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Friday, Feb. 5, 2010 | 2:58 p.m.
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Beyond the Sun
Fitch Ratings today downgraded to "D" from "C" its rating on hundreds of millions of dollars of Las Vegas Monorail bonds -- no surprise given the monorail company's bankruptcy filing last month.
"The 'D' rating primarily reflects the Chapter 11 bankruptcy filing on Jan. 13; the related disputes over control of the revenues from ticket sales and advertising between the monorail and Wells Fargo, the (bondholders') trustee, to pay for operating expenses; and the financial metrics of the enterprise which suggest that a payment default is virtually certain on the scheduled July 2010 payment," Fitch said in a statement.
The rating covers $451.4 million of the monorail's $649 million in bond debt.
"The monorail continues to earn enough revenue to cover its operating costs; thus monorail operations are currently expected to continue. However, recent disputes over the allocation of revenues between the monorail and the trustee, in addition to disputes with Ambac over whether the enterprise is eligible for Chapter 11 bankruptcy, further complicate matters," Fitch said.
Fitch was referring to demands by bond insurer Ambac Assurance Corp. that the monorail's Chapter 11 case be dismissed so that the monorail can refile as a government agency under Chapter 9.
Under Chapter 11, Ambac has said it could lose up to $1.1 billion to cover payments on defaulted monorail bonds.
The monorail says Chapter 11 is appropriate for its reorganization since it insists it is not a government agency.
Fitch also was referring to recent disputes between the bondholders' trustee and monorail management over the management of daily monorail cash receipts and disbursements.
Bankruptcy Judge Bruce Markell has set a Feb. 17 hearing on Ambac's motion that the Chapter 11 case be dismissed and on the disputes over what is known as "cash collateral" between the bondholders and the monorail.
In court papers, the monorail has said that because of disappointing rider counts it has never been able to make enough money to cover its debt obligations. The system, which started operations in 2004, has said that without financial relief it won't be able to pay for hundreds of millions of dollars in necessary train and equipment repair and replacement costs.
The recession has deepened problems at the monorail. Ridership fell to 6 million in 2009 from 7.9 million in 2007. The system, which charges $5 for a one-way ride, collected $27 million in fare revenue in 2009, down from $30.3 million in 2007. Advertising revenue has also declined.
Last year, the system generated less than $5 million in net cash flow, far short of the $34 million needed to service its debt.
Net cash flow for a transit system still makes it more successful then RTC who requires tax dollars through local and federal resources for not just capital but to cover daily operation costs as well.
For that reason the LV Monorail should be rescued in some formation and continue running along with plans to expand.
Ya think?
That's also why the Monorail is so expensive to ride, if you're not a local. If they had subsidies to cover their capital and operating, it wouldn't cost $14 for a one day pass or $30 for a three day pass and only be a few miles long.
Solution: $1 fare with a $13 tax added on.
There's a bond rating lower than "crap"?
I must have walked a mile to escort my niece and her boyfriend from MGM Grand parking to the Monorail station on New Years. She wanted to meet a friend at Wynn, and then return to MGM. So we took the foolish train to as close as we could to Wynn.
So we walked. And walked. Good God, I was exhausted, and thank Christ it was in the Winter. Stumbled back, swore I would never use this fiasco again.
As Jay Leno says "What were they thinking"? Maybe they should sue the designers of this useless, useless joke...
The people of Las Vegas should be so mad about this project. It will never pay for itself. Who in the ? put the tracks a mile from the casinos,a 5th grader would have design it much better.This THING does not even go to the airport or downtown,(someone got a purk of of this project). The people of Las Vegas should ask (demand) there money back,it does not work.
k first of all if you don't know what ur talking about maybe ur 2 cents isn't worth a crap. to begin, the monorail is a tax free organization, so taxing tickets isn't possible. 2nd, the casino's decide whether or not they want the monorail attached to the casino...the Wynn had it attached but opted to not have it going there anymore. lastly the monorail has been trying to expand to the airport for years but doesn't have the funding or backers to pay for the extension....recognize
and wolf85023...ur the dumbest comment yet. Steve Wynn was the one that didn't let the monorail go down the center of the strip. and what money should the people of las vegas demand back?? r u retarded? when you say people it's assumed you mean the residents, and i don't recall the people of las vegas putting any money into the monorail. Especially not tax money because Nevada is a tax free state...why do you even waste everyone elses oxygen?