Just When We Thought We Knew All the Affiliates in the Fortress / AAF / Brightline Club, Up Pops AAF Mezzanine Holdings, LLC.

AAF Mezanine

All Aboard Florida Mezzanine Holdings, LLC

(www.can-goldlink.com)

IN DECEMBER 2015 WE WROTE ABOUT HOW NEW FORTRESS ENERGY, LLC  (NFE) WAS FORMED ON NOVEMBER 19, 2015 AS THE NEWEST NEW FORTRESS / ALL ABOARD FLORIDA / BRIGHTLINE AFFILIATE.  

 https://verocommunique.com/2015/12/17/lng-and-a-report-on-other-affiliates-in-the-fortress-aaf-brightline-club/

But now, after reading columnist Ray McNulty’s article in the June 16, 2016 issue of 32963 entitled “Will All Aboard Florida be Funded by the Chinese?”we did some digging and found that another entity, All Aboard Florida Mezzanine Holdings, LLC, has already received Chinese funding for the All Aboard Florida project.

It’s not about that they may receive Chinese funding, its about how they already have.

In June 17, 2014 All Aboard Florida (AAF) issued $405 million of debt to help finance its high-speed railway along the state’s eastern coast.  AAF Holdings LLC sold 12 percent, five-year bonds with a payment-in-kind (PIK) toggle option. PIK are one of the riskiest forms of debt, yielded 10.25 percentage points more than similar-maturity Treasuries. (Source: Bloomberg)

According to “All Aboard Florida Project – EB5 Visa Program,” which Mr. McNulty referred to as the potential Chinese funding for their $ 1.75 billion in Private Activity Bonds, the CanAm Florida Regional Center (CARFC) has already loaned AAF Mezzanine Holdings, LLC $300 million of EB-5 capital of the $405 million in 2014 debt, referred to above, “to build, own and operate the AAF South Segment passenger rail services.” (http://w.w.w.eb5visa-program.com/all-aboard-florida-project.php)

AAF Mezzanine Holdings, LLC is a Delaware limited liability company formed to own 100% of the equity interests of AAF Holdings, LLC.  It is a wholly owned subsidiary of Florida East Coast Industries, LLC (“FECI”). FECI is owned by certain private equity funds managed by affiliates of Fortress Investment Group, LLC (“Fortress.”)

Confused?

We were unable to find out any information about AAF Holdings, LLC. except from this website: http://www.corporationwike.com: “AAF Holdings LLC filed as a Foreign Limited Liability in the State of Florida on Tuesday, June 10, 2014 and is approximately two years old, according to public records filed with Florida Department of State. A corporate filing is called a foreign filing when an existing corporate entity files in a state other than the state they originally filed in. This does not necessarily mean that they are from outside the United States.”

Inasmuch as this filing was seven days before the bonds were sold, we have to assume AAF Holdings LLC  was set up as the financing arm to sell the FECI’s $ 405 million in “junk” bonds, of which $300 million were sold to All Aboard Mezzanine Holdings, LLC., who was loaned $ 300 million from the EB-5 Visa Program.

Still Confused?

The US Immigrant Investor Program (EB-5) is overseen by the US Citizenship & Immigration Services (USCIS).  It was originally established as a pilot program by Congress in 1990, designed to stimulate economic activity and job growth, including increased export sales improved regional productivity, job creation or increased domestic capital investment.

Now, a full fledged program, it allows foreign nationals to become conditional permanent U.S. residents for a period of two years upon making an investment of $ 1 million, or $ 500,000 in an Targeted Employment Area (high unemployment or rural area) so long as the investment creates or preserves 10 jobs for U.S. workers excluding the investor and the immediate family.  Once the job creation requirement is met, the two year conditions are removed and the EB-5 immigrant investors may obtain unconditional permanent residency.

In 1993 the US government allowed for the formation of regional centers to enable immigrant investors to pool their funds into larger job-creating businesses. CanAm Enterprises, LLC, based in New York City, with more than 30 years of experience in promoting and administering private and government immigration-linked investment funds is the administrator of the regional centers.

badge-regional-center

According to its web page, “CanAm’s team is committed to providing exceptional service so that your immigration and investment goals can be reached in a timely and seamless fashion.”

Once again, according to its web page, CanAm’s staff provides investors with the latest immigration procedures and requirements related to the EB-5 Program.

Services include:

  • Preparation of evidentiary documentation for green card applicants.
  • Monitoring of the project as it relates to job creation.
  • Preparation of Semi-Annual Reports to the investors regarding to the status of the investment project.
  • Preparation of annual reports to USCIS regarding projects and investor statistics.

[What’s interesting is that CanAm had its beginning in 1987 in Canada’s Business Immigrant Investment Program.  Over the next 15 years, CanAm raised approximately $ 192 million from over 1,400 qualified investors. But, according to a April 25, 2014 article by Tom DeWeese entitled “Is the U.S. Being Colonized by Red China? the Canadian government has decided recently to halt its immigrant investor program due to the large number of Chinese applications that were found to be fraught with fraud and corruption and to be of little economic benefit to the country.”]

The CanAm Florida Regional Center (CAFRC) was the seventh Regional Center operated by CanAm Enterprises as designated by the US Citizenship and Immigration Services (USCIS).

CanAm Florida

CARFRC’s first project, All Aboard Florida, was pre-approved as a qualified project by USCIS as part of the Regional Center designation.  As a result, subscribers were accorded deference in the adjudication of I-526 petitions.

Now, if you got to https://www.canamenterprises.com/about-us/track-record.html you will see that the CanAm Florida Regional Center Track Record as of May, 2016 reports a loan of $300,000,000 to All Aboard Florida by 600 investors ($500,000/each) with a maturity date of 8/15/2020.

So, once again, it’s not about how All Aboard Florida may receive Chinese funding, its about how they already have.

 

10 thoughts on “Just When We Thought We Knew All the Affiliates in the Fortress / AAF / Brightline Club, Up Pops AAF Mezzanine Holdings, LLC.

  1. Pingback: 12 Chinese Investors Put $ 16 Million into Heralded Florida Organic Aquaculture LLC (FOA) in Fellsmere, FL. And What About Hillary Clinton’s Brother? | Vero Communiqué

  2. The Chinese manufacture and sell high speed trains. Certainly, they have an interest in All Aboard Florida.

    Robert Scheppy
    Old China Hand

    Like

  3. My responses are two:

    1 So what? Why is it important WHERE the money comes from?

    2. If this article’s author and/or McNulty had put as much effort into analyzing objector assumptions (complaints), they’d have learned a long time ago that claims of traffic congestion, reduced safety, quality-of-life reductions, etc., etc., are complete rubbish not supported by a rational view of facts. Ten years ago at the height of the real estate boom, far more rail traffic (in terms of total length of daily trains combined) passed through the Treasure Coast than anything that will be seen after AAF is operational. The widened canal will have little net impact on FEC’s total rail haulage aside from a more balanced southbound/northbound haulage.

    In short, rather than drilling into such detail of a meaningless non-issue as where the private funding originates (one could argue it originated in the US because that is where most Chinese money is made), this article’s author and/or McNulty would better serve readers by taking a rational look at the specious claims of objectors, none of which are supportable.

    The anti-AAF movement is motivated by fear and fueled by fiction.

    Like

    • Fiction? Here are some facts:
      2010 – 2014 FEC is in the top 5 most unsafe railroads in the county (All crossing events, crossing fatalities, crossing injuries) and often ranked 1 or 2 because of the large number of crossings
      2012: Congressman Mica announces AAF and says “fast track environmental approvals” (his chief of staff is now Rusty Roberts of AAF)
      2012: Husein Cumber, Fortress LNG head, meets with Gov. Scott’s staff, set up by Hollingsworth, ex-Fortress employee
      2013: Southeast Regional Cargo 2040 report: “AAF will double FEC freight Capacity”
      2013: Industry publications – millions going into FL ports and rail to handle Panamax vessels
      2014: FEC CEO Hertwig tells Asian conference “FEC sees doubling even tripling of market share at Port of Miami” (looking for investors?)
      2014: Fortress announces construction of 2 LNG plants in Florida
      2014: AAF website shows eventual growth to JAX and Tampa
      2015: Fortress founder, Wes Edens invests $75 million of his own money in Florida LNG plant
      2015: DOE approves Fortress LNG plants can transport LNG to FL ports by rail or road (includes Tampa port)
      2015: Fortress strategic plan – LNG exports to South America and Asia – multi $Billion market annually
      2015 – 2016: Multiple times in the past 12 months crossings have been closed to cars because of equipment failure or derailment of FEC – it has delayed EMS teams.
      2015: FRA calls out AAF for reducing safety upgrades for IRC crossings – to save money(?)
      2016: Fortress LNG announces contract to supply Jamaica with LNG
      2016: Cong. Posey announces the AAF consulting firm that did the ridership and profit projections has been disbarred by 2 international banking firms and a principle was convicted of fraud.
      It is obvious that forcing 21st century technology and rail traffic onto 19th century infrastructure is a bad idea, regardless of what the companies are doing to improve the tracks. It is even more obvious that FEC has a need for double capacity and rail to Tampa and AAF is the means to that end. 50+ trains per day, many going 100 mph, and many carrying Haz Mat is a far cry from past rail traffic on the route. Lastly, AAF used a shady outfit to do its business projections because it needed to make the project look profitable. All the while, Fortress knows it can lose millions on AAF and make out like a bandit on FEC and LNG. Any reasonable person can see this is a dangerous gamble and Fortress puts profit over lives!

      Like

      • Susan is long on conspiracy theory and short on common sense.

        She assembles a litany of “facts” most of which are either irrelevant or misleading.

        Then she concludes with a non-sequitur summation.

        Nobody is “forcing” 21st-century technology into 19th-century infrastructure. Doesn’t Susan actually READ any of the information about the massive upgrades of the FEC rail line to be performed by and a the expense of AAF? Evidently not.

        To the best of my knowledge, AAF is the ONLY railroad “in the county”, so it would be the safest and most unsafe at the same time. And, even if she meant to write “country”, the point is meaningless if not in context with the nature of the statistics. For example, suppose there were 9 students in a class and their numerical “grades” were 99, 97, 96, 94, 93, 85, 80, 72, and 68. A grade of 90 or higher rates an “A” letter grade. If Susan were the student with a grade of 93, she would warrant an “A” grade. But she would also be in the “top 5” of the worst students in the class. Context is everything. Lacking context, Susan’s claim is meaningless.

        Evidently, Susan hasn’t figured out that Fortress could “make out like a bandit on FEC and LNG” with or without AAF. The two are mutually exclusive in terms of rail needs and profitability. It is deceptive to try to mix the two.

        Susan’s “50+ trains per day” is fiction. According to FEC schedule information readily available to anyone, the current maximum number of daily trains through IRC ranges from 7 to 11, depending on the day of the week. Add to that 32 much shorter, faster AAF trains (equivalent in crossing closure time to 10 FEC trains), and the number of trains per day range from 39 to 43. Using the equivalent number of FEC trains (in terms of crossing delays), road closures will be the equivalent of 17 to 21 current FEC trains. In 2006, 24 FEC trains per day operated, creating more closure time than will AAF + FEC in 2018.

        Higher speeds mean shorter times through crossings. Higher speeds require improvements to rail, better maintenance, and improved crossing safety measures (by law) — meaning a safer railroad.

        As typical for objector complains about AAF, the arguments by Susan are erroneous, misleading, or irrelevant in terms of the impact on county residents.

        Fearmongering is always the refuge of those who have no legitimate arguments to put forth.

        Like

  4. You guys lost me when you loaded the comments with acronyms. I recently returned from China, where they have constructed thousands of miles of high speed railroads. In Florida, they bicker over a line from Miami to Orlando.

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    • AAF = All Aboard Florida (aka, Brightline) an intercity express passenger rail project to serve the Miami to Orlando corridor via Florida East Cost Railroad (FEC or FECR) freight rail corridor between Miami and Cocoa with a new passenger train only extension from Cocoa to Orlando Intl. Airport (new intermodal terminal).

      IRC = Indian River County

      LNG = Liquified Natural Gas

      DOE = Department of Energy

      FRA = Federal Railroad Administration

      Hope that helps.

      Like

  5. The statistics on rail accidents come directly from the Fed. Rail Administration – so they’re facts. And, ha, ha, it’s the country not the county – quick of you to catch that. In AAF’s own EIS and FEC’s own words – they are anticipating at least 24 freight trains per day. Last time I added 24 to 32 it equaled MORE than 50.

    And Bob, the deception has all been on AAF’s part from the beginning. Just ask anyone who knows how they struggled to keep the two businesses apart while they operate on the very same set of tracks. Rail expansion of freight or passenger is still expansion and no one would look at the numbers of trains crossing 30 streets in our county and say that one has nothing to do with the other. You can claim the AAF trains will only stop traffic for a few minutes but 20+ 2-mile long trains per day also stopping traffic will add up quickly.

    But that’s not the only deception – AAF is a pro at deceiving the public and bullying people. They’ve sued private individuals for asking to see their bond prospectus and threatened our own county attorney with bogus charges that proved to be totally deceptive as soon as FOIA request documents were finally delivered this spring.

    Safer? As the previous Secretary of Transportation said in a Senate hearing on Capital Hill a few years ago when Sen. Rubio was discussing AAF and the number of grade crossings, “The only safe grade crossing is NO grade crossing.” All the safety upgrades in the world will not make AAF safe – we know that from the lack of grade crossings in all other HSR systems. Taking a 100 year old train route and putting 100 mph trains on to it is madness and everyone knows it!

    I could go on, but I won’t bother boring the readers of Vero Communique any longer with your petty squabbling. They know the truth and they know the damage AAF and FEC will do to our county. There is no fear mongering going on – just common sense.

    Like

    • I didn’t question your SOURCE of statistics, I questioned your use of them. See my grading example.

      The “anticipated” number of 24 trains per day for the EIS does not reflect the reality of the train business.

      The vast proportion of FECR’s business is to supply southeast Florida (Miami to Palm Beach) with the consumer goods required to sustain that population. That is why 3 of every 4 containers hauled northbound are empty.

      Unless southeast Florida has a HUGE population explosion (not anticipated in the foreseeable future) OR if there is a sudden NEW demand for shipping to or from Miami from within Florida, then the impact of the widened canal will easily be taken up northbound by filling empty containers currently traveling north.

      Southbound freight should decline by the amount that now originates in Pacific nations and had to be shipped via Pacific ports capable of handling the larger ships that could not transit the old narrow canal. Those shipments to southeast Florida can no go directly by sea to be consumed in SE Florida.

      Since there will be 11 other eastern ports capable of handling larger ships through the widened canal, the myth that shippers will all use Miami’s port cannot be sustained. Shippers will ship goods via the nearest port. Shipments on larger ships from Florida will be able to use either Jacksonville (after improvements are finished) or Miami. Shipments from other states will use the port most convenient. Florida’s panhandle is closer to the port in Mobile, AL.

      So the anticipation of 24 daily trains does not reflect a realistic change from the current 7 to 11 through Treasure Coast communities. EIS estimates and reality are two very different things.

      What is the rational argument that supports more than doubling current FECR trains through the Treasure Coast? I’ve yet to hear one other than “widened canal” which, as I’ve explained, is no argument at all.

      If you have a concern about crossing safety, then understand that Amtrak reaches 90 mph on many of its national routes (including through Florida). A speed of 100 to 110 mph does not necessarily mean that every crossing will have trains operating at that speed, particularly in built-up areas. You seem unaware that higher rated track classification has the LOWEST derailment rate and the improvements AAF will make will upgrade the FECR track between Miami and Cocoa to classification 6, the highest possible and, therefore, the safest in terms of derailments.

      Of course, there is always a possibility of an accident. No transport system works on the basis of zero chance of an accident. Your expectations are unrealistic.

      The age of the train route has nothing to do with the quality of the improvements to be made. Crossings are inherently safe so long as people don’t try to do stupid things like beating the train by driving around gates. But improvements by AAF will make that extremely difficult if not impossible.

      Susan, I do not view our exchanges as “squabbling”… I prefer “exchange of information”. I try to bring the best information available to the discussion and try to keep things in perspective.

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  6. Pingback: Reader Chatter About Our Article on China’s Investment in All Aboard Florida! | Vero Communiqué

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