Brightline Florida raises going concern warning, lacks liquidity for coming debt payments

Bloomberg News

Brightline Florida's latest financial audits raised substantial doubts about the passenger rail line's ability to continue as a going concern.

The Florida line, operating between Miami and Orlando as the nation's only privately-owned intercity passenger rail line, has seen a recent uptick in ridership but continues to fall short of revenue projections. The project has about $5.5 billion of tax-exempt, taxable, unrated and junk-rated bonds.

That includes $2.2 billion of tax-exempt senior, so-called Opco bonds — $1.13 billion of which feature an Assured Guaranty wrap — that have endured a bruising series of downgrades in the last year.

Brightline Florida, like Brightline West on the West Coast, is owned by Fortress Investment Group.

Brightline Florida's financial statements for 2024 and 2025 by Ernst & Young LLP, filed Thursday on the Electronic Municipal Market Access website, warn that the company lacks the cash to cover pending debt payments. The company is working to raise equity or debt, the audit said, echoing the message Brightline has been saying for several months.

"While we do not currently have the liquid funds necessary to repay the indebtedness and meet such other obligations as they come due, management is working to" raise capital in the form of debt or additional equity, and obtain "additional extension(s) of such indebtedness prior to the maturity date," the filing said.

"However, substantial doubt remains as to the ability of the company to continue as a going concern."

The company and its investors have hired advisors and law firms amid talks of a restructuring and efforts to bring in equity improvements. Bloomberg reported this week that the company is seeking investors to avoid filing for bankruptcy.

"There's no other course of action," a buyside analyst said Friday about next steps for the company, whether it's restructuring or even the possibility of bankruptcy, though the former is more likely at this time.

Its bond prices Friday, a piece of $213.18 million of the Opco bonds that carry Assured Guaranty insurance with a 5.25% coupon due in 2047 sold for a high of 98.98, down from 100.13 cents on April 24.

Earlier this week, Brightline Florida said bondholders agreed to give more time to make the debt payment on $985 million of so-called commuter bonds.

Bondholders of $1.2 billion of the credit's unrated subordinate bonds, also called AAF Operations Holdings or Holdco bonds, in early April brought on UMB Bank NA as bond trustee, a move that's typically seen in the municipal bond market when holders are dealing with distress and may be looking at a debt restructuring.

The bonds were refinanced last August with a 10% coupon and a June 2026 mandatory put at $104.25. The first payment was due on Feb. 15, and when the company was unable to make the payment, bondholders agreed — in exchange for a 2% step-up rate — to push the payment to April 15. In April, the company announced another extension that pushes the due date to May 15. The latest grace period, ending June 15, was announced Monday.

But even as things continue to deteriorate, there is some good news. The month's ridership totaled 337,874, up 21% from March 2025, and monthly revenue totaled $23.6 million, up 14% from the previous March, Brightline said.

Recent efforts to revamp schedules and bring on more trainsets, along with the hiring of CEO Nicholas Petrovic, may be starting to show results, an investor told The Bond Buyer in late April. "Recent monthly results, particularly since October, suggest these initiatives are beginning to bear fruit in both ridership and revenue," the investor said.

Furthermore, Brightline Florida is not out of options just yet.

"There is hope for another round of concessions and breaks, but I can't say whether there's hope for the long term. I do think there's a high level of hope that there'll be another option on the table that will get done. It might take three steps to get this thing working, but I have a high level of comfort that there is going to be a next step," said the buyside analyst.

Over on the West Coast, Brightline West's project to build an all-electric high-speed train between Las Vegas and a suburb of Los Angeles has had to negotiate with bondholders for debt exchanges or ask for more time as the company tries to nail down additional equity, debt or a federal loan to keep the project on track.

Brightline West's latest agreement with its bondholders follows a debt exchange with bondholders last November aimed at giving the railroad more time to nail down equity and financing for the high-speed rail project. That deal required Brightline to raise at least $400 million in equity by March 31, with an additional extension.

A Thursday filing on EMMA reported that Brightline West and its bondholders have reached an agreement that gives the former more time to "pursue financing for the next phase of capital formation and to conclude contracting efforts, locking in the total cost to deliver the project."

The agreement includes a provision "for the release of additional funds, up to $50,000,000 in total from the California Series 2025B Withheld Bond Proceeds Accounts and the Nevada Series 2025B Withheld Bond Proceeds Accounts, to fund certain project development costs and adjust certain milestone dates," which will give the company more time to finish its construction contracting and financing activities, the filing said.

"The agreement also includes issuance of additional warrants to bondholders, to be granted pro rata with the released funds," the filing stated.

Some Brightline West bonds rose in trading Thursday after the head of the Federal Railroad Administration said the DOT was "interested in putting in money" during a P3 Forum. The company applied for a $6 billion federal Railroad Rehabilitation and Improvement Financing Loan in September. About $18.2 million of bonds with a 12% coupon due in 2065 sold for 58, up from 51.25 cents on Monday.

Representatives for Brightline declined to comment.