Several days ago I wrote an article on Cadiz (NASDAQ:CDZI), a California-based land-holding company that just signed a letter of intent with the Golden State Water Company, California’s second largest publicly-traded water utility, plus four unnamed public municipal water agencies serving the San Bernardino, Los Angeles, Orange, and Ventura counties to develop its underground aquifer as a water-holding system to be piped into Southern California communities during times of severe drought. The 44 mile proposed pipeline project to connect the aquifer with the California aqueduct will come at a financial cost of $200 million and an as yet undetermined environmental cost.
Today, Los Angeles Times columnist Michael Hiltzik picked up on this story and expanded upon it in a column appearing in the Business Section. Entitled “This deal was all wet the last time” Hiltzik reveals that Cadiz CEO, British-born Keith Brackpool, had in 1983 plead guilty to criminal charges that included dealing in securities without a license.
Indeed, Brackpool’s motives have been under suspicion by many for a long time. Quoting from an article written nine years ago, “He’s a real operator,” said Steve Erie, history professor at UC San Diego who served with Brackpool on the [Governor's Commission on Building for the 21st Century]. “He’s shrewd, and I don’t mean that in a pejorative sense. He’s out there defending Cadiz’s interests at all times.”
We’ll see if this project goes anywhere. If, by some miracle, it does, Cadiz stands to profit by at least $500 million, assuming the estimates from a previous similar proposal are any guidelines. But the project faces major opposition from environmental groups as well as California Senator Dianne Feinstein as I mentioned in my previous article. If you’re itching to get in on a water play, I would stay away from Cadiz because in the end it could well be the shareholders who will be the ones getting soaked.