Wednesday, Aug. 18, 2010 | 11:34 a.m.
Related Document (.pdf)
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The Las Vegas Monorail filed a reorganization plan Tuesday as part of its ongoing bankruptcy proceedings.
The plan would reduce the debt of the nonprofit company that runs the monorail on the east side the Strip by nearly $630 million.
In papers filed in U.S. Bankruptcy Court, the monorail proposes eliminating most of its $648 million debt, leaving the company with debt of just $18.5 million.
The monorail has never been able to meet the ridership levels projected before the system was built, and its problems became worse due to the current recession, court documents say.
“While the Monorail’s financial problems existed from the beginning of its operations given the significantly lower than projected ridership and farebox and advertising revenues, the problems were exacerbated due to declining tourism and the consequent decrease in hotel and Convention Center bookings, and the number of riders on the Monorail has not met projections formed prior to the economic collapse,” the court filing says.
However, the company maintains that it generates enough revenue to pay its operational costs, but not enough to continue payments on its massive start-up debt or capital improvements that will be required as the system ages.
A reorganized company would be projected through the year 2019 to be able to pay its operational expenses, make payments on the $18.5 million in debt and be able to save some money for future capital improvements.
The monorail said in the filing that its alternative to eliminating most of the debt is “literally ceasing service no later than 2019.”
If the plan is approved, the monorail would keep its current executives and board of directors, court documents say.
The monorail’s debt is split into three tiers. The $149 million in debt held by the second tier and the $48 million held by the third tier would be eliminated in the plan. The first tier debt of $450 million would be reduced to $18.5 million.
The monorail’s plan still must be approved by the bankruptcy court and be voted on by its bondholders, a process that is expected to take two or three months.
The monorail initially filed for Chapter 11 bankruptcy protection in January.
The 3.9-mile system runs on an elevated track linking casinos and the Las Vegas Convention Center east of the Strip and is the only privately owned public transportation system in the United States.
The monorail carried 6,005,024 passengers in 2009, with total revenue for the system at $27,643,026 for the year. That is down from a peak passenger count of 7,917,613 in 2007, when the system had revenue of $36,584,689.