What are the chances of pending litigation and existence of chromium 6 issues going away? And when would would that happen? And, finally, if this water project is derailed, what is the company worth?
Sentiment: Strong Sell
Thanks for the info and concerns. I can add that Cadiz water is 10-16 part per Billion. See website
If you look at the overall picture here, there is no question that water companies are going to do well over the next few years. Considering how high the bar to entrée is here, Cadiz is in a good spot. That explains why capital has been coming forth. If annual revenue falls into the 30-40 Million range at 50,000 acre-foot, what should the market cap be?
I went back and ran these numbers - if you think the stock is fairly valued around 7 (or cheap I guess), they are essentially receiving $5 mil net of stock value, but will have to repay 12.6 mil in three years, inclusive of the 8% div accrual - that's a 36% rate of compounding. Not sure where you get 12-13%.
Hey, glad to see the old gang's here!
I haven't tried to calculate the 12-13% number (how do you calculate that out of curiosity...seems low, if you think there is value to the equity) - anyway, the one caveat which you aren't mentioning is that the lender acquired the bulk of the debt at a discount (which I don't think has been publicly quantified) - so they may be thinking of it as a penny on the dollar speculation at this point, where they make a profit even on a partial recovery of debt -
I assume you get the $25 mil from the initial contract w SMWD - if you look at the language at the time that deal was announced, it was presented as a discounted rate because SMWD was going to be the lead customer with some associated costs. My guess is they would try to price additional deals closer to $750/acre foot, still below their original projection of a few years ago.
I take it you're considering a short here? I closed out mine awhile back when momentum seemed to be shifting up again - and I wouldn't be surprised to see a bounce if they conclude all the lawsuits successfully this year - that would leave the Federal right of way issue (does CDZI qualify for an exemption to Federal environmental review due to its use of railway tracks), and what is likely the more difficult hurdle of whether MWD will allow access without the implementation of a very expensive filtering system for Chromium 6 contaminants.
I was interested to see the debt sale with equity kicker - would be VERY curious to know what was presumably a vulture debt buyer paid for that debt - if its penny's on the dollar, it's another indication there isn't much here - if they actually paid substantive dollars, then maybe they see something - either some residual value, or a plausible chance project is approved with manageable economics. The recent drought clearly helps these guys, although my sense is that is more in the Northern part of the state (haven't spent much time looking into this)
Am I reading this correctly that the company is looking at $25 Million in annual revenue from selling 50,000 acre foot plus maintenance and capital recapture fees?
So $1.55/share revenue. Yes/no?
Of course you see it as the company having trouble raising funds, because it has been people like you on this board that have forever seen the company having some kind of trouble, being on the verge of bankruptcy, never again be able to access the capital markets, running out money, what have you. In a word, it is you who have been consistently blinded, not I. This company raised over $25mm of new capital last year at a blended rate of just over 8%, with no revenues to speak of on the strength of the its assets and the improving prospects of gaining approval for Stage i of the water project, with no interest or principal due until late 2015. Precisely what blinded naysayers like yourself insisted it would never be able to do. And as legal hurdles continue to fall, so will the company's cost of capital. Just as mortgage and non-recourse lending was available to the company in direct contradiction of predictions from so many posters on this board, so too will project finance be at mid-single digit interest rates in principal sizes that will once again make a mockery of your simpleminded analysis of this company.
Uh 12/13% is junk bond territory and clearly illustrates they are running out of easy money. To me it is an indicator that they are having a rough time raising fund. If you don't think 12/13% doesn't illustrate that then you are blinded by emotion for this stock or the company.
Yes. The entire package, $10mm of the 8% mortgage bonds due in 3 years done at par + the 700k shares done at nil equates to roughly 12/13% cost of capital for the company. Expensive money yes, but not the end of the world. When you add in that the bonds require no interest until maturity and the shares are restricted as you mentioned, it is less outrageous still, especially considering how crucial that capital raise was to the company. It how has no capital needs into the middle of next year, when it should be able to see clearly to first water. Your mock outrage is misplaced....
Um, OK so they are so hard up for cash that they got a $10 million increase on their line of credit and as a penance for that they issue 700,000 shares of restricted stock worth nearly $5 million at market value!?! Only a desperate organization would give $5 million in stock in exchange for a $10 million CREDIT line increase. #$%$??
Does this make sense to ANYONE?????
California announced Friday that a major source of water for areas throughout the state will halt all deliveries for 2014 until further notice, an unprecedented move indicating the ongoing and historic California drought is only getting worse.
The State Water Project, a system of reservoirs and water delivery systems helping supply Northern California, the San Francisco Bay area, the San Joaquin Valley, the Central Coast, and Southern California, had already been distributing water at historically low rates due to several successive years of drought conditions. Friday’s action by the state Department of Water Resources means the 25 million residents and 750,000 acres of farmland that receive water from the system will have to rely more heavily on other sources, including other reservoirs. Many key reservoirs in the state are at levels far below average. A measurement taken Thursday in the Sierra Nevada, a major supplier of water to the state when the snowpack melts each spring, found water content in the peaks is only about 12 percent of average for this time of year.
Earlier this month, Gov. Jerry Brown declared a drought emergency in the state and urged Californians to reduce their water consumption by 20 percent. Some rural areas in the state that rely on wells and reservoirs currently at low levels, are in danger of running out of water in two to four months, according to state officials.
The State Water Project, which halted 2014 deliveries on Friday, has never before reduced the allocation of its water to zero in its 54-year history.
Sentiment: Strong Buy