Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

Debt

The carrying amounts of our long-term debt are as follows:

	September 30, 2021		December 31, 2020
	(in millions)
Corporate – Recourse:
Revolving credit facility	$	—	$	50.0
Senior notes, net of unamortized discount of $0.2 and $0.2	399.8		399.8
	399.8		449.8
Less: unamortized debt issuance costs	(1.3)		(1.6)
Total recourse debt	398.5		448.2
Leasing – Non-recourse:
Wholly-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.5 and $0.6	2,293.3		2,042.4
2017 promissory notes, net of unamortized discount of $8.4 and $10.1	770.8		802.7
TILC warehouse facility	514.4		519.4
	3,578.5		3,364.5
Less: unamortized debt issuance costs	(25.0)		(24.0)
	3,553.5		3,340.5
Partially-owned subsidiaries:
Secured railcar equipment notes, net of unamortized discount of $0.3 and $—	909.2		1,237.5
TRIP Railcar Co. term loan	327.0		—
Less: unamortized debt issuance costs	(11.7)		(9.2)
	1,224.5		1,228.3
Total non–recourse debt	4,778.0		4,568.8
Total debt	$	5,176.5	$	5,017.0

Estimated Fair Value of Debt – The estimated fair value of our 4.55% senior notes due 2024 ("Senior Notes") is based on a quoted market price in a market with little activity (Level 2 input). The estimated fair values of our secured railcar equipment notes are based on our estimate of their fair value using unobservable input values provided by a third party (Level 3 inputs). The respective carrying values of our revolving credit facility, 2017 promissory notes, TILC warehouse facility, and TRIP Railcar Co. term loan approximate fair value because the interest rate adjusts to the market interest rate. The estimated fair values of our long-term debt are as follows:

	September 30, 2021		December 31, 2020
	(in millions)
Level 1	$	1,612.2	$	1,372.1
Level 2	425.3		420.3
Level 3	3,295.6		3,462.4
	$	5,333.1	$	5,254.8

Revolving Credit Facility – We have a $450.0 million unsecured corporate revolving credit facility. During the nine months ended September 30, 2021, we had total borrowings of $470.0 million and total repayments of $520.0 million under the revolving credit facility. Additionally, we had outstanding letters of credit issued in an aggregate amount of $28.3 million, leaving $421.7 million available for borrowing as of September 30, 2021. The outstanding letters of credit as of September 30, 2021 are scheduled to expire in July 2022. The revolving credit facility bears interest at a variable rate which resulted in an interest rate of LIBOR plus 1.75%, with a LIBOR floor of 0.30%, as of September 30, 2021. A commitment fee accrues on the average daily unused portion of the revolving facility at the rate of 0.175% to 0.40% (0.25% as of September 30, 2021).

The revolving credit facility requires the maintenance of ratios related to minimum interest coverage for the leasing and manufacturing operations and maximum leverage. In March 2021, we amended our revolving credit facility to increase the maximum leverage ratio through March 31, 2022 and to decrease the minimum interest coverage ratio through December 31, 2021 to provide additional near-term flexibility. As of September 30, 2021, we were in compliance with all such financial covenants.

TILC Warehouse Loan Facility – TILC has a $1.0 billion warehouse loan facility, which was established to finance railcars owned by TILC. In March 2021, the facility was extended through March 15, 2024, the total commitment was increased from $750 million to $1.0 billion, with a potential increase of up to an additional $250 million, subject to certain conditions, and provided for a facility margin of 185 basis points. During the nine months ended September 30, 2021, we had total borrowings of $374.7 million and total repayments of $379.7 million under the TILC warehouse loan facility. Under the renewed facility, the entire unused facility amount of $485.6 million was available as of September 30, 2021 based on the amount of warehouse-eligible, unpledged equipment. Advances under the facility bear interest at a defined index rate plus a margin, for an all-in interest rate of 1.94% at September 30, 2021.

TRL-2021 – In June 2021, Trinity Rail Leasing 2021 LLC, a Delaware limited liability company ("TRL-2021") and a limited purpose, indirect wholly-owned subsidiary of the Company owned through TILC, issued an aggregate principal amount of (i) $305.2 million of its Series 2021-1 Class A Green Secured Railcar Equipment Notes (the "TRL-2021 Class A Notes") and (ii) $19.8 million of its Series 2021-1 Class B Green Secured Railcar Equipment Notes (the "TRL-2021 Class B Notes") (the TRL-2021 Class A Notes and the TRL-2021 Class B Notes are, collectively, the “TRL-2021 Notes”). The TRL-2021 Class A Notes bear interest at a fixed rate of 2.26%, and the TRL-2021 Class B Notes bear interest at a fixed rate of 3.08%. The TRL-2021 Notes are payable monthly, and have a stated final maturity date of July 19, 2051. We incurred $3.3 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRL-2021 Notes. The TRL-2021 Notes are obligations of TRL-2021 and are non-recourse to Trinity. The obligations are secured by a portfolio of railcars and operating leases thereon, certain cash reserves, and other assets acquired and owned by TRL-2021. Net proceeds received from the railcars acquired in connection with the issuance of the TRL-2021 Notes were used to repay approximately $214.4 million of borrowings under TILC's warehouse loan facility and for general corporate purposes.

June 2021 Refinancing of Partially-Owned Leasing Subsidiaries

Triumph Rail – In June 2021, Triumph Rail, formerly known as TRIP Master Funding, issued an aggregate principal amount of (i) $535.0 million of its Series 2021-2 Class A Green Secured Railcar Equipment Notes (the “Triumph Class A Notes”) and (ii) $25.4 million of its Series 2021-2 Class B Green Secured Railcar Equipment Notes (the “Triumph Class B Notes”) (the Triumph Class A Notes and the Triumph Class B Notes are, collectively, the “Triumph Notes”). The Triumph Class A Notes bear interest at a fixed rate of 2.15%, and the Triumph Class B Notes bear interest at a fixed rate of 3.08%. The Triumph Notes are payable monthly, and have a stated final maturity date of June 15, 2051. We incurred $5.6 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the Triumph Notes. The Triumph Notes are non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings, and are secured by Triumph Rail's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by Triumph Rail.

Triumph Rail used the net proceeds received from the issuance of the Triumph Notes, as well as proceeds from the sale of railcars and related operating leases to TRIP Railcar Co. described below, to redeem its outstanding debt, consisting of (i) the Series 2011 Class A-2 TRIP Master Funding Secured Railcar Equipment Notes due July 2041, (ii) the Series 2014-1 Class A-2 Secured Railcar Equipment Notes due April 2044, and (iii) the Series 2017-1 Secured Railcar Equipment Notes due August 2047, of which $869.1 million was outstanding at the redemption date. The all-in rate for these notes was 5.16% per annum at the time of redemption. In connection with the redemption, we recognized a loss on extinguishment of debt of $8.7 million, which included a $3.3 million early redemption premium and a write-off of $5.4 million in unamortized debt issuance costs. These charges are reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the nine months ended September 30, 2021.

TRIP Railcar Co. Term Loan – In June 2021, TRIP Railcar Co. drew down $329.6 million under a term loan agreement ("TRIP Railcar Co. term loan"). The TRIP Railcar Co. term loan was established to finance railcars and operating leases thereon purchased by TRIP Railcar Co. from Triumph Rail. The principal and interest of this indebtedness are paid from the cash flows of the underlying leases. The TRIP Railcar Co. term loan bears interest at LIBOR plus 1.85%, for an all-in interest rate of 1.94% at September 30, 2021, and has a stated maturity date of June 2025. We incurred $2.9 million in debt issuance costs, which will be amortized to interest expense over the anticipated repayment term of the TRIP Railcar Co. term loan. The TRIP Railcar Co. term loan is non-recourse to Trinity, TILC, TRIP Holdings, and the other equity investors in TRIP Holdings; and are secured by TRIP Railcar Co.'s portfolio of railcars, operating leases thereon, and all other assets owned by TRIP Railcar Co. Net proceeds received from the transaction were used to purchase railcars and related operating leases from Triumph Rail.

TRP-2021 – In June 2021, TRP-2021, formerly known as TRL-2012, issued an aggregate principal amount of (i) $334.0 million of its Series 2021-1 Class A Green Secured Railcar Equipment Notes (the “TRP-2021 Class A Notes”) and (ii) $21.0 million of its Series 2021-1 Class B Green Secured Railcar Equipment Notes (the “TRP-2021 Class B Notes”) (the TRP-2021 Class A Notes and the TRP-2021 Class B Notes are, collectively, the “TRP-2021 Notes”). The TRP-2021 Class A Notes bear interest at a fixed rate of 2.07%, and the TRP-2021 Class B Notes bear interest at a fixed rate of 3.06%. The TRP-2021 Notes are payable monthly, and have a stated final maturity date of June 15, 2051. We incurred $3.7 million in debt issuance costs, which will be amortized to interest expense through the anticipated repayment date of the TRP-2021 Notes. The TRP-2021 Notes are non-recourse to Trinity, TILC, RIV 2013, and the other equity investors in RIV 2013, and are secured by TRP-2021's portfolio of railcars and operating leases thereon, its cash reserves, and all other assets owned by TRP-2021.

TRP-2021 used the net proceeds from the issuance of the TRP-2021 Notes to redeem its outstanding debt, consisting of (i) the Series 2012-1 Secured Railcar Equipment Notes due January 2043 and (ii) the Series 2013-1 Class A-1 Secured Railcar Equipment Notes due July 2043, of which $348.0 million was outstanding at the redemption date. The all-in rate for these notes was 3.59% per annum at the time of redemption. In connection with the redemption, we recognized a loss on extinguishment of debt of $3.0 million, which related to the write-off of unamortized debt issuance costs. This write-off is reflected in the loss on extinguishment of debt line of our Consolidated Statements of Operations for the nine months ended September 30, 2021.

Each of our secured railcar equipment notes, including the TRL-2021 Notes, the Triumph Rail Notes, and the TRP-2021 Notes, generally has an anticipated repayment date and a stated final maturity date. While the stated final maturity date of these notes is in 2051, the cash flows from the assets of each of TRL-2021, Triumph Rail, and TRP-2021 will be applied, pursuant to the payment priorities of their respective indentures, so as to amortize their respective notes to achieve monthly targeted principal balances. If the cash flow assumptions used in determining the targeted balances are met, it is anticipated that the Notes will be repaid well in advance of their stated final maturity date. There can be no assurance, however, that such cash flow assumptions will be realized. If these notes are not repaid by the anticipated repayment date, the respective interest rates on these notes would increase from the fixed rates stated above.

Terms and conditions of our other long-term debt, including recourse and non-recourse provisions and scheduled maturities, are described in Note 8 of our 2020 Annual Report on Form 10-K.