North America’s largest chassis leasing firm not expected to change direction after sale.
The private equity company Fortress Investment Group is seeking to sell TRAC Intermodal, the largest intermodal chassis leasing company in North America, said Keith Lovetro, the chief executive officer of TRAC, confirming a Reuters report that appeared last month.
Lovetro said the sale is not expected to change the direction or strategy of the company going forward.
“TRAC has had a pretty successful last few years, and we think that is what will make it a very attractive investment for another private equity firm,” he said.
“Fortress, being a private equity company, buys and sells firms. They acquired TRAC in 2007, so they have been in the investment a fairly long time,” he added.
TRAC 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 originally founded in 1968 and was a public company from 1993 until it was taken private by Seacastle in July 2007.
The company is being advised by Morgan Stanley. While it is difficult to tell how long the process will take, Lovetro said the aspiration is to conclude a deal in the next three to four months.
He said TRAC has attracted quite a few investors and that the offer period is still open. He added the company is attractive to investors in transportation and infrastructure companies. “It is an open market bid,” said Lovetro, so in addition to traditional private equity firms, TRAC could attract offers from other sorts of buyers as well.
Companies submit a letter of interest, signed documentation that allows them to look at a book of information about TRAC. There will be a couple rounds of bidding and then a final transaction.
Lovetro said he fully expects to stay on at the company with his management team after a transaction is completed.
“If someone is going to pony-up the kind of money that it will take to make this transaction go forward, they are going to rely, I think, on the existing management team to continue to perform as they have been performing. Part of what you are buying is the skill and experience of the team. We fully expect the buyer will hope and expect the management team to stay on.”
According to the 10-Q quarterly financial report that TRAC filed with the Securities and Exchange Commission in November, on September 30 TRAC had assets of $1.88 billion.
The company provides marine and domestic chassis on both long and short-term leases or rental agreements to customers that include leading container shipping lines, railroads, major U.S. intermodal transportation companies and motor carriers.
As of September 30, it owned, leased-in or managed a fleet of 276,075 chassis and 35,930 units available for remanufacture. (It’s common to take older chassis, remove the axles and build a new frame around the old axles.) The company’s active fleet of marine chassis for 20-, 40-, and 45-foot containers was 199,786 on September 30. On the same date it had 76,289 chassis for 53-foot domestic containers.
TRAC had a profit of $6.2 million on revenues of $167.1 million in the quarter ending September 30, 2014 compared with a loss of $6.3 million on revenues of $134.2 million in the same period in 2013.
In the first nine months last year it had a loss of $10.1 million on revenues of $459.2 million, compared with a loss of nearly $8 million on revenue of $379.2 million in the first nine months of 2013.
Fortress seeking buyer for TRAC Intermodal
