Cadiz Inc. (NASDAQ: CDZI) (“Cadiz”, “the Company”) is pleased to announce that it has entered into an agreement with its senior lenders (“the Lenders”) to refinance the Company’s existing $66 million corporate term debt that is currently due June 29, 2013. The agreement establishes two separate debt instruments, a $30 million senior secured mortgage loan due in three years and a new $53.5 million convertible bond due in five years. No principal or interest payments are required under either instrument during the term until maturity. The new debt instruments will replace all existing term debt on the Company’s balance sheet and provide $17.5 million in new working capital to fund the Company’s current operations, including pre-construction activities related to the Cadiz Valley Water Conservation, Recovery and Storage Project (the “Water Project”).
The major components of the refinancing include:
- A $30 million senior term loan secured by the underlying assets of the Company, including our landholdings and infrastructure (“Senior Secured Debt”). This instrument, which will be held entirely by our existing Lenders, will accrue interest at 8% and require no principal or interest payments before maturity in March 2016. Prepayment would be mandatory following any asset sale or voluntary at the Company’s option, subject to a premium. The Senior Secured Debt will have a senior position to any other Company debt instrument.
- A $53.5 million convertible bond held by our existing Lenders and new investors (“Convertible Bond(s)”). The Bond will be convertible at any time into the Company’s common stock at a price of $8.05 per share. Interest will accrue at 7%, with no principal or interest payments required before maturity in March 2018. This instrument will have a junior position to the Senior Secured Debt.
- Approximately $17.5 million in new working capital provided as part of the Convertible Bond issuance to fund Company operations.
The Company is currently engaged in important pre-construction planning activities for the Water Project, including resolution of outstanding administrative CEQA litigation, the finalization of water supply purchase agreements with all Project participants, and final facility engineering and design, which will include a technical agreement with the Metropolitan Water District related to the exchange of Cadiz water. The Water Project’s environmental review was successfully completed in 2012 with the Project receiving a certified Final Environmental Impact Report (“Final EIR”) concluding that operations would not cause any significant adverse environmental impacts. The Project also obtained key approvals of its 50-year groundwater extraction plan and the first purchase agreement for project water supplies.