30 Sep Press Release: Cadiz Secures New Working Capital Facility
Financing to Provide Funds for Cadiz Water Conservation Project Permitting Phase
LOS ANGELES (September 30, 2010) – Cadiz Inc. [NASDAQ: CDZI] is pleased to announce that it has reached agreement with LC Capital Master Fund, Ltd., the Company’s existing lender, (“Lender”) for an additional $10 million working capital facility. This facility, together with existing cash resources, has been designed to see the Company through completion of its Water Conservation & Storage Project’s (“Project”) environmental review and permitting process.
Under the terms of the new $10 million facility, the Company would draw the first $5 million at closing (“First Tranche”) and, at the Company’s option, up to an additional $5 million over the following 12 months (“Second Tranche”). All interest on outstanding balances would accrue at 6%, with no principal or interest payments required before June 2013, consistent with the Company’s existing term debt facility. The First Tranche would be convertible at any time into the Company’s common stock at a price of $13.50 per share and the Second Tranche, if drawn, would be convertible into the Company’s common stock at $12.50 per share.
Further, the existing debt facility, which as of June 30th had $44.96 million outstanding, will be modified at closing as to certain of its conversion features. Approximately $20 million of the existing convertible debt would be changed to allow for up to $2.5 million of this amount to be converted at any time into the company’s common stock at the price of $13.50 per share, with the remaining amount becoming non-convertible. If the Second Tranche is drawn, another $20 million of the existing debt would be changed to allow for up to $5 million of this amount to be converted at any time into the Company’s common stock at $12.50 per share, with the remaining amount becoming non-convertible. The final $4.55 million of the existing debt would continue to be convertible at $7 per share.
At closing, there will be no net increase in fully diluted shares of the Company’s common stock as a result of this transaction. The Company expects to close the transaction shortly, subject to the completion of definitive closing documents and standard closing conditions.
About the Project
One of the largest water conservation efforts of its kind, the Cadiz Project will capture and utilize billions of gallons of renewable native groundwater that is currently being lost to evaporation through an aquifer system beneath Cadiz’s landholdings in eastern San Bernardino County, California and yield a sustainable annual supply for subscribers. In addition, the Project offers approximately one million acre feet of storage capacity that can be used to conserve – or “bank” – imported water, without the high rates of evaporative loss suffered by local surface reservoirs.
The Project is presently in an environmental review and permitting phase with technical studies and field work ongoing. Acting as lead agency for the environmental process is Santa Margarita Water District, who along with Three Valleys Municipal Water District and Golden State Water Company have committed funds to the environmental review process and have acquired options in the Project for a firm annual supply of water and groundwater storage rights.
Earlier this year, leading engineering consulting firm CH2M HILL unveiled the findings of a comprehensive study confirming the scale and recharge rate of the of the Project’s aquifer system. The study, which was peer reviewed and validated by leading groundwater experts, estimates total groundwater in storage in the aquifer system between 17 and 34 million acre-feet, a quantity on par with Lake Mead, the nation’s largest surface reservoir. The study also confirmed a renewable annual supply of native groundwater in the aquifer system currently being lost to evaporation.
Founded in 1983, Cadiz is a publicly-held renewable resources company that owns 70 square miles of property with significant water resources and clean energy potential in eastern San Bernardino County, California. The Company is engaged in a combination of water storage and supply, solar energy and organic farming projects. Last year, Cadiz signed a wide-ranging “Green Compact” to promote environmental conservation and sustainable management practices. Further information can be obtained by visiting the Company’s website at http://cadizinc.wpengine.com.
This release contains forward-looking statements that are subject to significant risks and uncertainties, including statements related to the future operating and financial performance of the Company and the financing activities of the Company. Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Factors that could cause actual results or events to differ materially from those reflected in the Company’s forward-looking statements include the Company’s ability to maximize value for Cadiz land and water resources, the Company’s ability to obtain new financing as needed, and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.