Cadiz Inc. said Thursday that its Sun World International agriculture subsidiary filed for bankruptcy protection, adding to the Santa Monica-based water company's list of troubles.
Sun World, a fruit and vegetable grower, said it has liabilities of $158 million and assets of $148 million. According to a copy of its Chapter 11 filing in U.S. Bankruptcy Court in Riverside, the company has debt of $115 million in notes due in April 2004 and interest payments of $13 million a year.
Sun World Chief Executive Timothy Shaheen said his company was hurt by the financial uncertainty surrounding Cadiz, which prevented the parent firm from providing its usual supplemental $10 million in funding to Sun World. The shortfall forced Sun World to seek more than its usual amount of seasonal funding, and bondholders balked, he said.
At the same time, he said, the company has secured $40 million of short-term financing to maintain farming operations through the produce-growing season.
Shaheen acknowledged that Sun World's bankruptcy filing throws into question Cadiz's ownership of the subsidiary -- and its only income. But he added that Cadiz owns 30,000 acres of California farmland along with some water rights. "We think we have two businesses that both stand on their own," he said.
The bankruptcy filing is the latest setback for Cadiz. Last fall, the Metropolitan Water District of Southern California rejected its plan to store excess MWD water on Cadiz property during wet years and deliver it to the agency when water supplies are low.
The company stood to gain up to $1 billion in revenue over the 50-year life of the project.
Through the first nine months of 2002, Cadiz reported losing $14.7 million on revenue totaling $95 million. Cadiz also owes $35 million to its own lender, ING Capital.
Shaheen, who also serves on Cadiz' board of directors, said that Cadiz had not yet secured a permanent extension on the $35-million loan that is due today. He said ING "is working very closely with the company" and has given Cadiz a series of 30-day extensions.
For Sun World, the filing is a return trip through the courts. The company was in bankruptcy when Cadiz bought it in 1996.
The company, with about 550 full-time employees, is based in Coachella and Bakersfield. It owns 12,000 acres under cultivation, the vines and trees in its fields, two packing plants and a collection of patents covering special breeds of fruit.