All Aboard Florida Plans $405 Million Debt for Railway

Tuesday, 17 Jun 2014 04:46 PM

 

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All Aboard Florida, a unit of Fortress Investment Group LLC, plans to borrow $405 million to help finance a high-speed railway along the state’s eastern coast over the opposition of some local residents.

AAF Holdings LLC may sell five-year notes that yield about 12 percent, according to a person with knowledge of the transaction who asked not to be identified because they weren’t authorized to speak publicly about it. AAF increased the offering from $390 million previously marketed. The bonds will have a payment-in-kind toggle option, which allows interest to be paid in additional notes, the person said.

The company applied for a $1.6 billion loan from the Federal Railroad Administration, according to Lauren Dunaj, a spokeswoman for All Aboard Florida who works for Finn Partners.

Bankers at JPMorgan Chase & Co., which is helping to manage the sale, declined to comment on the offering, spokeswoman Tasha Pelio wrote in a June 13 e-mail.

The railway, estimated to cost more than $2 billion, would link Miami to Orlando with transit times of less than three hours, according to the project’s website. Orlando and Miami are the top tourist destinations in Florida. The train will also stop at downtown locations in Fort Lauderdale and West Palm Beach, population centers with international airports.

 

The train will speed past smaller, less-affluent towns and cities along Florida’s east coast without stopping. Some jurisdictions, including Port St. Lucie and Martin County, have passed resolutions against the project, saying it will create noise and traffic problems.

Florida’s Republican Governor, Rick Scott, sent letters to All Aboard Florida and the Federal Railroad Administration last week asking for more time for public input before the project is approved.

Fortress, the first publicly traded private-equity and hedge-fund manager in the U.S., acquired All Aboard Florida’s parent company, Florida East Coast Industries Inc., for $2.65 billion in July 2007, according to data compiled by Bloomberg.

 

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