Trinity Industries has wrapped up the $375 million sale of its highway products business to Rush Hour Intermediate II LLC, which is owned by an affiliated investment fund of Monomoy Capital Partners.
Dallas, Tex.-based Trinity on Dec. 31 reported that the cash sale of its highway products business—which works with state highway departments and contractors to provide highway guardrails, crash cushions, truck-mounted attenuators, flexible post delineators, traffic control barriers and a variety of proprietary roadside products—was subject to “certain adjustments based on levels of cash, debt and working capital at closing and for certain other items.” The company announced a definitive agreement with Monomoy, a New York City-based middle-market private equity fund, on Nov. 3.
In conjunction with the closing, Trinity reported its plans regarding the proceeds from the sale:
Trinity will “repurchase $250 million of its $0.01 par value common stock (Common Stock), representing 8.78 million shares, from ValueAct Capital Master Fund, L.P. (ValueAct) today [Dec. 31], reducing ValueAct’s ownership to approximately 3.87 million shares. The shares will be repurchased from ValueAct at a price of $28.49 per share, representing a 3.5% discount from the closing price for a share of Common Stock on the New York Stock Exchange on December 30, 2021. The repurchase from ValueAct is separate from, and does not reduce the authorized amount remaining under, the company’s existing $250 million share repurchase program approved by its Board of Directors in September 2021 (the Existing Program).”
Trinity also announced its intention to “enter into an Accelerated Share Repurchase (ASR) program with JPMorgan Chase Bank, National Association to repurchase $125 million of Common Stock under the Existing Program. Under the anticipated terms of the ASR, Trinity will receive an initial delivery of shares representing approximately 80% of the notional amount of the ASR, with the specific amount of shares to be based on the closing price for a share of Common Stock on December 31, 2021. The final number of shares to be repurchased under the ASR will be based on the average of Trinity’s daily volume-weighted average stock price, less a discount, during the term of the ASR program, which is expected to be completed by the third quarter of 2022. The ASR program is expected to commence on Monday, January 3, 2022. Approximately $73 million of the Existing Program will remain after the completion of the ASR.”
Trinity said it will provide the results of its highway products business, including the gain on the sale, as part of discontinued operations, starting with its fourth-quarter 2021 earnings report.
“I again want to thank our dedicated highway employees for their hard work at Trinity and wish them success under their new ownership,” Trinity President and CEO Jean Savage said. “Today’s [Dec. 31] announcements reinforce our company’s stated goals of optimizing our capital structure and our business, while also creating substantial value for our shareholders.”