THE company building the high-speed line between Las Vegas and Southern California has entered into a transaction support agreement for a bond exchange. This is intended to provide sufficient time to obtain additional equity funding, debt financing and federal loans for the project, while enabling construction to progress as the remaining contracts are finalised.

DesertXpress Enterprises, also known as Brightline West, says that the agreement is expected to culminate in a private exchange by holders of a significant majority of the $US 2.5bn of Series 2025A Bonds issued by California Infrastructure and Economic Development Bank and the Director of the State of Nevada Department of Business and Industry.

Brightline West says that the proposed private exchange has already received broad support from a “supermajority” of bondholders, representing most of those with the largest holdings. It hopes that 100% of those holding Series 2025A Bonds will participate in either the private exchange or the follow-on public exchange, and says it is enhancing the terms of the new Series 2025B Bonds that will be received by investors in the exchange.

The public exchange is intended to be launched soon after settlement of the private exchange to allow additional holders of the Series 2025A Bonds to participate on the same economic terms. All holders that participate in the exchanges will receive the same compensation:

  • a pro-rata portion of up to $US 1.8bn, depending on participation, of new senior secured bonds in Brightline West, on a par-for-par basis for exchanged Series 2025A Bonds not being repurchased. The new Series 2025B Bonds will be senior in right of payment to Brightline West’s subordinated debt, including any Series 2025A Bonds that do not participate in the exchange
  • a pro-rata repurchase price of participating Series 2025A Bonds of approximately $US 700m, at a 1% premium. This will reduce Brightline West’s outstanding bond debt, excluding escrow bonds expected to be issued concurrently with the closing, to approximately $US 1.8bn
  • accrued and unpaid interest on Series 2025A Bonds valid for repurchase and exchange before the expected closing date of November 26, and
  • a pro-rata number of warrants for up to 7.5% of the common units of BL Trains Holding West and, in exchange for additional liquidity that may be retained by Brightline West, a pro-rata number of warrants for an additional 7.5% of the common units of BL Trains Holding West.

Brightline West has also committed to raise at least $US 400m in equity by March 31 2026, of which $US 250m will be used to redeem Series 2025B Bonds and the remainder to move the project forward. The company says it expects to receive $50m of equity on January 1, February 1 and March 1 next year.

According to a Bloomberg report cited by IRJ’s sister publication Railway Age, the expected cost of building the 349.8km high-speed line from Las Vegas to Rancho Cucamonga, east of Los Angeles, has increased from $US 16bn to $US 21.5bn. Brightline CEO, Mike Reininger, has blamed rising labour and materials costs, fuelled by high demand from other transport projects as well as new data centres and power stations.

Brightline West has applied for a $US 6bn loan from the US Department of Transportation’s (USDOT) Railroad Rehabilitation and Improvement Financing (RRIF) programme. This will take the place of a $US 6bn bank facility in Brightline West’s original financing plan, with the company also planning to raise equity to cover most of the $US 5.5bn increase in construction costs in place of the original equity target of $US 1bn.

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