Virgin announced Friday it is finally set to build its West Palm Beach-to-Orlando link, thanks to the successful sale of $1.75 billion in bonds.
The bond sale ends months of uncertainty over the project’s financing, which was contingent on approval of a plan to use a special bond designation.
Formerly known as Brightline, Virgin’s higher-speed U.S. train service hopes to complete construction of the extension in 2022. The company plans to build 170 miles of new track that will lead into a new inter-modal facility at Orlando International Airport.
Construction will begin right away, the company said in a statement.
“Today is affirmation that our vision for passenger rail holds great promise and highlights a tremendous appetite in the private markets for large-scale transportation and infrastructure projects,” Wes Edens, co-founder and co-chief executive officer of Fortress Investment Group and chairman of Virgin Trains USA, said in a statement.
“Connecting Miami and Orlando makes tremendous business sense, but even more, it provides a public benefit to the State of Florida including thousands of jobs that will keep the state economically competitive for decades,” he said.
Morgan Stanley was the underwriter for the transaction, which was purchased by 67 different investors, the company said. The sale of the tax-free private activity bonds, which was authorized earlier this month by the Florida Development Finance Corp., represents one of the largest such transactions recorded. The FDFC says taxpayers would not be on the hook if the company were to default.
Joseph Krist, a municipal bond analyst for Court Street Group, a Brooklyn-based research and consulting firm, said the sale was four-times oversubscribed, and shows Virgin’s decision to forgo an initial public offering was the correct one.
“The deal reflects favorable investor demand, and certainly in the high-yield market,” he said. “Despite all the hurdles, it turned out to be a really good time to come to this market.”
Virgin says the Orlando project will create 10,000 jobs and generate more than $650 million in federal, state and local tax revenue.