Brightline West eyes $3.5 billion financing to kick off high-speed train

Brightline West, the high-speed rail line between Las Vegas and southern California that broke ground in April, is eyeing its biggest borrowing to date in the next several weeks.

In a notice on the Electronic Municipal Market Access website, the company announced potential plans to float $2.5 billion of private activity bonds and refinance $1 billion of existing PABs "by the end of 2024 or shortly thereafter."

The financing would mark the next step for the roughly $12 billion project, which aims to be the nation's first privately owned, all-electric high-speed train. The company, owned by Fortress, which also owns Brightline Florida Trains LLC, hopes to open by 2028, in time for the Los Angeles Olympics. The 218-mile line will mainly run along the I-15 median with fully electric trains capable of reaching 186 mph or more, according to officials, allowing for a six-hour drive to be compressed into a two-hour trip.

The project, along with other proposed high-speed lines, won support from the Biden administration, which has prioritized development of a national high-speed rail network. While the mostly privately funded Brightline West line has won bipartisan praise, Republicans have been sharply critical of California's publicly funded, long-delayed and overbudget rail line.

The company in August remarketed $1 billion of PABs originally issued in 2020. The scheduled mandatory tender date is Aug. 15, 2025. By that time, the company "expects to fully capitalize the approximately $11 billion total remaining project costs," according to August bond documents.

The capital stack includes a $3 billion federal grant awarded last December as well as $6 billion of bank loans, the $3.5 billion of bonds and additional sponsor equity, according to bond documents. Brightline and a consortium of banks are in negotiations over the terms of the $6 billion of senior term loans, some of which may be tax-exempt bonds and all which will be senior to the bonds, according to the EMMA notice.

The company expects the $3.5 billion of bonds will be floated "promptly" after the company wins commitments from the bankers for the $6 billion, the notice said. The bonds will be issued through the California Infrastructure and Economic Development Bank Revenue Bonds and the State of Nevada Department of Business and Industry.

In the bond documents, Brightline said it expects the tax-exempt debt to grow to a larger portion of the permanent capital stack over time, as was the case with Brightline Florida.

In September, the Federal Railroad Administration officially signed the $3 billion grant agreement awarded to the Nevada Department of Transportation for the train line, allowing the company to ask to begin drawing on the funds.

"This is a historic commitment that will jumpstart the high-speed rail industry in America, creating thousands of jobs all across the country," Michael Reininger, CEO of Brightline, said in a statement when the grant was signed.

Morgan Stanley & Co. LLC is the senior underwriter on the deal. The firm declined to comment.