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LOS ANGELES - Cadiz Inc. (NASDAQ: NASDAQ:CDZI), a company specializing in California water solutions, has announced the sale of 7 million shares in a registered direct offering at $3.34 each, aiming to raise approximately $23.38 million in gross proceeds. The transaction, expected to close on Tuesday, involves the company's largest equity shareholder, Heerema International Group Services SA, maintaining a 34% ownership stake in Cadiz.
The funds from this offering are earmarked for the development of the company's water supply and groundwater banking project. Specifically, the proceeds will be utilized for acquiring equipment and materials for the construction of northern and southern pipeline projects slated to begin in 2025. Additionally, the funds may be allocated for wellfield infrastructure on Cadiz-owned land, business development, capital expenditures, working capital, business expansion, and potential acquisitions.
B. Riley Securities is serving as the sole placement agent for this offering. The shares were made available under a shelf registration statement filed with the Securities and Exchange Commission (SEC) on August 13, 2024, and declared effective on August 22, 2024. Relevant documentation, including a prospectus supplement and accompanying prospectus, will be accessible through the SEC's website.
Cadiz Inc., founded in 1983, is committed to providing sustainable water solutions in California. With extensive land holdings, water supply, pipeline infrastructure, and advanced water treatment technology, the company addresses the challenges posed by climate change to water accessibility.
This press release contains forward-looking statements regarding the offering's completion and the intended use of proceeds. These statements are subject to market conditions and customary closing conditions, and there can be no guarantee that the offering will be finalized as planned or at all. The information is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy the securities described.
In other recent news, Cadiz Inc. has made substantial strides in its operations. The company announced a partnership with an investment fund for a $150 million investment intended to support the Mojave Groundwater Bank project. The collaboration will result in the creation of a new entity, Newco, which will mobilize capital for the construction, ownership, and operation of the project. This development comes alongside Cadiz's partnership with RIC Energy to establish California's largest green hydrogen production site.
Further, Cadiz's subsidiary, ATEC Water Systems, secured three contracts valued at $1.6 million, set to serve nearly 100,000 people across California, Washington, and Oregon by 2025. Cadiz also reached near full capacity deals for its Northern Pipeline, with purchase commitments for 85% of the pipeline's capacity.
Analyst firm B.Riley maintained a Buy rating on Cadiz shares, emphasizing the company's potential for a significant positive shift if it successfully establishes a Master Limited Partnership. Recently, Cadiz appointed Cathryn Rivera as its new Chief Operating Officer, bringing her extensive experience in senior management to drive the execution of Cadiz's groundbreaking groundwater banking project. These are the latest developments in the recent activities of Cadiz Inc.
InvestingPro Insights
Cadiz Inc.'s recent share offering aligns with several key financial metrics and trends highlighted by InvestingPro. The company's market capitalization stands at $237.64 million, reflecting its position as a niche player in the water solutions industry. This capital raise comes at a time when Cadiz is experiencing significant momentum, with InvestingPro data showing a strong 49.57% price return over the last six months.
The decision to raise funds through a share offering is particularly relevant given two InvestingPro Tips: Cadiz "suffers from weak gross profit margins" and is "not profitable over the last twelve months." These factors likely contribute to the company's need for additional capital to fund its ambitious water infrastructure projects.
Despite these challenges, InvestingPro Tips also indicate that "analysts anticipate sales growth in the current year," which could be bolstered by the planned pipeline projects and infrastructure developments outlined in the company's use of proceeds. Additionally, the tip that "liquid assets exceed short term obligations" suggests that Cadiz maintains a degree of financial flexibility, which may be further enhanced by this capital raise.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Cadiz Inc., providing a deeper understanding of the company's financial position and market performance.
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