Brightline reworks debt in bankruptcy court but its high-speed trains will keep running in Florida
The Brightline companies that bet more than $5 billion on developing the nation's only privately held passenger railroad are reworking their debt in bankruptcy court, but the bright yellow trains will continue running between Miami and Orlando.
This financial move does not affect Brightline's sister company Brightline West, which is working to build a high-speed railroad between Las Vegas and a stop outside Los Angeles in Southern California.
The deal that Brightline worked out with its creditors will allow the railroad to borrow $490 million more as it works to attract enough riders to pay all of its bills. Assured Guaranty said on Friday that the financing commitments include $350 million of new junior debt and $140 million of additional senior debt.
Assured said that Brightline Trains Florida LLC, which runs the railroad, has not filed for Chapter 11 bankruptcy protection, but that certain other Brightline Florida entities did file for such protection.
“Brightline is a critical part of Florida’s transportation network that has changed the way people move around the state,” Brightline Florida CEO Patrick Goddard said in a statement. “Today’s agreement brings $490 million in new long-term capital to Brightline from the stakeholders who know this business, and it comes at a time of real momentum.”
Brightline earned the worst safety record of any railroad in the nation with more than 200 deaths along its tracks since it was founded, but Goddard said at a news conference earlier this month that the railroad has been working to improve safety with better safety measures around rail crossings.
The company has seen its ridership grow 14% for the year-to-date through August, with revenue up 17% for the same period when compared with last year.
But Tim Hynes, who is head of Global Credit Research at Debtwire, said Brightline's current ridership of about 3.5 million people a year that generates about $240 million of revenue is less than half the number of riders and one-third of the revenue the railroad predicted in 2024. He said that's why Brightline needed to rework its debt and obtain additional financing.
“The broader lesson is that intercity rail financed mainly with private high-yield debt is very hard to make work, so expect future projects to lean more on public money,” said Hynes, who also thinks investors will demand more conservative ridership forecasts.
Brightline first began running its trains between Miami and Orlando in 2023. The company began operating between Miami and West Palm Beach in 2018. But it is only able to run at its maximum speed of 125 mph (202 kph) on the stretch between the Orlando airport and Cocoa, Florida, because that section is totally fenced off and doesn't have any public grade crossings.
Brightline hopes to eventually extend its service to Tampa.
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