Passenger Trains > Brightline West Bond sale officially off

Trains News wire is reporting that the proposed sale of Muni bonds to fund the Las Vegas-LA high speed rail project is off -- officially it's been "postponed until market liquidity improves,”.  Key point here is the CA funding earmarked for this project will be available for other projects, so Fortress will have to start the whole process of negotiating with CA at some point in the future.
https://trn.trains.com/news/news-wire/2020/11/01-las-vegas-high-speed-project-postponed-because-of-inability-to-sell-bonds

So how many of us observers are surprised????

WP17

 

I am not surprised as all institutions who are trying to borrow money at this time will find it difficult at best due to the low interest that bond holders will receive with rates being where they are.  This goes for Municipal Bonds which are Federal Tax Free Interest to the lender and could be tax free interest for lenders (bond owners) in many states.
John in White Marsh, Maryland

More Covid roadkill.
 

Another attempt for a Vegas Train bites the dust, NEXT!!!

ProAmtrak Wrote:
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> Another attempt for a Vegas Train bites the dust,
> NEXT!!!

I dont think so.  Covid roadkill id say.   Times are very uncertain.    I'd like the state of CA to invest in this rather than the duplicate train to nowhere up in modesto.  Ad Fortress is probably having enough finantial hand wringing wi FLA right now.    Its a solid project, not the X train ppl.  I think its wrong of you to put them all in the same bucket.  Maybe in the meantime they can nail down getting the train to the LA basin.

Or they might walk away.  Times are toiugh and uncertain. They are still building in FLA.  They havent walked away from that, or had a "Temporary construction stop"

Bashing is easy, but not very productive

Well said and I think pretty accurate.  The folks at Fortress are not amateurs.

Gordon

Yes well said, but key to sucess is getting into the LA Basin, without a change. 

I sold enough tickets on the old Wind and had to explain to many of no frequient service.
Driving over Cajon Pass, & possible parking charges are not the answer.

If one has to get over Cajon, and the auto is loaded, they will continue to drive.  Course that is if they understand the few hours on Friday and Sunday,, they doe not want to be on the Interstate.

Ed

Bolt Bus couldn't even make a go of it with "free" infrastructure ...

mundo Wrote:
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> Yes well said, but key to sucess is getting into
> the LA Basin, without a change. 
>
> Ed

The point I was trying to make is that Fortress isn't X-Train.  Whether the bond sale is off because of the Pandemic or because they re-examined their ridership projections is something I certainly don't know, but I can't imagine that they got as far along in the bonding process as they did without having done significant research.  Also unknown is how their real estate development calculations factored into the process.  Finally, the Class 1's can't just blow them off so I'm confident that there were serious (quiet) conversations so that all concerned had a clear understanding of the facts.  Again, these are not amateurs or wild visionaries.  Something in their calculations changed.

Gordon 

Don't blame Covid,  the economy or anything else.  What they have here is a bond issue with little or no interest from institutional investors who comprise the market for such issues.  As I mentioned earlier,  the underwriters probably got a lot of "Nobody Cares"  when calling potential bond buyers.  Taking a phrase from poker,  Fortress knows very well when to fold 'em.     Some folks on the financing team (managing underwriters, bond counsel et al ) just saw a big contribution to their bonus pools go down the drain.

As masterphots succinctly describes, the market for this kind of offering isn't huge.

When you walk the deal to other investment houses and their pension plan etc clients, you can get a great response, or you can a pass.

With today's low interest rates, long term investors need a lot of pizzaz to buy into a deal.

Posted from Android

And the world of people investing in rail oriented projects is limited.  You have the Texas Central people whom you can argue have a better story for bond investors.  Plus there is a lot of stuff going on in the background looking for money to back another attempt at taking Kansas City Southern private - that alone will suck up a lot of institutional investment money.

njmidland Wrote:
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> And the world of people investing in rail oriented
> projects is limited.  You have the Texas Central
> people whom you can argue have a better story for
> bond investors.  Plus there is a lot of stuff
> going on in the background looking for money to
> back another attempt at taking Kansas City
> Southern private - that alone will suck up a lot
> of institutional investment money.

That's a good example of what an institutional investor is considering for a $200mn to $500mn participation in a deal.  Kansas City Southern is a more dependable cash flow, requiring much less construction, and offering more credible business projections.  A purely passenger railroad, requiring lots of new construction, would present a different package of risks and rewards.

So at this point nothing can be done to keep BrightLine West going?

Can we call it a dead duck?

ts1457 Wrote:
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> So at this point nothing can be done to keep
> BrightLine West going?
>
> Can we call it a dead duck?

They can find another source of funding, but that's iffy at best.

mundo Wrote:
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> Yes well said, but key to sucess is getting into
> the LA Basin, without a change. 

I still think that ultimately it will happen, the promoters intend for it to happen, and that separating a LA-LV route at Victorville-ish simplifies the EIS vastly. If they can show that LV-Victorville-ish is a viable project, then another project can address the vastly different type of environmental impacts west of there. West of there might even be further divided into separate projects with independent utility, such as Victorville-ish - Palmdale (connecting with HSR or Metrolink or running on the existing Metrolink track), Palmdale - LA (HSR or improving Metrolink), Improvement between San Berdoo and Victorville-ish for Metrolink expansion (then use it to run the LV trains into LA) etc.

I doubt that anyone working on this expects Apple Valley to be the end of the line literally or figuratively.

TAW

Maybe they'd have better luck if service to Orlando had been running for 5 or 10 years and had proven returns. 

when i invest, i do it to MAKE money.

i am curious, is there an example of an hsr or conventional passenger system where private investors have made profits?

66

goneon66 Wrote:
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> when i invest, i do it to MAKE money.
>
> i am curious, is there an example of an hsr or
> conventional passenger system where private
> investors have made profits?
>
> 66

Duh..  
Have u ever invested in something cause u believed in it, or u just wanted it to succeed?    Ive put over 100K into things with no return, and I dont even get my money back.  But I get to see something i believe in succeed.     And I hate cars and driving.   Could we be any more different?   Just want u to know that now everyone out there is like u.

As for Brightline west....The real money and sell, is in property.  Same as it is in FLA.   The RR could make money. but it needs the same incredibly low cost emphastructure that the airlines have.  If the airlines had to pay for the airports and air traffic control....their landscape would be a whole lot different, to say the least.

But the main stream of this evening syposium is... Fortress is not X-train, and some of us take issue with those here who just like to paint everything with one big fat negative brush.

   One of the issues certainly is that most of the RR is in CA, and Las Vegas is in NV.  Hard to get CA to back the project if it just takes $$ out of CA.  Casinos should have interest.  They have money. LAS casino profit just for 2019 approx 2 billion.  But who could blame them for being fiscally tight right now.  Covid has killed them, according to reports.   I could be wrong, but i dont think you HAVE to have institutional investors to get something off the ground. .  

pdt Wrote:
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> goneon66 Wrote:
> --------------------------------------------------
> -----
> > when i invest, i do it to MAKE money.
> >
> > i am curious, is there an example of an hsr or
> > conventional passenger system where private
> > investors have made profits?
> >
> > 66
>
> Duh..  
> Have u ever invested in something cause u believed
> in it, or u just wanted it to succeed?    Ive
> put over 100K into things with no return, and I
> dont even get my money back. 

The term you are looking for there is philanthropy.

> But I get to see
> something i believe in succeed.     And I hate
> cars and driving.   Could we be any more
> different?   Just want u to know that now
> everyone out there is like u.

And therein lies your misunderstanding. 

https://www.merriam-webster.com/dictionary/investment
https://www.investopedia.com/terms/i/investment.asp
https://www.dictionary.com/browse/investment

There is a difference between an investment and a donation. 

Investment is for some kind of gain, either financial (fiscal) or physical for you or your company or family, etc.