First American Railways Announces Financing Commitment and Initial Closing.

HOLLYWOOD, Fla.--(BUSINESS WIRE)--May 18, 1998--First American Railways Inc. (Nasdaq:FTRN), the entertainment and scenic rail company which operates both the Florida Fun-Train and The Durango & Silverton Narrow Gauge Railroad, Monday announced financing commitments of an aggregate of $3 million, the majority of which ($2.95 million) is from an existing investor.

A total of $450,000 of these commitments has been funded, $400,000 of which came from the investor, and the remaining $50,000 is represented by an investment by the company's financial advisor, International Capital Growth Ltd.

Funding of the balance of the financing commitment is expected over the next 60 days and is subject, among other things, to certain conditions including continued due diligence by the investor and the conversion of substantially all the company's Convertible Secured Notes into equity. As part of the terms of the existing investor's commitment, the company has elected a representative of that investor to serve as the sole director of Fun-Trains Inc., the company's wholly owned subsidiary that operates the Florida Fun-Train. The company has also agreed not to alter the board of directors of this subsidiary without the consent of the investor.

Proceeds of the financing will be used for working capital and general corporate purposes, as well as for the funding of a more aggressive sales and marketing program.

Allen C. Harper, chairman and chief executive officer of First American Railways commenting on the announcement said, "We are quite pleased to have the capital necessary to launch the next, more aggressive phase of our sales and marketing program which we believe critical to increasing ridership on the Florida Fun-Train."

First American Railways Inc. provides innovative, quality entertainment passenger rail services through the development of "Fun-Trains" and the acquisition of "Scenic Destination Railroads." The company currently operates the Florida Fun-Train between Central and South Florida. The company also owns and operates the Colorado based Durango & Silverton Narrow Gauge Railroad, a National Historic Landmark, which accommodates approximately 200,000 passengers annually. -0-

Certain statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for "Forward-Looking Statements." In order to comply with the terms of the safe harbor, the company notes that a variety of factors could cause the company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the company's "Forward-Looking Statements." Such factors include, among others, the following: the ability of the company to obtain, from internal and external sources, sufficient additional working capital to fund its operations (particularly those of the Florida Fun-Train) and continue as a going concern, the prompt improvement in the Florida Fun-Train financial performance, specifically an immediate and significant increase in ridership on the Florida Fun-Train, reduction in the company's outstanding indebtedness through the conversion of existing convertible debt into equity, delivery of the remaining railcars to complete the Florida Fun-Train, the successful marketing of the company's rail service in Florida and Colorado and unscheduled repairs to the company's railroad equipment. In addition, the company's business prospects are generally susceptible to national economic conditions, particularly those affecting the Colorado and Florida tourism markets, as well as weather patterns in Colorado and Florida. Actual results could differ materially from the forward-looking statements as a result of the foregoing factors.

CONTACT: First American Railways Inc., Hollywood

Michael Acierno, 954/920-0606, Ext. 120