AIDEA July 2015 Overview

AIDEA Overview

FY 2015

• Development finance corporation for the State of Alaska

• Semi-independent entity, overseen by a seven member Board

• AIDEA is self funded - receiving no General Funds

• Provides an annual dividend back to the State of Alaska– Total since 1997 - $373.5 million

• Revolving Fund ≈ $1.4 billion in assets.

• Standard & Poor’s AA+ credit rating

Overview

To promote, develop, and advance economic growth and diversification in Alaska by providing various means

of financing and investment.

Mission

AIDEA fulfills its mission by providing access to affordable, long-term, asset financing

History

$180 million in cash and loans provided funding for the Loan Participation Program

1967

1981

1986

2013

2014

AIDEA created by Legislature

$143.5 million in cash & loans funded the DeLong Mountain Transportation

System (Project Development)

SETS program established and capitalized

Arctic Infrastructure Development Fund established (not capitalized)

AIDEA Funds

Three funds - different risk characteristics and project eligibility criteria

Revolving Fund

Enterprise Account

Loan Participation

Program

Commercial Finance

Lower Risk

Economic Development

Account

Project Finance

Project & Infrastructure Development

Higher Risk

SETSEnergy Infrastructure

Development

Legislative Appropriations

Range of Risk

Debt &Credit

Enhancements

Arctic Infrastructure Fund

Infrastructure Development

Legislative Appropriations Range of Risk

Debt & Credit

Enhancements

Financing Tools

AIDEA provides a range of financing pathways

• Loan Participations• Energy Loans• Development Project Finance• Tax-Exempt Bonds• Taxable Bonds

Debt• 100% Ownership• Partner in LLC or Subsidiary Corporation

Equity• Loan Guarantees• Bond Guarantees

Enhancements

Project Finance Continuum

7

Investments and Impairments

Loans and Loan Participations Projects Conduit Bonds0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000741,726

144,709

620,965

1,851 0 0

Investments and ImpairmentsProjects Financed Since July 1, 2000

($ millions)

Investments Impairments

• Natural Resource Extraction and Processing

• Community Public Purpose Facilities

• Transportation and Logistics

• Commercial Real Estate

• Tourism/Recreation

• Communications

• Federal Facilities

• Manufacturing

• Infrastructure

• Healthcare

• Utilities

• Energy

• Retail

AIDEA Assists in Financing

Well Stocked Tool Box

Infrastructure Development

EnergyDevelopment

AIDEA

Programs

ProjectDevelopment

Commercial Finance

Conduit Bonds

Specialty Financing

Loan Participation Program

• Participation may total up to 90% of a loan originated by an eligible lending organization (for example, a commercial bank), with total participation not to exceed $25 million.

• Terms: Up to 15 years for personal property or 25 years for real property;

• 75% loan-to-value;

• Fixed or variable interest rates

• The program has created approximately 5,000 construction jobs and 6,000 permanent jobs

Provides long-term commercial financing to Alaska businesses

Loan Participations by Industry

Loan Participations by Region

Region Balance ($) Dollars (%) Loans (#) Loans (%)

Anchorage 211,309,870 53.8 129 54.7

Southeast 82,957,548 21.2 40 16.9

Mat-Su 41,520,112 10.6 29 12.3

Interior 26,075,215 6.6 9 3.8

Gulf Coast 22,616,198 5.8 21 8.9

Northern 2,922,495 0.7 2 0.8

Southwest 5,284,804 1.3 6 2.5

Totals $392,686,242 100.0% 236 100.0%

Project & Infrastructure Development

Long-Term Financing for Projects & Infrastructure in Alaska

Own all or a part of an economic development or infrastructure project.

Co-Invest in a Corporation or LLC that owns the project or infrastructure.

Provide direct loans or loan/bond guarantees for development projects.

14

Project Criteria

The project must be endorsed by the local government

The project must be economically advantageous to the state and to the general public welfare

The project applicant must be financially responsible

The project must be economically and financially feasible and generate sufficient revenues to repay AIDEA’s

investment

Analysis & Decision Making

DeLong Mountain Transportation System

• The mine and DMTS provide more than 500 regular and 100 seasonal jobs

• Direct and indirect jobs provide more than $15 million of annual income to local residents

• Royalty payments to NANA, average more than $35 million annually

• PILT from Teck to NWAB was more than $9 million in 2012

• AIDEA’s investment of $265 million to be repaid over 50 years with an expected ROI of 6.50%

52 mile road and port facility serving Red Dog Mine

Lik Deposit Transportation System

• The LDTS will be a haul road approximately 20-mile long connecting the Lik Deposit to the DMTS haul road system.

• The LDTS will be constructed on land owned by the State of Alaska and NANA. LDTS will use approximately 40 miles of the existing DMTS roadway.

• Port site modifications would include an additional concentrate storage building, fuel storage, a camp extension, upgraded generation capacity, an expanded shallow water dock, and modifications to the existing ship loader, or if necessary, a new ship loader.

20 mile road and port site modifications

Skagway Ore Terminal

• AIDEA recently made approximately $14 million in improvements to the facility. This investment has been paid back through user fees by the current tenant

• SOT supports family wage year-round jobs and the expanding mining sector in the Yukon Territory

• AIDEA has legislative authorization to issue up to $65 million in bonds to fund a major expansion of the facility

100,000 sq. ft. ore concentrate storage facility and ship loader

Ketchikan Shipyard

• AIDEA is nearing completion of an $87 million capital expansion and upgrade of the shipyard including: an operations office, assembly hall/production center and a steel fabrication shop

• Vigor Industrial purchased the shipyard operator, Alaska Ship & Drydock, in March 2012.

• AIDEA retains ownership of the Ketchikan Shipyard

The shipyard provides 160 direct jobs in Ketchikan

Alaska Class Ferries

• Vigor Marine & Ketchikan Shipyard awarded contract to construct two Alaska Class ferries - 2018

• At 280 feet each ferry will seat up to 300 passengers and carry 53 standard vehicles

Additional economic impact to Ketchikan - $32.1 million

• Increased employment by 60-80 per year for 4 years

• Additional $22 million in wages and $9.8 million in local spending

Ketchikan Shipyard

Mustang Operations Center 1, LLC

• 15,000 BPD operating facility will process crude oil produced in the South Miluveach Unit with 25 – 30 million barrel proven reserves. The oil will then be transported to the Alpine Pipeline onto the Kuparuk pipeline and finally to TAPS.

• The facility will create:– 250 construction jobs

– 20-25 permanent jobs

– Up to 200 indirect jobs

• AIDEA’s $70 million investment in the project is expected to leverage more than $500 million in additional private investment in the Mustang Field.

Up to an additional 15,000 bpd of oil in TAPS

Camp Denali Readiness Center

• AIDEA financed a $15 million expansion of the National Guard Armory on JBER

• The Camp Denali Readiness Center Addition Project includes a new 29,000 square foot facility, relocation and replacement of an antenna array, a new access road and expanded parking.

• AIDEA owns the project which will be operated by the Alaska Department of Military &Veterans Affairs through a 30 year lease

• Retained 115 USCG and civilian jobs

New home for US Coast Guard in Anchorage

BlueCrest Energy

• AIDEA investment up to $30 million• 98 million barrels - proved and

probable reserves of oil• 297 BCF - proved and probable

reserves of gas• Development of Cook Inlet oil reserves• Increase local and State tax base• 50 construction jobs• 150 new jobs created

Onshore oil rig for Cook Inlet

Bokan Mountain Mining Project

• Legislature approved up to $145 million in bonding authority

• High paying jobs for a region with high unemployment

• Decrease US dependence on Chinese REE

Rare Earth Element (REE) production

Niblack Mining Project

• Legislature approved up to $125 million in bonding authority

• Infrastructure development may also occur at the Gravina Island Industrial Complex in Ketchikan

• High paying jobs for a region with high unemployment

• 150 full-time on Prince of Wales• 80 ore processing in Ketchikan

Copper, Zinc, Gold and Silver

Conduit Revenue Bond Program

• Neither the assets nor credit of AIDEA or the State of Alaska are at risk

• Essential to the underwriting and placement of bonds are– the creditworthiness of the

project, and – any credit enhancements

offered by the applicant

Access to tax-exempt and taxable bonds

317

$1.4 B

Energy Development

Sustainable Energy Transmission and Supply FundThe SETS fund, established and capitalized in AIDEA, provides tools for financing Alaska’s energy infrastructure needs

Liquefaction, regasification, distribution, storage, or use of natural gas except a pipeline from North Slope or Cook Inlet to market.

Transmission, generation, conservation, storage or distribution of heat or electricity.

Distribution or storage of refined petroleum products.

• Direct Loans• Loan & Bond Guarantees• Bond Issuances

Financing limits:• 33% of direct financing, or• $20 million in credit enhancements

Arctic Development

Eligible Projects• (A) the construction, improvement, rehabilitation, or expansion of

a facility– (i) in the Arctic to aid in development or meet emergency response

needs; or

– (ii) in the state if the construction, improvement, rehabilitation, or expansion supports or furthers the development of a facility in the Arctic; or

• (B) the construction, improvement, rehabilitation, or expansion of a shore-based plant, facility, or equipment used in support of a fishery in the Arctic.

Arctic Infrastructure Development Fund

Arctic Development

Financing limits:• 33% of direct financing• $20 million in loan/bond guarantees• 40 year maximum term

Financing Alaska’s Arctic infrastructure needs

New Markets Tax Credits

Provides AIDEA with ability to incentivize the use of the federal New Markets Tax Credit (NMTC) program in underdeveloped and poverty-stricken areas of the state.• Incentivizes economic development opportunities in those areas

with the most need.• AIDEA may provide a guarantee to a commercial lender for a

leveraged loan in a NMTC transaction• AIDEA may make direct leveraged loans in a NMTC transaction if the

project proponent cannot secure financing from a commercial lender.

• Allows for a $40 million rolling cap in loans and guarantees.

Investment in areas of high unemployment & poverty

Contact

Alaska Industrial Developmentand Export Authority

813 West Northern Lights Blvd.,Anchorage, Alaska 99503

(907) 771-3000(888)300-8534 (Toll Free in Alaska)

www.aidea.org

#AIDEA