All Aboard Florida Sells $405 Million of Debt for Railway

All Aboard Florida, a unit of Fortress Investment Group LLC (FIG), issued $405 million of debt to help finance a high-speed railway along the state’s eastern coast over the opposition of some local residents.

AAF Holdings LLC sold 12 percent, five-year bonds with a payment-in-kind toggle option, which allows interest to be paid in additional notes, according to data compiled by Bloomberg. The PIKs, one of the riskiest forms of debt, yielded 10.25 percentage points more than similar-maturity Treasuries. AAF increased the offering from $390 million previously marketed.

The company applied for a $1.6 billion loan from the Federal Railroad Administration, according to Lauren Dunaj, a spokeswoman for All Aboard Florida who works for Finn Partners.

The railway, estimated to cost more than $2 billion, would link Miami to Orlando with transit times of less than three hours, according to the project’s website. Orlando and Miami are the top tourist destinations in Florida. The train will also stop at downtown locations in Fort Lauderdale and West Palm Beach, population centers with international airports.

The train will speed past smaller, less-affluent towns and cities along Florida’s east coast without stopping. Some jurisdictions, including Port St. Lucie and Martin County, have passed resolutions against the project, saying it will create noise and traffic problems.

Florida’s Republican Governor, Rick Scott, sent letters to All Aboard Florida and the Federal Railroad Administration last week asking for more time for public input before the project is approved.

Fortress, the first publicly traded private-equity and hedge-fund manager in the U.S., acquired All Aboard Florida’s parent company, Florida East Coast Industries Inc., for $2.65 billion in July 2007, Bloomberg data show.

To contact the reporters on this story: Caroline Chen in New York at cchen509@bloomberg.net; Toluse Olorunnipa in Tallahassee, Florida at tolorunnipa@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net John Parry, Chapin Wright

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