Guam Waterworks Authority Water and Wastewater System Revenue Refunding Bonds, Series 2017 Investor Presentation November 3, 2017
Disclaimer This electronic Investor Presentation you are about to view is provided as of November 3, 2017, for a proposed offering by the Guam Waterworks Authority (the “Issuer”) in connection with its Water and Wastewater System Revenue Refunding Bonds, Series 2017 (the “Bonds”) . If you are viewing this presentation after November 3, 2017, there may have been events that occurred subsequent to such date that would have a material adverse effect on the financial information that is presented herein, and neither the Issuer nor Citigroup Global Markets Inc. and Barclays PLC (collectively, the “Underwriters”) have undertaken any obligation to update this electronic presentation. All market prices, financial presentation prices, data and other information provided herein are not warranted as to completeness or accuracy and are subject to change without notice. This Investor Presentation is provided for your information and convenience only. Any investment decisions regarding the Bonds should only be made after a careful review of the complete Preliminary Official Statement, dated November 3, 2017. By accessing this presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation, nor to produce, publish or distribute this Investor Presentation in any form whatsoever. This Investor Presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, including the Bonds, or to adopt any investment strategy. Any offer or solicitation with respect to the Bonds will be made solely by means of the Preliminary Official Statement and Official Statement, which describe the actual terms of such Bonds. In no event shall the Underwriters or the Issuer be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. Neither the Issuer nor the Underwriters make any representations as to the legal, tax, credit or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. You should consult with your own advisors as to such matters and the consequences of the purchase and ownership of the Bonds. Nothing in these materials constitutes a commitment by the Issuer, Underwriters or any of their affiliates to enter into any transaction. No assurance can be given that any transaction mentioned herein could in fact be executed. Past performance is not indicative of future returns, which will vary. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances. Clients should contact their salesperson at, and execute transactions through, an entity of the Underwriters in their home jurisdiction unless governing law permits otherwise. 1
Presentation Participants Officer of the Governor The Honorable Edward J.B. Calvo Governor of Guam Consolidated Commission on Utilities Guam Waterworks Authority Joseph Duenas Miguel Bordallo, P.E. Greg Cruz Chairman General Manager Chief Financial Officer Guam Economic Development Authority Jay Rojas Administrator Bookrunning Senior Managing Underwriter Citigroup Tim Rattigan Stephen Field Managing Director Vice President 2
Overview of the Series 2017 Bonds Series 2017 Bonds Issuer Guam Waterworks Authority Issue Water and Wastewater System Revenue Refunding Bonds Par Amount* $110,180,000* Maturities* 2019 – 2040* Tax-Exempt Non-AMT Tax Status Exempt from taxation by any state or territory of the United States Pricing* November 15 th , 2017* December 14 th , 2017 Closing Date The Authority is issuing the 2017 Bonds to (i) refund all or a portion of the Authority’s outstanding 2010 Use of Proceeds Bonds and (ii) pay costs incurred in connection with the issuance of the 2017 Bonds. Limited obligations of the authority payable solely from and secured by a pledge of Revenues consisting Security primarily of all gross income and revenue received by the Authority from the ownership or operation of the Authority’s water and wastewater system Redemption Provisions* Subject to optional redemption anytime on or after July 1, 2027* Ratings Standard & Poor’s: A - Moody’s: Baa2 Fitch: BBB- Bookrunning Citigroup Senior Manager Co-Senior Manager Barclays *Preliminary and subject to change 3
Overview of Guam Guam is an unincorporated territory of the United States with a strategic U.S. military post in the Western Pacific and a thriving tourist industry Asia ■ Guam is governed by an elected Governor and Ritidian Point Lieutenant Governor, 15 Senators and a Beijing Tokyo Northern Reefs Andersen judicial branch Mariana Hong Kong Air Force Base Islands Pati Point (Northwest Field) Guam Manila Oceanview ■ Guam’s population as of 2010 was estimated Port Morsbey to be 159,358 1 Yigo Tumon Bay Dededo Oca Point Agana Bay Agana Tamuning Pagat Point Glass ■ Guam’s GDP measured $5.8 billion 2 for 2016 Reefs Breakwater Maite Barrigada Piti Orote Ordot Point Mangilao Guam Lockwood Terrace Pago Bay ■ Guam’s proximity to many of the major cities Yona Apra Heights Agat Bay of Asia and the South Pacific greatly contribute Agat Santa Rita to a diverse population and visitor industry Reefs Reefs Talofofo Facpi Point Pacific Ocean 3-5 hour flight from most major cities in Umatac Asia Inarajan Merizo Cocos Lagoon N Cocos Island Aga Point Reefs 0 5km 144 0 40 0 0 5mi US Federal Land Government of Guam Land (1) 2010 U.S. Census. (2) US Bureau of Economic Analysis 4
Guam Tourism Update Guam’s economy continues to expand as Guam’s visitor base becomes increasingly more diverse Total Visitor Arrivals and Japanese Arrivals as a Percent of Total Arrivals (FY 2012-2017) in millions 1.56 mm Total Visitor Arrivals 1.51 mm Millions 1.60 80% 1.37 mm 1.34 mm 1.34 mm 1.27 mm 70% 1.20 60% Non-Japanese Arrivals 50% 0.80 40% 72% 68% 62% 30% 57% 50% Japanese Arrivals 43% 0.40 20% 10% 0.00 0% 2012 2013 2014 2015 2016 2017 Guam Visitor Arrivals by Market FY2017 FY2012 Taiwan China Taiwan China US US 3.9% 2.3% 1.5% 0.7% 5.1% 4.9% Other Other 6.5% 5.8% FY2012 FY2017 Japan South Japan 43.2% South Korea 71.5% 13.0% Korea 41.6% 5
Marine Relocation & Department of Defense Projects The signing of the Record of Decision in 2015 for the relocation of approximately 5,000 Marines from Okinawa to Guam began the process for significant additional military investment in Guam U.S. Military Construction Authorizations for Guam 1 Expected Incremental Population Increase by Year 2 (in $millions) 10,000 $600 $495 million 8,000 $500 $400 6,000 $249 $233 $300 million million 4,000 $162 $200 million $102 million 2,000 $100 0 $0 1 2017 2019 2021 2023 2025 2027 2013 2014 2015 2016 2017 Fiscal Year Fiscal Year Record of Decision (ROD) was released in August 2015 and identified final locations for Marines relocating to Guam Longer and more gradual construction period (13 years) compared to 2010 Environmental Impact Statement (7 year construction period) In 2016, the military agreed to give Guam approximately $55.3 million in grants to fund civilian water and wastewater projects linked to the military build-up Recent construction awards further demonstrate that the military buildup is ready to move forward (1) Fiscal year 2017 Military Construction Authorization as passed by the House Armed Services Committee (HASC) (2) Reflects incremental not cumulative population increase based on information in the Supplemental Environmental Impact Study (SEIS) 6
GWA Management and Governance GWA is a public corporation governed by the Consolidated Commission on Utilities The Consolidated Commission on Utilities (“CCU”) oversees GWA Guam Public Utilities Commission — Serves like a board of directors for GWA — Responsibilities include hiring GM, CFO and Consolidated Commission on Utilities internal counsel The Guam Public Utilities Commission (“PUC”) serves Joey Duenas Francis Santos Chairman Vice Chairman to regulate utility rates and significant expenditures that may impact rates Judith Guthertz George Bamba Simon Sanchez Both the PUC and CCU must approve any rate Secretary Commissioner Treasurer increases In 2004, the PUC adopted a 1.75x minimum debt Guam Waterworks Authority service coverage policy for GWA Miguel Bordallo, P.E. Kelly Clark Greg Cruz, CPA General Manager Legal Counsel Chief Financial Officer 7
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