The intermodal equipment leasing company may look for an individual buyer or try to go public, and ocean carrier United Arab Shipping Co. has selected TRAC as its sole chassis supplier in the United States.
Private equity firm Fortress Investment Group is seeking to exit its ownership of TRAC Intermodal LLC after several years without much in returns, the Wall Street Journal reported Tuesday.
Early this month, TRAC offered $485 million in bonds to institutional buyers, with $325 million of the proceeds designated as a cash dividend for Fortress and the balance to pay off higher-interest debt.
TRAC CEO Keith Lovetro told the Wall Street Journal the company pulled its bond offering after weak investor response and is exploring a sale of the company or initial public offering.
TRAC is the largest equipment provider for the port and rail drayage industry, with about 312,00 chassis in its fleet, according to the company’s annual report. Shippers, railroads, ocean lines and trucking companies lease the equipment on a daily basis, or under long-term contracts.
TRAC had an operating profit of $26.7 million in 2015 after being $40 million in the red between 2011 and 2014. Fortress acquired TRAC for $2.4 billion in 2007, before the global financial crisis that has more than halved the growth rate in containerized trade globally. TRAC technicvally was acquired by Seacastle, which is owned by private equity funds managed by an affiliate of Fortress. Prior to then it was known as Interpool, which was founded in 1968 and was a public company from 1993 until it was taken private.
American Shipper confirmed a Reuters report in December 2014 that Fortress tried to sell TRAC at that time.
TRAC is partnering with several competitors to operate new gray chassis pools at the Port of New York/New Jersey and in Southern California. The arrangement, designed in response to equipment imbalances at terminals associated with bigger vessels and shifting terminal calls by ocean carrier alliances, enables truckers to interchange chassis at multiple pick-up/drop-off locations without regard to the underlying company from which the equipment is leased. The idea is to eliminate the need for truckers to drive back and forth between different terminals or other depots exchanging chassis that are committed by the leasing companies to specific ocean carriers – and thus cut down on wasted time and traffic.
Meanwhile, United Arab Shipping Co. announced Tuesday that it will use TRAC as its exclusive chassis provider in the United States.
The liner carrier said that that using one chassis provider will simplify and streamline chassis utilization, improve the accuracy of billing for customers and enable the company to offer more competitive rates for door-to-door rates under which the ocean line takes responsibility for arranging inland transportation.
The contract with TRAC covers areas where TRAC offers equipment in shared pools or where TRAC operates its own pools.
TRAC Intermodal tests waters for potential sale, IPO
