All Aboard Florida plans to issue $1.75 billion of private activity bonds in a plan of finance that includes refunding debt sold in December for its Brightline-branded passenger train project.
AAF and Brightline officials will ask the Florida Development Finance Corp. at a meeting Wednesday to be the conduit issuer for the bonds. The request will be heard by three board members; two positions on the board are vacant.
Some $921.7 million of PAB proceeds will be used to build portions of Brightline’s second phase - the 169 miles between West Palm Beach and Orlando, according to a memorandum by FDFC’s financial advisor Jeff Larson.
The plan also calls for using another $630 million of bond proceeds, which includes a 5% early call premium, to refund bonds sold Dec. 19. The bonds, to be refunded Jan. 1, 2019, financed part of the work on the 66.5-mile first phase between Miami and West Palm Beach where the privately owned train service is in operation.
“We look forward to presenting an update on Brightline to the FDFC board and moving forward with the private activity bond process,” the company said in a statement Tuesday. “The extension of Brightline to Orlando will create an important transportation system for the nation’s third most populated state and create jobs and generate economic impact.”
The FDFC board also will be asked to approve a bond resolution stating that the company may finance or refinance a portion of the project’s costs “from debt financing that it procures from one or more sources other than the Series 2018 bonds.”
The company didn’t respond when asked if it still is considering obtaining a low-interest loan from the U.S. Department of Transportation’s Federal Railroad Administration Railroad Rehabilitation and Improvement Financing program.
In April 2017, company officials told the FRA they planned to submit an application for a loan. At the time, AAF told The Bond Buyer that the company was “considering all funding options,” and that it was open to using PABs and other forms of federally supported financing.
“AAF is a corporation and has the ability to fund its projects in multiple ways,” said Bill Spivey, FDFC executive director. The bond resolution is designed to provide AAF “flexibility,” he said, adding that he doesn’t know if the company has obtained an FRA loan.
Spivey also said that AAF refunding will address changes in the project’s financing since the 2017 bonds were issued, from one covering the southern segment to a project that will cover both south and northern segments.
“Now that the north segment is seeking funding, not sure an investor would want half a project,” he said in an email.
When the 2018 bonds close, an amended and restated mortgage will be filed to include collateral in the company’s easement interests in the rail corridor between Miami and Orlando as well as its leasehold interest at Orlando International Airport, according to Larson’s memo.
The U.S. Department of Transportation has given All Aboard Florida until Dec. 31 to sell the PABs.
Larson’s memo says Brightline has selected Morgan Stanley as the underwriter for the deal, which is expected to price in November and close in December.
A draft preliminary limited offering memorandum included in the
Speakers representing the litigants said they will attend the FDFC meeting to discuss the lawsuit, which is attempting to block the PAB issuance, as well as safety issues and ridership information released by AAF that they say calls into question studies performed for the project.
The company’s
The financial statement also shows an operating loss of $28.23 million.
“We have obtained necessary approvals to extend our network to Orlando and are evaluating plans to commence construction,” the financial statement said. “We also intend to participate in the request for proposal announced by Governor [Rick] Scott to lease certain FDOT and [Central Florida Expressway Authority] owned rights-of-way to further extend our privately-funded passenger rail service between Orlando and Tampa.”
AAF submitted an unsolicited proposal to the Florida Department of Transportation to lease the 86 miles of right of way between Orlando and Tampa, a project that Scott said he believed was a good idea. It also opened competitive procedure in which the state is taking proposals from other interested companies.
A packet of information submitted to the FDFC board for review, filed by opponents of the train project, includes articles about investments by Scott in a credit fund of the Fortress Investment Group. Scott was required to disclose the investment as a candidate running for U.S. Senate against incumbent Sen. Bill Nelson.
Fortress is the parent company of Florida East Coast Industries, which owns All Aboard Florida.
