Brightline West seeks $6 billion federal RRIF loan

Brightline West

Brightline West, the proposed Nevada to California bullet train, is seeking a $6 billion federal loan as its price tag continues to climb.

DesertXpress Enterprises LLC, which does business as Brightline West and is owned by Fortress Investment Group, on Sept. 26 applied with the Department of Transportation's Build America Bureau for a Railroad Rehabilitation and Improvement Financing loan, according to the DOT's website.

The project cost is listed on the site as $21.5 billion, which reflects a 35% increase over an earlier $16 billion price tag. The cost increase and loan application was first reported by Bloomberg, which quoted Brightline's CEO Mike Reininger as blaming rising labor and material costs. Reininger also told Bloomberg that the federal loan would replace a $6 billion bank facility and that the company still seeks to raise $5.5 billion in equity.

The loan application cleared up some questions about the bullet train's financing plans, said First Eagle Investments, a major holder of Brightline West's bonds.

"Brightline West management had mentioned that they were seeking alternative financing in their conference call from early September," the firm said in an email to The Bond Buyer. "The bond market had been wondering since then what that was in reference to. Their application with the US DOT for a $6 billion RRIF loan provides more clarity at this time," the firm said. "It sounds advantageous for them to pursue given the much lower interest costs and extended amortization versus a typical bank loan." If approved, the "additional government support" would be "quite positive at this juncture," the firm said.

Brightline West most recently came to market in February with $2.5 billion of unrated private activity bonds. The deal terms gave the company six months to secure a $6 billion bank facility. If the company failed to secure the additional funds by the end of November, there is a mandatory bond redemption at 101.

In a Sept. 4 disclosure notice and investor call, the company said it had not yet secured the financing and that it expects to either satisfy the terms by the end of November or remarket or refinance the bonds.

The news comes as Brightline's Florida counterpart struggles with lower-than-projected ridership and revenue. An August refinancing of the Florida capital stack gave some of its bondholders a lien on Brightline West's equity pending approval.

Brightline West in late 2024 secured a $3 billion federal grant from the Biden administration that is the same Federal Railroad Administration grant as the one for California's high-speed train that the Trump administration canceled in July. The administration has singled the Brightline West project out for praise, comparing its "impressive work" with the "slow progress" of California's train.

RRIF loans can fund up to 100% of a railroad project with repayment periods of up to 35 years and interest rates equal to the cost of borrowing to the government.

The project calls for a 218-mile high-speed rail line between a station between Las Vegas and Rancho Cucamonga, Calif., running along the median of I-15.

Brightline did not respond to a request for comment.