Guam Power Authority Revenue Refunding Bonds 2017 Series A
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PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER 7, 2017 NEW ISSUE – BOOK-ENTRY-ONLY RATINGS: (See “RATINGS” herein) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority (“Bond Counsel”), 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 2017A Senior Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”). In the further opinion of Bond Counsel, interest on the 2017A Senior Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, nor is it included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel is also of the opinion that, under 48 U.S.C. Section 1423a, interest on the 2017A Senior Bonds is exempt from taxation by the government of Guam, or by any state or territory 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 2017A Senior Bonds. See “TAX MATTERS” herein. $146,450,000* GUAM POWER AUTHORITY Revenue Refunding Bonds, 2017 Series A Dated: Date of Delivery Due: October 1, as shown on the inside front cover This cover page contains certain information for general reference only. It is not a summary of the security for or terms of the 2017A Senior Bonds. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The Guam Power Authority Revenue Refunding Bonds, 2017 Series A (the “2017A Senior 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 2017A Senior Bonds. Individual purchases of the 2017A Senior Bonds will be made in book-entry form only. Interest on the 2017A Senior Bonds will be payable semiannually on April 1 and October 1 of each year, commencing April 1, 2018. The 2017A Senior Bonds will be issued only in book-entry form in denominations of $5,000 or any integral multiple thereof. Payments of principal, redemption price of, if applicable, and interest on the 2017A Senior Bonds are required to be made to purchasers by DTC through the DTC participants. See APPENDIX F—“BOOK-ENTRY SYSTEM” herein. Purchasers will not receive physical delivery of 2017A Senior Bonds purchased by them. The 2017A Senior Bonds are subject to redemption prior to maturity, as described herein. The 2017A Senior Bonds are being issued pursuant to an Indenture, dated as of December 1, 1992, as subsequently amended and supplemented by supplemental indentures, including by the Seventh Supplemental Indenture, dated as of December 1, 2017 (collectively, the “Senior Indenture”), each by and among the Guam Power Authority (the “Authority”), the Bank of Guam, as Trustee (the “Senior Trustee”) and Depository (the “Senior Depository”), and U.S. Bank National Association, as Co-Trustee (the “Senior Co-Trustee”). The 2017A Senior Bonds are being issued for the purposes of (i) refunding all or a portion of the Authority’s outstanding 2010 Senior Bonds (as defined herein), and (ii) paying expenses incurred in connection with the issuance of the 2017A Senior Bonds and the refunding of all or a portion of the 2010 Senior Bonds. See “REFUNDING PLAN” herein. The 2017A Senior Bonds are not general obligations of the Authority, but are limited obligations payable solely from and secured by a pledge of Revenues, subject to the prior application of such Revenues for the payment of Maintenance and Operation Expenses, all of the proceeds of the 2017A Senior Bonds and any other amounts held in any Fund or Account established pursuant to the Senior Indenture (except amounts held in the Rebate Fund), on a parity with any outstanding and future Senior Bonds. “Revenues” generally consist of any and all rates and charges received in connection with the operation of the electric power system of the Authority (the “System”). Neither the Government of Guam nor any political subdivision thereof is obligated to pay the principal or redemption price of, if applicable, or interest on the 2017A Senior Bonds, except from such Revenues, and neither the Authority, the Government of Guam nor any political subdivision thereof has pledged its faith or credit to the payment of such principal, redemption price, if applicable, and interest. AN INVESTMENT IN THE 2017A SENIOR BONDS INVOLVES CERTAIN RISKS, INCLUDING THOSE DESCRIBED HEREIN UNDER THE HEADINGS “INTRODUCTION,” “SECURITY AND SOURCES OF PAYMENT FOR THE SENIOR BONDS,” “THE GUAM POWER AUTHORITY,” “FINANCIAL MATTERS,” “OTHER FACTORS AFFECTING THE AUTHORITY AND THE ELECTRIC UTILITY INDUSTRY,” AND “BONDHOLDER RISKS,” AND ELSEWHERE IN THIS OFFICIAL STATEMENT. The 2017A Senior 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 its General Counsel, and for the Underwriters by their counsel, Kutak Rock LLP, Spokane, Washington. Certain legal matters will be passed upon by Orrick, Herrington & Sutcliffe LLP as disclosure counsel to the Authority. It is expected that the 2017A Senior Bonds in book-entry form will be available for delivery through the DTC book-entry system on or about December 21, 2017. Barclays Citigroup December __, 2017 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 2017A Senior Bonds in any in which such offer, nor shall there be any * Preliminary, subject to change. MATURITY SCHEDULE $146,450,000* GUAM POWER AUTHORITY REVENUE REFUNDING BONDS 2017 SERIES A Maturity Principal Interest CUSIP No. (October 1) Amount* Rate Price/Yield 400653† 2018 $ 135,000 % % 2019 175,000 2022 245,000 2023 3,970,000 2024 4,165,000 2025 4,380,000 2026 4,595,000 2027 4,825,000 2028 5,065,000 2029 5,325,000 2030 5,585,000 2031 5,865,000 2032 6,160,000 2033 6,465,000 2034 6,790,000 2035 7,130,000 2036 13,675,000 2037 14,365,000 2038 15,080,000 2039 15,830,000 2040 16,625,000 * Preliminary, subject to change. † Copyright 2017, American Bankers Association. CUSIP® is a registered trademark of the American Bankers Association. The CUSIP data herein are provided by CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Capital IQ. The CUSIP numbers are not intended to create a database and do not serve in any way as a substitute for CUSIP service. CUSIP numbers have been assigned by an independent company not affiliated with either the Authority or the Guam Economic Development Authority (“GEDA”) and are provided solely for convenience and reference. The CUSIP numbers for a specific maturity or maturities are subject to change after the issuance of the 2017A Senior Bonds. None of the Authority, GEDA or the Underwriters takes responsibility for the accuracy of the CUSIP numbers, and no representation is made as to their correctness on the applicable 2017A Senior Bond certificates or in this Official Statement. CONSOLIDATED COMMISSION ON UTILITIES Joseph T. Duenas Chairman Francis E. Santos Vice Chairman J. George Bamba Judith T. Guthertz, Ph.D. Secretary Treasurer Simon A. Sanchez II Commissioner GUAM POWER AUTHORITY John M. Benavente, P.E. General Manager John J.E. Kim Melinda C. Mafnas, P.E. Chief Financial Officer Assistant General Manager, Operations John J. Cruz, Jr., P.E. Beatrice P. Limtiaco Assistant General Manager, Assistant General Manager, Administration Engineering & Technical Services D. Graham Botha General Counsel GOVERNMENT OF GUAM Edward J. B. Calvo Governor Raymond S. Tenorio Lieutenant Governor GUAM ECONOMIC DEVELOPMENT AUTHORITY Jay Rojas Administrator Mana Silva Taijeron Deputy Administrator Christina Garcia Manager, Public Finance Division SPECIAL SERVICES Bond Counsel and Disclosure Counsel Trustee and Depositary Orrick, Herrington & Sutcliffe LLP Bank of Guam Hagåtña, Guam Independent Auditors Co-Trustee and Paying Agent Deloitte & Touche LLP U.S. Bank National Association Los Angeles, California Dissemination Agent Verification Agent Digital Assurance Certification, L.L.C. Causey Demgen & Moore P.C. Winter Park, Florida Denver, Colorado The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriters to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing.