November 11, 2018 Emily Deach Acting Borough Manager Skagway, Alaska [email protected] Re: RCL Interest to Invest in Upgrade of Skagway Dear Emily: This letter confirms that Royal Caribbean Cruises, Ltd (“RCL”) is interested to enter into a series of discussions with the Port and City of Skagway, Alaska to discuss the range of topics outlined in your RFI memo of August 29, 2018. We are open to explore and perhaps guide your team in understanding how your goals could be addressed, drawing on our experience and expertise, possibly leading to RCL’s involvement in your port and waterfront as a long-term financial partner and operator. If there is an opportunity for our company to become involved in the destination, either unilaterally or in some appropriate venture with other parties, we are interested to explore what are the goals, steps and possible timing to such an outcome. An RCL executive delegation met with local authorities in an Alaskan visit earlier this year. I myself visited Skagway for the umpteenth time on a Celebrity Cruise ship with my family in August, 2018. RCL views Skagway as an integral component of the “Alaska Cruise” itinerary, today and likely forever. We understand that you have an environmental remediation situation at the dock and you place a priority on resolving that. If we become involved, we will be pleased to place that initiative at the top of the list and will work with you to eliminate that hazard. On the other topics outlined in your RFI, we venture that RCL is the most likely candidate to provide assistance, ideas, collaboration, investment capital and operational management to appropriately address those matters. Our sense from the RFI is that you are at this moment looking for expression of interest rather than conclusive recommendations. At your request, we would organize with our various skilled consultants and collaborators a detailed proposal as appropriate. We understand that your waterfront is still tied up under the remaining years of a long-term lease to White Pass, so you may only be expiring possible alternatives to consider at this time. You may be aware that RCL is by far the leading developer and operator of cruise facilities worldwide. We have developed or privatized more port facilities than all the other concessionaires combined, and we have an enormous pipeline of works in progress in all the major cruise operating theaters of the world. We enclose some information and examples of past projects that we had recently prepared for an RFQ in San Juan Puerto Rico. Our track record and success are a result of our flexibility in our approach: we listen carefully to the goals of the government or port authority in each situation, then either respond to the approach proposed or if requested, offer advice on an appropriate way to make things happen in the desired direction. In most of our projects, we work with collaborators on design, engineering, legal matters, capital investment and operations. We have completed every project we have undertaken on time and budget. All of our port concessions generate positive cash flow and most have repaid debt financing and equity recovery earlier than forecast. We work with both “active” port authorities and “landlord” port authorities. We have partnered with MSC cruises and Costa Cruises on numerous projects, and we have partnered extensively with the two primary private port operators, Global Ports of Turkey and Costa Maya group of Mexico, as well as numerous other private parties. Our primary objective in participating in port expansions and developments is to gain a long-term preferential right for one berth that can accommodate our state-of-the-art ships in a complimentary manner for guest experience. Many other cruise lines use the ports we create and manage, and we welcome them for the economic return from their usage. In the past few years, RCL “advised” the central government of Japan on best practices for cruise port investment and operations leading to new legislation in Japan that promotes and encourages cruise line-port authority collaboration to create dedicated cruise facilities. RCL is now advancing 4 such port redevelopments with 4 port authorities in Japan. Carnival group and Genting cruises also submitted proposals and they are each advancing two ports as well. Note we are not giving you a specific “proposal” for your town’s port facilities but to our understanding there are still numerous years left on the current operating concession. It is not so clear what is the environment or timing for a change of direction in Skagway. Our intent is to express our sincere interest to help and possibly participate whenever the opportunity is available in Skagway cruise port. Sincerely, . John F. Tercek Vice President, Commercial Development Royal Caribbean Cruises Ltd PORT OF SKAGWAY, ALASKA Request for Information (RFI) TABLE OF CONTENTS Executive Summary ........................................................................................................................................................ 3 Part 1: Background & Team Information ............................................................................................................... 4 1.1 | Description of Team ......................................................................................................................................... 4 Commercial Development Team...................................................................................................................... 4 Royal Caribbean Cruises Ltd. ............................................................................................................................. 4 OVERALL MANAGEMENT STRUCTURE .......................................................................................................... 8 1.2 | Resumes ............................................................................................................................................................ 11 Part 2: Financial Capabilities .................................................................................................................................... 14 2.1 | Financial Capacity of Team ......................................................................................................................... 14 2.2 | Ability to Raise Financing ............................................................................................................................ 17 2.3 | Letters of support from financing institutions .................................................................................... 21 Credit Agreement #1 for $1.2 Billion ........................................................................................................... 21 Credit Agreement #2 for $1.4 Billion ........................................................................................................... 22 Part 3: Technical & Operational Capabilities ..................................................................................................... 23 3.1 | Design & Construction Capabilities ........................................................................................................ 23 RCL Cruise Terminal Transactions ................................................................................................................. 23 3.2 | Cruise Terminal Operations ........................................................................................................................ 26 The number and size of past or current cruise terminals under operation .................................. 27 Track record of successful operations ......................................................................................................... 28 Demonstrated ability to grow patronage of cruise terminals ............................................................ 29 3.3 | Open Access..................................................................................................................................................... 29 Berthing Allocations & Competing Cruise Lines ..................................................................................... 29 Fair Treatment of Cruise Lines........................................................................................................................ 29 Fair & Non-discriminatory Operations ....................................................................................................... 30 3.4 | Facilities Maintenance & Rehabilitation ................................................................................................ 30 Dredging ................................................................................................................................................................ 30 Land Reclamation & Land Removal ............................................................................................................. 30 [Type here] 1 Construction of pile supported cruise pier with rock sockets ........................................................... 30 RoRo Berth Construction ................................................................................................................................. 30 Coral relocation & monitoring ....................................................................................................................... 31 Part 4 Attachments .....................................................................................................................................................