A final vote by the Metropolitan Water District board on the controversial Cadiz water storage project may not take place until mid-January, district officials said Tuesday--a delay that could heighten financial pressures on its corporate sponsor, Cadiz Inc.
The MWD board's subcommittee on rules and ethics scheduled a series of hearings and project reviews to take place through November in preparation for a final board vote on the $150-million venture. At least one board member observed that holiday schedules, among other factors, could delay that vote until after December.
For The Record
Los Angeles Times Thursday September 19, 2002 Home Edition Main News Part A Page 2 National Desk 15 inches; 569 words Type of Material: Correction
Water project--Cadiz Inc. said it was looking forward to working with the Metropolitan Water District after the agency's board Tuesday delayed a vote on a Cadiz desert water-storage project. A Business section story Wednesday incorrectly said the company did not comment on the MWD vote. The story was not updated to reflect that the company did provide a comment.
The timing of the MWD vote is crucial to Cadiz, a publicly traded company led by Keith Brackpool, an advisor to Gov. Gray Davis on state water issues. Cadiz stands to see as much as $1 billion in revenue over 50 years from the project, which includes plans to store up to 1.5 million acre-feet of surplus Colorado River water in a Mojave Desert aquifer underlying company-owned land.
But Cadiz, which has never turned an annual profit and currently records almost all its revenue from agriculture in the San Joaquin Valley, faces the expiration or maturation of about $64 million in debt by Jan. 30. In the past, these credit lines have been extended by lenders but generally at higher rates.
Under the terms of one loan, Cadiz's foreign bank--ING Baring--could obtain more than 1.3 million Cadiz shares for a nominal fee if the loan is not repaid by Jan. 30, according to company documents. That would give Baring and its affiliates about a 10% share of Cadiz.
The Mojave project has been held up for years by environmental concerns about plans to extract an additional 1.5 million acre-feet of water from the aquifer.
Cadiz did not reply to a request for comment on the MWD meeting. Its shares rose 21 cents to $4.31 on Nasdaq.