Project Description

Fortress Transportation and Infrastructure Spin-off Notes

January 8, 2022 Update

  • FTAI has officially filed a confidential submission of form 10
  • There is a full press release about the submission

If FTAI proceeds with the spin-off, it currently would expect to complete the transaction in the first half of 2022.

Notes December 17, 2021

  • FTAI has hinted for a while that they would like to break up into two companies.
  • Great video interview that outlines the benefit of the split up and the FTAI investment case. Accompanying slide deck. Here are my notes:
    • A pass through LLC corporate structure generating a K-1.
    • It has 99MM shares outstanding. Trading at $26. $2.5BN market cap. $2.3BN of corporate debt. $700MM of Jefferson Project debt, $294MM Long Range Power Plan Debt Debt, $315MM preferred, Engines $350MM debt funding.
    • Currently a infrastructure and airline engine company. Don’t have much do with one another. Going to be splitting apart the business into 2 public companies. Neither will have a K-1. According to their research, stocks that got rid of their K-1 outperformed the S&P over subsequent 12 months by 20% on average. So that should be beneficial. Liquidity doubled. Index funds don’t own K-1 producing stocks. Index funds represent 40% of ownership in stocks. That is big.  Plus he’s had a bunch of conversations with institutional investors who say they can’t do anything if a company produces a K-1.
    • Some folks can’t do K-1s by mandates.
    • Infrastructure:
    • Aviation: $65 per share of value
  • Good VIC write up of FTAI (need to create free account to access).
  • Comment: Has been written up many times on Seeking Alpha and Value Investor Club. I historically haven’t had much success with names that are highly covered.
  • My questions:
    • Management gets a management fee.