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Element Closes $405MM Offering of Rail Equipment Notes

March 04, 2015, 06:00 AM
Filed Under: Industry News

Element Financial Corporation (TSX:EFN) (“Element” or the “Company”), one of North America’s leading equipment finance companies, together with its wholly-owned subsidiaries Element Rail Leasing II LLC and Element Rail Leasing Canada LP, announced today that it has closed its offering of Secured Portfolio Railcar Equipment Notes, Series 2015-1 raising gross proceeds in the amount of US$405.0 million.

The transaction was comprised of three classes of notes with ratings from Standard & Poor’s with two of the three classes, comprising 94% of the notes, carrying an A(sf) rating. Together, the notes offered an initial blended coupon of 3.460 percent and an expected weighted average life of 5.9 years. The transaction was secured by a portfolio of 4,145 railcars, with an appraised value of $476.3 million, and their related leases at an advance rate of 85 percent. Proceeds
from this transaction will be used to pay down amounts owing under Element’s senior credit facility.

“This second offering of secured railcar notes was funded at a higher advance rate and an all-in coupon that was lower than our initial offering of US$340 million which carried a blended coupon of 3.547 percent when it closed last April,” said Steven K. Hudson, Element Financial Corporation’s Executive Chairman and CEO. “I’m also pleased that this offering attracted a broader base of investors and was uniquely structured to include both Canadian and US rail
assets,” added Mr. Hudson.

The notes were offered by Credit Suisse Securities (USA) LLC as lead arranger and initial purchaser and included Barclays Capital Inc. and Deutsche Bank Securities Inc. as additional initial purchasers.

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