Cadiz Farm Deal With Waleed Hits Snags

Cadiz Inc. said Wednesday that the proposed merger of its agricultural operations with those of a billionaire Saudi prince has run into regulatory snags and probably would not be completed before the end of next month.

The Santa Monica-based company initially said it expected the merger of its Sun World subsidiary with Kingdom Agricultural Development Co., or Kadco, to be completed by April 30. Kadco is owned by Saudi Prince Al Waleed ibn Talal ibn Abdulaziz al Saud, a member of the Saudi royal family and an active investor in U.S. communications and financial companies.

The closing is “going to slip a little” past the end of the second quarter, Cadiz Chairman and Chief Executive Keith Brackpool told investors in a conference call.

Kadco would invest as much as $80 million in Cadiz in a deal crucial to restructuring the company’s heavy debt load, although Cadiz executives said Wednesday that they were ready with an unspecified “Plan B” if the merger does not take place soon. At the end of last year, Cadiz reported $141.4million in debt, compared with shareholder equity of $17.7 million.

Cadiz is negotiating with the Metropolitan Water District of Southern California to build a $150-million water storage project in the Mojave Desert. The deal would require the heavily leveraged company to come up with as much as $75 million of additional financing.

Disclosure of the delay in the Sun World-Kadco merger came as Cadiz reported a net loss of $7.8million, or 22 cents a share, on revenue of $7.8 million for the first quarter ended March 31. That compares with a loss of $9.6 million, or 27 cents a share, on revenue of $7.4million in the same period a year earlier. The year-earlier figures exclude one-time items.

Typically, Cadiz’s revenue comes almost exclusively from Sun World’s harvesting and packaging of grapes and citrus produce.

Brackpool said the Sun World-Kadco merger has been delayed by regulatory issues in Egypt, where Kadco is helping the government develop an experimental agricultural zone fed by waters diverted from the Nile. Sun World is a subcontractor of Kadco in the program. The Egyptians apparently are balking at the transfer of some development concessions to the merged company, Brackpool said.