Fortress Transportation and Infrastructure Spin-off Notes
July 15, 2022 Update
– Regular way trading for the infrastructure spin-off will begin on August 2
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.
- 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.