Trinity Industries and Element Financial have formed a multi-year strategic alliance to build a diversified fleet of up to $2bn of leased railcars.
As part of the programme agreement, the portfolio of leased railcars will be purchased by Element and will include Trinity Rail Group manufactured new railcars, Trinity Industries Leasing’s (TILC) existing railcars.
The portfolio will also consist of secondary market purchases that are selected by TrinityRail Asset Management (TRAMCo) and Element. Under the alliance, TILC will act as servicer of the Element-owned leased railcar fleet.
Initially, Element is likely to acquire roughly $500m existing leased railcars from TILC and the $100m these purchases is expected to complete by 31 December 2013.
Closing of the remaining $400m of the initial purchase may be carried out by the end of first quarter of 2014.
The initial sale will be followed by an additional $500m purchase in 2014, which will involve new TrinityRail manufactured railcars.
Of the targeted $2bn portfolio, the remaining $1bn purchases by Element are anticipated to take place in 2015. It will include newly manufactured railcars, existing TILC leased railcars, and secondary market purchases.
Trinity Industries senior vice president Stephen Menzies said: "Aligning Trinity’s expertise in railcar leasing and management services with Element’s proven leadership and committed financial resources is an ideal strategic combination.
"This alliance complements our other funding vehicles and further enhances Trinity’s financial resources and flexibility to grow our railcar leasing platform."