LV Monorail files for bankruptcy

The Las Vegas Monorail Company filed for Chapter 11 bankruptcy Wednesday, one month after representatives of the rail system announced such a move could allow a future $500 million expansion to McCarran International Airport.

Monorail officials said last month that they had three options: negotiate an agreement with bondholders without filing for bankruptcy; file for bankruptcy with the bondholders' blessing; or file without a new agreement in place.

Curtis Myles, chief executive officers of the company, would not elaborate on a deal forged with bondholders.

"We have been in discussions with bondholders. We have some agreements with some of them; some are pretty confidential," he said. "They are definitely aware we are filing."

Chapter 11 bankruptcy means reorganizing the financial structure; a plan developed throughout court proceedings is ultimately approved by a judge or a vote of the creditors. The company's intent is to lower its payments to bondholders.

Myles said the filing will not effect monorail services.

"We'll open tomorrow," Myles said.

Ridership has never met expectations since 2004, when the elevated train began providing service between the Las Vegas Convention Center and Strip hotels. Because the train's popularity was underestimated, the company has failed to pay off the $650 million in construction and start-up costs.

In 2000, the state's Department of Business and Industry awarded the company the tax-exempt bonds in a three-tier structure with the company promising revenue after the monorail met the start-up costs.

Monorail representatives told the state it anticipated about 20 million passengers a year who would pay a fee of $2.50 per trip. Its Web site says it has carried 27 million passengers in five years.

Last year, the train carried 6 million passengers and brought in $27 million in fare box and advertising revenues. In prior years, ridership figures hovered between 7 million and 8 million. Company officials blame the sluggish economy for the drop. Las Vegas hosts fewer conventions and attendance has decreased at events in town.

The company was forced to dip into its reserve funds in 2008 in an effort to meet more than $19 million in principal and interest due for the bonds issued by the Business and Industry division. At that time, Fitch Ratings, a New York City-based credit rating firm, estimated the company had $69 million in reserves on hand, down $20 million from 2006.