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Cruise Terminal Financing January 26, 2009 Board Workshop

Cruise Terminal Financing January 26, 2009 Board Workshop. presented by Public Financial Management 300 S. Orange Avenue Suite 1170 Orlando, FL 32801 407-648-2208 407-648-1323 fax. Topics of Discussion. Existing Revenue Bonds Key Bond Covenants Credit Ratings Criteria

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Cruise Terminal Financing January 26, 2009 Board Workshop

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  1. Cruise Terminal Financing January 26, 2009 Board Workshop presented byPublic Financial Management300 S. Orange Avenue Suite 1170 Orlando, FL 32801 407-648-2208 407-648-1323 fax

  2. Topics of Discussion • Existing Revenue Bonds • Key Bond Covenants • Credit Ratings Criteria • Pro Forma Scenarios • Existing System (2008 Bond Forecast including MOL) • System + Hanjin without Cruise • System + Hanjin + Cruise based on BREA Case • System + Hanjin + Cruise Worst Case Scenario • Financial Conclusions

  3. Existing Revenue Bonds • JaxPort currently has 3 series of revenue bonds outstanding for which system net revenues are used to cover debt service • Series 2000, 2006 and 2008 • Capacity for further bonding depends on forecast system net revenues and financing conditions

  4. Key Bond Covenants • Rate Covenant:Each Fiscal Year Net Revenues, together with Interlocal Agreement Revenues, will be sufficient to: • pay one hundred twenty-five per centum (125%) of the then current Annual Debt Service Requirement on the Senior Bonds then outstanding, and • provide Gross Revenues, together with Interlocal Agreement Revenues, sufficient to pay all debt service, reserves and other payments required for in the Bond Resolution. • Additional Bonds Test – In order to issue Senior Revenue Bonds to fund projects such as the new Cruise Terminal and/or the Hanjin Container Terminal, JaxPort must meet one of the following tests: • Historical, Net Revenues plus Interlocal Agreement Revenues during preceding two Fiscal Years equaled at least 1.50 times the MADS on the outstanding Senior Bonds plus additional parity bonds, or • Projected,Estimated Net Revenues plus Interlocal Agreement Revenues during five Fiscal Years following completion of the Project at least equal 1.25 times the MADS on the outstanding Senior Bonds plus additional parity bonds during such five Fiscal Years.

  5. Credit Ratings Criteria • JaxPort’s Senior Lien Revenue Bonds are currently rated “A2” by Moody’s and “A” by Fitch • JaxPort’s rating benefits from it’s diversified cargo and revenue streams as well as a strong local/regional economy • Other rating factors taken into consideration include attributes such as forecasted cargo/container demand, competition with other ports, diversification among shipping lines/trade routes, surface transportation links, etc. • While there is no defined debt service coverage level that will guarantee a certain rating, generally 1.75x senior lien debt service coverage is seen as safe level for “A” rated entities • Debt service coverage levels may be offset by above factors as well as well-crafted long term contracts and leases

  6. Proforma: MOL only (Existing Case) • Existing case includes MOL. Hanjin and cruise not included. • Minimum senior coverage is 1.94x

  7. Proforma: Hanjin / No Cruise • Hanjin proceeds as planned. Cruise business is not pursued. • Minimum senior coverage is 1.70x • NPV of Hanjin project is positive $70 million • No bond covenant default occurs. Credit ratings remain stable.

  8. Proforma: Hanjin / Cruise based on BREA Case • Cruise debt issued for a $60 million project • Minimum senior coverage is 1.70x • NPV for the cruise project is positive $45 million • Cruise project supports itself. System debt service coverages on average decrease slightly versus the Hanjin / No Cruise scenario. No bond covenant default occurs. Credit ratings remain stable.

  9. Proforma: Hanjin / Worst Case Cruise Scenario • Cruise debt issued for a $52 million project but cruise revenue only runs through 2016 • Minimum senior coverage is 1.50x • NPV is negative $30 million • Worst case because it assumes that after 2016 no cruise line comes back to the new cruise terminal for the life of the bonds. Regardless, no bond covenant default occurs. However, credit ratings could be lowered.

  10. Conclusion • Cruise Terminal project pays for itself based on BREA study projected revenues • System debt service coverage declines slightly with the cruise project, but remain adequate such that JaxPort should keep its current rating • Even under a worst case scenario, system debt coverage may be sufficient to keep minimum “A” level credit ratings (but no guarantee) • Thus, Cruise Terminal project appears financially feasible based on the revenue forecast and financing factors • Prior to issuing revenue bonds to finance the Cruise Terminal project, JaxPort will need to obtain an updated market and financial analysis from a qualified feasibility consultant showing that the system (not just the Cruise Terminal) can support the additional indebtedness

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