FTAI Infrastructure (FIP) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We have limited operating history as an independent company and may not be able to successfully operate our business strategy, generate sufficient revenue to make or sustain distributions to our stockholders or meet our contractual commitments
2. 02The historical financial information included in this report may not be indicative of the results we would have achieved as a separate stand-alone company and are not a reliable indicator of our future performance or results
3. 03Uncertainty relating to macroeconomic conditions may reduce the demand for our assets, limit our ability to obtain additional capital to finance new investments or refinance existing debt, or have other unforeseen negative effects
4. 04The industries in which we operate have experienced periods of oversupply during which asset values have declined, particularly during the most recent economic downturn, and any future oversupply could materially adversely affect our results of operations and cash flows
5. 05There can be no assurance that any target returns will be achieved
6. 06Contractual defaults may adversely affect our business, prospects, financial condition, results of operations and cash flows by decreasing revenues and increasing storage, positioning, collection, recovery and lost equipment expenses
7. 07If we acquire a high concentration of a particular type of asset, or concentrate our investments in a particular sector, our business, prospects, financial condition, results of operations and cash flows could be adversely affected by changes in market demand or problems specific to that asset or sector
8. 08We may not generate a sufficient amount of cash or generate sufficient free cash flow to fund our operations or repay our indebtedness
9. 09We operate in highly competitive markets
10. 10The values of our assets may fluctuate due to various factors
11. 11Our use of joint ventures or partnerships, and our Manager’s outsourcing of certain functions, may present unforeseen obstacles or costs
12. 12We are subject to the risks and costs of obsolescence of our assets
13. 13The North American rail sector is a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future laws, regulations and other requirements could significantly increase our operational costs of doing business, thereby adversely affecting our profitability
14. 14Our business could be adversely affected if service on the railroads is interrupted or if more stringent regulations are adopted regarding railcar design or the transportation of crude oil by rail
15. 15We could be negatively impacted by environmental, social, and governance (“ESG”) and sustainability-related matters
16. 16We transport hazardous materials
17. 17We may be affected by fluctuating prices for fuel and energy
18. 18Because we depend on Class I railroads for a significant portion of our operations in North America, our results of operations, financial condition and liquidity may be adversely affected if our relationships with these carriers deteriorate
19. 19Transtar faces competition from other railroads and other transportation providers
20. 20Our assets are exposed to unplanned interruptions caused by events outside of our control which may disrupt our business and cause damage or losses that may not be adequately covered by insurance
21. 21We are actively evaluating potential acquisitions of assets and operating companies in other infrastructure sectors which could result in additional risks and uncertainties for our business and unexpected regulatory compliance costs
22. 22Restrictive covenants in our debt agreements and the certificates of designations for our Series A Redeemable Preferred Stock and our newly issued Series B Preferred Stock may adversely affect us
23. 23Terrorist attacks or other hostilities could negatively impact our operations and our profitability and may expose us to liability and reputational damage
24. 24Our inability to obtain sufficient capital would constrain our ability to grow our portfolio and to increase our revenues
25. 25The effects of various environmental regulations may negatively affect the industries in which we operate which could have a material adverse effect on our financial condition, results of operations and cash flows
26. 26Our Repauno site and the Long Ridge property are subject to environmental laws and regulations that may expose us to significant costs and liabilities
27. 27We have material customer concentration with respect to the Jefferson Terminal and Railroad businesses, with a limited number of customers accounting for a material portion of our revenues
28. 28If we are deemed an “investment company” under the Investment Company Act, it could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows
29. 29Adverse judgments or settlements in legal proceedings could materially harm our business, financial condition, operating results and cash flows

Risks Related to Our Capital Structure

1. 30The terms of our Series A Preferred Stock have provisions that could result in the holders of the Series A Preferred Stock having the ability to elect a majority of our board of directors in the case of an Event of Noncompliance, including our failure to pay amounts due upon redemption of Series A Preferred Stock
2. 31The failure of the Company to pay required dividends on its Series A Preferred Stock following August 1, 2024, may have a material adverse effect on the Company’s financial condition

Risks Related to Our Manager

1. 32We are dependent on our Manager and other key personnel at Fortress and may not find suitable replacements if our Manager terminates the Management Agreement or if other key personnel depart
2. 33Our Management Agreement was not negotiated at arm’s-length, and its terms, including fees payable, may not be as favorable to us as if they had been negotiated with an unaffiliated third party
3. 34Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our assets
4. 35Our Manager’s due diligence of potential asset acquisitions or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations

Risks Related to the Spin-off

1. 36We may be unable to achieve some or all of the benefits that we expect to achieve from our spin-off from FTAI
2. 37Our agreements with FTAI may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties
3. 38The ownership by some of our directors of common shares, options, or other equity awards of FTAI may create, or may create the appearance of, conflicts of interest
4. 39We may compete with affiliates of and entities managed by our Manager which could adversely affect our and their results of operations
5. 40We share certain key directors with FTAI, which means those officers do not devote their full time and attention to our affairs and the overlap may give rise to conflicts
6. 41We incurred indebtedness in the form of the 2027 Notes, and the degree to which we are leveraged could cause a material adverse effect on our business, financial condition, results of operations and cash flows
7. 42Our ability to use net operating losses to offset future taxable income may be subject to limitations

Risks Related to Our Common Stock

1. 43The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders
2. 44An increase in market interest rates may have an adverse effect on the market price of our common stock
3. 45There can be no assurance that the market for our common stock will provide you with adequate liquidity
4. 46Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price
5. 47Your percentage ownership in us may be diluted in the future
6. 48Our common stock is subject to ownership and transfer restrictions intended to preserve our ability to use our net operating loss carryforwards and other tax attributes
7. 49We may incur or issue debt or issue equity, which may negatively affect the market price of our common stock
8. 50Provisions of Delaware law, our certificate of incorporation and our bylaws, prevent or delay an acquisition of our company, which could decrease the market price of our common stock
9. 51Our bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees
10. 52While we currently pay regular quarterly dividends to our stockholders, we may change our dividend policy at any time
11. 53As a public company, we will incur additional costs and face increased demands on our management
12. 54If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, our stock price and trading volume could decline
13. 55Our determination of how much leverage to use to finance our acquisitions may adversely affect our return on our assets and may reduce funds available for distribution
14. 56Changes to United States federal income tax laws could materially and adversely affect us and our stockholders