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ECN Capital Sells 55% of Existing Rail Portfolio for $360MM to Trinity Affiliates

October 18, 2018, 07:05 AM

ECN Capital Corp. announced it has closed the sale of Element Rail Leasing I (ERL I) representing approximately 55 percent of its rail finance portfolio to affiliates of Trinity Industries Leasing Company on the terms previously announced.

ECN Capital Corp. on Sept. 24, announced it had entered into an agreement to sell railcar assets to the Trinity affiliates for proceeds of $360 million. Including transaction costs, the total after-tax loss would be approximately $29 million, reflecting 0.93x book value of assets.

All the railcar assets sold were owned by ECN’s Railcar ABS Vehicle, Element Rail Leasing I LLC (ERL I). 

Upon completion of the sale, ECN’s total rail portfolio is reduced by approximately 55 percent to less than $350 million of assets and further de-risked through the elimination of more than 80 percent of owned tank cars and 100 percent of the unjacketed DOT-111 tank cars.

“The sale of ERL I marks the continued execution of the winddown of our legacy assets and ECN’s transition to a business services company providing origination, management and advisory solutions to U.S. financial institutions. Following the completion of this transaction, we will have reduced legacy assets from approximately $5 billion at year-end 2016 to approximately $750 million, while preserving book value through six separate dispositions at a total premium of 1 percent to assets and 5 percent to equity,” said Jim Nikopoulos, ECN Capital’s President said in the September announcement. “This transaction will release approximately $85 million in equity capital for redeployment.”

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