence of the assets that we own; |
• | increases in supply levels of assets in the market due to the sale or merging of our customers; and |
• | reintroduction of previously unused or dormant assets into the industries in which we operate. |
• | competition from market participants; |
• | general economic and/or industry trends, including pricing for the products or services offered by our operating businesses; |
• | the issuance and/or continued availability of necessary permits, licenses, approvals and agreements from governmental agencies and third parties as are required to construct and operate such businesses; |
• | changes or deficiencies in the design or construction of development projects; |
• | unforeseen engineering, environmental or geological problems; |
• | potential increases in construction and operating costs due to changes in the cost and availability of fuel, power, materials and supplies; |
• | the availability and cost of skilled labor and equipment; |
• | our ability to enter into additional satisfactory agreements with contractors and to maintain good relationships with these contractors in order to construct development projects within our expected cost parameters and time frame, and the ability of those contractors to perform their obligations under the contracts and to maintain their creditworthiness; |
• | potential liability for injury or casualty losses which are not covered by insurance; |
• | potential opposition from non-governmental organizations, environmental groups, local or other groups which may delay or prevent development activities; |
• | local and economic conditions; |
• | changes in legal requirements; and |
• | force majeure events, including catastrophes and adverse weather conditions. |
• | merge, consolidate or transfer all, or substantially all, of our assets; |
• | incur additional debt or issue preferred stock; |
• | make certain investments or acquisitions; |
• | create liens on our or our subsidiaries’ assets; |
• | sell assets; |
• | make distributions on or repurchase our shares; |
• | enter into transactions with affiliates; and |
• | create dividend restrictions and other payment restrictions that affect our subsidiaries. |
• | meet the terms and maturities of our existing and future debt facilities; |
• | purchase new assets or refinance existing assets; |
• | fund our working capital needs and maintain adequate liquidity; and |
• | finance other growth initiatives. |
• | failure to successfully integrate Transtar in a manner that permits us to realize the anticipated benefits of the acquisition; |
• | difficulties and delays integrating Transtar’s personnel, operations and systems and retaining key employees, including as a result of the spin-off transaction; |
• | higher than anticipated costs incurred in connection with the integration of the business and operations of Transtar, including as a result of the spin-off transaction; |
• | challenges in operating and managing rail lines across geographically disparate regions; |
• | disruptions to our ongoing business and diversions of our management’s attention caused by transition or integration activities involving Transtar, including as a result of the spin-off transaction; |
• | challenges with implementing adequate and appropriate controls, procedures and policies in Transtar’s business, including as a result of the spin-off transaction; |
• | Transtar’s dependence on the Seller as its primary customer; |
• | difficulties expanding our customer base; |
• | difficulties arising from Transtar’s dependence on the Seller to provide a variety of necessary transition services to Transtar and any failure by the Seller to adequately provide such services; |
• | assumption of pre-existing contractual relationships of Transtar that we may not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business; and |
• | any potential litigation arising from the transaction. |
• | a shift in our investor base; |
• | our quarterly or annual earnings, or those of other comparable companies; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements by us or our competitors of significant investments, acquisitions or dispositions; |
• | the failure of securities analysts to cover our common stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | the operating and share price performance of other comparable companies; |
• | overall market fluctuations; |
• | general economic conditions; and |
• | developments in the markets and market sectors in which we participate. |
• | a shift in our investor base; |
• | our quarterly or annual earnings and cash flows, or those of other comparable companies; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements by us or our competitors of significant investments, acquisitions, dispositions or other transactions; |
• | the failure of securities analysts to cover our stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | market performance of affiliates and other counterparties with whom we conduct business; |
• | the operating and stock price performance of other comparable companies; |
• | our failure to maintain our exemption under the Investment Company Act or satisfy the Nasdaq listing requirements; |
• | negative public perception of us, our competitors or industry; |
• | overall market fluctuations; and |
• | general economic conditions. |
• | a classified board of directors with staggered three-year terms; |
• | provisions regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors for cause only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | provisions regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | removal of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors; |
• | our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval; |
• | advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; |
• | a prohibition will be in our certificate of incorporate that states that no holder of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election; and |
• | a requirement in our bylaws specifically denying the ability of our stockholders to consent in writing to take any action in lieu of taking such action at a duly called annual or special meeting of our stockholders. |
• | changes in economic conditions generally and specifically in our industry sectors, and other risks relating to the global economy, including, but not limited to, ongoing COVID-19 pandemic and other public health crises, and any related responses or actions by businesses and governments; |
• | reductions in cash flows received from our assets; |
• | our ability to take advantage of acquisition opportunities at favorable prices; |
• | a lack of liquidity surrounding our assets, which could impede our ability to vary our portfolio in an appropriate manner; |
• | the relative spreads between the yield on the assets we acquire and the cost of financing; |
• | adverse changes in the financing markets we access affecting our ability to finance our acquisitions; |
• | customer defaults on their obligations; |
• | our ability to renew existing contracts and enter into new contracts with existing or potential customers; |
• | the availability and cost of capital for future acquisitions; |
• | concentration of a particular type of asset or in a particular sector; |
• | the competitive market for acquisition opportunities; |
• | risks related to operating through joint ventures, partnerships, consortium arrangements or other collaborations with third parties; |
• | obsolescence of our assets or our ability to sell our assets; |
• | exposure to uninsurable losses and force majeure events; |
• | infrastructure operations and maintenance may require substantial capital expenditures; |
• | the legislative/regulatory environment and exposure to increased economic regulation; |
• | difficulties in obtaining effective legal redress in jurisdictions in which we operate with less developed legal systems; |
• | our ability to maintain our exemption from registration under the Investment Company Act and the fact that maintaining such exemption imposes limits on our operations; |
• | our ability to successfully utilize leverage in connection with our investments; |
• | foreign currency risk and risk management activities; |
• | effectiveness of our internal control over financial reporting; |
• | exposure to environmental risks, including natural disasters, increasing environmental legislation and the broader impacts of climate change; |
• | changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes; |
• | actions taken by national, state, or provincial governments, including nationalization, or the imposition of new taxes, could materially impact the financial performance or value of our assets; |
• | our dependence on our Manager and its professionals and actual, potential or perceived conflicts of interest in our relationship with our Manager; |
• | effects of the merger of Fortress Investment Group LLC with affiliates of SoftBank.; |
• | volatility in the market price of our shares; |
• | the inability to pay dividends to our stockholders in the future; and |
• | other risks described in the “Risk Factors” section of this Information Statement. |
• | financial institutions; |
• | insurance companies; |
• | broker-dealers; |
• | regulated investment companies; |
• | partnerships and trusts; |
• | persons who hold our stock on behalf of another person as a nominee; |
• | persons who receive our stock through the exercise of employee stock options or otherwise as compensation; |
• | persons holding our stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment; |
• | persons that own (actually or constructively) more than 5% of our common shares; |
• | tax-exempt organizations; and |
• | except to the extent expressly discussed below, foreign investors. |
• | a citizen or resident of the United States; |
• | a corporation created or organized in the United States or under the laws of the United States, or of any state thereof, or the District of Columbia; |
• | an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or |
• | a trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person. |
• | our registration statement on Form 10, of which this Information Statement is a part, shall have become effective under the Exchange Act, and no stop order relating to the registration statement shall be in effect; |
• | all other actions and filings necessary or appropriate under applicable federal or state securities laws and state blue sky laws in connection with the transactions shall have been taken; |
• | an independent appraisal firm or firms acceptable to FTAI shall have delivered one or more opinions to the board of directors of FTAI confirming the solvency and financial viability of FTAI and FTAI Infrastructure after consummation of the distribution, and such opinions shall be acceptable to FTAI in form and substance in FTAI’s sole discretion and such opinions shall not have been withdrawn or rescinded; |
• | the FTAI Infrastructure common stock to be distributed in the separation shall have been accepted for listing on the Nasdaq, subject to compliance with applicable listing requirements; |
• | the Restructuring Transactions shall have been completed; |
• | the ancillary agreements shall have been executed and delivered by each of FTAI and us, as applicable, and no party to any of the ancillary agreements will be in material breach of any such agreement; |
• | any material governmental and third-party approvals shall have been obtained and be in full force and effect; and |
• | no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect. |
• | Creates two independent companies, each with the opportunity to pursue growth through the execution of distinctly different business plans. We and FTAI’s board of directors believe that having two independent companies with distinct investment profiles will maximize the strategic focus and financial flexibility of each company to grow and return capital to stockholders. We and FTAI’s board of directors believe that the two businesses, each with a clear focus, strong, independent boards of directors, and strengthened balance sheets, will create greater shareholder value as two companies than as one. |
• | Enhances investor transparency, better highlights the attributes of both companies, and provides investors with the option to invest in one or both companies. The separation will provide each shareholder the opportunity to make an individual allocation of capital to one or both of the two differentiated businesses, each with a distinct investment risk/return profile. In addition, we and FTAI’s board of directors believe the separation will make FTAI Infrastructure and FTAI more competitive and appealing to a broader investor audience moving forward, providing them with the opportunity to invest in two companies with compelling value propositions and distinct investment strategies. Investors can increase their allocation to FTAI Infrastructure or to FTAI, depending on their preference. |
• | Tailored capital structure and financing options. Each company will have the flexibility to create a capital structure tailored to its needs, and each may be able to attain more favorable financing terms separately. In addition, tailored capital structures will facilitate each company’s ability to pursue acquisitions, possibly using common stock, and other strategic alliances. |
• | Stock ownership. We believe the conversion of FTAI Infrastructure to a Delaware corporation and the subsequent spin-off of FTAI Infrastructure will make it easier for both domestic and international investors to own its stock and help simplify shareholders’ tax reporting, which we expect should provide for significant growth potential for our shareholders. In addition, FTAI’s subsequent restructuring from a publicly traded partnership to a corporation is also expected to provide for significant growth potential for FTAI’s shareholders. |
• | Anticipated benefits of the separation may not be realized. Following the separation, FTAI Infrastructure and FTAI will be independent companies. FTAI Infrastructure and/or FTAI may not be able to achieve some or all of the benefits that it expects to achieve as a company independent from the other in the time it expects, if at all. |
• | There may be disruptions to the business as a result of the separation. The actions required to separate FTAI Infrastructure and FTAI could disrupt FTAI Infrastructure’s and FTAI’s operations after the separation. The separation and distribution may divert management’s time and attention, which could have a material adverse effect on the business, results of operations, financial condition and cash flows. |
• | Costs of the Separation. FTAI Infrastructure and FTAI will incur costs in connection with the transition to being separate public companies that include accounting, tax, legal and other professional service costs. In addition, FTAI Infrastructure and FTAI will incur costs in connection with operating as separate, stand alone public companies that the combined company otherwise shared, such as expenses associated with reporting and compliance as public companies and separate management and incentive fees, working capital requirements, overhead, insurance, financing and other operating costs, as well the potentially higher cost of capital as separate companies. |
• | There may be conflicts between FTAI Infrastructure and FTAI. There may be, or there may be the appearance of, conflicts of interest in FTAI Infrastructure’s relationship with FTAI. We expect certain directors to overlap at least at the outset and we expect that, if and to the extent matters come before the board as to which there is a conflict between the two companies, that the companies would take appropriate steps so that decisions with respect to such matters are made by disinterested and independent directors. The agreements between FTAI and us, if any, generally will not limit or restrict FTAI or its affiliates from engaging in any business or managing other entities that engage in business of the type conducted by us. Actual, potential, or perceived conflicts could give rise to investor dissatisfaction, settlements with stockholders, litigation, or regulatory inquiries or enforcement actions. |
• | the acquisition of Transtar and related purchase accounting adjustments; |
• | the impact of any agreements between FTAI Infrastructure and FTAI related to the separation and distribution; |
• | the issuance of related party debt to FTAI for a principal amount of $ million, additional third-party debt and equity financing arrangements of $ million, and any subsequent settlement with FTAI associated with the related party debt; |
• | the issuance of our common stock to holders of FTAI common shares; and |
• | the elimination of FTAI’s net investment in us. |
• | the transfer of certain transaction costs resulting from the separation and distribution that were not included in our historical combined consolidated financial statements; |
• | other adjustments as described in the notes to these unaudited pro forma combined consolidated financial statements; |
• | the acquisition of Transtar and related purchase accounting adjustments; and |
• | the impact of any agreements between FTAI Infrastructure and FTAI related to the separation and distribution. |
| | FTAI Infrastructure (historical) | | | Acquisition of Transtar (a) | | | Transaction Accounting Adjustments | | | Notes | | | Autonomous Entity Adjustments | | | Notes | | | Pro Forma Results | |
Assets | | | | | | | | | | | | | | | |||||||
Current assets: | | | | | | | | | | | | | | | |||||||
Cash and cash equivalents | | | [•] | | | [•] | | | [•] | | | (c) | | | — | | | | | [•] | |
Restricted cash | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Accounts receivable, net | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Operating lease right-of-use assets, net | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Other assets | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Total current assets | | | [•] | | | [•] | | | [•] | | | | | — | | | | | [•] | ||
Leasing equipment, net | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Operating lease right-of-use assets, net | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Property, plant, and equipment, net | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Investments | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Intangible assets, net | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Goodwill | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Other assets | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Total assets | | | [•] | | | [•] | | | [•] | | | | | — | | | | | [•] | ||
| | | | | | | | | | | | | | ||||||||
Liabilities | | | | | | | | | | | | | | | |||||||
Current liabilities: | | | | | | | | | | | | | | | |||||||
Accounts payable and accrued liabilities | | | [•] | | | [•] | | | — | | | | | [•] | | | (f) | | | [•] | |
Debt, net | | | [•] | | | — | | | [•] | | | (c) | | | — | | | | | [•] | |
Operating lease liabilities | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Other liabilities | | | [•] | | | [•] | | | [•] | | | (b) | | | — | | | | | [•] | |
Total current liabilities | | | [•] | | | [•] | | | [•] | | | | | — | | | | | [•] | ||
Debt, net | | | [•] | | | — | | | [•] | | | (c) | | | — | | | | | [•] | |
Operating lease liabilities | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Other liabilities | | | [•] | | | [•] | | | [•] | | | (b) | | | — | | | | | [•] | |
Total liabilities | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | [•] | ||
| | | | | | | | | | | | | | ||||||||
Equity | | | | | | | | | | | | | | | |||||||
Net parent investment | | | [•] | | | [•] | | | [•] | | | (d) | | | — | | | | | [•] | |
Accumulated other comprehensive loss | | | [•] | | | [•] | | | — | | | | | [•] | | | (e, f) | | | [•] | |
Parent company equity | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | [•] | ||
Non-controlling interest | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Common stock | | | [•] | | | — | | | [•] | | | (c, d, h) | | | — | | | | | [•] | |
Additional paid-in capital | | | [•] | | | — | | | [•] | | | (c, d) | | | — | | | | | [•] | |
Total equity | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | [•] | ||
Total liabilities and equity | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | [•] |
| | FTAI Infrastructure (historical) | | | Acquisition of Transtar (a) | | | Transaction Accounting Adjustments | | | Notes | | | Autonomous Entity Adjustments | | | Notes | | | Pro Forma Results | |
Revenues | | | | | | | | | | | | | | | |||||||
Total revenues | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
| | | | | | | | | | | | | | ||||||||
Expenses | | | | | | | | | | | | | | | |||||||
Operating expenses | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
General and administrative | | | [•] | | | [•] | | | [•] | | | (a) | | | [•] | | | (e) | | | |
Acquisition and transaction expenses | | | [•] | | | [•] | | | — | | | | | [•] | | | (e, f) | | | ||
Management fees and incentive allocation to affiliate | | | [•] | | | — | | | — | | | | | [•] | | | (e) | | | ||
Depreciation and amortization | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
Total expenses | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
| | | | | | | | | | | | | | ||||||||
Other (expense) income | | | | | | | | | | | | | | | |||||||
Equity in losses of unconsolidated entities | | | [•] | | | — | | | — | | | | | — | | | | | |||
Gain (loss) on sale of assets, net | | | [•] | | | [•] | | | — | | | | | — | | | | | |||
Loss on extinguishment of debt | | | [•] | | | — | | | — | | | | | — | | | | | |||
Interest expense | | | [•] | | | — | | | — | | | | | — | | | | | |||
Other (expense) income | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
Total other (expense) income | | | [•] | | | [•] | | | [•] | | | | | — | | | | | |||
(Loss) income before income taxes | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
(Benefit from) provision for income taxes | | | [•] | | | [•] | | | [•] | | | (a, b) | | | — | | | | | ||
Net (loss) income | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries | | | [•] | | | — | | | — | | | | | — | | | | | |||
Net (loss) income attributable to FTAI Infrastructure | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
| | | | | | | | | | | | | | ||||||||
Net (loss) income per share: (g, h) | | | | | | | | | | | | | | | |||||||
Basic (loss) income per share | | | | | | | | | | | | | | | [•] | ||||||
Diluted loss per share | | | | | | | | | | | | | | | [•] | ||||||
Weighted-average shares used to compute (loss) income per share: | | | | | | | | | | | | | | | |||||||
Shares used in computation of basic loss (income) per share | | | | | | | | | | | | | | | [•] | ||||||
Shares used in computation of diluted loss (income) per share | | | | | | | | | | | | | | | [•] |
| | FTAI Infrastructure (historical) | | | Acquisition of Transtar (a) | | | Transaction Accounting Adjustments | | | Notes | | | Autonomous Entity Adjustments | | | Notes | | | Pro Forma Results | |
Net (loss) income | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Other comprehensive (loss) income: | | | | | | | | | | | | | | | |||||||
Other comprehensive (loss) income related to equity method investees, net | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Comprehensive (loss) income | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Comprehensive (loss) income attributable to non-controlling interest: | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Comprehensive (loss) income attributable to FTAI Infrastructure | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] |
| | FTAI Infrastructure (historical) | | | Acquisition of Transtar (a) | | | Transaction Accounting Adjustments | | | Notes | | | Autonomous Entity Adjustments | | | Notes | | | Pro Forma Results | |
Revenues | | | | | | | | | | | | | | | |||||||
Total revenues | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
| | | | | | | | | | | | | | ||||||||
Expenses | | | | | | | | | | | | | | | |||||||
Operating expenses | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
General and administrative | | | [•] | | | [•] | | | [•] | | | (a) | | | [•] | | | (e) | | | |
Acquisition and transaction expenses | | | [•] | | | [•] | | | — | | | | | [•] | | | (e,f) | | | ||
Management fees and incentive allocation to affiliate | | | [•] | | | — | | | — | | | | | [•] | | | (e) | | | ||
Depreciation and amortization | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
Total expenses | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
| | | | | | | | | | | | | | ||||||||
Other (expense) income | | | | | | | | | | | | | | | |||||||
Equity in losses of unconsolidated entities | | | [•] | | | — | | | — | | | | | — | | | | | |||
Gain (loss) on sale of assets, net | | | [•] | | | [•] | | | — | | | | | — | | | | | |||
Loss on extinguishment of debt | | | [•] | | | — | | | — | | | | | — | | | | | |||
Interest expense | | | [•] | | | — | | | — | | | | | — | | | | | |||
Other (expense) income | | | [•] | | | [•] | | | [•] | | | (a) | | | — | | | | | ||
Total other (expense) income | | | [•] | | | [•] | | | [•] | | | | | — | | | | | |||
(Loss) income before income taxes | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
(Benefit from) provision for income taxes | | | [•] | | | [•] | | | [•] | | | (a, b) | | | — | | | | | ||
Net (loss) income | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries | | | [•] | | | — | | | — | | | | | — | | | | | |||
Net (loss) income attributable to FTAI Infrastructure | | | [•] | | | [•] | | | [•] | | | | | [•] | | | | | |||
| | | | | | | | | | | | | | ||||||||
Net (loss) income per share (g, h) | | | | | | | | | | | | | | | |||||||
Basic (loss) income per share | | | | | | | | | | | | | | | [•] | ||||||
Diluted loss per share | | | | | | | | | | | | | | | [•] | ||||||
Weighted-average shares used to compute (loss) income per share: | | | | | | | | | | | | | | | |||||||
Shares used in computation of basic loss (income) per share | | | | | | | | | | | | | | | [•] | ||||||
Shares used in computation of diluted loss (income) per share | | | | | | | | | | | | | | | [•] |
| | FTAI Infrastructure (historical) | | | Acquisition of Transtar (a) | | | Transaction Accounting Adjustments | | | Notes | | | Autonomous Entity Adjustments | | | Notes | | | Pro Forma Results | |
Net (loss) income | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Other comprehensive (loss) income: | | | | | | | | | | | | | | | |||||||
Other comprehensive (loss) income related to equity method investees, net | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Comprehensive (loss) income | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] | ||
Comprehensive (loss) income attributable to non-controlling interest: | | | [•] | | | — | | | — | | | | | — | | | | | [•] | ||
Comprehensive (loss) income attributable to FTAI Infrastructure | | | [•] | | | [•] | | | — | | | | | — | | | | | [•] |
(a) | Adjustment reflects the indicative Transtar results of operations that would have been achieved if the acquisition had taken place as of January 1, 2020. |
(b) | Adjustment reflects the income tax impact of the pro forma adjustments. The tax impact was calculated using the jurisdictional tax rate associated with each adjustment. Furthermore, the legacy FTAI structure was a publicly traded partnership with several standalone corporate entities with separate tax return filing obligations. The post transaction structure will give rise to a consolidated group of corporations filing combined income tax returns in various jurisdictions. As such, the income tax provision (benefit) of FTAI Infrastructure will [increase/decrease] $[•] million. The final income tax impact may be materially different as more detailed information will become available after the consummation of the spin-off and related transactions. |
(c) | Adjustment reflects $[•] million in indebtedness between FTAI and FTAI Infrastructure, $[•] million indebtedness to third-parties, net of debt issuance costs of $[•] million, and $[•] million of capital raised through equity issuance. The debt agreements assume an interest rate of [•]% and [•]%, respectively. The pro forma interest expense is calculated based on these agreement terms. A [•]% change to the annual interest rate would change interest expense by $[•] million and $[•] million for the nine-months ended September 30, 2021 and year ended December 31, 2020, respectively. |
(d) | Adjustment represents the reclassification of FTAI’s net investment in our company to additional paid-in capital. This reflects the issuance of [•] shares of our common stock with a par value of $[•] per share pursuant to the separation and distribution. We have assumed the number of outstanding shares of our common stock based on [•] shares of FTAI common shares outstanding on September 30, 2021, inclusive of the common stock issued as part of the equity issuance detailed in adjustment (c), and a distribution ratio of one share of our common stock for every [•] shares of FTAI common shares. The actual number of shares issued will not be known until the record date for the distribution. |
(e) | Adjustment reflects the impact of the post-spin management agreement, which results in incremental management fees, general and administrative expenses, and acquisition and transaction expenses not included in FTAI Infrastructure’s combined consolidated financial statements. An adjustment of $[•] million, $[•] million and $[•] million to increase management fees, general and administrative expenses, and acquisition and transaction expenses, respectively, were recorded in the unaudited pro forma combined consolidated statement of operations for the nine-months ended September 30, 2021. An adjustment of $[•] million, $[•] million and $[•] million to increase management fees, general and administrative expenses, and acquisition and transaction expenses, respectively, were recorded in the unaudited pro forma combined consolidated statement of operations for the year ended December 31, 2020. |
(f) | Adjustment reflects transaction costs resulting from the separation which were incurred after the balance sheet date through December [•], 2021. We expect to incur an additional $[•] million to $[•] million in |
(g) | Pro forma basic and diluted loss per share and pro forma weighted-average basic and diluted shares outstanding for the nine-months ended September 30, 2021 and year ended December 31, 2020 reflect the number of shares of our common stock that are expected to be outstanding upon completion of the separation and distribution. |
(h) | Pro forma diluted loss per share are adjusted to reflect the impact of additional options provided to the Manager for the equity issuance detailed in adjustment (c). |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Revenues | | | | | | | | | ||||
Lease income | | | $1,653 | | | $1,186 | | | $3,362 | | | $(2,176) |
Rail revenues | | | 24,182 | | | — | | | — | | | — |
Terminal services revenues | | | 33,010 | | | 50,887 | | | 42,965 | | | 7,922 |
Crude marketing revenues | | | — | | | 8,210 | | | 166,134 | | | (157,924) |
Other revenue | | | 13,829 | | | 8,279 | | | 16,991 | | | (8,712) |
Total revenues | | | 72,674 | | | 68,562 | | | 229,452 | | | (160,890) |
| | | | | | | | |||||
Expenses | | | | | | | | | ||||
Operating expenses | | | 66,206 | | | 69,391 | | | 260,909 | | | (191,518) |
General and administrative | | | 6,173 | | | 8,522 | | | 7,469 | | | 1,053 |
Acquisition and transaction expenses | | | 8,860 | | | 1,658 | | | 9,134 | | | (7,476) |
Management fees and incentive allocation to affiliate | | | 11,244 | | | 13,073 | | | 16,541 | | | (3,468) |
Depreciation and amortization | | | 38,900 | | | 31,114 | | | 33,128 | | | (2,014) |
Asset impairment | | | — | | | — | | | 4,726 | | | (4,726) |
Total expenses | | | 131,383 | | | 123,758 | | | 331,907 | | | (208,149) |
| | | | | | | | |||||
Other (expense) income | | | | | | | | | ||||
Equity in losses of unconsolidated entities | | | (8,810) | | | (3,107) | | | (546) | | | (2,561) |
Gain (loss) on sale of assets, net | | | 16 | | | (8) | | | 121,296 | | | (121,304) |
Loss on extinguishment of debt | | | — | | | (4,724) | | | — | | | (4,724) |
Interest expense | | | (9,396) | | | (10,764) | | | (17,907) | | | 7,143 |
Other (expense) income | | | (6,855) | | | 92 | | | 2,857 | | | (2,765) |
Total other (expense) income | | | (25,045) | | | (18,511) | | | 105,700 | | | (124,211) |
(Loss) income before income taxes | | | (83,754) | | | (73,707) | | | 3,245 | | | (76,952) |
(Benefit from) provision for income taxes | | | (2,755) | | | (1,984) | | | 14,384 | | | (16,368) |
Net loss | | | (80,999) | | | (71,723) | | | (11,139) | | | (60,584) |
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries | | | (18,949) | | | (16,522) | | | (17,571) | | | 1,049 |
Net (loss) income attributable to FTAI Infrastructure | | | $(62,050) | | | $(55,201) | | | $6,432 | | | $(61,633) |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Net (loss) income attributable to FTAI Infrastructure | | | $(62,050) | | | $(55,201) | | | $6,432 | | | $(61,633) |
Add: (Benefit from) provision for income taxes | | | (2,755) | | | (1,984) | | | 14,384 | | | (16,368) |
Add: Equity-based compensation expense | | | 3,281 | | | 2,325 | | | 1,509 | | | 816 |
Add: Acquisition and transaction expenses | | | 8,860 | | | 1,658 | | | 9,134 | | | (7,476) |
Add: Losses on the modification or extinguishment of debt and capital lease obligations | | | — | | | 4,724 | | | — | | | 4,724 |
Add: Changes in fair value of non-hedge derivative instruments | | | (1,979) | | | 181 | | | 4,555 | | | (4,374) |
Add: Asset impairment charges | | | — | | | — | | | 4,726 | | | (4,726) |
Add: Incentive allocations | | | — | | | — | | | 5,819 | | | (5,819) |
Add: Depreciation & amortization expense | | | 38,900 | | | 31,114 | | | 33,128 | | | (2,014) |
Add: Interest expense | | | 9,396 | | | 10,764 | | | 17,907 | | | (7,143) |
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities(1) | | | 10,767 | | | 3,140 | | | 442 | | | 2,698 |
Less: Equity in losses of unconsolidated entities | | | 8,810 | | | 3,107 | | | 546 | | | 2,561 |
Less: Non-controlling share of Adjusted EBITDA(2) | | | (8,706) | | | (9,637) | | | (9,859) | | | 222 |
Adjusted EBITDA (non-GAAP) | | | $4,524 | | | $(9,809) | | | $88,723 | | | $(98,532) |
(1) | Includes the following items for the nine-months ended September 30, 2021 and years ended December 31, 2020 and 2019: (i) net loss of $(9,286), $(3,503) and $(734), (ii) interest expense of $827, $1,138 and $131, (iii) depreciation and amortization expense of $6,677, $5,513 and $1,045, (iv) acquisition and transaction expense of $0, $581 and $0, (v) changes in fair value of non-hedge derivative instruments of $12,525, $(589) and $0 and (vi) asset impairment of $24, $0 and $0, respectively. |
(2) | Includes the following items for the nine-months ended September 30, 2021 and years ended December 31, 2020 and 2019: (i) equity based compensation of $620, $374 and $230, (ii) provision for income taxes of $36, $59 and $60, (iii) interest expense of $1,940, $2,025 and $3,400, (iv) depreciation and amortization expense of $6,177, $6,149 and $4,833, (v) changes in fair value of non-hedge derivative instruments of $(67), $38 and $1,336 and (vi) loss on extinguishment of debt of $0, $992 and $0, respectively. |
• | terminal services revenue of $33.0 million at Jefferson Terminal; |
• | rail revenue of $24.2 million at Transtar; and |
• | other revenue of $13.8 million at Repauno and our railcar cleaning business. |
• | operating expenses of $66.2 million, which primarily reflects compensation and benefits of $27.4 million and facility operations of $16.9 million; |
• | acquisition and transaction expenses of $8.9 million, primarily due to transaction costs associated with the acquisition of Transtar in 2021; |
• | management fees and incentive allocation to affiliate of $11.2 million, which reflects FTAI Infrastructure's respective allocation of the management fee to the Manager; and |
• | depreciation and amortization of $38.9 million. |
• | cost of sales of $167.4 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019; and |
• | facility operations of $19.2 million which primarily reflects (i) a decrease of $14.1 million at Jefferson Terminal due to lower railcar and storage expenses associated with the crude marketing strategy and (ii) a decrease of $4.1 million due to the Long Ridge Transaction. |
• | a decrease of $121.3 million in gains on sale of assets, net primarily due to the Long Ridge Transaction; |
• | a decrease in interest expense of $7.1 million which primarily reflects a decrease of $6.8 million at Jefferson Terminal due to the issuance of the Series 2020 Bonds (“Jefferson Refinancing”), which reduced its weighted average interest rate. See Note 8 to the combined consolidated financial statements for additional information; |
• | a loss on extinguishment of debt of $4.7 million due to the Jefferson Refinancing in 2020; |
• | a decrease in other income of $2.8 million primarily due to the Long Ridge Transaction; and |
• | an increase of $2.6 million in equity in losses of unconsolidated entities. |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Revenues | | | | | | | | | ||||
Lease income | | | $1,295 | | | $1,186 | | | $2,306 | | | $(1,120) |
Terminal services revenues | | | 32,853 | | | 50,887 | | | 35,908 | | | 14,979 |
Crude marketing revenues | | | — | | | 8,210 | | | 166,134 | | | (157,924) |
Total revenues | | | 34,148 | | | 60,283 | | | 204,348 | | | (144,065) |
| | | | | | | | |||||
Expenses | | | | | | | | | ||||
Operating expenses | | | 35,939 | | | 53,072 | | | 231,506 | | | (178,434) |
Depreciation and amortization | | | 26,438 | | | 29,034 | | | 22,873 | | | 6,161 |
Total expenses | | | 62,377 | | | 82,106 | | | 254,379 | | | (172,273) |
| | | | | | | | |||||
Other (expense) income | | | | | | | | | ||||
Equity in losses of unconsolidated entities | | | — | | | — | | | (292) | | | 292 |
(Loss) gain on sale of assets, net | | | — | | | (8) | | | 4,636 | | | (4,644) |
Loss on extinguishment of debt | | | — | | | (4,724) | | | — | | | (4,724) |
Interest expense | | | (8,496) | | | (9,426) | | | (16,189) | | | 6,763 |
Other (expense) income | | | (2,795) | | | 92 | | | 752 | | | (660) |
Total other expense | | | (11,291) | | | (14,066) | | | (11,093) | | | (2,973) |
Loss before income taxes | | | (39,520) | | | (35,889) | | | (61,124) | | | 25,235 |
Provision for income taxes | | | 163 | | | 278 | | | 284 | | | (6) |
Net loss | | | (39,683) | | | (36,167) | | | (61,408) | | | 25,241 |
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries | | | (18,743) | | | (16,483) | | | (17,356) | | | 873 |
Net loss attributable to FTAI Infrastructure | | | $(20,940) | | | $(19,684) | | | $(44,052) | | | $24,368 |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Net loss attributable to FTAI Infrastructure | | | $(20,940) | | | $(19,684) | | | $(44,052) | | | $24,368 |
Add: Provision for income taxes | | | 163 | | | 278 | | | 284 | | | (6) |
Add: Equity-based compensation expense | | | 2,664 | | | 1,676 | | | 1,054 | | | 622 |
Add: Acquisition and transaction expenses | | | — | | | — | | | — | | | — |
Add: Losses on the modification or extinguishment of debt and capital lease obligations | | | — | | | 4,724 | | | — | | | 4,724 |
Add: Changes in fair value of non-hedge derivative instruments | | | — | | | 181 | | | 6,364 | | | (6,183) |
Add: Asset impairment charges | | | — | | | — | | | — | | | — |
Add: Incentive allocations | | | — | | | — | | | — | | | — |
Add: Depreciation and amortization expense | | | 26,438 | | | 29,034 | | | 22,873 | | | 6,161 |
Add: Interest expense | | | 8,496 | | | 9,426 | | | 16,189 | | | (6,763) |
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities(1) | | | — | | | — | | | 656 | | | (656) |
Less: Equity in losses of unconsolidated entities | | | — | | | — | | | 292 | | | (292) |
Less: Non-controlling share of Adjusted EBITDA(2) | | | (8,492) | | | (9,517) | | | (9,820) | | | 303 |
Adjusted EBITDA (non-GAAP) | | | $8,329 | | | $16,118 | | | $(6,160) | | | $22,278 |
(1) | Includes the following items for the year ended December 31, 2019: (i) net loss of $(349) and (ii) depreciation and amortization expense of $1,005. |
(2) | Includes the following items for the nine-months ended September 30, 2021 and years ended December 31, 2020, and 2019: (i) equity-based compensation of $599, $352 and $221, (ii) provision for income taxes of $36, $59 and $60, (iii) interest expense of $1,911, $1,979 and $3,400, (iv) changes in fair value of non-hedge derivative instruments of $0, $38 and $1,336, (v) depreciation and amortization expense of $5,946, $6,097 and $4,803 and (vi) loss on extinguishment of debt of $0, $992 and $0, respectively. |
• | operating expenses of $35.9 million which primarily includes compensation and benefits of $12.7 million and facility operating expense of $11.0 million; and |
• | depreciation and amortization of $26.4 million. |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Revenues | | | | | | | | | ||||
Lease income | | | $— | | | $— | | | $1,056 | | | $(1,056) |
Terminal services revenues | | | 157 | | | — | | | 7,057 | | | (7,057) |
Other revenue | | | 9,825 | | | 3,855 | | | 14,074 | | | (10,219) |
Total revenues | | | 9,982 | | | 3,855 | | | 22,187 | | | (18,332) |
| | | | | | | | |||||
Expenses | | | | | | | | | ||||
Operating expenses | | | 12,202 | | | 10,327 | | | 24,854 | | | (14,527) |
Acquisition and transaction expenses | | | — | | | 907 | | | 5,008 | | | (4,101) |
Depreciation and amortization | | | 6,726 | | | 1,497 | | | 9,849 | | | (8,352) |
Asset impairment | | | — | | | — | | | 4,726 | | | (4,726) |
Total expenses | | | 18,928 | | | 12,731 | | | 44,437 | | | (31,706) |
| | | | | | | | |||||
Other (expense) income | | | | | | | | | ||||
Equity in losses of unconsolidated entities | | | (9,262) | | | (3,222) | | | (192) | | | (3,030) |
Gain on sale of assets, net | | | 16 | | | — | | | 116,660 | | | (116,660) |
Interest expense | | | (857) | | | (1,335) | | | (1,712) | | | 377 |
Other (expense) income | | | (3,864) | | | — | | | 2,098 | | | (2,098) |
Total other (expense) income | | | (13,967) | | | (4,557) | | | 116,854 | | | (121,411) |
(Loss) income before income taxes | | | (22,913) | | | (13,433) | | | 94,604 | | | (108,037) |
(Benefit from) provision for income taxes | | | (3,599) | | | (2,265) | | | 14,106 | | | (16,371) |
Net (loss) income | | | (19,314) | | | (11,168) | | | 80,498 | | | (91,666) |
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries | | | (206) | | | (39) | | | (215) | | | 176 |
Net (loss) income attributable to FTAI Infrastructure | | | $(19,108) | | | $(11,129) | | | $80,713 | | | $(91,842) |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Net (loss) income attributable to FTAI Infrastructure | | | $(19,108) | | | $(11,129) | | | $80,713 | | | $(91,842) |
Add: (Benefit from) provision for income taxes | | | (3,599) | | | (2,265) | | | 14,106 | | | (16,371) |
Add: Equity-based compensation expense | | | 617 | | | 649 | | | 455 | | | 194 |
Add: Acquisition and transaction expenses | | | — | | | 907 | | | 5,008 | | | (4,101) |
Add: Losses on the modification or extinguishment of debt and capital lease obligations | | | — | | | — | | | — | | | — |
Add: Changes in fair value of non-hedge derivative instruments | | | (1,979) | | | — | | | (1,809) | | | 1,809 |
Add: Asset impairment charges | | | — | | | — | | | 4,726 | | | (4,726) |
Add: Incentive allocations | | | — | | | — | | | — | | | — |
Add: Depreciation and amortization expense | | | 6,726 | | | 1,497 | | | 9,849 | | | (8,352) |
Add: Interest expense | | | 857 | | | 1,335 | | | 1,712 | | | (377) |
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities(1) | | | 10,712 | | | 3,304 | | | (153) | | | 3,457 |
Less: Equity in losses of unconsolidated entities | | | 9,262 | | | 3,222 | | | 192 | | | 3,030 |
Less: Non-controlling share of Adjusted EBITDA(2) | | | (214) | | | (120) | | | (39) | | | (81) |
Adjusted EBITDA (non-GAAP) | | | $3,274 | | | $(2,600) | | | $114,760 | | | $(117,360) |
(1) | Includes the following items for the nine-months ended September 30, 2021 and years ended December 31, 2020 and 2019: (i) net loss of $(9,262), $(3,222) and $(193), (ii) depreciation expense of $6,677, $5,513 and $40, (iii) interest expense of $748, $1,021 and $0, (iv) acquisition and transaction expense of $0, $581 and $0, (v) changes in fair value of non-hedge derivative instruments of $12,525, $(589) and $0 and (vi) asset impairment of $24, $0 and $0, respectively. |
(2) | Includes the following items for the nine-months ended September 30, 2021 and years ended December 31, 2020 and 2019: (i) equity-based compensation of $21, $22 and $9, (ii) interest expense of $29, $46 and $0, (iii) depreciation expense of $231, $52 and $30 and (iv) changes in fair value of non-hedge derivative instruments of $(67), $0 and $0, respectively. |
• | operating expenses of $12.7 million primarily due to the Long Ridge Transaction; and |
• | cost of sales of $2.6 million related to the sale of butane at Repauno. |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Revenues | | | | | | | | | ||||
Lease income | | | $358 | | | $— | | | $— | | | $— |
Rail revenues | | | 24,182 | | | — | | | — | | | — |
Total revenues | | | 24,540 | | | — | | | — | | | — |
| | | | | | | | |||||
Expenses | | | | | | | | | ||||
Operating expenses | | | 12,877 | | | — | | | — | | | — |
Acquisition and transaction expenses | | | 851 | | | — | | | — | | | — |
Depreciation and amortization | | | 5,270 | | | — | | | — | | | — |
Total expenses | | | 18,998 | | | — | | | — | | | — |
| | | | | | | | |||||
Other expense | | | | | | | | | ||||
Interest expense | | | (37) | | | — | | | — | | | — |
Other expense | | | (197) | | | — | | | — | | | — |
Total other expense | | | (234) | | | — | | | — | | | — |
Income before income taxes | | | 5,308 | | | — | | | — | | | — |
Provision for income taxes | | | 681 | | | — | | | — | | | — |
Net income | | | 4,627 | | | — | | | — | | | — |
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries | | | — | | | — | | | — | | | — |
Net income attributable to FTAI Infrastructure | | | $4,627 | | | $— | | | $— | | | $— |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Net income attributable to FTAI Infrastructure | | | $4,627 | | | $— | | | $— | | | $— |
Add: Provision for income taxes | | | 681 | | | — | | | — | | | — |
Add: Equity-based compensation expense | | | — | | | — | | | — | | | — |
Add: Acquisition and transaction expenses | | | 851 | | | — | | | — | | | — |
Add: Losses on the modification or extinguishment of debt and capital lease obligations | | | — | | | — | | | — | | | — |
Add: Changes in fair value of non-hedge derivative instruments | | | — | | | — | | | — | | | — |
Add: Asset impairment charges | | | — | | | — | | | — | | | — |
Add: Incentive allocations | | | — | | | — | | | — | | | — |
Add: Depreciation & amortization expense | | | 5,270 | | | — | | | — | | | — |
Add: Interest expense | | | 37 | | | — | | | — | | | — |
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities | | | — | | | — | | | — | | | — |
Less: Equity in losses of unconsolidated entities | | | — | | | — | | | — | | | — |
Less: Non-controlling share of Adjusted EBITDA | | | — | | | — | | | — | | | — |
Adjusted EBITDA (non-GAAP) | | | $11,466 | | | $— | | | $— | | | $— |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Revenues | | | | | | | | | ||||
Other revenue | | | $4,004 | | | $4,424 | | | $2,917 | | | $1,507 |
Total revenues | | | 4,004 | | | 4,424 | | | 2,917 | | | 1,507 |
| | | | | | | | |||||
Expenses | | | | | | | | | ||||
Operating expenses | | | 5,188 | | | 5,992 | | | 4,549 | | | 1,443 |
General and administrative | | | 6,173 | | | 8,522 | | | 7,469 | | | 1,053 |
Acquisition and transaction expenses | | | 8,009 | | | 751 | | | 4,126 | | | (3,375) |
Management fees and incentive allocation to affiliate | | | 11,244 | | | 13,073 | | | 16,541 | | | (3,468) |
Depreciation and amortization | | | 466 | | | 583 | | | 406 | | | 177 |
Total expenses | | | 31,080 | | | 28,921 | | | 33,091 | | | (4,170) |
| | | | | | | | |||||
Other (expense) income | | | | | | | | | ||||
Equity in earnings (losses) of unconsolidated entities | | | 452 | | | 115 | | | (62) | | | 177 |
Interest expense | | | (6) | | | (3) | | | (6) | | | 3 |
Other income | | | 1 | | | — | | | 7 | | | (7) |
Total other income (expense) | | | 447 | | | 112 | | | (61) | | | 173 |
Loss before income taxes | | | (26,629) | | | (24,385) | | | (30,235) | | | 5,850 |
Provision for (benefit from) income taxes | | | — | | | 3 | | | (6) | | | 9 |
Net loss | | | (26,629) | | | (24,388) | | | (30,229) | | | 5,841 |
Less: Net income attributable to non-controlling interest in consolidated subsidiaries: | | | — | | | — | | | — | | | — |
Net loss attributable to FTAI Infrastructure | | | $(26,629) | | | $(24,388) | | | $(30,229) | | | $5,841 |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Change | ||||
(in thousands) | | | 2020 | | | 2019 | | | ‘20 vs. ‘19 | |||
Net loss attributable to FTAI Infrastructure | | | $(26,629) | | | $(24,388) | | | $(30,229) | | | $5,841 |
Add: Provision for (benefit from) income taxes | | | — | | | 3 | | | (6) | | | 9 |
Add: Equity-based compensation expense | | | — | | | — | | | — | | | — |
Add: Acquisition and transaction expenses | | | 8,009 | | | 751 | | | 4,126 | | | (3,375) |
Add: Losses on the modification or extinguishment of debt and capital lease obligations | | | — | | | — | | | — | | | — |
Add: Changes in fair value of non-hedge derivative instruments | | | — | | | — | | | — | | | — |
Add: Asset impairment charges | | | — | | | — | | | — | | | — |
Add: Incentive allocations | | | — | | | — | | | 5,819 | | | (5,819) |
Add: Depreciation and amortization expense | | | 466 | | | 583 | | | 406 | | | 177 |
Add: Interest expense | | | 6 | | | 3 | | | 6 | | | (3) |
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities(1) | | | 55 | | | (164) | | | (61) | | | (103) |
Less: Equity in (earnings) losses of unconsolidated entities | | | (452) | | | (115) | | | 62 | | | (177) |
Less: Non-controlling share of Adjusted EBITDA | | | — | | | — | | | — | | | — |
Adjusted EBITDA (non-GAAP) | | | $(18,545) | | | $(23,327) | | | $(19,877) | | | $(3,450) |
(1) | Includes the following items for the nine-months ended September 30, 2021 and years ended December 31, 2020 and 2019: (i) net loss of $(24), $(281) and $(192) and (ii) interest expense of $79, $117 and $131, respectively. |
• | operating expenses of $5.2 million, which primarily includes compensation and benefits and facility operating expense at our railcar cleaning business; |
• | general and administrative expenses of $6.2 million, which represents FTAI Infrastructure's respective share of FTAI's allocated corporate costs; |
• | management fees and incentive allocation to affiliate of $11.2 million, which reflects FTAI Infrastructure's respective share of the management fee to our Manager; and |
• | acquisition and transaction expenses of $8.0 million, which reflects FTAI Infrastructure's respective share of FTAI's acquisition and transaction-related expenses. |
• | Cash used for the purpose of making investments was $779.4 million, $252.2 million and $351.9 million, during the nine-months ended September 30, 2021 and years ended December 31, 2020 and 2019, respectively. |
• | Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities. |
• | During the nine-months ended September 30, 2021, additional borrowings were obtained in connection with the (i) Series 2021 Bonds (as defined in Note 8 of the combined consolidated financial statements) of $425.0 million and (ii) EB-5 Loan Agreement of $26.1 million. |
• | During the year ended December 31, 2020, additional borrowings were obtained in connection with the Series 2020 Bonds (as defined in Note 8 of the combined consolidated financial statements) of $264.0 million. We made principal payments of $240.0 million related to the Jefferson Revolver and the Series 2016 and 2012 Bonds. |
• | During the year ended December 31, 2019, additional borrowings were obtained in connection with (i) LREG Credit Agreement of $173.5 million, (ii) the DRP Revolver of $25.0 million and (iii) the Jefferson Revolver of $23.2 million. We made principal payments of $24.8 million related to the Jefferson Revolver and Series 2012 Bonds. |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Cash flow data: | | | | | | | |||
Net cash used in operating activities | | | $(69,796) | | | $(46,860) | | | $(52,672) |
Net cash used in investing activities | | | (779,403) | | | (252,216) | | | (258,578) |
Net cash provided by financing activities | | | 1,132,420 | | | 337,628 | | | 293,647 |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
(in thousands) | | | 2020 | | | 2019 | |||
Net cash used in operating activities | | | $(69,796) | | | $(46,860) | | | $(52,672) |
Add: Proceeds from sale of assets | | | — | | | — | | | 91,732 |
Add: Return of capital distributions from unconsolidated entities | | | — | | | — | | | 1,555 |
Less: Required payments on debt obligations | | | — | | | — | | | (24,878) |
Less: Capital distributions to non-controlling interest | | | — | | | — | | | — |
Exclude: Changes in working capital | | | 36,624 | | | 15,823 | | | (20,508) |
Funds Available for Distribution (FAD) | | | $(33,172) | | | $(31,037) | | | $(4,771) |
• | FAD does not include equity capital called from our existing limited partners, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in our operations. |
• | FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified. |
• | While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as we rely on alternative sources of liquidity to fund such purchases. |
• | FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as we have multiple sources of liquidity and intend to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity. |
• | FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments. |
• | FAD does not reflect changes in working capital balances as management believes that changes in working capital are primarily driven by short term timing differences, which are not meaningful to our distribution decisions. |
• | Management has significant discretion to make distributions, and we are not bound by any contractual provision that requires us to use cash for distributions. |
| | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | Thereafter | | | Total | |
DRP Revolver | | | $25,000 | | | $— | | | $— | | | $— | | | $— | | | $— | | | $25,000 |
Series 2020 Bonds | | | — | | | — | | | — | | | — | | | 79,060 | | | 184,920 | | | 263,980 |
Total principal payments on loans and bonds payable | | | 25,000 | | | — | | | — | | | — | | | 79,060 | | | 184,920 | | | 288,980 |
Total estimated interest payments(1) | | | 12,443 | | | 11,940 | | | 11,940 | | | 11,940 | | | 9,568 | | | 106,305 | | | 164,136 |
Operating lease obligations | | | 4,546 | | | 4,414 | | | 4,361 | | | 4,124 | | | 3,988 | | | 145,547 | | | 166,980 |
Total contractual obligations | | | $41,989 | | | $16,354 | | | $16,301 | | | $16,064 | | | $92,616 | | | $436,772 | | | $620,096 |
(1) | Estimated interest payments based on rates as of December 31, 2020. |
Asset | | | Range of Estimated Useful Lives | | | Residual Value Estimates |
Railcars and locomotives | | | 40 - 50 years from date of manufacture | | | Scrap value at end of useful life |
Track and track related assets | | | 15 - 50 years from date of manufacture | | | Scrap value at end of useful life |
Land, site improvements and rights | | | N/A | | | N/A |
Bridges and tunnels | | | 15 – 55 years | | | Scrap value at end of useful life |
Buildings and site improvements | | | 20 - 30 years | | | Scrap value at end of useful life |
Railroad equipment | | | 3 - 15 years from date of manufacture | | | Scrap value at end of useful life |
Terminal machinery and equipment | | | 15 - 25 years from date of manufacture | | | Scrap value at end of useful life |
Vehicles | | | 5 - 7 years from date of manufacture | | | Scrap value at end of useful life |
Furniture and fixtures | | | 3 - 6 years from date of purchase | | | None |
Computer hardware and software | | | 2 - 5 years from date of purchase | | | None |
Construction in progress | | | N/A | | | N/A |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
• | serving as our consultant with respect to the periodic review of the acquisition criteria and parameters for asset acquisitions, borrowings, financing transactions and operations; |
• | investigating, analyzing, valuing and selecting asset acquisition opportunities; |
• | with respect to our prospective acquisitions and dispositions of assets, conducting negotiations with brokers, sellers and purchasers and their respective agents and representatives, investment bankers and owners of privately and publicly held companies; |
• | engaging and supervising independent contractors that provide services relating to us or our assets, including, but not limited to, investment banking, legal or regulatory advisory, tax advisory, due diligence, accounting advisory, securities brokerage and other financial brokerage and consulting services as the Manager determines from time to time is advisable; |
• | negotiating the sale, exchange or other disposition of any assets; |
• | coordinating and managing operations of any of our joint venture or co-investment interests and conducting all matters with respect to those joint ventures or co-investments; |
• | coordinating and supervising all matters related to our assets, including the sale and management of such assets and retaining agents, managers or other advisors in connection therewith; |
• | providing executive and administrative personnel, office space and office services required in rendering services to us; |
• | administering the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to our management as may be agreed upon by our Manager and our board of directors, including, without limitation, the collection of revenues and the payment of our debts and obligations and maintenance of appropriate computer services to perform such administrative functions; |
• | communicating with the past, current and prospective holders of any of our equity or debt securities as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and to maintain effective relations with such holders; |
• | counseling us in connection with policy decisions to be made by our board of directors; |
• | evaluating and recommending to our board of directors modifications to any hedging strategies in effect on the date hereof and engaging in hedging activities consistent with such strategies, as in effect from time to time; |
• | counseling us regarding the maintenance of our exemption from the Investment Company Act and monitoring compliance with the requirements for maintaining such an exemption; |
• | assisting us in developing criteria that are specifically tailored to our acquisition objectives and making available to us its knowledge and experience with respect to our target assets; |
• | representing and making recommendations to us in connection with the purchase and finance, and commitment to purchase and finance, of our target assets, and in connection with the sale and commitment to sell such assets; |
• | monitoring the operating performance of our assets and providing periodic reports with respect thereto to our board of directors, including comparative information with respect to such operating performance, valuation and budgeted or projected operating results; |
• | investing and re-investing any of our moneys and securities (including investing in short-term investments pending investment in asset acquisitions, payment of fees; costs and expenses; or payments of dividends or distributions to our shareholders and partners) and advising us as to our capital structure and capital raising; |
• | causing us to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures, compliance procedures and testing systems with respect to financial reporting obligations and to conduct quarterly compliance reviews with respect thereto; |
• | causing us to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses; |
• | taking all necessary actions to enable us to make required tax filings and reports, including soliciting shareholders for required information to the extent provided by the provisions of the Code; |
• | assisting us in complying with all regulatory requirements applicable to us in respect of our business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents required under the Exchange Act; |
• | handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which we may be involved or to which we may be subject arising out of our day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by our board of directors; |
• | using commercially reasonable efforts to cause expenses incurred by us or on our behalf to be within any expense guidelines set by our board of directors from time to time; |
• | performing such other services as may be required from time to time for management and other activities relating to our assets as our board of directors and our Manager shall agree from time to time or as our Manager shall deem appropriate under the particular circumstances; |
• | using commercially reasonable efforts to cause us to comply with all applicable laws; and |
• | traveling in connection with the performance of any services or activities relating to our assets, operations, acquisitions or investment analysis. |
• | the willful violation of the Management Agreement by the Manager in its corporate capacity (as distinguished from the acts of any employees of the Manager which are taken without the complicity of any of the Manager’s management) under the Management Agreement; |
• | our Manager’s fraud, misappropriation of funds, or embezzlement against us; or |
• | our Manager’s gross negligence of duties under our Management Agreement. |
Name | | | Age | | | Position |
Joseph P. Adams, Jr. | | | 64 | | | Chairman of the board of directors |
James Hamilton | | | 67 | | | Independent Director |
| | [•] | | | Independent Director | |
| | [•] | | | Independent Director |
Name | | | Age | | | Position |
| | | | Chief Executive Officer and President | ||
Scott Christopher | | | 48 | | | Chief Financial Officer and Treasurer |
| | | | Chief Accounting Officer |
• | assisting the board’s oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our independent auditors’ qualifications and independence, and (iv) the performance of our independent auditors and our internal auditors; |
• | preparing the report required to be prepared by the Audit Committee pursuant to the rules of the SEC for inclusion in our annual proxy statement; |
• | reviewing our financial risk and control procedures; and |
• | has the sole discretion to appoint annually our independent registered public accounting firm, evaluate its independence and performance and set clear hiring policies for employees or former employees of the independent registered public accounting firm. |
• | recommend to the board of directors individuals qualified to serve as directors and on committees of the board of directors; |
• | advise the board with respect to board composition, procedures and committees; |
• | advise the board with respect to the corporate governance principles applicable to us; and |
• | oversee the evaluation of the board of directors. |
• | oversee our annual review of the Management Agreement, including the performance of and compensation payable to our Manager thereunder; |
• | oversee our compensation policies and, if applicable, employee benefit plans and practices, including any incentive-compensation and equity-based plans; |
• | review and discuss with management our compensation discussion and analysis to be included in our annual proxy statement or annual report on Form 10-K filed with the SEC; |
• | prepare Compensation Committee reports, as required by the rules of the SEC; |
• | make recommendations to the board of directors regarding director compensation; and |
• | perform such further functions as may be consistent with the charter of the Compensation Committee of the board of directors or assigned by applicable law, our articles of incorporation or bylaws, or the board of directors. |
• | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
• | full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications; |
• | compliance with applicable governmental laws, rules and regulations; |
• | prompt internal reporting of violations of the code to appropriate persons identified in the code; and |
• | accountability for adherence to the code. |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Option Awards ($) | | | All Other Compensation ($) | | | Total ($) |
Scott Christopher, Chief Financial Officer | | | 2021 | | | 200,000 | | | (1) | | | — | | | 9,168(2) | | | 209,168 |
| | 2020 | | | 200,000 | | | 700,000 | | | — | | | 8,868 | | | 908,868 |
(1) | The discretionary bonus payable for 2021 is not yet determinable as of the date of this Information Statement. Our Manager expects to determine the amount of such discretionary bonus on or before March 15, 2022, and we will update this Information Statement with this information when such amount has been determined. |
(2) | This amount consists of (i) $8,700 of 401(k) matching contributions made by our Manager and (ii) $468 of life insurance premiums paid by our Manager. |
• | Base Salary - Our Manager paid Mr. Christopher a base salary of $200,000 in 2021 to assist each with paying basic living expenses during the calendar year; |
• | Bonus - Our Manager expects to pay Mr. Christopher a discretionary bonus in early 2022 based on its subjective review of his performance in 2021; and |
• | Retirement Arrangements and Other Compensation - Our Manager provides Mr. Christopher with 401(k) matching contributions and company-paid life insurance premiums, which our Manager believes are reasonable, competitive and consistent with the Manager’s overall executive compensation objectives to reward and retain talented and experienced individuals. |
(i) | voting power, which includes the power to vote, or to direct the voting of, our common stock; and/or |
(ii) | investment power, which includes the power to dispose of, or to direct the disposition of, our common stock. |
Name and Address of Beneficial Owner(1) | | | Amount and Nature of Beneficial Ownership | | | Percent of Class(2) |
The Washington State Investment Board(3) | | | | | ||
Fortress Investment Group LLC and certain affiliates(4) | | | | | ||
Morgan Stanley(5) | | | | | ||
Joseph P. Adams, Jr.(6) | | | | | ||
James Hamilton(6) | | | | | ||
Scott Christopher(6) | | | | | ||
All directors, nominees and executive officers as a group ( persons) | | | | |
* | Denotes less than 1%. |
(1) | The address of all officers and directors listed above, and of Fortress and certain affiliates, are in the care of Fortress Investment Group LLC, 1345 Avenue of the Americas, 45th Floor, New York, NY 10105. |
(2) | Percentages shown assume the exercise by such persons of all options to acquire shares of common stock that are exercisable within 60 days of , 2022, and no exercise by any other person. |
(3) | Sole voting and dispositive power in respect of shares of common stock, based on a Schedule 13G/A filed with the SEC on April 29, 2020. The Washington State Investment Board’s address is 2100 Evergreen Park Drive SW, P.O. Box 40916, Olympia, WA 98504. |
(4) | Includes shares of common stock held by Fortress Worldwide Transportation and Infrastructure Investors LP, shares of common stock held by FTAI Offshore Holdings L.P. and options held by the Manager that are exercisable within 60 days of , 2022. |
(5) | Shared voting power of in respect of shares of common stock; shared dispositive power in respect of shares of common stock, as stated in a Schedule 13G/A filed with the SEC on . Morgan Stanley’s address is 1585 Broadway, New York, NY 10036. |
(6) | Includes with respect to each of these individuals the following number of shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days of , 2022: Adams, Jr.- ; Hamilton- ; and Christopher- . |
(a) | own, to the extent it does not already own, all of FTAI’s investments in Jefferson Terminal, Repauno, Long Ridge, Transtar, Aleon and Gladieux, KRS, Clean Planet USA, FYX, CarbonFree and Containers; and |
(b) | assume, to the extent it is not already liable for: |
(i) | any liabilities relating to or arising out of our initial portfolio of assets described under (a) above, whether arising prior to, at the time of, or after, the effectiveness of the Separation and Distribution Agreement; |
(ii) | any liabilities arising out of claims by our directors, officers and affiliates arising after the time of effectiveness of the Separation and Distribution Agreement against either FTAI or us to the extent they relate to our initial portfolio of assets described under (a) above as of the date of the Separation and Distribution Agreement; and |
(iii) | any other potential liabilities related to (A) recent FTAI equity offerings in certain specified percentages as disclosed in the Separation and Distribution Agreement; (B) FTAI’s Exchange Act reports relating to disclosures about our initial portfolio of assets described under (a) above; and (C) indemnification obligations under the Management Agreement with respect to our initial portfolio of assets described under (a) above. |
(a) | any liabilities relating to our initial portfolio of assets, which shall include all of Jefferson Terminal, Repauno, Long Ridge, Transtar, Aleon and Gladieux, KRS, Clean Planet USA, FYX, CarbonFree and Containers, whether arising prior to, at the time of, or after, the effectiveness of the Separation and Distribution Agreement; |
(b) | any liabilities arising out of claims by our directors, officers and affiliates arising after the time of effectiveness of the Separation and Distribution Agreement against either FTAI or us to the extent they relate to the our initial portfolio of assets described under (a) above as of the date of the Separation and Distribution Agreement; |
(c) | any other potential liabilities related to (A) recent FTAI equity offerings in certain specified percentages as disclosed in the Separation and Distribution Agreement; (B) FTAI’s Exchange Act reports relating to disclosures about our initial portfolio of assets described under (a) above; and (C) indemnification obligations under the Management Agreement with respect to the our initial portfolio of assets described under (a) above; |
(d) | any failure by any member of the FTAI Infrastructure or any other person to pay, perform or otherwise promptly discharge any liability listed under (a)-(c) above in accordance with their respective terms, whether prior to, at or after the time of effectiveness of the Separation and Distribution Agreement; |
(e) | any breach by any member of the FTAI Infrastructure of any provision of the Separation and Distribution Agreement and any agreements ancillary thereto (if any), subject to any limitations of liability provisions and other provisions applicable to any such breach set forth therein; and |
(f) | any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in this Information Statement or the registration statement of which this Information Statement is a part other than information that relates solely to any assets owned, directly or indirectly by FTAI, excluding the assets that will comprise our initial portfolio described under (a) above. |
(a) | any other liability of FTAI or its subsidiaries (excluding any liabilities related to FTAI Infrastructure); |
(b) | any failure of any member of the FTAI Group or any other person to pay, perform or otherwise promptly discharge any liability listed under (a) and (b) above in accordance with their respective terms, whether prior to, at or after the time of effectiveness of the Separation and Distribution Agreement; |
(c) | any breach by any member of the FTAI Group of any provision of the Separation and Distribution Agreement and any agreements ancillary thereto (if any), subject to any limitations of liability provisions and other provisions applicable to any such breach set forth therein; and |
(d) | any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in this Information Statement or the registration statement of which this Information Statement is a part that relates solely to any assets owned, directly or indirectly by FTAI, other than our initial portfolio of assets, which shall include all of Jefferson Terminal, Repauno, Long Ridge, Transtar, Aleon and Gladieux, KRS, Clean Planet USA, FYX, CarbonFree and Containers. |
• | shares of common stock, par value $0.01 per share; and |
• | shares of preferred stock, par value $0.01 per share. |
• | restricting dividends in respect of our common stock; |
• | diluting the voting power of our common stock or providing that holders of preferred stock have the right to vote on matters as a class; |
• | impairing the liquidation rights of our common stock; or |
• | delaying or preventing a change of control of us. |
• | the Fortress Parties have the right to, and have no duty to abstain from, exercising such right to, engage or invest in the same or similar business as us, do business with any of our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees; |
• | if the Fortress Parties, or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, it has no duty to offer such corporate opportunity to us, our stockholders or affiliates; |
• | we have renounced any interest or expectancy in, or in being offered an opportunity to participate in, such corporate opportunities; and |
• | in the event that any of our directors and officers who is also a director, officer or employee of any of the Fortress Parties, acquire knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as our director or officer and such person acted in good faith, then such person is deemed to have fully satisfied such person’s fiduciary duty and is not liable to us if any of the Fortress Parties pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us. |
• | a citizen or resident of the United States; |
• | a corporation created or organized in the United States or under the laws of the United States, or of any state thereof, or the District of Columbia; |
• | an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or |
• | a trust if (i) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person. |
• | the gain is effectively connected with such Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment of such Non-U.S. Holder); |
• | in the case of a Non-U.S. Holder that is a non-resident alien individual, such Non-U.S. Holder is present in the United States for 183 or more days in the taxable year of disposition and certain other requirements are met; or |
• | FTAI Infrastructure is or has been a “United States real property holding corporation” (“USRPHC”) at any time within the shorter of the five-year period ending on the date of such sale, exchange, or other taxable disposition or the period that such Non-U.S. Holder held FTAI Infrastructure common stock and either (a) FTAI Infrastructure common stock is not treated as regularly traded on an established securities market at the time of the sale, or (b) such Non-U.S. Holder owns or owned (actually or constructively) more than 5% of FTAI Infrastructure common stock at any time during the shorter of the two periods mentioned above. |
FTAI Infrastructure Predecessor | | | |
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Transtar, LLC and Subsidiaries | | | |
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| | Notes | | | September 30, 2021 (Unaudited) | | | December 31, | ||||
| | 2020 | | | 2019 | |||||||
Assets | | | | | | | | | ||||
Current assets: | | | | | | | | | ||||
Cash and cash equivalents | | | 2 | | | $55,244 | | | $15,706 | | | $6,522 |
Restricted cash | | | 2 | | | 283,398 | | | 39,715 | | | 10,347 |
Accounts receivable, net | | | 2 | | | 85,846 | | | 4,952 | | | 14,949 |
Other current assets | | | 2 | | | 63,250 | | | 24,142 | | | 9,210 |
Total current assets | | | | | 487,738 | | | 84,515 | | | 41,028 | |
Leasing equipment, net | | | 4 | | | 36,288 | | | 37,116 | | | 38,348 |
Operating lease right-of-use assets, net | | | 12 | | | 70,649 | | | 60,561 | | | 35,356 |
Property, plant, and equipment, net | | | 5 | | | 1,492,042 | | | 940,258 | | | 726,983 |
Investments | | | 6 | | | 89,293 | | | 123,794 | | | 155,898 |
Intangible assets, net | | | 7 | | | 72,078 | | | 13,028 | | | 16,582 |
Goodwill | | | 2 | | | 239,941 | | | 122,735 | | | 122,639 |
Other assets | | | 2 | | | 20,289 | | | 17,003 | | | 17,471 |
Total assets | | | | | $2,508,318 | | | $1,399,010 | | | $1,154,305 | |
| | | | | | | | |||||
Liabilities | | | | | | | | | ||||
Current liabilities: | | | | | | | | | ||||
Accounts payable and accrued liabilities | | | | | $128,204 | | | $52,276 | | | $76,088 | |
Debt, net | | | 8 | | | 25,000 | | | 25,000 | | | 146,010 |
Operating lease liabilities | | | 12 | | | 2,833 | | | 892 | | | 566 |
Other current liabilities | | | | | 12,989 | | | 4,189 | | | 3,184 | |
Total current liabilities | | | | | 169,026 | | | 82,357 | | | 225,848 | |
Debt, net | | | 8 | | | 692,970 | | | 253,473 | | | 112,067 |
Operating lease liabilities | | | 12 | | | 67,950 | | | 60,011 | | | 35,212 |
Other liabilities | | | | | 45,287 | | | 7,772 | | | 15,209 | |
Total liabilities | | | | | $975,233 | | | $403,613 | | | $388,336 | |
| | | | | | | | |||||
Commitments and contingencies | | | 18 | | | | | | | |||
| | | | | | | | |||||
Equity | | | | | | | | | ||||
Net Parent investment | | | | | $1,631,568 | | | $999,291 | | | $729,057 | |
Accumulated other comprehensive (loss) income | | | | | (105,158) | | | (26,237) | | | 372 | |
Parent company equity | | | | | 1,526,410 | | | 973,054 | | | 729,429 | |
Non-controlling interest in equity of consolidated subsidiaries | | | | | 6,675 | | | 22,343 | | | 36,540 | |
Total equity | | | | | $1,533,085 | | | $995,397 | | | $765,969 | |
Total liabilities and equity | | | | | $2,508,318 | | | $1,399,010 | | | $1,154,305 |
| | Note | | | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | |||||||
Revenues | | | | | | | | | ||||
Total revenues | | | 11 | | | $72,674 | | | $68,562 | | | $229,452 |
| | | | | | | | |||||
Expenses | | | | | | | | | ||||
Operating expenses | | | | | 66,206 | | | 69,391 | | | 260,909 | |
General and administrative | | | | | 6,173 | | | 8,522 | | | 7,469 | |
Acquisition and transaction expenses | | | | | 8,860 | | | 1,658 | | | 9,134 | |
Management fees and incentive allocation to affiliate | | | 16 | | | 11,244 | | | 13,073 | | | 16,541 |
Depreciation and amortization | | | 4, 5, 7 | | | 38,900 | | | 31,114 | | | 33,128 |
Asset impairment | | | | | — | | | — | | | 4,726 | |
Total expenses | | | | | 131,383 | | | 123,758 | | | 331,907 | |
| | | | | | | | |||||
Other (expense) income | | | | | | | | | ||||
Equity in losses of unconsolidated entities | | | 6 | | | (8,810) | | | (3,107) | | | (546) |
Gain (loss) on sale of assets, net | | | 6 | | | 16 | | | (8) | | | 121,296 |
Loss on extinguishment of debt | | | | | — | | | (4,724) | | | — | |
Interest expense | | | | | (9,396) | | | (10,764) | | | (17,907) | |
Other (expense) income | | | | | (6,855) | | | 92 | | | 2,857 | |
Total other (expense) income | | | | | (25,045) | | | (18,511) | | | 105,700 | |
(Loss) income before income taxes | | | | | (83,754) | | | (73,707) | | | 3,245 | |
(Benefit from) provision for income taxes | | | 15 | | | (2,755) | | | (1,984) | | | 14,384 |
Net loss | | | | | (80,999) | | | (71,723) | | | (11,139) | |
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries | | | | | (18,949) | | | (16,522) | | | (17,571) | |
Net (loss) income attributable to the Parent | | | | | $(62,050) | | | $(55,201) | | | $6,432 |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Net loss | | | $(80,999) | | | $(71,723) | | | $(11,139) |
Other comprehensive (loss) income: | | | | | | | |||
Other comprehensive (loss) income related to equity method investees, net (1) | | | (78,921) | | | (26,609) | | | 372 |
Comprehensive loss | | | (159,920) | | | (98,332) | | | (10,767) |
Comprehensive loss attributable to non-controlling interest: | | | (18,949) | | | (16,522) | | | (17,571) |
Comprehensive (loss) income attributable to Parent | | | $(140,971) | | | $(81,810) | | | $6,804 |
(1) | Net of deferred tax (benefit) expense of $(1,271), $(7,075) and $99 for the nine-months ended September 30, 2021 (unaudited) and years ended December 31, 2020 and 2019, respectively. |
| | Net Parent Investment | | | Accumulated Other Comprehensive Income (Loss) | | | Non-Controlling Interest in Equity of Consolidated Subsidiaries | | | Total Equity | |
Equity - December 31, 2018 | | | $600,455 | | | $— | | | $52,602 | | | $653,057 |
Net income (loss) | | | 6,432 | | | — | | | (17,571) | | | (11,139) |
Other comprehensive income | | | — | | | 372 | | | — | | | 372 |
Net transfers from Parent | | | 122,170 | | | — | | | — | | | 122,170 |
Equity-based compensation | | | — | | | — | | | 1,509 | | | 1,509 |
Equity - December 31, 2019 | | | $729,057 | | | $372 | | | $36,540 | | | $765,969 |
Net loss | | | (55,201) | | | — | | | (16,522) | | | (71,723) |
Other comprehensive loss | | | — | | | (26,609) | | | — | | | (26,609) |
Net transfers from Parent | | | 325,435 | | | — | | | — | | | 325,435 |
Equity-based compensation | | | — | | | — | | | 2,325 | | | 2,325 |
Equity - December 31, 2020 | | | $999,291 | | | $(26,237) | | | $22,343 | | | $995,397 |
Net loss | | | (62,050) | | | — | | | (18,949) | | | (80,999) |
Other comprehensive loss | | | — | | | (78,921) | | | — | | | (78,921) |
Net transfers from Parent | | | 694,327 | | | — | | | — | | | 694,327 |
Equity-based compensation | | | — | | | — | | | 3,281 | | | 3,281 |
Equity - September 30, 2021 (unaudited) | | | $1,631,568 | | | $(105,158) | | | $6,675 | | | $1,533,085 |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Cash flows from operating activities: | | | | | | | |||
Net loss | | | $(80,999) | | | $(71,723) | | | $(11,139) |
Adjustments to reconcile net loss to cash used in operating activities: | | | | | | | |||
Equity in losses of unconsolidated entities | | | 8,810 | | | 3,107 | | | 546 |
(Gain) loss on sale of assets | | | (16) | | | 8 | | | (121,296) |
Loss on extinguishment of debt | | | — | | | 4,724 | | | — |
Equity-based compensation | | | 3,281 | | | 2,325 | | | 1,509 |
Depreciation and amortization | | | 38,900 | | | 31,114 | | | 33,128 |
Asset impairment | | | — | | | — | | | 4,726 |
Change in deferred income taxes | | | (2,920) | | | (2,314) | | | 10,661 |
Change in fair value of non-hedge derivatives | | | (1,979) | | | 181 | | | 4,555 |
Amortization of deferred financing costs | | | 1,755 | | | 1,542 | | | 3,690 |
Bad debt expense (recoveries) | | | (4) | | | (1) | | | 440 |
Change in: | | | | | | | |||
Accounts receivable | | | (62,265) | | | 9,998 | | | 4,123 |
Other assets | | | (25,237) | | | (12,670) | | | 133 |
Accounts payable and accrued liabilities | | | 46,510 | | | (14,225) | | | 21,339 |
Other liabilities | | | 4,368 | | | 1,074 | | | (5,087) |
Net cash used in operating activities | | | (69,796) | | | (46,860) | | | (52,672) |
| | | | | | ||||
Cash flows from investing activities: | | | | | | | |||
Investment in unconsolidated entities | | | (54,499) | | | (4,692) | | | — |
Acquisition of business, net of cash acquired | | | (627,399) | | | — | | | — |
Acquisition of property, plant and equipment | | | (97,505) | | | (247,524) | | | (323,037) |
Acquisition of remaining interest in JV investment | | | — | | | — | | | (28,828) |
Proceeds from sale of subsidiary, net of cash transferred | | | — | | | — | | | 91,732 |
Return of capital distributions from unconsolidated entities | | | — | | | — | | | 1,555 |
Net cash used in investing activities | | | $(779,403) | | | $(252,216) | | | $(258,578) |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Cash flows from financing activities: | | | | | | | |||
Proceeds from debt | | | $451,100 | | | $263,980 | | | $221,835 |
Repayment of debt | | | — | | | (239,983) | | | (24,878) |
Payment of deferred financing costs | | | (13,007) | | | (11,804) | | | (25,480) |
Net transfers from Parent | | | 694,327 | | | 325,435 | | | 122,170 |
Net cash provided by financing activities | | | 1,132,420 | | | 337,628 | | | 293,647 |
| | | | | | ||||
Net increase (decrease) in cash and cash equivalents and restricted cash | | | 283,221 | | | 38,552 | | | (17,603) |
Cash and cash equivalents and restricted cash, beginning of period | | | 55,421 | | | 16,869 | | | 34,472 |
Cash and cash equivalents and restricted cash, end of period | | | $338,642 | | | $55,421 | | | $16,869 |
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Supplemental disclosure of cash flow information: | | | | | | | |||
Cash paid for interest, net of capitalized interest | | | $8,119 | | | $8,586 | | | $13,112 |
Cash paid for taxes | | | 326 | | | 329 | | | 162 |
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Supplemental disclosure of non-cash investing and financing activities: | | | | | | | |||
Acquisition of property, plant and equipment | | | $(1,062) | | | $(10,817) | | | $(47,078) |
Investment in Long Ridge JV | | | — | | | — | | | 155,589 |
Non-Cash change in equity method investment | | | (78,921) | | | (26,609) | | | 372 |
Asset | | | Range of Estimated Useful Lives | | | Residual Value Estimates |
Railcars and locomotives | | | 40 - 50 years from date of manufacture | | | Scrap value at end of useful life |
Track and track related assets | | | 15 - 50 years from date of manufacture | | | Scrap value at end of useful life |
Land, site improvements and rights | | | N/A | | | N/A |
Bridges and tunnels | | | 15 – 55 years | | | Scrap value at end of useful life |
Buildings and site improvements | | | 20 - 30 years | | | Scrap value at end of useful life |
Railroad equipment | | | 3 - 15 years from date of manufacture | | | Scrap value at end of useful life |
Terminal machinery and equipment | | | 15 - 25 years from date of manufacture | | | Scrap value at end of useful life |
Vehicles | | | 5 - 7 years from date of manufacture | | | Scrap value at end of useful life |
Furniture and fixtures | | | 3 - 6 years from date of purchase | | | None |
Computer hardware and software | | | 2 - 5 years from date of purchase | | | None |
Construction in progress | | | N/A | | | N/A |
Fair value of assets acquired: | | | |
Cash and cash equivalents | | | $8,610 |
Accounts receivable | | | 18,625 |
Operating lease right-of-use assets | | | 10,831 |
Property, plant and equipment | | | 506,479 |
Intangible assets | | | 62,500 |
Other assets | | | 15,594 |
Total assets | | | 622,639 |
Fair value of liabilities assumed: | | | |
Accounts payable and accrued liabilities | | | 47,010 |
Operating lease liabilities | | | 10,689 |
Pension and other postretirement benefits(1) | | | 37,552 |
Other liabilities | | | 8,587 |
Total liabilities | | | 103,838 |
Goodwill(2) | | | 117,206 |
Total purchase consideration | | | $636,007 |
(1) | Included in Other liabilities in the Combined Consolidated Balance Sheets. |
(2) | Goodwill is primarily attributable to the assembled workforce of Transtar and the synergies expected to be achieved. This goodwill is assigned to the new Transtar segment and is tax deductible for income tax purposes. |
| | Estimated useful life in years | | | Fair value | |
Above/below market leases | | | 2 - 7 | | | $1,500 |
Customer relationships | | | 13 - 15 | | | 61,000 |
Total | | | | | $62,500 |
| | Estimated useful life in years | | | Fair value | |
Railcars | | | 1 - 40 | | | $126,055 |
Track and track related assets | | | 1 - 40 | | | 88,121 |
Land, site improvements and rights | | | N/A | | | 91,890 |
Bridges and tunnels | | | 15 - 55 | | | 176,309 |
Buildings and improvements | | | 3 - 25 | | | 12,533 |
Railroad equipment | | | 2 - 15 | | | 2,712 |
Terminal machinery and equipment | | | 2 - 15 | | | 3,215 |
Vehicles | | | 2 - 5 | | | 3,538 |
Construction in progress | | | N/A | | | 1,928 |
Computer hardware and software | | | 2 - 5 | | | 178 |
Total | | | | | $506,479 |
• | The allocation of the purchase price and related adjustments, including adjustments to depreciation and amortization expense related to the fair value of property, plant and equipment and intangible assets acquired; |
• | The exclusion of acquisition-related costs incurred during the nine-months ended September 30, 2021 and allocation of substantially all acquisition-related costs to the year ended December 31, 2020; and |
• | Associated tax-related impacts of adjustments. |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, 2020 | |
Total revenue | | | $152,217 | | | $183,744 |
Net loss attributable to Parent | | | (37,634) | | | (39,349) |
| | September 30, 2021 (Unaudited) | | | December 31, | ||||
| | 2020 | | | 2019 | ||||
Leasing equipment | | | $44,179 | | | $44,179 | | | $44,326 |
Less: Accumulated depreciation | | | (7,891) | | | (7,063) | | | (5,978) |
Leasing equipment, net | | | $36,288 | | | $37,116 | | | $38,348 |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Depreciation expense for leasing equipment | | | $828 | | | $1,106 | | | $1,108 |
| | September 30, 2021 (Unaudited) | | | December 31, | ||||
| | 2020 | | | 2019 | ||||
Land, site improvements and rights | | | $151,185 | | | $52,047 | | | $51,901 |
Construction in progress | | | 92,299 | | | 401,729 | | | 206,591 |
Buildings and improvements | | | 18,826 | | | 4,491 | | | 3,783 |
Bridges and tunnels | | | 176,310 | | | — | | | — |
Terminal machinery and equipment | | | 937,319 | | | 557,788 | | | 519,603 |
Track and track related assets | | | 96,497 | | | 2,349 | | | 2,208 |
Railroad equipment | | | 7,792 | | | 5,560 | | | 4,823 |
Railcars and locomotives | | | 126,429 | | | — | | | — |
Computer hardware and software | | | 5,337 | | | 5,101 | | | 4,325 |
Furniture and fixtures | | | 1,745 | | | 1,750 | | | 1,715 |
Other | | | 9,583 | | | 5,870 | | | 1,969 |
| | 1,623,322 | | | 1,036,685 | | | 796,918 | |
Less: Accumulated depreciation | | | (131,280) | | | (96,427) | | | (69,935) |
Property, plant and equipment, net | | | $1,492,042 | | | $940,258 | | | $726,983 |
| | | | | | September 30, 2021 (Unaudited) | | | December 31, | ||||||
| | Investment | | | Ownership Percentage | | | 2020 | | | 2019 | ||||
Intermodal Finance I, Ltd. | | | Equity method | | | 51% | | | $— | | | $— | | | $501 |
Long Ridge Terminal LLC | | | Equity method | | | 50% | | | 35,538 | | | 122,539 | | | 155,397 |
FYX Trust Holdco LLC | | | Equity | | | 14% | | | 1,255 | | | 1,255 | | | — |
GM-FTAI Holdco LLC | | | Equity method | | | 50% | | | 52,500 | | | — | | | — |
| | | | | | $89,293 | | | $123,794 | | | $155,898 |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
JGP Energy Partners LLC | | | $— | | | $— | | | $(292) |
Intermodal Finance I, Ltd. | | | 452 | | | 115 | | | (62) |
Long Ridge Terminal LLC | | | (9,262) | | | (3,222) | | | (192) |
Total | | | $(8,810) | | | $(3,107) | | | $(546) |
| | September 30, 2021 (Unaudited) | | | December 31, | ||||
Balance Sheet | | | 2020 | | | 2019 | |||
Assets | | | | | | | |||
Current assets | | | | | | | |||
Cash and cash equivalents | | | $7,645 | | | $3,059 | | | $1,992 |
Restricted cash | | | 32,740 | | | 27,000 | | | 30,917 |
Accounts receivable, net | | | 29,048 | | | 5,803 | | | 12,219 |
Other current assets | | | 4,854 | | | 6,117 | | | 991 |
Total current assets | | | 74,287 | | | 41,979 | | | 46,119 |
Leasing equipment, net | | | 494 | | | 1,078 | | | 2,546 |
Property, plant, and equipment, net | | | 751,379 | | | 612,699 | | | 390,416 |
Intangible assets, net | | | 5,035 | | | 5,320 | | | 38,138 |
Goodwill | | | 89,390 | | | 89,390 | | | 89,294 |
Other assets | | | 4,115 | | | 2,557 | | | 3,074 |
Total assets | | | $924,700 | | | $753,023 | | | $569,587 |
| | | | | | ||||
Liabilities | | | | | | | |||
Current Liabilities | | | | | | | |||
Accounts payable and accrued liabilities | | | $23,135 | | | $25,473 | | | $33,123 |
Other current liabilities | | | 43,993 | | | 252 | | | 82 |
Total current liabilities | | | 67,128 | | | 25,725 | | | 33,205 |
Debt, net | | | 618,063 | | | 456,448 | | | 186,953 |
Other liabilities | | | 178,811 | | | 36,448 | | | 448 |
Total liabilities | | | 864,002 | | | 518,621 | | | 220,606 |
| | | | | | ||||
Equity | | | | | | | |||
Shareholders’ equity | | | 90,321 | | | 241,210 | | | 351,880 |
Accumulated deficit | | | (29,623) | | | (6,808) | | | (2,899) |
Total equity | | | 60,698 | | | 234,402 | | | 348,981 |
Total liabilities and equity | | | $924,700 | | | $753,023 | | | $569,587 |
| | Nine-Months ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
Income Statement | | | 2020 | | | 2019 | |||
Revenue | | | $38,425 | | | $25,079 | | | $8,887 |
Total revenue | | | 38,425 | | | 25,079 | | | 8,887 |
Expenses | | | | | | | |||
Operating expenses | | | 16,767 | | | 16,987 | | | 7,669 |
General and administrative | | | 104 | | | 125 | | | 556 |
Management fees and incentive allocation to affiliate | | | 54 | | | 91 | | | 142 |
Depreciation and amortization | | | 13,327 | | | 11,004 | | | 2,351 |
Interest expense | | | 1,649 | | | 2,267 | | | 285 |
Total expenses | | | 31,901 | | | 30,474 | | | 11,003 |
Other (expense) income | | | (25,059) | | | (1,585) | | | 734 |
Loss before income taxes | | | (18,535) | | | (6,980) | | | (1,382) |
Provision for income taxes | | | — | | | — | | | — |
Net loss | | | $(18,535) | | | $(6,980) | | | $(1,382) |
| | September 30, 2021 (Unaudited) | |||||||
| | Jefferson Terminal | | | Transtar | | | Total | |
Intangible assets | | | | | | | |||
Acquired favorable lease intangibles | | | $— | | | $1,500 | | | $1,500 |
Less: Accumulated amortization | | | — | | | (63) | | | (63) |
Acquired favorable lease intangibles, net | | | — | | | 1,437 | | | 1,437 |
| | | | | | ||||
Customer relationships | | | $35,513 | | | $61,000 | | | $96,513 |
Less: Accumulated amortization | | | (25,150) | | | (722) | | | (25,872) |
Acquired customer relationships, net | | | 10,363 | | | 60,278 | | | 70,641 |
| | | | | | ||||
Total intangible assets, net | | | $10,363 | | | $61,715 | | | $72,078 |
| | | | | | ||||
Intangible liabilities | | | | | | | |||
Acquired unfavorable lease intangibles | | | $— | | | $100 | | | $100 |
Less: Accumulated amortization | | | — | | | (2) | | | (2) |
Acquired unfavorable lease intangibles, net | | | $— | | | $98 | | | $98 |
| | December 31, 2020 | |||||||
| | Jefferson Terminal | | | Transtar | | | Total | |
Customer relationships | | | $35,513 | | | $— | | | $35,513 |
Less: Accumulated amortization | | | (22,485) | | | — | | | (22,485) |
Total intangible assets, net | | | $13,028 | | | $— | | | $13,028 |
| | December 31, 2019 | |||||||
| | Jefferson Terminal | | | Transtar | | | Total | |
Customer relationships | | | $35,513 | | | $— | | | $35,513 |
Less: Accumulated amortization | | | (18,931) | | | — | | | (18,931) |
Total intangible assets, net | | | $16,582 | | | $— | | | $16,582 |
| | Classification in Combined Consolidated Statements of Operations | | | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | |||||||
Lease intangibles | | | Depreciation and amortization | | | $61 | | | $— | | | $— |
Customer Relationships | | | Depreciation and amortization | | | 3,387 | | | 3,553 | | | 3,553 |
Total | | | | | $3,448 | | | $3,553 | | | $3,553 | |
| | | | | | | |
| | September 30, 2021 (unaudited) | | | December 31, 2020 | |
Remainder of 2021 and 2021, respectively | | | $1,990 | | | $3,551 |
2022 | | | 7,960 | | | 3,551 |
2023 | | | 7,949 | | | 3,551 |
2024 | | | 6,695 | | | 2,375 |
2025 | | | 4,322 | | | — |
Thereafter | | | 43,064 | | | — |
Total | | | $71,980 | | | $13,028 |
| | September 30, 2021 (Unaudited) | | | December 31, 2020 | | | December 31, 2019 | |||||||
| | Outstanding Borrowings | | | Stated Interest Rate | | | Maturity Date | | | Outstanding Borrowings | | | Outstanding Borrowings | |
Loans payable | | | | | | | | | | | |||||
Jefferson Revolver(1) | | | $— | | | N/A | | | N/A | | | $— | | | $50,000 |
DRP Revolver(2) | | | 25,000 | | | (i) Base Rate + 1.50%; or (ii) Base Rate + 2.50% (Eurodollar) | | | 11/5/21 | | | 25,000 | | | 25,000 |
EB-5 Loan Agreement | | | 26,100 | | | 5.75% | | | 1/5/26 | | | — | | | — |
Total loans payable | | | 51,100 | | | | | | | 25,000 | | | 75,000 | ||
Bonds payable | | | | | | | | | | | |||||
Series 2012 Bonds(3) | | | — | | | N/A | | | N/A | | | — | | | 41,059 |
Series 2016 Bonds | | | — | | | N/A | | | N/A | | | — | | | 144,200 |
Series 2020 Bonds | | | 263,980 | | | (i) Tax Exempt Series 2020A Bonds: 3.625% (ii) Tax Exempt Series 2020A Bonds: 4.00% (iii) Taxable Series 2020B Bonds: 6.00% | | | (i) 1/1/35 (ii) 1/1/50 (iii) 1/1/25 | | | 263,980 | | | — |
Series 2021 Bonds | | | 425,000 | | | (i) Series 2021A Bonds: 1.875% to 3.000% (ii) Series 2021B Bonds: 4.100% | | | (i) 1/1/26 to 1/1/50 (ii) 1/1/28 | | | — | | | — |
Total bonds payable | | | 688,980 | | | | | | | 263,980 | | | 185,259 | ||
Debt | | | 740,080 | | | | | | | 288,980 | | | 260,259 | ||
Less: Debt issuance costs | | | (22,110) | | | | | | | (10,507) | | | (2,182) | ||
Total debt, net | | | $717,970 | | | | | | | $278,473 | | | $258,077 | ||
Total debt due within one year | | | $25,000 | | | | | | | $25,000 | | | $146,010 |
(1) | Requires a quarterly commitment fee at a rate of 0.50% on the average daily unused portion, as well as customary letter of credit fees and agency fees. |
(2) | Requires a quarterly commitment fee at a rate of 0.875% on the average daily unused portion, as well as customary letter of credit fees and agency fees. |
(3) | Includes unamortized premium of $1,509 as of December 31, 2019. |
i) | $39.1 million aggregate principal amount of Serial Bonds maturing between January 1, 2026 and January 1, 2031, and bearing interest at specified fixed rates ranging from 1.875% to 2.625% per annum, |
ii) | $38.2 million aggregate principal amount of Term Bonds maturing January 1, 2036, and bearing interest at a fixed rate of 2.750% per annum, |
iii) | $44.9 million aggregate principal amount of Term Bonds maturing January 1, 2041, and bearing interest at a fixed rate of 2.875% per annum, and |
iv) | $102.8 million aggregate principal amount of Term Bonds maturing January 1, 2050, and bearing interest at a fixed rate of 3.00% per annum. |
| | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | Thereafter | | | Total | |
DRP Revolver | | | $25,000 | | | $— | | | $— | | | $— | | | $— | | | $— | | | $25,000 |
Series 2020 Bonds | | | — | | | — | | | — | | | — | | | 79,060 | | | 184,920 | | | 263,980 |
Total principal payments on loans and bonds payable | | | $25,000 | | | $— | | | $— | | | $— | | | $79,060 | | | $184,920 | | | $288,980 |
• | Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs. |
• | Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability. |
• | Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. |
• | Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts. |
• | Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). |
| | Fair Value as of September 30, 2021 (Unaudited) | | | Fair Value Measurements Using Fair Value Hierarchy as of September 30, 2021 (Unaudited) | | | ||||||||
| | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | Valuation Technique | |
Assets | | | | | | | | | | | |||||
Cash and cash equivalents | | | $55,244 | | | $55,244 | | | $— | | | $— | | | Market |
Restricted cash | | | 283,398 | | | 283,398 | | | — | | | — | | | Market |
Derivative assets | | | 1,979 | | | — | | | 1,979 | | | — | | | Income |
Total assets | | | $340,621 | | | $338,642 | | | $1,979 | | | $— | | |
| | Fair Value as of December 31, 2020 | | | Fair Value Measurements Using Fair Value Hierarchy as of December 31, 2020 | | | ||||||||
| | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | Valuation Technique | |
Assets | | | | | | | | | | | |||||
Cash and cash equivalents | | | $15,706 | | | $15,706 | | | $— | | | $— | | | Market |
Restricted cash | | | 39,715 | | | 39,715 | | | — | | | — | | | Market |
Total assets | | | $55,421 | | | $55,421 | | | $— | | | $— | | |
| | Fair Value as of December 31, 2019 | | | Fair Value Measurements Using Fair Value Hierarchy as of December 31, 2019 | | | ||||||||
| | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | Valuation Technique | |
Assets | | | | | | | | | | | |||||
Cash and cash equivalents | | | $6,522 | | | $6,522 | | | $— | | | $— | | | Market |
Restricted cash | | | 10,347 | | | 10,347 | | | — | | | — | | | Market |
Derivative assets | | | 181 | | | — | | | — | | | 181 | | | Income |
Total assets | | | $17,050 | | | $16,869 | | | $— | | | $181 | | |
| | September 30, 2021 (Unaudited) | | | December 31, | ||||
| | 2020 | | | 2019 | ||||
Series 2012 Bonds | | | $— | | | $— | | | $41,450 |
Series 2016 Bonds | | | — | | | — | | | 145,143 |
Series 2020 A Bonds(1) | | | 191,362 | | | 186,306 | | | — |
Series 2020 B Bonds(1) | | | 81,768 | | | 79,723 | | | — |
Series 2021 A Bonds(1) | | | 219,071 | | | — | | | — |
Series 2021 B Bonds(1) | | | 196,042 | | | — | | | — |
(1) | Fair value is based upon market prices for similar municipal securities. |
| | September 30, 2021 (Unaudited) | | | December 31, 2020 | | | December 31, 2019 | |
Notional Amount (BBL in thousands) | | | 493 | | | N/A | | | N/A |
Fair Value of Assets(1) | | | $1,979 | | | $— | | | $— |
Term | | | 1 to 6 months | | | N/A | | | N/A |
(1) | Included in Other current assets in the Combined Consolidated Balance Sheets. |
| | Nine-Months Ended September 30, 2021 (Unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Beginning Balance | | | $— | | | $181 | | | $6,545 |
Net losses recognized in earnings | | | — | | | (181) | | | (6,364) |
Purchases | | | — | | | — | | | 314 |
Sales | | | — | | | — | | | (674) |
Settlements | | | — | | | — | | | 360 |
Ending Balance | | | $— | | | $— | | | $181 |
| | Nine-Months Ended September 30, 2021 (Unaudited) | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Lease income | | | $1,295 | | | $— | | | $358 | | | $— | | | $1,653 |
Rail revenues | | | — | | | — | | | 24,182 | | | — | | | 24,182 |
Terminal services revenues | | | 32,853 | | | 157 | | | — | | | — | | | 33,010 |
Crude marketing revenues | | | — | | | — | | | — | | | — | | | — |
Other revenue | | | — | | | 9,825 | | | — | | | 4,004 | | | 13,829 |
Total revenues | | | $34,148 | | | $9,982 | | | $24,540 | | | $4,004 | | | $72,674 |
| | Year Ended December 31, 2020 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Lease income | | | $1,186 | | | $— | | | $— | | | $— | | | $1,186 |
Rail revenues | | | — | | | — | | | — | | | — | | | — |
Terminal services revenues | | | 50,887 | | | — | | | — | | | — | | | 50,887 |
Crude marketing revenues | | | 8,210 | | | — | | | — | | | — | | | 8,210 |
Other revenue | | | — | | | 3,855 | | | — | | | 4,424 | | | 8,279 |
Total revenues | | | $60,283 | | | $3,855 | | | $— | | | $4,424 | | | $68,562 |
| | Year Ended December 31, 2019 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Lease income | | | $2,306 | | | $1,056 | | | $— | | | $— | | | $3,362 |
Rail revenues | | | — | | | — | | | — | | | — | | | — |
Terminal services revenues | | | 35,908 | | | 7,057 | | | — | | | — | | | 42,965 |
Crude marketing revenues | | | 166,134 | | | — | | | — | | | — | | | 166,134 |
Other revenue | | | — | | | 14,074 | | | — | | | 2,917 | | | 16,991 |
Total revenues | | | $204,348 | | | $22,187 | | | $— | | | $2,917 | | | $229,452 |
| | September 30, 2021 (Unaudited) | | | December 31, 2020 | |
2021 | | | $222 | | | $1,457 |
2022 | | | — | | | — |
2023 | | | — | | | — |
2024 | | | — | | | — |
2025 | | | — | | | — |
Thereafter | | | — | | | — |
Total | | | $222 | | | $1,457 |
| | Year Ended December 31, | ||||
| | 2020 | | | 2019 | |
Operating lease expense | | | $4,587 | | | $5,846 |
Short-term lease expense | | | 315 | | | 3,088 |
Variable lease expense | | | 1,379 | | | 3,263 |
Sublease income | | | — | | | (1,032) |
Total Lease expense | | | $6,281 | | | $11,165 |
| | December 31, 2020 | | | December 31, 2019 | |
Right-of-use assets, net | | | $60,561 | | | $35,356 |
Lease liabilities | | | $60,903 | | | $35,778 |
| | | | |||
Weighted average remaining lease term | | | 40.7 years | | | 43.1 years |
Weighted average incremental borrowing rate | | | 6.2% | | | 7.4% |
| | | | |||
Cash paid for amounts included in the measurement of operating lease liabilities | | | $4,591 | | | $4,855 |
| | December 31, 2020 | |
2021 | | | $4,546 |
2022 | | | 4,414 |
2023 | | | 4,361 |
2024 | | | 4,124 |
2025 | | | 3,988 |
Thereafter | | | 145,547 |
Total undiscounted lease payments | | | 166,980 |
Less: Imputed interest | | | 106,077 |
Total lease liabilities | | | $60,903 |
| | Nine-Months Ended September 30, 2021 | | | Year Ended December 31, | | | Remaining Expense To Be Recognized, If All Vesting Conditions Are Met as of September 30, 2021 (Unaudited) | ||||
| | (Unaudited) | | | 2020 | | | 2019 | | | ||
Restricted shares | | | $2,664 | | | $1,676 | | | $1,054 | | | $4,712 |
Common units | | | 617 | | | 649 | | | 455 | | | 1,230 |
Total | | | $3,281 | | | $2,325 | | | $1,509 | | | $5,942 |
| | Pension Benefits | | | Postretirement Benefits | |
Benefit obligation as of January 1, 2021 | | | $— | | | $— |
Transtar acquisition | | | 9,055 | | | 28,487 |
Service costs | | | 392 | | | 431 |
Interest costs | | | 45 | | | 139 |
Actuarial losses (gains) | | | — | | | — |
Benefit paid | | | — | | | — |
Benefit obligation as of September 30, 2021 (unaudited) | | | $9,492 | | | $29,057 |
| | Pension Benefits | | | Postretirement Benefits | |
Weighted-average assumptions used to determine pension benefit obligation as of September 30, 2021 (unaudited): | | | | | ||
Discount rate | | | 2.88% | | | N/A |
Rate of compensation increase | | | 3.50% | | | N/A |
| | | | |||
Weighted-average assumptions used to determine net periodic pension and postretirement costs for the nine-month ended September 30, 2021 (unaudited): | | | | | ||
Discount rate | | | 2.88% | | | 2.86% |
Expected long-term return on plan assets | | | N/A | | | N/A |
Rate of compensation increases | | | 3.50% | | | N/A |
Average future working lifetime (years) | | | 10.93 | | | 11.43 |
Initial healthcare cost trend rate | | | N/A | | | 6.00% |
Ultimate healthcare cost trend rate | | | N/A | | | 3.80% |
Year ultimate healthcare cost trend rate is reached | | | N/A | | | 2075 |
| | Pension Benefits | | | Postretirement Benefits | |
2022 | | | $12 | | | $144 |
2023 | | | 106 | | | 214 |
2024 | | | 193 | | | 321 |
2025 | | | 351 | | | 454 |
2026 | | | 435 | | | 556 |
Years 2027 – 2031 | | | $4,435 | | | $4,190 |
| | Year Ended December 31, | ||||
| | 2020 | | | 2019 | |
Current: | | | | | ||
Federal | | | $4 | | | $(9) |
State and local | | | 329 | | | 243 |
Foreign | | | (41) | | | 54 |
Total current provision | | | 292 | | | 288 |
Deferred: | | | | | ||
Federal | | | (2,272) | | | 14,097 |
State and local | | | — | | | (1) |
Foreign | | | (4) | | | — |
Total deferred (benefit) provision | | | (2,276) | | | 14,096 |
Total | | | $(1,984) | | | $14,384 |
| | Year Ended December 31, | ||||
| | 2020 | | | 2019 | |
U.S. federal tax at statutory rate | | | 21.00% | | | 21.00% |
Income not subject to tax at statutory rate | | | 4.15% | | | (212.63)% |
State and local taxes | | | (0.45)% | | | 7.44% |
Foreign taxes | | | 0.06% | | | 1.67% |
| | | | |||
Other | | | 0.06% | | | 10.99% |
Change in valuation allowance | | | (22.13)% | | | 614.62% |
Provision for income taxes | | | 2.69% | | | 443.09% |
| | December 31, | ||||
| | 2020 | | | 2019 | |
Deferred tax assets: | | | | | ||
Net operating loss carryforwards | | | $85,174 | | | $69,987 |
Accrued expenses | | | 469 | | | 1,252 |
Interest expense | | | 25,488 | | | 24,706 |
Operating lease liabilities | | | 10,119 | | | 6,104 |
Other | | | 2,619 | | | 1,735 |
Total deferred tax assets | | | 123,869 | | | 103,784 |
Less valuation allowance | | | (94,139) | | | (81,313) |
Net deferred tax assets | | | 29,730 | | | 22,471 |
Deferred tax liabilities: | | | | | ||
Investment in partnerships | | | (14,982) | | | (23,058) |
Fixed assets and goodwill | | | (9,550) | | | (7,599) |
Operating lease right-of-use assets | | | (10,062) | | | (6,032) |
Net deferred tax liabilities | | | $(4,864) | | | $(14,218) |
| | December 31, | ||||
| | 2020 | | | 2019 | |
Valuation allowance at beginning of period | | | $81,313 | | | $60,745 |
Change due to current year losses | | | 12,826 | | | 23,300 |
Change due to current year releases | | | — | | | (2,732) |
Valuation allowance at end of period | | | $94,139 | | | $81,313 |
| | September 30, 2021 (unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Management fees | | | $11,244 | | | $13,073 | | | $10,722 |
Income incentive allocation | | | — | | | — | | | — |
Capital gains incentive allocation | | | — | | | — | | | 5,819 |
Total | | | $11,244 | | | $13,073 | | | $16,541 |
| | Nine-Months ended September 30, 2021 (unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Classification in the Combined Consolidated Statements of Operations: | | | | | | | |||
General and administrative expenses | | | $2,712 | | | $4,053 | | | $3,747 |
Acquisition and transaction expenses | | | 720 | | | 682 | | | 714 |
Total | | | $3,432 | | | $4,735 | | | $4,461 |
| | Nine-Months ended September 30, 2021 (unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Classification in the Combined Consolidated Statements of Operations: | | | | | | | |||
General and administrative expenses | | | $3,461 | | | $4,469 | | | $3,722 |
Acquisition and transaction expenses | | | 7,289 | | | 69 | | | 3,412 |
Total | | | $10,750 | | | $4,538 | | | $7,134 |
| | Nine-Months ended September 30, 2021 (unaudited) | | | Year Ended December 31, | ||||
| | 2020 | | | 2019 | ||||
Non-controlling interest share of net loss | | | $(18,949) | | | $(16,522) | | | $(17,571) |
| | Nine-Months Ended September 30, 2021 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Revenues | | | | | | | | | | | |||||
Total revenues | | | $34,148 | | | $9,982 | | | $24,540 | | | $4,004 | | | $72,674 |
| | | | | | | | | | ||||||
Expenses | | | | | | | | | | | |||||
Operating expenses | | | 35,939 | | | 12,202 | | | 12,877 | | | 5,188 | | | 66,206 |
General and administrative | | | — | | | — | | | — | | | 6,173 | | | 6,173 |
Acquisition and transaction expenses | | | — | | | — | | | 851 | | | 8,009 | | | 8,860 |
Management fees and incentive allocation to affiliate | | | — | | | — | | | — | | | 11,244 | | | 11,244 |
Depreciation and amortization | | | 26,438 | | | 6,726 | | | 5,270 | | | 466 | | | 38,900 |
Total expenses | | | 62,377 | | | 18,928 | | | 18,998 | | | 31,080 | | | 131,383 |
| | | | | | | | | | ||||||
Other (expense) income | | | | | | | | | | | |||||
Equity in (losses) earnings of unconsolidated entities | | | — | | | (9,262) | | | — | | | 452 | | | (8,810) |
Gain on sale of assets, net | | | — | | | 16 | | | — | | | — | | | 16 |
Interest expense | | | (8,496) | | | (857) | | | (37) | | | (6) | | | (9,396) |
Other (expense) income | | | (2,795) | | | (3,864) | | | (197) | | | 1 | | | (6,855) |
Total other (expense) income | | | (11,291) | | | (13,967) | | | (234) | | | 447 | | | (25,045) |
(Loss) income before income taxes | | | (39,520) | | | (22,913) | | | 5,308 | | | (26,629) | | | (83,754) |
Provision for (benefit from) income taxes | | | 163 | | | (3,599) | | | 681 | | | — | | | (2,755) |
Net (loss) income | | | (39,683) | | | (19,314) | | | 4,627 | | | (26,629) | | | (80,999) |
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries | | | (18,743) | | | (206) | | | — | | | — | | | (18,949) |
Net (loss) income attributable to Parent | | | $(20,940) | | | $(19,108) | | | $4,627 | | | $(26,629) | | | $(62,050) |
| | Nine-Months Ended September 30, 2021 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Adjusted EBITDA | | | $8,329 | | | $3,274 | | | $11,466 | | | $(18,545) | | | $4,524 |
Add: Non-controlling share of Adjusted EBITDA | | | | | | | | | | | 8,706 | ||||
Add: Equity in losses of unconsolidated entities | | | | | | | | | | | (8,810) | ||||
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities | | | | | | | | | | | (10,767) | ||||
Less: Interest expense | | | | | | | | | | | (9,396) | ||||
Less: Depreciation and amortization expense | | | | | | | | | | | (38,900) | ||||
Less: Incentive allocations | | | | | | | | | | | — | ||||
Less: Asset impairment charges | | | | | | | | | | | — | ||||
Less: Changes in fair value of non-hedge derivative instruments | | | | | | | | | | | 1,979 | ||||
Less: Losses on the modification or extinguishment of debt and capital lease obligations | | | | | | | | | | | — | ||||
Less: Acquisition and transaction expenses | | | | | | | | | | | (8,860) | ||||
Less: Equity-based compensation expense | | | | | | | | | | | (3,281) | ||||
Less: Benefit from income taxes | | | | | | | | | | | 2,755 | ||||
Net loss attributable to FTAI | | | | | | | | | | | $(62,050) |
| | Year Ended December 31, 2020 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Revenues | | | | | | | | | | | |||||
Total revenues | | | $60,283 | | | $3,855 | | | $— | | | $4,424 | | | $68,562 |
| | | | | | | | | | ||||||
Expenses | | | | | | | | | | | |||||
Operating expenses | | | 53,072 | | | 10,327 | | | — | | | 5,992 | | | 69,391 |
General and administrative | | | — | | | — | | | — | | | 8,522 | | | 8,522 |
Acquisition and transaction expenses | | | — | | | 907 | | | — | | | 751 | | | 1,658 |
Management fees and incentive allocation to affiliate | | | — | | | — | | | — | | | 13,073 | | | 13,073 |
Depreciation and amortization | | | 29,034 | | | 1,497 | | | — | | | 583 | | | 31,114 |
Total expenses | | | 82,106 | | | 12,731 | | | — | | | 28,921 | | | 123,758 |
| | | | | | | | | | ||||||
Other (expense) income | | | | | | | | | | | |||||
Equity in (losses) earnings of unconsolidated entities | | | — | | | (3,222) | | | — | | | 115 | | | (3,107) |
Loss on sale of assets, net | | | (8) | | | — | | | — | | | — | | | (8) |
Loss on extinguishment of debt | | | (4,724) | | | — | | | — | | | — | | | (4,724) |
Interest expense | | | (9,426) | | | (1,335) | | | — | | | (3) | | | (10,764) |
Other income | | | 92 | | | — | | | — | | | — | | | 92 |
Total other (expense) income | | | (14,066) | | | (4,557) | | | — | | | 112 | | | (18,511) |
Loss before income taxes | | | (35,889) | | | (13,433) | | | — | | | (24,385) | | | (73,707) |
Provision for (benefit from) income taxes | | | 278 | | | (2,265) | | | — | | | 3 | | | (1,984) |
Net loss | | | (36,167) | | | (11,168) | | | — | | | (24,388) | | | (71,723) |
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries | | | (16,483) | | | (39) | | | — | | | — | | | (16,522) |
Net loss attributable to FTAI | | | $(19,684) | | | $(11,129) | | | $— | | | $(24,388) | | | $(55,201) |
| | Year Ended December 31, 2020 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Adjusted EBITDA | | | $16,118 | | | $(2,600) | | | $— | | | $(23,327) | | | $(9,809) |
Add: Non-controlling share of Adjusted EBITDA | | | | | | | | | | | 9,637 | ||||
Add: Equity in losses of unconsolidated entities | | | | | | | | | | | (3,107) | ||||
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities | | | | | | | | | | | (3,140) | ||||
Less: Interest expense | | | | | | | | | | | (10,764) | ||||
Less: Depreciation and amortization expense | | | | | | | | | | | (31,114) | ||||
Less: Incentive allocations | | | | | | | | | | | — | ||||
Less: Asset impairment charges | | | | | | | | | | | — | ||||
Less: Changes in fair value of non-hedge derivative instruments | | | | | | | | | | | (181) | ||||
Less: Losses on the modification or extinguishment of debt and capital lease obligations | | | | | | | | | | | (4,724) | ||||
Less: Acquisition and transaction expenses | | | | | | | | | | | (1,658) | ||||
Less: Equity-based compensation expense | | | | | | | | | | | (2,325) | ||||
Less: Benefit from income taxes | | | | | | | | | | | 1,984 | ||||
Net loss attributable to FTAI | | | | | | | | | | | $(55,201) |
| | Year Ended December 31, 2019 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Revenues | | | | | | | | | | | |||||
Total revenues | | | $204,348 | | | $22,187 | | | $— | | | $2,917 | | | $229,452 |
| | | | | | | | | | ||||||
Expenses | | | | | | | | | | | |||||
Operating expenses | | | 231,506 | | | 24,854 | | | — | | | 4,549 | | | 260,909 |
General and administrative | | | — | | | — | | | — | | | 7,469 | | | 7,469 |
Acquisition and transaction expenses | | | — | | | 5,008 | | | — | | | 4,126 | | | 9,134 |
Management fees and incentive allocation to affiliate | | | — | | | — | | | — | | | 16,541 | | | 16,541 |
Depreciation and amortization | | | 22,873 | | | 9,849 | | | — | | | 406 | | | 33,128 |
Asset impairment | | | — | | | 4,726 | | | — | | | — | | | 4,726 |
Total expenses | | | 254,379 | | | 44,437 | | | — | | | 33,091 | | | 331,907 |
| | | | | | | | | | ||||||
Other income (expense) | | | | | | | | | | | |||||
Equity in losses of unconsolidated entities | | | (292) | | | (192) | | | — | | | (62) | | | (546) |
Gain on sale of assets, net | | | 4,636 | | | 116,660 | | | — | | | — | | | 121,296 |
Interest expense | | | (16,189) | | | (1,712) | | | — | | | (6) | | | (17,907) |
Other income | | | 752 | | | 2,098 | | | — | | | 7 | | | 2,857 |
Total other (expense) income | | | (11,093) | | | 116,854 | | | — | | | (61) | | | 105,700 |
(Loss) income before income taxes | | | (61,124) | | | 94,604 | | | — | | | (30,235) | | | 3,245 |
Provision for (benefit from) income taxes | | | 284 | | | 14,106 | | | — | | | (6) | | | 14,384 |
Net (loss) income | | | (61,408) | | | 80,498 | | | — | | | (30,229) | | | (11,139) |
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries | | | (17,356) | | | (215) | | | — | | | — | | | (17,571) |
Net (loss) income attributable to FTAI | | | $(44,052) | | | $80,713 | | | $— | | | $(30,229) | | | $6,432 |
| | Year Ended December 31, 2019 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Adjusted EBITDA | | | $(6,160) | | | $114,760 | | | $— | | | $(19,877) | | | $88,723 |
Add: Non-controlling share of Adjusted EBITDA | | | | | | | | | | | 9,859 | ||||
Add: Equity in losses of unconsolidated entities | | | | | | | | | | | (546) | ||||
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities | | | | | | | | | | | (442) | ||||
Less: Interest expense | | | | | | | | | | | (17,907) | ||||
Less: Depreciation and amortization expense | | | | | | | | | | | (33,128) | ||||
Less: Incentive allocations | | | | | | | | | | | (5,819) | ||||
Less: Asset impairment charges | | | | | | | | | | | (4,726) | ||||
Less: Changes in fair value of non-hedge derivative instruments | | | | | | | | | | | (4,555) | ||||
Less: Losses on the modification or extinguishment of debt and capital lease obligations | | | | | | | | | | | — | ||||
Less: Acquisition and transaction expenses | | | | | | | | | | | (9,134) | ||||
Less: Equity-based compensation expense | | | | | | | | | | | (1,509) | ||||
Less: Provision for income taxes | | | | | | | | | | | (14,384) | ||||
Net income attributable to FTAI | | | | | | | | | | | $6,432 |
| | September 30, 2021 (Unaudited) | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Current assets | | | $357,560 | | | $48,504 | | | $72,592 | | | $9,082 | | | $487,738 |
Non-current assets | | | 946,676 | | | 315,554 | | | 699,303 | | | 59,047 | | | 2,020,580 |
Total assets | | | 1,304,236 | | | 364,058 | | | 771,895 | | | 68,129 | | | 2,508,318 |
| | | | | | | | | | ||||||
Debt, net | | | 692,970 | | | 25,000 | | | — | | | — | | | 717,970 |
| | | | | | | | | | ||||||
Current liabilities | | | 72,962 | | | 33,566 | | | 61,636 | | | 862 | | | 169,026 |
Non-current liabilities | | | 752,369 | | | 2,975 | | | 50,777 | | | 86 | | | 806,207 |
Total liabilities | | | 825,331 | | | 36,541 | | | 112,413 | | | 948 | | | 975,233 |
| | | | | | | | | | ||||||
Non-controlling interests in equity of consolidated subsidiaries | | | 4,869 | | | 1,806 | | | — | | | — | | | 6,675 |
Total equity | | | 478,905 | | | 327,517 | | | 659,482 | | | 67,181 | | | 1,533,085 |
| | | | | | | | | | ||||||
Total liabilities and equity | | | $1,304,236 | | | $364,058 | | | $771,895 | | | $68,129 | | | $2,508,318 |
| | December 31, 2020 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Current assets | | | $79,288 | | | $2,936 | | | $— | | | $2,291 | | | $84,515 |
Non-current assets | | | 910,640 | | | 397,281 | | | — | | | 6,574 | | | 1,314,495 |
Total assets | | | 989,928 | | | 400,217 | | | — | | | 8,865 | | | 1,399,010 |
| | | | | | | | | | ||||||
Debt, net | | | 253,473 | | | 25,000 | | | — | | | — | | | 278,473 |
| | | | | | | | | | ||||||
Current liabilities | | | 52,242 | | | 29,303 | | | — | | | 812 | | | 82,357 |
Non-current liabilities | | | 313,387 | | | 7,869 | | | — | | | — | | | 321,256 |
Total liabilities | | | 365,629 | | | 37,172 | | | — | | | 812 | | | 403,613 |
| | | | | | | | | | ||||||
Non-controlling interests in equity of consolidated subsidiaries | | | 20,947 | | | 1,396 | | | — | | | | | 22,343 | |
Total equity | | | 624,299 | | | 363,045 | | | — | | | 8,053 | | | 995,397 |
| | | | | | | | | | ||||||
Total liabilities and equity | | | $989,928 | | | $400,217 | | | $— | | | $8,865 | | | $1,399,010 |
| | December 31, 2019 | |||||||||||||
| | Jefferson Terminal | | | Ports and Terminals | | | Transtar | | | Corporate and Other | | | Total | |
Current assets | | | $34,884 | | | $5,142 | | | $— | | | $1,002 | | | $41,028 |
Non-current assets | | | 746,538 | | | 361,260 | | | — | | | 5,479 | | | 1,113,277 |
Total assets | | | 781,422 | | | 366,402 | | | — | | | 6,481 | | | 1,154,305 |
| | | | | | | | | | ||||||
Debt, net | | | 233,077 | | | 25,000 | | | — | | | — | | | 258,077 |
| | | | | | | | | | ||||||
Current liabilities | | | 202,261 | | | 23,102 | | | — | | | 485 | | | 225,848 |
Non-current liabilities | | | 122,248 | | | 40,234 | | | — | | | 6 | | | 162,488 |
Total liabilities | | | 324,509 | | | 63,336 | | | — | | | 491 | | | 388,336 |
| | | | | | | | | | ||||||
Non-controlling interests in equity of consolidated subsidiaries | | | 35,755 | | | 785 | | | — | | | — | | | 36,540 |
| | | | | | | | | | ||||||
Total equity | | | 456,913 | | | 303,066 | | | — | | | 5,990 | | | 765,969 |
| | | | | | | | | | ||||||
Total liabilities and equity | | | $781,422 | | | $366,402 | | | $— | | | $6,481 | | | $1,154,305 |
| | As of June 30, 2021 (unaudited) | | | As of December 31, 2020 | | | As of December 31, 2019 | |
ASSETS | | | | | | | |||
Current assets | | | | | | | |||
Cash and cash equivalents | | | $433 | | | $748 | | | $496 |
Investment in affiliate | | | 354,653 | | | 525,117 | | | 460,016 |
Accounts receivable, net | | | 9,202 | | | 11,656 | | | 11,828 |
Prepaids and other current assets | | | 2,768 | | | 3,306 | | | 2,145 |
Due from affiliates | | | 11,491 | | | 10,905 | | | 11,860 |
Total current assets | | | 378,547 | | | 551,732 | | | 486,345 |
| | | | | | ||||
Property and equipment, net | | | 136,149 | | | 137,943 | | | 144,753 |
Operating lease right of use assets | | | 11,722 | | | 12,567 | | | 14,344 |
Other assets | | | 5,987 | | | 5,710 | | | 5,492 |
Total assets | | | $532,405 | | | $707,952 | | | $ 650,934 |
LIABILITIES & MEMBER’S EQUITY | | | | | | | |||
Current liabilities | | | | | | | |||
Accounts payable | | | 33,437 | | | 27,182 | | | 28,337 |
Payroll and benefits liabilities | | | 6,236 | | | 5,315 | | | 6,060 |
Accrued taxes and other current liabilities | | | 1,874 | | | 2,853 | | | 1,590 |
Operating lease liabilities | | | 2,315 | | | 2,320 | | | 2,311 |
Finance lease liabilities | | | 840 | | | 702 | | | 336 |
Due to affiliates | | | 878 | | | 798 | | | 1,241 |
Note payable to affiliate | | | — | | | 5,845 | | | 5,625 |
Total current liabilities | | | 45,580 | | | 45,015 | | | 45,500 |
Non-current liabilities | | | | | | | |||
Operating lease liabilities | | | 9,283 | | | 10,320 | | | 12,108 |
Finance lease liabilities | | | 1,425 | | | 1,600 | | | 1,121 |
Deferred income tax liabilities | | | 15,320 | | | 15,320 | | | 15,179 |
Other liabilities | | | 10,720 | | | 9,852 | | | 9,953 |
Total non-current liabilities | | | 36,748 | | | 37,092 | | | 38,361 |
Total liabilities | | | 82,328 | | | 82,107 | | | 83,861 |
Member’s equity | | | | | | | |||
Total member’s equity | | | 450,077 | | | 625,845 | | | 567,073 |
Total liabilities and member’s equity | | | $532,405 | | | $707,952 | | | $ 650,934 |
| | Year Ended December 31, 2020 | | | Year Ended December 31, 2019 | |
Revenues | | | | | ||
Revenues from affiliates | | | $93,586 | | | $108,602 |
Revenues from unrelated parties | | | 21,596 | | | 24,164 |
Total revenues | | | 115,182 | | | 132,766 |
Operating expenses | | | | | ||
Cost of sales | | | 52,907 | | | 67,843 |
Depreciation expense | | | 9,357 | | | 7,888 |
Selling, general and administrative expense | | | 5,985 | | | 6,994 |
Total operating expenses | | | 68,249 | | | 82,725 |
Operating income | | | 46,933 | | | 50,041 |
Other income (expense), net | | | 627 | | | (147) |
Interest income from affiliate | | | 11,511 | | | 20,444 |
Interest expense | | | (214) | | | (267) |
Income before income taxes | | | 58,857 | | | 70,071 |
Income tax expense | | | 14,934 | | | 18,172 |
Net income | | | $43,923 | | | $51,899 |
| | Six months Ended June 30, 2021 (unaudited) | | | Six months Ended June 30, 2020 (unaudited) | |
Revenues | | | | | ||
Revenues from affiliates | | | $56,405 | | | $44,479 |
Revenues from unrelated parties | | | 12,867 | | | 11,141 |
Total revenues | | | 69,272 | | | 55,620 |
Operating expenses | | | | | ||
Cost of sales | | | 31,175 | | | 31,055 |
Depreciation expense | | | 4,453 | | | 4,490 |
Selling, general and administrative expense | | | 2,825 | | | 2,831 |
Total operating expenses | | | 38,453 | | | 38,376 |
Operating income | | | 30,819 | | | 17,244 |
Other income, net | | | 1,159 | | | 1,105 |
Interest income from affiliate | | | 4,143 | | | 7,601 |
Interest expense | | | (76) | | | (120) |
Income before income taxes | | | 36,045 | | | 25,830 |
Income tax expense | | | 9,132 | | | 6,533 |
Net income | | | $26,913 | | | $ 19,297 |
BALANCE, January 1, 2019 | | | $481,204 |
Contributions from Parent, net | | | 33,970 |
Net income | | | 51,899 |
BALANCE, December 31, 2019 | | | $567,073 |
Contributions from Parent, net | | | 14,849 |
Net income | | | 43,923 |
BALANCE, December 31, 2020 | | | $625,845 |
Distributions to Parent, net (unaudited) | | | (202,681) |
Net income (unaudited) | | | 26,913 |
BALANCE, June 30, 2021 (unaudited) | | | $450,077 |
| | Year ended December 31, 2020 | | | Year ended December 31, 2019 | |
Cash flows from operating activities | | | | | ||
Net income | | | $43,923 | | | $51,899 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | ||
Depreciation expense | | | 9,357 | | | 7,888 |
Loss (gain) on sale of fixed assets | | | 36 | | | (371) |
Amortization of operating lease right of use assets | | | 1,778 | | | 1,011 |
Impairment of property, plant, and equipment | | | — | | | 1,300 |
Deferred tax provision | | | 141 | | | 579 |
Change in deferred credits and other liabilities | | | (99) | | | 519 |
Change in: | | | | | ||
Accounts receivables, net | | | 172 | | | (104) |
Due to/from affiliates | | | 512 | | | (1,294) |
Other assets | | | (217) | | | (433) |
Prepaids and other current assets | | | (1,161) | | | 1,671 |
Accounts payable | | | (947) | | | (9,361) |
Payroll and benefits liabilities | | | (746) | | | (2,293) |
Operating lease liabilities | | | (1,780) | | | (1,007) |
Accrued taxes and other current liabilities | | | 1,263 | | | (18,743) |
Net cash provided by operating activities | | | 52,232 | | | 31,261 |
Cash flows from investing activities | | | | | ||
Purchase of fixed assets | | | (1,529) | | | (10,021) |
Proceeds from sale of fixed assets | | | 67 | | | 435 |
Net cash outflows from investment in affiliate | | | (65,101) | | | (56,472) |
Net cash used by investing activities | | | (66,563) | | | (66,058) |
Cash flows from financing activities | | | | | ||
Repayment of finance lease principal | | | (486) | | | (182) |
Borrowings on note payable from affiliate | | | 220 | | | 460 |
Contributions from Parent, net | | | 14,849 | | | 33,970 |
Net cash provided by financing activities | | | 14,583 | | | 34,248 |
| | | | |||
Net increase (decrease) in cash and cash equivalents | | | 252 | | | (549) |
Cash and cash equivalents at beginning of period | | | 496 | | | 1,045 |
Cash and cash equivalents at end of period | | | $748 | | | $496 |
| | Six months ended June 30, 2021 (unaudited) | | | Six months ended June 30, 2020 (unaudited) | |
Cash flows from operating activities | | | | | ||
Net income | | | $26,913 | | | $19,297 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | ||
Depreciation expense | | | 4,453 | | | 4,490 |
(Gain) loss on sale of fixed assets | | | (356) | | | 36 |
Amortization of operating lease right of use assets | | | 844 | | | 754 |
Change in deferred credits and other liabilities | | | 866 | | | 913 |
Change in: | | | | | ||
Accounts receivables, net | | | 2,454 | | | 1,824 |
Due to/from affiliates | | | (506) | | | 3,401 |
Other assets | | | (277) | | | (134) |
Prepaids and other current assets | | | 538 | | | (165) |
Accounts payable | | | 5,264 | | | (7,117) |
Payroll and benefits liabilities | | | 921 | | | (29) |
Operating lease liabilities | | | (1,042) | | | (890) |
Accrued taxes and other current liabilities | | | (979) | | | 361 |
Net cash provided by operating activities | | | 39,093 | | | 22,741 |
Cash flows from investing activities | | | | | ||
Purchase of fixed assets | | | (1,579) | | | (605) |
Proceeds from sale of fixed assets | | | 620 | | | 67 |
Net cash inflows (outflows) from investment in affiliate | | | 170,464 | | | (27,243) |
Net cash provided by (used in) investing activities | | | 169,505 | | | (27,781) |
Cash flows from financing activities | | | | | ||
Repayment of finance lease principal | | | (387) | | | (213) |
(Repayment of) draw on note payable to affiliate | | | (5,845) | | | 100 |
(Distributions to) Contributions from Parent, net | | | (202,681) | | | 5,846 |
Net cash (used in) provided by financing activities | | | (208,913) | | | 5,733 |
| | | | |||
Net (decrease) increase in cash and cash equivalents | | | (315) | | | 693 |
Cash and cash equivalents at beginning of period | | | 748 | | | 496 |
Cash and cash equivalents at end of period | | | $433 | | | $1,189 |
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION |
2. | SIGNIFICANT ACCOUNTING POLICIES |
• | Level 1 – Quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. |
• | Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data. |
• | Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are unobservable. |
3. | REVENUE FROM CONTRACTS WITH CUSTOMERS |
| | Year ended December 31, 2020 | | | Year ended December 31, 2019 | |
Switching | | | $69,005 | | | $80,319 |
Interline | | | 29,301 | | | 33,241 |
Ancillary services | | | 14,373 | | | 18,134 |
Total revenues from contracts with customers | | | 112,679 | | | 131,694 |
Rental revenues | | | 2,503 | | | 1,072 |
Total revenues | | | $115,182 | | | $132,766 |
| | Six months ended June 30, 2021 (unaudited) | | | Six months ended June 30, 2020 (unaudited) | |
Switching | | | $39,644 | | | $33,209 |
Interline | | | 22,201 | | | 13,337 |
Ancillary services | | | 6,175 | | | 8,437 |
Total revenues from contracts with customers | | | 68,020 | | | 54,983 |
Rental revenues | | | 1,252 | | | 637 |
Total revenues | | | $69,272 | | | $55,620 |
4. | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS |
| | As of June 30, 2021 (unaudited) | | | As of December 31, 2020 | | | As of December 31, 2019 | |
Accounts receivable – trade | | | $9,943 | | | $12,397 | | | $12,569 |
Allowance for doubtful accounts | | | (741) | | | (741) | | | (741) |
Accounts receivable, net | | | $9,202 | | | $11,656 | | | 11,828 |
5. | PROPERTY AND EQUIPMENT, NET |
| | Cost | | | Accumulated Depreciation | | | Net Book Value | | | Life of Asset (Years) | |
Buildings | | | $8,395 | | | $(4,590) | | | $3,805 | | | 20-35 |
Land | | | 7,296 | | | — | | | 7,296 | | | — |
Machinery and Equipment | | | 280,021 | | | (147,769) | | | 132,252 | | | 5-50 |
Vehicles | | | 1,640 | | | (1,349) | | | 291 | | | 4-6 |
Construction in Progress | | | 1,109 | | | — | | | 1,109 | | | — |
Total | | | $298,461 | | | $(153,708) | | | $144,753 | | |
| | Cost | | | Accumulated Depreciation | | | Net Book Value | | | Life of Asset (Years) | |
Buildings | | | $8,395 | | | $(4,801) | | | $3,594 | | | 20-35 |
Land | | | 7,296 | | | — | | | 7,296 | | | — |
Machinery and Equipment | | | 281,647 | | | (156,108) | | | 125,539 | | | 5-50 |
Vehicles | | | 2,969 | | | (1,861) | | | 1,108 | | | 4-6 |
Construction in Progress | | | 406 | | | — | | | 406 | | | — |
Total | | | $300,713 | | | $(162,770) | | | $137,943 | |
6. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
7. | RETIREMENT BENEFIT PLANS |
8. | INCOME TAXES |
Current tax expense | | | |
Federal | | | $12,275 |
State | | | 5,318 |
Deferred tax expense | | | |
Federal | | | 418 |
State | | | 161 |
Income tax expense | | | $18,172 |
Current tax expense | | | |
Federal | | | $10,488 |
State | | | 4,374 |
Deferred tax expense | | | |
Federal | | | 27 |
State | | | 45 |
Income tax expense | | | $14,934 |
| | December 31, 2019 | |
Tax provision at statutory rate | | | 21.0% |
State income taxes, net of federal income tax benefit | | | 6.2% |
Income tax credits | | | (1.3)% |
Other, net | | | 0.0% |
Effective income tax rate | | | 25.9% |
| | December 31, 2020 | |
Tax provision at statutory rate | | | 21.0% |
State income taxes, net of federal income tax benefit | | | 5.9% |
Income tax credits | | | (1.6)% |
Other, net | | | 0.1% |
Effective income tax rate | | | 25.4% |
| | December 31, 2019 | |
Deferred income tax assets: | | | |
Operating lease liabilities | | | $3,343 |
Accruals and reserves not deducted for tax purposes until paid | | | 4,218 |
Other | | | 110 |
| | ||
Deferred income tax liabilities: | | | |
Property and equipment basis difference | | | (19,502) |
Operating lease right of use asset | | | (3,348) |
Net deferred tax liabilities | | | $(15,179) |
| | December 31, 2020 | |
Deferred income tax assets: | | | |
Operating lease liabilities | | | $2,904 |
Accruals and reserves not deducted for tax purposes until paid | | | 4,327 |
Other | | | 143 |
| | ||
Deferred income tax liabilities: | | | |
Property and equipment basis difference | | | (19,785) |
Operating lease right of use asset | | | (2,909) |
Net deferred tax liabilities | | | $(15,320) |
9. | COMMITMENTS AND CONTINGENCIES |
10. | SUPPLEMENTAL CASH FLOW INFORMATION |
| | Six Months Ended June 30, 2021 (unaudited) | | | Six Months Ended June 30, 2020 (unaudited) | |
Cash paid for interest, net | | | $76 | | | $120 |
| | Year Ended December 31, 2020 | | | Year Ended December 31, 2019 | |
Cash paid for interest, net | | | $214 | | | $267 |
11. | RELATIONSHIP WITH PARENT AND RELATED ENTITIES |
| | Six Months Ended June 30, 2021 (unaudited) | | | Six Months Ended June 30, 2020 (unaudited) | |
Cost of sales | | | $411 | | | $677 |
Selling, general and administrative expense | | | 2,629 | | | 2,133 |
Total | | | $3,040 | | | $2,810 |
| | Year Ended December 31, 2020 | | | Year Ended December 31, 2019 | |
Cost of sales | | | $1,408 | | | $1,425 |
Selling, general and administrative expense | | | 4,700 | | | 4,811 |
Total | | | $6,108 | | | $6,236 |
| | June 30, 2021 (unaudited) | | | June 30, 2020 (unaudited) | |
Operating lease right of use assets | | | $2,127 | | | $2,233 |
Operating lease liabilities, current | | | 272 | | | 272 |
Operating lease liabilities, noncurrent | | | 1,696 | | | 1,803 |
| | December 31, 2020 | | | December 31, 2019 | |
Operating lease right of use assets | | | $2,183 | | | $2,285 |
Operating lease liabilities, current | | | 272 | | | 272 |
Operating lease liabilities, noncurrent | | | 1,888 | | | 1,991 |
12. | LEASES |
Classification | | | As of December 31, 2019 |
Assets | | | |
Operating lease right of use assets | | | $14,344 |
Property and equipment, net | | | 1,443 |
Total leased assets | | | $15,787 |
Liabilities | | | |
Current | | | |
Operating lease liabilities, current | | | $2,311 |
Finance lease liabilities, current | | | 336 |
Noncurrent | | | |
Operating lease liabilities, noncurrent | | | 12,108 |
Finance lease liabilities, noncurrent | | | 1,121 |
Total lease liabilities | | | $15,876 |
Classification | | | As of December 31, 2020 |
Assets | | | |
Operating lease right of use assets | | | $12,567 |
Property and equipment, net | | | 2,262 |
Total leased assets | | | $14,829 |
Liabilities | | | |
Current | | | |
Operating lease liabilities, current | | | $2,320 |
Finance lease liabilities, current | | | 702 |
Noncurrent | | | |
Operating lease liabilities, noncurrent | | | 10,320 |
Finance lease liabilities, noncurrent | | | 1,600 |
Total lease liabilities | | | $14,942 |
| | Classification | | | Year Ended December 31, 2019 | |
Operating lease cost | | | Cost of Sales | | | $2,005 |
Finance lease cost | | | Depreciation expense | | | 196 |
Finance lease cost | | | Interest expense | | | 35 |
Total lease cost | | | | | $2,236 |
| | Classification | | | Year Ended December 31, 2020 | |
Operating lease cost | | | Cost of Sales | | | $2,799 |
Finance lease cost | | | Depreciation expense | | | 511 |
Finance lease cost | | | Interest expense | | | 69 |
Total lease cost | | | | | $3,379 |
| | Operating Leases | | | Finance Leases | | | Total | |
2021 | | | $2,693 | | | $765 | | | $3,458 |
2022 | | | 2,573 | | | 765 | | | 3,338 |
2023 | | | 2,364 | | | 636 | | | 3,000 |
2024 | | | 2,109 | | | 240 | | | 2,349 |
2025 | | | 2,096 | | | 21 | | | 2,117 |
After 2025 | | | 4,301 | | | — | | | 4,301 |
Total lease payments | | | $16,136 | | | $2,427 | | | $18,563 |
Less: Imputed Interest | | | (3,496) | | | (125) | | | (3,621) |
Present value of lease liabilities | | | $12,640 | | | $2,302 | | | $14,942 |
| | Year Ended December 31, 2019 | |
Weighted-average remaining lease term (years) | | | |
Operating leases | | | 8.54 years |
Finance leases | | | 4.64 years |
Weighted-average discount rate (%) | | | |
Operating leases | | | 6.34% |
Finance leases | | | 3.84% |
| | Year Ended December 31, 2020 | |
Weighted-average remaining lease term (years) | | | |
Operating leases | | | 8.53 years |
Finance leases | | | 4.21 years |
Weighted-average discount rate (%) | | | |
Operating leases | | | 7.66% |
Finance leases | | | 3.14% |
| | Year Ended December 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | | | |
Operating cash flows from operating leases | | | $2,005 |
Investing cash flows from operating leases | | | — |
Operating cash flows from finance leases | | | (35) |
Financing cash flows from finance leases | | | 182 |
Leased assets obtained in exchange for finance lease liabilities | | | 1,640 |
Leased assets obtained in exchange for operating lease liabilities | | | — |
| | Year Ended December 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities | | | |
Operating cash flows from operating leases | | | $2,799 |
Investing cash flows from operating leases | | | — |
Operating cash flows from finance leases | | | (69) |
Financing cash flows from finance leases | | | (486) |
Leased assets obtained in exchange for finance lease liabilities | | | 1,330 |
Leased assets obtained in exchange for operating lease liabilities | | | — |
13. | SUBSEQUENT EVENTS |