Textainer Group Holdings Limited (TGH)’s Financing And Share Repurchase Moves

BIGC Stock
BIGC Stock

Textainer Group Holdings Limited (TGH) recently announced closure of an asset backed financing of $829 million by one of its Bermuda-based, indirect, wholly-owned companies Textainer Marine Containers VII Limited (“TMCL VII”).

TGH is a holding company that focuses on purchasing, leasing, and resale of intermodal containers. The fixed-rate notes issued by TMCL VII include $532 million Series 2020-2 Class A Notes, $213 million Series 2020-3 Class A Notes, $76 million Series 2020-2 Class B Notes, and $8 million Series 2020-3 Class B Notes.

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In compliance of Rule 144A and Regulation S under the Securities Act of 1933 the Notes were issued to qualified institutional buyers and non-U.S. persons.

Standard and Poor has assigned a rating of A(sf) to Company’s Class A Notes while that assigned to Class B Notes is BBB(sf). The Notes issued bear fixed coupon and have an approximately five years of weighted average life. TMCL VII has issued the Notes against its assets as security. The company will utilize the proceeds from recent financing to pay down debt including its secured debt facility, revolving credit facility and to fully pay back the Notes issued in its 2017-2 and 2018-1 financings.

Lower market rates in the current environment will help us reduce borrowing costs through issuance of these Notes. This will also help us build additional capacity to make further container investments in future. After the current financing, company’s collective effective interest rate reduced to nearly 3.10%, Company’s Chief Financial Officer and Executive Vice President, Michael K. Chan said.

Earlier this month, TGH initially started a share repurchase program of up to $50 million of the Company’s outstanding common shares. The company afterwards increased the amount to $100 million by adding another $50 million for the program on September 15. The changed plan became immediately effective as there was amount of nearly $1.0 million remained as on September 11 from the initially authorized amount of $50 million.