Giant container owner Triton International (TRTN) is being acquired by Brookfield Infrastructure (BIP).
Triton has a number of high yield perpetual preferreds outstanding which can be seen here.
It is stated that ‘preference shares will remain outstanding’.
Announcements etc can be read here.
A great day for those who bought TRTN preferreds yesterday and again this morning. I still expect the A shares to be called next year, but there is less meat on the bone left there relative to the B and C shares. I am out of the A shares but still hold B and C. Somebody (probably PFF) dumped the C shares late yesterday for an unusually good buying opportunity.
Indeed. The panic was self inflicted. Those are the easy ones to take advantage of
I too traded in and out of TRTN A and B for a nice quick profit
Congrats on your trade
While all information is good. Shouldn’t we be asking BIP what their plans are for the preferred instead of TRTN? Any whales out there got BIP CEO in their contacts? Thanks. Asking for all us minnows.
If I read the prospectus correctly on the preferreds, everyone here is focused on completely the wrong thing…
The preferreds appear to have provisions that guarantee optional conversion rights for the holders if a buyer of TRTN is NYSE listed and fails to maintain listing of the preferreds.
So if BIM threatens to take the preferreds dark… you just demand conversion. Simple as…
The real threat here is BIM deciding to stop paying the preferreds (there is really no reason why they have to) but keeps them listed. Or if they BK the underlying like happened w/ Teekay / Altera.
Delisting would be a huge win for preferred holders.
What funny about this whole saga is when Brookfield bought ARGO, ARGO-A reacted positively and jumped higher. Really no difference between that transaction and this one from a preferreds perspective.
I’m with Martin. Why don’t you check the current pricing of Altera Infrastructure preferreds ALIN-A,B,E? Recall that Brookfield bought Altera out. They paid on the preferreds a while before halting payments, then bankrupting the whole company IIRC. Preferred holders suffered a ~ 100% loss. So there is a precedent here. The downside to Brookfield is low, while the upside to their common seems high. Place your bets accordingly. . .
Brookfield didn’t bankrupt ALIN/TOO. The parent company Teekay put them on the path to distress by vastly overpaying dividends and dropping down ships at inflated prices. That all happened before Brookfield came on the scene. Not sure what Brookfield could have done differently to avoid bankruptcy there. Clearly not what they wanted to have happen.
Landlord, I understand that Teekay put them in distress, but remind me when Brookfield entered the situation? Was ALIN mismanaged WHILE it was owned by Brookfield? Or did Brookfield buy it after it was already mismanaged where they thought it could be turned around? And the turnaround was not successful, so Brookfield bankrupted them?
I thought Brookfield subsidized ALIN preferred dividends for a while after they were bought out, but your memory is better than mine. .
The turnaround was not successful and the company didn’t generate enough cash flow to pay interest on the bonds. Ultimately that led to bankruptcy. The root issue was overpaying for ships that TK parent dropped down and paying an MLP sky high dividend that left nothing for fleet renewal. That led to ever increasing debt loads.
Which prompts the question why Brookfield bought them in the first place?
I don’t trust Brookfield. They’ll screw over the preferred investors if it helps their brand and their common stockholders will cheer along with the decision imaging it helps them. Until they realize who they are in bed with and they get screwed over next.
the short answer is “nobody” but the sellers are still bailing out !
Today, SA’s Trapping Value sees the p’frds as sells- and says ‘no provisions”- huh?
Who pays the ongoing preferred dividends after the acquisition?
I own the Common but not any of the preferred so I am happy about the deal. Based on prior preferreds that I owned in companies taken private by a Brookfield entity I would sell any and all of the preferred if I owned any.
There have to be shares with comparable yields that do not involve the risk that Brookfield will either delist them or eliminate the dividends both of which has happened to me in the past. Just my opinion not a prediction of what Brookfield will do in this case.
I was not expecting to have my TRTN preferreds come under the ownership of Brookfield. The only preferred listing with suspended dividends associated with Brookfield I could find is DTLA that BPO created after buying MPG Office Trust in 2013. Dividends were paid until 2016 and now DTLA is stil listed, but it’s under a dollar. Could you let us know which Brookfield investments burned you? I wonder how the various companies in this group compare in terms of dividend safety.
These preferreds were rec by an advisor much respected on this site. I reviewed and saw they had only began paying dividends; before 2021 (I believe) only ROC. I asked why/what and advisor had no idea. I then looked at their corporate bonds and it was an easy decision. The bonds traded same yield as preferreds (thought not qualified). Anyway, I bought common and bonds no preferreds. I always prefer bonds if there is no real spread between them I am continually baffled by these advisor calls when the bonds trade comparable. FWIW
TRTN 2032s are yielding 6%. I think the 275 bps extra you get in the preferreds is appealing so long as they’re not delisted.
I have 3 separate calls into Triton: CEO, BOD Member and their IR guy. I have been told “everyone is swamped” and “as far as I know we have no plans to delist the preferreds”. As soon as I get someone to explain what Triton is planning on doing I will report back to everyone here. I have a quite large position in 3 of the preferreds and I have no plans on selling any shares. I use to own the largest boat and RV storage facility in Ocala, Florida and bought 31 of Triton’s 1 trip shipping containers, so I’m very familiar with Triton.
In Latin we say, Mundus est pro eis qui pro seipsis putabunt
Stay Tuned, Azure.
Azure I would not put any stock in what somebody on the Investor line tells you;
other than some documentation of that
from the BIP ; its all hearsay IMHO
it it were I, ide bail out ; i just had a similar experience with GLOP ; and it was not pretty
I was interested in Series A- until I read this:
“Change of Control Triggering Event” means the occurrence of a Change of Control that is accompanied or followed by either a downgrade by one or more gradations (including both gradations within ratings categories and between ratings categories) or a withdrawal of the rating of the Series A Preference Shares within the Ratings Decline Period (in any combination) by the Named Rating Agency (as defined below) then rating the Series A Preference Shares, as a result of which the rating of the Series A Preference Shares on any day during the Ratings Decline Period is withdrawn or is below the rating by such Named Rating Agency in effect immediately preceding the first public announcement of the Change of Control (or occurrence thereof if such Change of Control occurs prior to public announcement).
Not seeing mention of preferreds in that announcement– prob just me.
Have had a very sm position in TRTN-C for quite a while, will wait & see unless it jumps a buck.
Gary–Prior to closing, Triton intends to maintain its current quarterly dividend on the Triton common shares. Upon the closing of the transaction, Triton’s common shares will be delisted from the New York Stock Exchange. Triton’s Series A-E cumulative redeemable perpetual preference shares will remain outstanding.
This is a cut and paste from the other site referencing the prospectus for the preferreds. It seems the preferreds must remain listed:
“the holders of Series (A-E) Preference Shares will not have a conversion right upon a Change of Control if (i) the acquiror has shares listed or quoted on the NYSE, the NYSE American or NASDAQ or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ, and (ii) the Series (A-E) Preference Shares remain continuously listed or quoted on the NYSE, the NYSE American or NASDAQ or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ.”
Thank you. My thoughts exactly.
Surprising how many people here have money in this and yet are so concerned about delisting. It’s like they don’t bother to read the prospectus of their investments.
Delisting = free conversion optionality for holders.
I’m okay with that.
Not a good look for Preferred stock in general when a company gets bought out and their preferred stock drops 10% on the news.
Ehhh. i hold a small amount of TRTN preferred and a large amount of TRTN common that I have held for years. I am ok see my TRTN preferred down a few hundred dollars while my TRTN common is up 5 digits
I will take that look anyday 🙂
And I think it says more about the psyche now of some preferred investors than anything that they panic and sell first, ask questions later at the first sign of any buyout
“….they panic and sell first, ask questions later at the first sign of any buyout.” That is my current policy. I used to think of preferreds as existing in a happy and safe area somewhere between common and bonds, a world of warm smiles and carefree yields.
However, since the SEC go dark regs, I feel like I have been running a rescue service and shelter for abandoned securities. Every day, I wake up fearing that I will find more unwanted preferreds left on my doorstep, meowing plaintively like cast-off kittens in a cardboard box. Just my opinion.
To expand on my previous post; If one wants to speculate on TRTN preferreds, I think the issue to buy is TRTN-A. At 24.10 the yield is 8.8+ and comparable to KTBA (which is already dark). This issue is qualified (not sure if the merger affects this) and is callable in March of next year. If Brookfield (which has preferred issues currently yielding only 7%) wanted to call any of the TRTN issues, the A would be the first to go. In the meantime, the yield is juicy.
We (or at least I) found out from WTREP that delisted issues can no longer pay qualified dividends. Listed/expert market issues can though.
I own TRTN-B. It is tanking today along with other TRTN preferreds. Must be because of the possibility of Brookfield taking the preferreds to the dark expert only market. Press release says the preferreds will remain outstanding. TRTN preferreds would be an excellent buy here if they remain listed or if they have a conversion right into TRTN common. I am holding my TRTN-B.
TGH is Triton’s largest competitor and the TGH common is up on the Triton news. TGH preferreds are down. I think an interesting play is to buy TGH-A here. Whether Textainer is bought or not, whether the preferreds go dark or not…I think the likelihood of TGH-A being redeemed in 2026 is very high due to the reset rate which will take effect at that time. Full disclosure: I have a large position in TGH-A. DYOD.
So, what could be the real fundamental reason for the drop in the preferreds prices?
For preferred shares the press release says;
Triton’s Series A-E cumulative redeemable perpetual preference shares will remain outstanding.
Does this mean that the preferred will remain outstanding but could be delisted
However for Pref A the prospectus says:
Upon the occurrence of a Change of Control Triggering Event, the Issuer may redeem the Series A Preference Shares by paying $25.00 per Series A Preference Share, plus all accumulated and unpaid dividends. Upon the occurrence of a Change of Control Triggering Event, each holder of Series A Preference Shares will have the right (unless the Issuer has provided notice of its election to redeem the Series A Preference Shares) to convert some or all of the Preference Shares into a number of shares of the Issuer’s common shares (see prospectus for further information).
Not sure which is applicable for Pref A, can someone please advise
I’m sure there will be a legal challenge from the preferred shareholders of A-E, “Upon the occurrence of a Change of Control Triggering Event, the Issuer may redeem the Series A Preference Shares by paying $25.00 per Series A Preference Share, plus all accumulated and unpaid dividends. Upon the occurrence of a Change of Control Triggering Event, each holder of Series A Preference Shares will have the right (unless the Issuer has provided notice of its election to redeem the Series A Preference Shares) to convert some or all of the Preference Shares into a number of shares of the Issuer’s common shares (see prospectus for further information).” Stay Tuned my friends
Az – just looking at A that doesn’t seem to be what the prospectus says:. This is under the heading “Optional Redemption Upon a Change of Control Triggering Event” NOTE “Optional”
Upon the occurrence of a Change of Control Triggering Event (as defined below), we may, at our option (NOTE “at our option’), redeem the Series A Preference Shares in whole or in part within 120 days after the first date on which such Change of Control Triggering Event….
I only looked quickly
I haven’t read the announcement closely but it sounds like only the common stock of the company is being acquired and it will remain an independent entity. That means preferred stockholders will not have recourse to the parent BIP.
Landlord, this is an interesting world we live in as preferred investors. I already said shipping is a volatile business. Has been for hundreds of years. I own a few but constantly watch these puppies to make sure they don’t chew up my shoes.
I own SEAL A partly because they said they would continue with the NYSE requirements of reporting financials even though owned by a private company and as the last Qtr. They have followed through.
That said, you have to ask yourself how much do you trust Brookfield?
Now another LNG shipper discussed here recently is GLOP which was acquired by Black Rock energy investments. They said they would leave the preferred outstanding. So you have to ask yourself how well you trust Black Rock?
Investors panicked and sold GLOP preferred Monday and Tuesday.
How many investors bought GLOP A and B the last couple days?