Cadiz Loss Narrows, but Funding Unclear
Cadiz Inc. said Thursday that it narrowed its third-quarter loss thanks to improved farming conditions but indicated that it has not yet reached final arrangements with all lenders over critical new financing.
The Santa Monica-based agricultural company said it would put off its quarterly earnings conference call with investors until after it completes “financing discussions” with certain lenders.
The restructuring of the company’s notes and loans became more pressing last month after the Metropolitan Water District of Southern California canceled a proposed $150-million joint project with Cadiz for a water storage program in the Mojave Desert.
Shortly after the MWD vote, company Chairman and Chief Executive Keith Brackpool said Cadiz had reached agreements to extend the Jan. 31 maturity date of its $35 million in bank loans by three years and the July 2004 redemption date of $12.5 million in preferred stock by two years.
A company official said Thursday that under the new terms the imputed annual interest rate on the bank debt would be significantly higher than the current charge.
The company also said the financing demands of its Sun World agricultural subsidiary would rise sharply next year. The company said Sun World would require $15 million over and above the $30 million available under a preexisting revolving credit line to cover expenses from April to June. It said it hopes to find the financing on “commercially reasonable terms” if it is able to reach unspecified new arrangements with holders of $115 million in Sun World notes.
For the third quarter ended Sept. 30, the company reported a net loss of $1 million, or 3 cents a share, on revenue of $64.3 million, compared with a net loss of $5.3 million, or 15 cents, on revenue of $48.7 million a year earlier.
Nearly all revenue came from produce farming, packing and licensing by Sun World, for which the third quarter customarily generates more than half of annual sales. The company attributed the improvement to better production conditions in the Central Valley as well as improved marketing of proprietary produce.
Cadiz shares fell 2 cents to close at $1.12 in Nasdaq trading Thursday.
The company was vague about the fate of its water program in the Mojave Desert in the wake of the MWD action. Cadiz said “several different scenarios to maximize the value of this water resource” are under “current evaluation.” The company declined to give further details.
Bulk sales of water from the Mojave tract could be difficult, however, as there is no efficient way currently to transport water to customers. For example, the nearest aqueduct, MWD’s Colorado River aqueduct, could be reached from Cadiz only via a $70-million pipeline, which the MWD -- the only entity that has federal permission to build it -- has canceled. Moreover, environmental and political issues still exist that could limit the amount of water Cadiz could extract from the site.
