Six weeks and counting. That’s how much time Poseidon officials have to clear a laundry list of approvals, then persuade Wall Street investors to buy $530 million in bonds to construct their 50 million gallon a day seawater desalination plant.
Senior vice president Peter MacLaggan said company personnel and southern California water officials alike are “working day and night to get to the finish line…everybody’s making a tremendous effort.”
Between late April and June 22 all were pushing to complete the following:
? Nine separate local water districts must approve revised 30 year contracts with Poseidon to buy the water. There has been haggling over water delivery, percent of profits allowed, and a few other issues. But MacLaggan said nearly all of the agreements were “dropping into place like clockwork.” Several district managers agreed.
? Metropolitan Water District’s top brass needs to sign an agreement guaranteeing up to $350 million in subsidies from its ratepayers. The giant water wholesaler’s board approved the subsidy last November.
General manager Jeffrey Kightlinger said there was no particular reason it hadn’t been signed, and he would do it soon.
? Poseidon is seeking a second investment grade rating in addition to the BBB- it garnered from the Standard & Poor’s rating agency.
? On May 25, the California Infrastructure and Economic Development Bank (I-Bank) must vote to issue $530 million in tax-exempt private activity bonds for the project. A few days before the vote, documents outlining the project’s costs, design and other information will finally be made public.
? Perhaps most contentious, San Diego County Water Authority’s 30 plus water district members must approve several measures. Those include agreeing to take over the $350 million Met subsidy if necessary and paying as much as $28 million more in subsidies that will benefit Poseidon and just nine of the districts.
The votes could come at the agency’s May 27 meeting, two days after the critical I-Bank bond vote to approve issuance of $530 million in so-called private activity bonds for construction. Paula Conners, I-Bank’s bond finance unit manager, said if they had assurances that the county was likely to approve the subsidies, the I-Bank would probably move forward. “Otherwise, it’s a toss-up,” she said.
If the bonds are approved, then “there are a lot of documents to be signed and executed,” said Conners. Barclays, Poseidon’s underwriter, would head to Wall Street seeking buyers. Once the bonds are issued and sold, the proceeds are transferred to a trustee – in this case Union Bank, which would dole the funds out to Poseidon.
? June 22-The approval to seek tax-exempt bonds granted by the obscure California Debt Allocation Committee expires. “The bonds have to be issued by that date,” said Conners. “They have to close the deal.”
If they can’t? Poseidon already missed the deadline once and won a three-month extension.
“I suppose we have to go back and ask them for another extension,” said MacLaggan.