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Trinity Industries Enters Into Strategic Railcar Alliance With Element Financial

Trinity Industries, Inc. (TRN) announced that its newly formed, wholly-owned subsidiary, TrinityRail Asset Management Company, LLC has entered into a strategic alliance with Element Financial Corp. (EFN.TO), and is expected to develop a diversified portfolio of up to $2 billion of leased railcars.

The company noted that under the terms of the multi-year program agreement, Element will acquire a portfolio of leased railcars primarily consisting of new railcars manufactured by Trinity Rail Group, LLC, existing railcars from Trinity Industries Leasing Company or TILC, as well as secondary market purchases identified by TRAMCo and Element. TILC will act as servicer of the Element-owned leased railcar fleet and receive fees accordingly.

It is expected that Element will initially purchase about $500 million of existing leased railcars from TILC. The first purchase of approximately $100 million of these leased railcars is expected to close on or before December 31, 2013 with the next $400 million expected to close by the end of first quarter of 2014.

The company stated that subsequent to the initial sale, an additional $500 million of purchases are expected to occur through 2014 and primarily consist of new TrinityRail manufactured railcars, the majority of which are in Trinity's current leasing order backlog.

The remaining $1 billion of the targeted $2 billion of railcar purchases by Element is anticipated to occur in 2015. These purchases may include a combination of newly manufactured railcars, existing TILC leased railcars, as well as secondary market purchases, Trinity said.

TILC will not retain an ownership interest in any of the leased railcars sold to Element. Macquarie Capital advised Trinity on this alliance.

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