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Bermuda Airport Agreement

The success of airport development operations depends in large part on the ability to maintain and increase passenger revenues. For Bermuda, the total number of passengers has been declining for 30 years. Private debt investors (i.e. lenders) who are not often interested in small airports the size of Bermuda because, according to industry data, 80% of them lose money; some protection against the risk of a continued decline in passenger revenues, which could jeopardize Skyport`s ability to repay its debts. Thus, it was agreed that the government would only guarantee the minimum revenues needed for the annual number of passengers on the basis of Conservative targets, so that Skyport could repay lenders and not generate profits. The lender also ensured that the resources needed for the project could be increased at a lower interest rate, ensuring that the total cost of the project was more affordable. Although debt payments are now protected, Skyport must, in the meantime, continue to cover all operating expenses, including salaries, maintenance of buildings and airfields, airport and passenger security screening services, investments and all other costs, including all construction-related cost overruns associated with the new terminal. Once the debt is converted, the minimum income guarantee disappears. Indeed, the Bermuda Airport Redemptoration Project has been an important catalyst for job creation in Bermuda. Following the award of the first order in April 2017, Aecon and Skyport recruited construction workers and staff for the day-to-day operation and maintenance of existing airport facilities.

At this stage of the project, Bermudians represent 61 per cent of the project`s construction staff and 89 per cent of the Skyport team. “About 80% of the employees who worked for DAO decided to move to Skyport,” says Gordana Terkalas, vice president of Aecon Human Resources. “Skyport then filled all the vacancies with a mix of local Bermudian staff. The team is helped by the deployment of a team of experienced international airport professionals, such as Ken Hassard, who has led the commercial side of many airports during his career, and Ken Villanueva, who brought his operational financial experience to the Quito Airport Project. The Bermuda Airport project is being provided under a framework agreement between the Bermuda government and the CCC, which awarded the work entirely to Aecon under a $274 million contract. The financing of the project was organized by Aecon Concessions and includes a U.S. private placement with a fixed coupon of $285 million, amortized over a 25-year period, with approximately $70 million of equity committed at the financial close and injected during construction.