Tuesday, June 17, 2014

All Aboard Florida is taking out a rather pricey loan for construction

From Bloomberg comes the news that All Aboard Florida wants a five-year $405 million dollar loan at 12%.

While such a bond offering certainly does help show that All Aboard Florida is indeed a serious concern, that high of an interest rate is absolutely ruinous for any plans to run a profitable rail line; even at their best, the margins are not terribly high. My personal supposition is that this is intended merely to get the ball rolling while they continue to seek an RRIF loan from the Federal government; part of that loan would then be used to refinance this loan into something rather more reasonable. Without the low interest rates of a Federal RRIF loan, however, I do not believe that this line can be profitably constructed, even with the potential revenue from their hotel and convention center plans.

1 comment:

  1. It's not that bad of an interest rate for real estate development, which is really FEC's impetus for service.

    ReplyDelete