Brightline Florida to Miss July 15 Interest Payment on HoldCo Series 2024 Bonds

Brightline Florida bonds connected to AAF Operations Holdings, or HoldCo, will miss the Tuesday, July 15, interest payments, sources told Octus. Under the bond documents, the missed payments do not constitute an event of default, one source added.

In response, Brightline told Octus that its HoldCo bonds enable the company to defer interest payments “in certain circumstances.” For the payment due July 15, the company has used this mechanism in compliance with the terms of the bond indenture, according to the company statement.

“As a result, annual interest due will increase by a step-up rate of 2.00%,” the company adds. “Following July 15, 2025, we intend to make the deferred interest payment with operating cash flow or proceeds from equity and debt financings that we are actively pursuing.”

The Florida Development Finance Corp. will be meeting on Wednesday, July 16, to approve the issuance of up to $400 million bonds for Brightline, as reported.

A notice via the DTC system to custodians was circulated to bondholders yesterday evening, July 10, sources added. The bonds affected include the $925 million 12% Series 2024 bonds maturing on July 15, 2032, and the $285.7 million 10% Series 2024A bonds maturing on July 15, 2059. Both are obligations of AAF Operations Holdings LLC.

There has been no public disclosures on EMMA, and neither of the bonds have traded since the DTC notice came in, according to secondary trading information on EMMA for the 10% bonds and 12% bonds. The 10% Series 2024A bonds last traded on June 30 with $5 million in volume, at prices ranging from 95.25 to 95. The 12% Series 2024 bonds last traded on May 22 with $5 million in volume, at prices ranging from 103.75 to 103.5.

Brightline’s capital structure, pro forma for the $400 million of loaned proceeds from the FDFC’s issuance of new notes, is below:
 

Octus’ primary analysis of Brightline Trains Florida LLC’s $2.219 billion Series 2024A bonds, Brightline East LLC’s $1.118 billion bonds and AAF Operations Holdings’s $285.7 million Series 2024A bonds and $925 million Series 2024 bonds is HERE. Octus covenant analysis of Brightline East is HERE. Brightline also remarketed $985 million Series 2025A Brightline Florida Passenger Rail Expansion Project bonds in February.

Sources said that news of the upcoming missed interest payments, which would be the first time for Brightline, was “somewhat unexpected” since they had expected the high-speed rail project to have more flexibility and liquidity.