After announcing rebrand, Virgin Trains USA, formerly Brightline, files to go public

Virgin Trains, formerly known as Brightline, will suspend service at noon Saturday as Hurricane Dorian approaches Florida.
Virgin Trains, formerly known as Brightline, will suspend service at noon Saturday as Hurricane Dorian approaches Florida. Miami Herald File

On the same day it announced a major rebranding as Richard Branson’s Virgin Group became an investor, the private train company formerly known as Brightline quietly filed with the Securities and Exchange Commission to become a publicly traded company.

Virgin Trains USA, the name the company said Friday it would formally adopt, filed an S-1 form stating its intent to begin trading its shares on the open market.

A Brightline spokesperson declined to comment, citing federal security laws. Under so-called “quiet period” rules, a company filing a registration statement with the SEC must wait for SEC approval before it can make additional public statements.

“We are the first new major private passenger intercity railroad in the United States in over a century, and we believe our business represents a scalable model for twenty-first century passenger travel in North America,” the company says in the filing. “Our goal is to build railroad systems in North America that connect major metropolitan areas with significant traffic and congestion. We believe that the economics of passenger rail service offer a highly compelling investment opportunity.”

In the filing, Virgin Trains says it anticipates its Florida passenger rail service, with stops in Miami, Fort Lauderdale, West Palm Beach, and, eventually, Orlando and Tampa, “will stabilize by the fourth quarter of 2023 or the first quarter of 2024,” after a “ramp up period” of approximately two years.

During this period, the company said, it expects ridership to increase “as travelers become acquainted with the new rail service and adjust their trip-making habits.”

The company uses projected ridership to Orlando for its financial outlook, forecasting an eventual total of 6.6 million riders annually, paying $73 in fare.

“We expect to offer service between Miami and Orlando for fares that are lower than the cost of driving or flying for individual travelers,” the company says in the filing. “Based on our expected fares for an individual traveler, we expect that a trip on our trains between Miami and Orlando will be approximately 25% less expensive than driving and approximately 30% less expensive than flying. We expect to carry approximately 6.6 million passengers annually.”

The company does not state its current ridership totals, instead pointing to a 42 percent increase in ridership in the second quarter of 2018 compared to the first quarter of 2018, and a 50 percent ridership increase in the third quarter of 2018 compared to the second quarter of 2018.

In October, a public filing related to the company’s debt showed Brightline’s passenger count stood at 106,090 for the months of April, May and June, and total ridership at 180,870 year-to-date.

“The trends driving growth are continuing and, as a result, our management expects that ridership in the fourth quarter of 2018 will continue to demonstrate strong levels of growth,” the company says in the filing. “We believe our new brand and relationship with the Virgin Group could help accelerate our ridership growth in the future as we continue to move toward achieving stabilized ridership.”

The company also discusses its plans to develop real estate adjacent to its stations, using Florida East Coast Industries, its parent company, as primary developer.

The company states its desire to expand to other routes, including Atlanta to Charlotte, North Carolina, Dallas to Houston, and Los Angeles to San Diego. That’s in addition to its proposed Tampa-Orlando route, and its recently acquired Southern California-to-Las Vegas route.

The company is owned by Fortress Investment Group, which also owns Florida East Coast Industries, a direct descendant of Henry Flagler’s Florida East Coast Railway Co.

The S-1 filing provides a look into the company’s current financial status. For the first nine months of 2018, the company was operating at a loss of more than $87 million. Over the same period, it grossed more than $5 million in revenue. Its debt stands at more than $600 million, and total cash stands at about $49 million.

Since Brightline began testing in 2017, there have been at least seven people killed in accidents. There have also been multiple non-fatal incidents, including a woman critically injured in Pompano Beach. In most of the incidents, police reports have not cited Brightline as the at-fault party.

The company classifies itself as “an emerging growth company,” which under securities law means it “may take advantage of certain reduced disclosure and other requirements that are otherwise applicable generally to public companies.”

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