Moody's report concerns Guam airport - KUAM.com-KUAM News: On Air. Online. On Demand.

Moody's report concerns Guam airport

Posted: May 15, 2018 5:32 PM Updated:

A new report released by Bond rating company Moody's describes the ongoing litigation between DFS and the airport as "credit negative." And that's raised serious concern from the airport about the impact it could have on its credit rating.

In a May 11 report, Moody's wrote that "a loss of the contract with Lotte Duty Free would be credit negative for the airport because a newly procured concession agreement could offer lower annual revenues. It adds that, "there could be a temporary loss in revenue if Lotte exits the airport before a new public procurement of the contract is completed, and this would put short term pressure on debt service coverage ratios."

In February, Judge Arthur Barcinas voided the airport's $152 million dollar contract with Lotte, but further ruled that the company could stay on until a new bid is awarded. The airport has called the Judge's decision a potential financial disaster.

The airport said it was also concerned that Lotte was under no obligation to abide by the voided agreement. In late April, GIAA signed a mediated "term sheet" that binds Lotte, but at 2-million dollars a year less in rent payments.

In a statement Tuesday, Board Chairman Ricardo Duenas said they are now "very concerned" that the Moody's report could seriously impact the airport's credit rating, bond covenants, signatory airline agreements.

Meanwhile, there are two conflicting court motions pending before Barcinas. DFS wants to expedite the rebid of the contract. The airport has filed a motion to stay pending an appeal of Barcinas' decision to the supreme court.

Barcinas has granted the stay pending his decision on the DFS motion.

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