The bond exchange buys more time to obtain debt, equity and federal loan financing for the high-speed project.
The company building the high-speed line between Las Vegas and Southern California has entered into a transaction support agreement to exchange bonds. This is intended to provide sufficient time to obtain additional equity financing, debt financing and federal loans for the project, while enabling construction to progress with the completion of the remaining contracts.
DesertXpress Enterprises, also known as Brightline West, says the agreement is expected to culminate in a private exchange between holders of a significant majority of the $2.5 billion Series 2025A notes issued by the California Infrastructure and Economic Development Bank and the Director of the Nevada Department of Business and Industry.
Brightline West says the proposed private exchange has already received broad support from a “vast majority” of bondholders, who represent most of those with the largest holdings. It hopes that 100% of Series 2025A bondholders will participate in either the private exchange or the next public exchange, and says it is working to enhance the terms of the new Series 2025B bonds that investors will receive on the exchange.
The public exchange is scheduled to launch shortly after the private exchange is settled to allow holders of additional Series 2025A notes to participate on the same economic terms. All participating owners of the exchanges will receive the same compensation:
- A pro rata portion of up to $1.8 billion, depending on participation, of Brightline West’s new senior secured notes, based on par in value to the non-repurchased Series 2025A Mutual Notes. The new Series 2025B Notes will have priority right of payment on Brightline West’s subordinated debt, including any Series 2025A Notes that do not participate in the exchange.
- The pro rata repurchase price for the participating Series 2025A Notes is approximately $700 million, at a premium of 1%. This will reduce Brightline West’s outstanding bond debt, excluding surety bonds expected to be issued in conjunction with the closing, to approximately $1.8 billion.
- Accrued and unpaid interest on Series 2025A Notes eligible for repurchase and redemption prior to the expected closing date of November 26, and
- A pro rata number of warrants for up to 7.5% of the common units in BL Trains Holding West, and in exchange for additional liquidity that Brightline West may hold, a pro rata number of warrants for an additional 7.5% of the common units in BL Trains Holding West.
Brightline West has also committed to raising at least $400 million in equity by March 31, 2026, of which $250 million will be used to redeem the Series 2025B notes and the remainder to move the project forward. The company says it expects to receive $50 million in shares on January 1, February 1 and March 1 of next year.
According to a Bloomberg report cited by IRJ’s sister publication Railway erathe projected cost of building the 349.8-kilometre high-speed line from Las Vegas to Rancho Cucamonga, east of Los Angeles, has risen from US$16 billion to US$21.5 billion. Brightline CEO Mike Reininger blamed rising labor and material costs, due to higher demand from other transportation projects as well as new data centers and power plants.
Brightline West has applied for a $6 billion loan for the U.S. Department of Transportation’s (USDOT) Rail Rehabilitation and Improvement Program (RRIF). This will replace a $6 billion bank facility in Brightline West’s original financing plan, with the company also planning to raise equity to cover most of the $5.5 billion increase in construction costs instead of the original equity target of $1 billion.
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