ECN Capital Corp. announced it has entered into an agreement to sell railcar assets to affiliates of Trinity Industries Leasing Company for proceeds of $360 million. Including transaction costs, the total after-tax loss will be approximately $29 million, reflecting 0.93x book value of assets.

All railcar assets to be sold are owned by ECN’s Railcar ABS Vehicle, Element Rail Leasing I LLC (ERL I).  The transaction is expected to close in the fourth quarter of 2018.

Upon completion of the sale, ECN’s total rail portfolio will be reduced by approximately 55 percent to less than $350 million of assets and further de-risked through the elimination of more than 80 percent of owned tank cars and 100 percent of the unjacketed DOT-111 tank cars.

“The sale of ERL I marks the continued execution of the winddown of our legacy assets and ECN’s transition to a business services company providing origination, management and advisory solutions to U.S. financial institutions. Following the completion of this transaction, we will have reduced legacy assets from approximately $5 billion at year-end 2016 to approximately $750 million, while preserving book value through six separate dispositions at a total premium of 1 percent to assets and 5 percent to equity,” said Jim Nikopoulos, ECN Capital’s President. “This transaction will release approximately $85 million in equity capital for redeployment.” 

Separately, ECN leased approximately $38 million of railcars previously in idle inventory during the third quarter that are not part of the ERL I sale. This reduced the rail inventory balance to approximately $3 million from $40.9 million as of June 30, 2018. ECN remains committed to the orderly winddown of its remaining legacy assets, the company said. 

With managed and advised assets of more than $28 billion, ECN Capital Corp. is a leading provider of prime credit portfolios to more than 90 US financial institutions. ECN Capital originates, manages and advises on prime credit assets offering unsecured and secured consumer portfolio solutions as well as credit card portfolios. These services are offered through three operating businesses: Service Finance, Triad Financial Services and The Kessler Group.