Port Authority of Guam
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PRELIMINARY OFFICIAL STATEMENT DATED JUNE 12, 2018 NEW ISSUE – BOOK ENTRY ONLY RATINGS: (See “RATINGS” herein) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2018 Series A Bonds and the 2018 Series B Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”), except that no opinion is expressed as to the status of interest on any 2018 Series B Bond for any period that such 2018 Series B Bond is held by a “substantial user” of the facilities financed or refinanced by the 2018 Series B Bonds or by a “related person” within the meaning of Section 147(a) of the Code. In the further opinion of Bond Counsel, interest on the 2018 Series A Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel observes, however, that interest on the 2018 Series B Bonds is a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that, under 48 U.S.C. Section 1423a, interest on the 2018 Series A Bonds and 2018 Series B Bonds is exempt from taxation by any State or Territory of the United States or any political subdivision thereof, or by the District of Columbia. Bond Counsel observes that interest on the 2018 Series C Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code. Bond Counsel is of the opinion that, under 48 U.S.C. Section 1423a, interest on the 2018 Series C Bonds is exempt from taxation by any State of the United States or any political subdivision thereof, or by the District of Columbia. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the 2018 Bonds. See “TAX MATTERS.” $31,655,000* $23,065,000* $17,880,000* PORT AUTHORITY OF GUAM PORT AUTHORITY OF GUAM PORT AUTHORITY OF GUAM Port Revenue Bonds, Port Revenue Bonds, Port Revenue Bonds, 2018 Series A 2018 Series B 2018 Series C (Governmental/Non-AMT) (Private Activity-AMT) (Federally Taxable) Dated: Date of Delivery Due: July 1, as shown on the inside front cover This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. Capitalized terms not defined on this cover page are defined inside. The Jose D. Leon Guerrero Commercial Port, also known as the Port Authority of Guam (the “Authority”), is issuing its Port Revenue Bonds, 2018 Series A (Governmental/Non-AMT) (the “2018 Series A Bonds”), its Port Revenue Bonds, 2018 Series B (Private Activity-AMT) (the “2018 Series B Bonds”), and its Port Revenue Bonds, 2018 Series C (Federally Taxable) (the “2018 Series C Bonds” and, together with the 2018 Series A Bonds and the 2018 Series B Bonds, the “2018 Bonds”), to (i) fund capital improvements to the Jose D. Leon Guerrero Commercial Port (the “Port”); (ii) retire certain of the Authority’s outstanding debt; (iii) provide for capitalized interest on the 2018 Bonds for up to two years (iv) fund a deposit to the Bond Reserve Fund (as defined herein); and (v) pay costs of issuing the 2018 Bonds. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS.” The 2018 Bonds will mature on the dates and in the amounts and will bear interest at the rates per annum listed on the inside front cover. Interest on the 2018 Bonds will be payable on January 1 and July 1 of each year, commencing January 1, 2019. The 2018 Bonds are subject to mandatory, optional and extraordinary optional redemption prior to maturity (as more particularly described herein). The 2018 Bonds are authorized to be issued pursuant to Article 2 of Chapter 10 of Title 12 of the Guam Code Annotated, as amended, and pursuant to a master indenture, dated as of July 1, 2018 (the “Master Indenture”), as supplemented, including as supplemented by a first supplemental indenture to be dated as of July 1, 2018 (the “First Supplemental Indenture” and, together with the Master Indenture, the “Indenture”), each by and among the Authority, Bank of Guam, as trustee and as depositary, and U.S. Bank National Association, as co-trustee and paying agent. The issuance, terms and conditions of the 2018 Bonds have been approved by the Legislature of Guam, the Guam Public Utilities Commission and the Board of Directors of the Authority. The issuance, sale and delivery of the 2018 Bonds have been approved by the Board of Directors of the Guam Economic Development Authority. The Bonds (as herein defined, including but not limited to the 2018 Bonds) are limited obligations of the Authority payable solely from and secured by a pledge of Revenues (as defined in the Indenture and more particularly described herein) consisting primarily of certain income and revenue received by the Authority from the operation of the Port (as defined in the Indenture and more particularly described herein), subject to the provisions of the Indenture permitting the application of Revenues for the purposes (including payment of Operation and Maintenance Expenses (as defined in the Indenture)), and exclusive of certain surcharges, described herein. The Bonds are not a legal or equitable pledge, charge, lien or encumbrance upon any property of the Authority or upon any of its income, receipts or revenues except the Revenues pledged to the payment thereof as provided in the Indenture. Neither the Government of Guam (the “Government”) nor any political subdivision thereof is obligated to pay the principal of, redemption price, if applicable, or the interest on the Bonds, except from such Revenues, and neither the Authority nor the Government or any political subdivision thereof has pledged its faith or credit to the payment of the principal of, redemption price, if applicable, or the interest on the 2018 Bonds. The 2018 Bonds will be issued as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the 2018 Bonds. Individual purchases of the 2018 Bonds will be made in book-entry form only. The 2018 Bonds will be issued only in denominations of $5,000 or any integral multiple thereof. Payments of principal of, redemption price, if applicable, and interest on the 2018 Bonds are to be made to purchasers by DTC through DTC participants. See “APPENDIX G—BOOK-ENTRY SYSTEM.” Purchasers will not receive physical delivery of 2018 Bonds. Investment in the 2018 Bonds involves risks which may not be appropriate for certain investors. See the section in this Official Statement entitled “CERTAIN INVESTOR CONSIDERATIONS” for a discussion of certain factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the 2018 Bonds. The 2018 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority. Certain legal matters will be passed upon for the Authority by The Law Offices of Phillips & Bordallo, P.C., counsel for the Authority, and for the Underwriters by their counsel, Kutak Rock LLP. Certain legal matters will be passed upon by Orrick, Herrington & Sutcliffe LLP as disclosure counsel to the Authority. It is expected that the 2018 Bonds in book-entry form will be available for delivery through the DTC book-entry system on or about July 11, 2018. Citigroup RBC Capital Markets June __, 2018 This Preliminary Official Statement and the information contained herein are subject to completion and amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, buy, to offer an of a solicitation or sell to Preliminary this shall circumstances no Under offer an constitute Statement Official This Preliminary amendment. and completion to are subject herein contained the information and Statement Official of such jurisdiction. under the securities laws be unlawful solicitation or sale would jurisdiction sale of the 2018 Bonds in any in which such offer, nor shall there be any * Preliminary, subject to change. MATURITY SCHEDULES $31,655,000* Port Authority of Guam Port Revenue Bonds, 2018 Series A (Governmental/Non-AMT) $15,350,000 _.__% Term Bonds due July 1, 2043; Yield/Price _.__%; CUSIP† Number _____ $16,305,000 _.__% Term Bonds due July 1, 2048; Yield/Price _.__%; CUSIP† Number _____ $23,065,000* Port Authority of Guam Port Revenue Bonds, 2018 Series B (Private Activity-AMT) Maturity Principal Interest (July 1) Amount Rate Yield/Price CUSIP† Number 2019 $1,330,000 2022 1,770,000 2023 2,425,000 2024 2,255,000 2029 1,420,000 2030 1,490,000 2031 1,565,000 2032 1,645,000 2033 1,725,000 2034 1,810,000 2035 1,900,000 2036 2,000,000 2037 1,730,000 $17,880,000* Port Authority of Guam Port Revenue Bonds, 2018 Series C (Federally Taxable) Maturity Principal Interest (July 1) Amount Rate Yield/Price CUSIP† Number 2020 $2,240,000 2021 2,330,000 2022 660,000 2023 125,000 2024 420,000 2025 2,810,000 2026 2,950,000 2027 3,095,000 2028 3,250,000 * Preliminary, subject to change.