A.B. Won Pat International Airport Authority, Guam

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GIAA Again Asks Superior Court to Stay Order in DFS Litigation

Wednesday, May 2, 2018

May 1, 2018 – Tamuning, Guam – Attorneys for the Antonio B. Won Pat International Airport Authority, Guam ("GIAA) yesterday asked the Guam Superior Court for leave to supplement GIAA's pending stay motion in the DFS litigation, originally filed on February 5, 2018. Pending its appeal to the Guam Supreme Court, GIAA filed a motion to stay the Superior Court's ruling voiding GIAA's duty free concession agreement with Lotte Duty Free Guam, LLC ("Lotte") to try to avoid substantial harm to GIAA, its bondholders, signatory airlines, the traveling public and visitor industry. GIAA's motion to stay has been pending for almost three months.

Unable to obtain an immediate stay of the Court's judgment, on Thursday, April 26, 2018, the GIAA Board of Directors approved a mediation term sheet with Lotte that resolves outstanding issues between the two parties relating to the specialty retail concession that has been operated by Lotte since July 2013 and the on-going $110 million Terminal Building Structural Upgrade and Concourse Isolation Project ("Third Floor Project"). The term sheet ensures that the specialty retail services Lotte provides to the traveling public continues.

The term sheet, arrived at in a mediation conducted by Frederick Horecky on April 3 and 4, was entered into by the two parties to address the uncertainty created by the Court's order voiding and setting aside the Lotte concession agreement – a decision and order that has been appealed to the Supreme Court of Guam by GIAA – as well as issues related to the long-awaited Third Floor Project, which is now underway.

"Without a stay, GIAA is in an untenable position," said Ricardo Duenas, Chairman of the GIAA Board of Directors. "The Court's order voided the concession contract with Lotte, but ordered GIAA to abide by the terms of the contract until a new procurement could take place. It put no such requirement on Lotte, which meant Lotte was effectively free to walk away from Guam – an outcome that would have been disastrous for GIAA and the future of the Airport. Additionally, the order also calls into question all of GIAA's concession contracts and is a serious threat to GIAA's ability to run the Airport efficiently and cost-effectively. For example, GIAA cannot solicit for food and beverage concession services using an RFP as every other airport in the world is able to do," said Duenas."

"The Lotte concession contract is the most favorable contract for the Airport in its history and a major basis for the GIAA's credit rating, its $247 million bond and overall financial budget, including capital improvement projects," said Duenas. "The Third Floor Project, which will be a tremendous upgrade to the Airport, will also have an impact on Lotte's operations over the next 24 months, so it was reasonable for GIAA to provide a reduction in rent during that time."

"The mediation term sheet keeps Lotte in the Airport until the litigation can be resolved, which is a good thing for all parties," continued Duenas. "GIAA is very appreciative of Lotte's renewed commitment to the Airport and people of Guam as exhibited by their participation in the mediation and adoption of the term sheet."

At a hearing before Judge Arthur Barcinas scheduled for Friday, May 4, GIAA's attorneys will once again be asking the judge to stay his February order until the Guam Supreme Court has a chance to review the case.

"At this point the only harm being done is to the Airport and the people of Guam and we are hopeful that the Superior Court will take notice and act accordingly," concluded Duenas. "The Supreme Court should and will be the ultimate decider of this case. We are asking that the order be stayed so that GIAA can do its job – running a world class airport – while the legal process runs its course."

For any questions, please contact Genevieve Rapadas at 646-9355 or [email protected]