Hedge fund investors holding Brightline’s $1.1bn corporate debt are preparing a restructuring plan that could give them priority over other creditors while providing new financing to the struggling high-speed rail project, according to a report by Bloomberg.
The report cites unnamed sources familiar with the discussions as saying that the group of bondholders due 2030 is exploring measures that would allow them to extend additional capital to Brightline and clear the path for outside equity investments. The plan could involve a common restructuring tactic: subordinating other holders of the same corporate debt to elevate their own claims.
Brightline, owned by Fortress Investment Group, has faced persistent shortfalls in ridership and revenue, with 2025 projections indicating 3.1 million passengers — 54% below estimates from a 2024 bond offering. Revenues are running 67% below forecasts. Despite the shortfall, the company retains enough cash to service $2.2bn of senior municipal bonds and the $1.1bn in junior corporate debt through 2026, Fitch Ratings notes.
The restructuring would not impact $2.2bn in senior municipal debt or other junior notes that rank below the corporate bonds. Hedge fund creditors are also weighing the timing of interest payments on $1.2bn of unrated junior municipal bonds, which Brightline deferred in July. The bonds currently trade at around 33 cents on the dollar.
Brightline has announced plans to raise a “substantial amount of equity” and is engaging potential strategic partners globally. The support of corporate bondholders, who control a majority of the debt, will be critical to any such recapitalisation.
