Las Vegas tourist board buys bankrupt monorail line
The long financial saga of the struggling Las Vegas monorail could come to an end after its second bankruptcy.
The project comes out of this second bankruptcy with the sale of the line to the Las Vegas Convention and Visitors Authority. But this time the bondholders will be paid. During the first round in 2011, bondholders suffered a steep discount.
In the first bankruptcy, the monorail’s debt was reduced from $ 650 million to $ 13 million.
LVCVA bought the line for $ 24 million, according to documents filed with the U.S. bankruptcy court in Las Vegas. The majority of the purchase price covers the $ 22 million debt fully owned by municipal bond investor Preston Hollow Capital LLC.
The monorail closed in March due to the pandemic and was unable to reopen, chief executive Curtis L. Myles III said in a statement filed with bankruptcy court in September. He said that at the time it was in the best interests of the system to file for Chapter 11 bankruptcy and trigger an asset sale.
Myles was not available for further comment, according to a spokesperson.
In 2010, company officials attributed the financial problems to overly optimistic ridership and revenue projections.
In 2020, pandemic restrictions forced the monorail to lay off 93% of its staff, cut compensation for remaining workers by up to 30%, and cut maintenance and operating expenses to a bare minimum, according to bankruptcy documents. The system had drawn on debt service reserves to pay bondholders since April.
As owners, the board of directors of the Las Vegas Convention and Visitors Authority on Thursday approved the elimination of a non-compete zone for the monorail, which will allow Elon Musk’s Boring Company to develop a network of tunnels of 15 miles which he says can connect Las Vegas Strip and Downtown Resorts with McCarran International Airport and Allegiant Stadium.
The elevated monorail has moved nearly five million people a year, according to LVCVA, many of whom attend meetings at the convention center. LVCVA has announced its intention to resume monorail operations when demand returns.
The expertise of key personnel from the existing monorail team will be retained and part of Western Management Group contracted by LVCVA to manage and operate the system, LVCVA said.
The monorail began in 1995 with service between MGM Grand and Bally’s using two used monorail trains that had previously been operated at Walt Disney World. The system was extended and reopened with seven stops on July 15, 2004, along the station corridor.