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Virgin Trains seeks $US 3.6bn bonds for California–Las Vegas line

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Privately-funded inter-city passenger operator Virgin Trains USA, previously known as Brightline, is seeking approval from the states of California and Nevada to raise as much as $US 3.6bn in tax-exempt bonds for a high-speed line linking southern California with Las Vegas.

Virgin Trains USA confirmed last September that it had acquired XpressWest, a high-speed project with rights to develop a federally-approved corridor connecting Victorville, a desert city 137km northeast of Los Angeles, with Las Vegas.

Bloomberg reports that a California state agency could sign off on Virgin Trains’ application in September, which would result in the company borrowing as much as $US 2.4bn in unrated private activity bonds for the project. In November, a Nevada agency will consider a similar request to let the company leverage as much as $US 1.2bn in similar debt.

The government agencies wouldn’t be responsible for the bond payments but they would allow the Florida-based company, which currently operates a service between Miami and West Palm Beach, to access cheaper capital for the $US 4.8bn project.

The California bond sale is planned for the first quarter of 2020, which could see construction start by June with an opening date in 2023.

Should a committee of Nevada’s government representatives approve the plan, almost a third of the state’s annual capacity for such debt would be designated for the project this year and next, which Bloomberg says is a sign of how important it considers the project.

Proposals for passenger rail links from California to Las Vegas go back decades. Most recently the Las Vegas Railway Express, or X Train, a 2010 start-up that had received state approval, issued stock and purchased passenger coaches before being discontinued in 2016.

Virgin Trains says a one-way trip to or from Las Vegas would take around 90 minutes, half the current driving time, and cost less than driving and parking, and flying, according to an economic impact analysis by Beacon Economics LLC.

The company plans to construct the line in the median of the separated freeway lanes along Interstate 15 from Victorville in San Bernardino County. The company expects the majority of passengers will come from Los Angeles County, according to its application to California’s Debt Limit Allocation Committee.

Earlier this year, Virgin Trains cancelled plans to launch an IPO before receiving approval to raise $US 950m in debt to fund its extension from West Palm Beach to Orlando.

 

Source: railjournal.com

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