Virgin Trains USA launches IPO for Brightline expansion


Virgin Trains USA, the new identity of Florida’s Brightline private passenger rail project, launched its initial public offering on Wednesday to finance the continued expansion of the system.

The announcement kicks off underwriters’ road show presentations about the IPO in a deal that will issue 28.3 million shares of common stock at $17 and $19 per share.

Virgin Trains USA, with some backing from British billionaire Richard Branson, has begun the process of going public to raise up to $540 million for expansion efforts.

Bloomberg News

Brightline announced in November that British billionaire Richard Branson’s Virgin Group had taken a stake in the passenger train company and agreed to license its name.

The initial offering is expected to raise between $468 million and $540 million, depending on the price of shares. The stock will eventually trade on Nasdaq under the ticker symbol VTUS, according to an amended S-1 registration statement filed with the Securities and Exchange Commission on Wednesday.

A Brightline spokesman declined to comment on the announcement. Brightline trains are expected to be rebranded as Virgin Trains this year through a trademark licensing agreement with Branson’s company.

The IPO launch comes as Brightline officials continue to mull when to issue $1.15 billion of tax exempt private activity bonds as part of its financing plan. The bonds will be sold by the Florida Development Finance Corp., as the conduit issuer.

The bonds will not be issued before completion of the IPO, according to the registration statement. It also said that the company is discussing obtaining a commitment for a $2.3 billion bridge loan.

Virgin Trains said it intends to use proceeds from the IPO, a concurrent private placement, and the bonds to construct the second phase of its passenger train system from West Palm Beach to Orlando and to fund the acquisition of XpressWest, an undeveloped high speed rail project to link Victorville, California, with Las Vegas.

Proceeds will also be used to refinance about $700 million of existing indebtedness, to pay general corporate expenses such as the cost of rebranding Brightline trains under the name Virgin Trains USA, and for continuing upgrades in safety measures along the south segment from Miami to West Palm Beach, which began operating last year.

The company said it also expects to fund an expansion of its service from Orlando to Tampa with proceeds of the IPO and/or with other debt or equity financings.

The prospectus for the securities will be available from Barclays, JPMorgan and Morgan Stanley, who are the book-running managers for the proposed IPO.

Additional book-running managers are Bank of America Merrill Lynch and Allen & Company LLC. Co-managers are JMP Securities, Raymond James and Stephens Inc.

The IPO launch comes amid legal challenges from Indian River County along Florida’s east coast.

On Jan. 16, the county filed a complaint in the Nineteenth Judicial Circuit for Indian River County asking a judge to determine if the passenger train company’s private owners can benefit from the county’s 31 at-grade highway crossing agreements with Florida East Coast Railway.

FECR granted Brightline an easement to use its tracks, but the county hasn’t agreed to make any changes in its crossing agreements with FECR that would allow Brightline to use the tracks. Both Brightline and FECR are named in the suit.

The complaint requests that the court determine who will pay for “substantial” safety improvements and upgrades to the tracks to support Brightline’s 32 daily trains that will run at speeds up to 110 mph through Indian River County.

The county has also filed a notice in federal court stating that it plans to appeal the lawsuit it lost in December. It challenged $1.15 billion of private activity bonds allocated to the project as well as federal reviews under the National Environmental Policy Act conducted by the Federal Railroad Administration.

The notice was posted Jan. 14 to preserve appellate rights, according to County Attorney Dylan Reingold. He is expected to discuss the appeal next month with county commissioners, who will vote on whether to pursue it.

Leave a Reply

Your email address will not be published. Required fields are marked *