Brightline going public under Virgin Trains USA
Brightline’s announcement Friday that it would rebrand as Virgin Trains USA was followed Monday by an SEC registration for an initial public stock offering.
Blanks for the price and size of the offering weren’t filled in on the SEC S1 registration, but shares will trade on NASDAQ under the symbol VTUS. The book runners for the offering are blue chip Wall Street firms Barclays, JP Morgan and Morgan Stanley.
The seller of the stock is AAF Holdings, which is the acronym for All Aboard Florida, the initial name for the Brightline service. AAF is controlled by Fortress Funds, one of the nation’s largest private equity companies.
The net proceeds from the offering, a concurrent private placement, and/or future debt or equity financings will be used to rebrand Brightline to Virgin Trains USA, to continue upgrading the infrastructure along Brightline’s tracks and complete construction of the route to Orlando and start the route to Tampa, which Brightline won recently after an uncontested RFP with the state.
The cost of expansion to Tampa will cost about $1.7 billion to complete, according to the SEC filing.
Money would also be available to help purchase the Xpress West high-speed rail project from Las Vegas to California and for general corporate purposes.
On Friday, Brightline, America’s first new major private intercity passenger railroad in over a century, announced a new strategic partnership and trademark licensing agreement with the Virgin Group, one of the world’s most recognizable brands in travel and hospitality. The partnership will allow Brightline to leverage Virgin’s industry-leading expertise and customer experience to establish a powerful new brand, “Virgin Trains USA”.
“Our private sector-led effort to reinvent passenger rail service in America is taking another leap forward with the addition of the Virgin team,” Wes Edens, chairman of Brightline and co-founder of Fortress Investment Group said in the Friday press release. “Virgin has built a respected and trusted brand in travel and hospitality. With our shared focus on customer experience, powered by a culture of innovation and disruption, we are well positioned to build on our success.”
Virgin Group has more than 60 companies focused on its core consumer sectors of travel and leisure, telecoms and media, music and entertainment, financial services and health and wellness.
“We have had a lot of fun and success creating innovative transport businesses that shake up markets and establish loyal followings. We transformed domestic air travel with Virgin America. Tens of millions of Americans travel on the railways every day, and we have tried for over a decade to find an opportunity to provide them with that same excellent service experience,” said Sir Richard Branson, founder of Virgin. “Brightline is at the forefront of innovation in this market, and the ideal partner for Virgin to work with to alter perceptions and traveling habits across the United States.”
Virgin is already active in South Florida with Virgin Cruises based in Plantation and Virgin Atlantic airline service to Miami.
“This partnership further validates the incredible accomplishments of our team as we challenge conventional wisdom to reinvent train travel in America,” said Patrick Goddard, president of Brightline. “Given our shared values and Virgin’s track record, this partnership will help amplify our efforts and growth potential as we seek to expand to new markets.”
The partnership could help to provide access to millions of customers with the potential for increased ridership from other Virgin branded travel and hospitality businesses, including Virgin Atlantic, Virgin Hotels and Virgin Voyages.
Virgin Group has significant experience operating in the UK rail sector, including its ongoing investment in Virgin Trains, a high speed intercity passenger rail system which it has run for 21 years. Last year passengers took more than 38 million trips on the UK’s West Coast Main Line.
As part of the strategic partnership, an affiliate of Virgin Group has agreed, subject to certain closing conditions, to make a minority investment in Brightline. Funds managed by an affiliate of Fortress Investment Group LLC will retain majority ownership of Brightline. Brightline’s current management team will oversee daily operations, engineering, business development and strategy. Brightline will rename itself Virgin Trains USA this month and transition to Virgin Trains USA branding in 2019.