Panama City

1
Panama City Bay County International Airport
Relocation
Financial Feasibility Review and Underwriter
Selection
INFRASTRUCTURE MANAGEMENT GROUP, INC.
www.IMGgroup.com ? August 4, 2005
2
Introduction

• Underwriter Selection
• Overview of Finance Process
• Responsibilities
• Selection Process
• Timing

• Financial Feasibility
• Key assumptions
• Sources
• Conclusions

3
Feasibility Approach

• Update of 2003 feasibility analysis of relocated
  airport (Project)
• Based on assumptions developed in 2004/early 2005
• Will be updated as key assumptions reviewed
• Panama City - Bay County International Airport
  (PFN)

4
Key Base Case Assumptions

• Begin construction in first quarter, 2006,
  following Record of Decision
• Relocated airport opens October, 2008 as current
  airport closes
• FAA and FDOT grants and bonds committed by first
  quarter, 2006
• Property sale realized through competitive tender
  first quarter 2006 with 54.5 million (MM) in net
  proceeds
• 1993 bond fully repaid in 2008

5
Traffic Forecast

• PFN s average annual enplanement (EPAX) growth
  1991 - 2003 was 5.9
• Low Forecast FAA Terminal Area Forecast (TAF)
  projects 2.6 rate
• High Forecast Assumes increased growth with
  longer runway. Follows Low Forecast until the new
  airport opens, then assumes growth of 4.9
• Base case uses Low Forecast

6
Uses of Funds (Base Case)
7
Sources of Funds (Base Case)
8
Grants

• Grants committed by first quarter, 2006
• FAA AIP letter-of-intent (LOI) grant may be
  dispersed over 8-10 year period
• Disbursements after construction period are
  funded with grant anticipation bond
• LOI grant may require third-party support to
  mitigate federal appropriation risk
• FDOT grants dispersed during design and
  construction period

9
Bond Sale

• GARB supported by
• General airport revenues
• Passenger Facility Charges (PFCs) of 4.50
• GARB issued first quarter, 2006 with mode
  flexibility
• Variable Rate Demand Note (VRDN) during
  construction (assumed rate 4.35)
• Fixed rate for remaining 27 years (5.6)
• AIP-backed issued bond 2007 fixed rate (5.0)

10
New Airport Revenues

• Airline fees increase at least 15 in 2005
  dollars when new airport opens in 2009
• 2004 airline cost/EPAX (CPEP) was 4.02
• CPEP increases to 5.16/EPAX in 2009 (5.81 in
  2009 dollars)

11
Feasibility Requirements

• Annual 1.25x debt service coverage
• Debt service reserves of one years maximum debt
  service for GARB and AIP-backed bonds
• Minimum operating reserve of 1.5 MM

12
Bond Sensitivity Analysis
Debt Service Coverage Ratio
13
Sale of Existing Airport

• Based on 2004 study
• Total of 713 acres available for sale
• Estimated value of 54.5 MM
• Assumes master planned, mixed-used redevelopment
• Timing is important
• 100 payment in first quarter 2006 through
  competitive tender, under base case
• Property transferred when airport closes

14
Feasibility Summary

• Project feasible in base case
• Need to secure grant commitments from FAA and
  FDOT
• Construction cost and schedule certainty is
  critical
• Timing and value of property sale must
  approximate assumptions

15
Finance Process Overview

• Develop financial plan
• Obtain credit rating (Standard Poors, Moodys,
  and/or Fitch)
• Secure bond insurance, if necessary/available
• Develop official statement (prospectus),
  including legal opinion from bond counsel,
  airport consultants report, and other documents
• Price bonds and close transaction

16
Underwriter Responsibilities

• Be available for project consultation
• Assist in development of credit strategies and
  advise on financing techniques and structuring
• Help prepare official statements and other
  documents
• Assist in preparation of rating agency
  presentations
• Sell bonds, working with the Authoritys
  financial advisors and financing team
• Perform other underwriter duties

17
Underwriter Selection Criteria

• Overall qualifications and experience of firm and
  individuals
• Underwriting capabilities and demonstrated
  experience serving public sector clients with
  emphasis on providing airports services requested
  in the RFP
• Proposed fees

18
Underwriter Selection Timing

• Issue RFP early August
• Receive proposal early September
• Invite up to 3 firms for presentations (if
  necessary) mid-September
• Select underwriter by end of September
• Underwriter begins work in early October