MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE Credit supportive governance linkage with State of Georgia The authority is a critical component of Georgia's economy and benefits from strong explicit and implicit state support, a credit positive. This support manifests in the form of state-issued bonds for terminal facilities; extraordinary aid for dredging; transportation improvements at Garden City Terminal; and potentially the construction and funding of a new bridge. Georgia has also been instrumental in economic development initiatives and support for the location and expansion of major port customers in the state. Additional support is provided in the form of close coordination/involvement in economic development and transportation planning with state agencies. Liquidity Liquidity is healthy and has been on an improving path. GPA ended fiscal 2021 with 555 days cash on hand, and no debt. Liquidity has strengthened meaningfully, and consistently, over the last five years, and we view recent levels, close to or above 500 days cash on hand for the last five years, as representing a solid liquidity profile. Strong liquidity is an important credit consideration because of the volume risk in the authority's operating model. Debt and Other Liabilities GPA continues to make major capital investments, but it has the cash flow and balance sheet capacity to accommodate the spending with limited credit impact. GPA cash funded $1.3 billion of capital spending over the last decade, and is budgeting $2.6 billion of pay-go over the next decade, supplemented by $1 billion of proceeds from borrowings. There is a large cumulative surplus between expected sources and uses of more than $1 billion over the 10-year capital budget, which provides significant flexibility. Exhibit 7 Capital plan is large but manageable and funded mostly internally Capital sources and uses (000) Cash Flow $1,000,000 $200,000 $400,000 $600,000 $800,000 $(1,000,000) $(800,000) $(600,000) $(400,000) $(200,000) $- 2022 2023 2024 Balance does not reflect carry forward of prior-year surplus Source: Georgia Ports Authority, Moody's Investors Service We believe spending can be adjusted to align with demand if needed, given that a large portion is for expansion. While the capital plan does not entail additional debt (2025 through 2032), there is heightened spending for a new container terminal, which could constrain cash flow and require debt depending on the ultimate cost and balance of the capital plan. However, Savannah Container Terminal phases 2 and 3, each of which is budgeted at half the cost of phase 1, can be developed as discrete projects over multiple years, if and to the extent demand warrants. We expect the DSCR will be maintained above 6.0x and that leverage will stabilize and ultimately moderate after 2025. Legal security The bonds are secured by a first lien on net revenues of port facilities. GPA will not fund a debt service reserve account for this series. Debt structure The Series 2021 bonds are fixed rate, fully amortizing senior lien obligations. 2025 2026 2027 2028 2029 2030 2031 Bonds (2021 and 2023) Debt Service Capital & Other Expenditures Balance of Sources/Uses 6 14 October 2021 Georgia Ports Authority: New rating for $420 million of bonds
