• Steve Brown

Business analyst says investors should avoid Cadiz and we agree

In a recent interview with investment website Seeking Alpha, business analyst James Duade offers blunt advice for investors on Cadiz (NASDAQ:CDZI). In the Seeking Alpha interview Duade notes:

  • Cadiz has not made a profit in the past decade, while within the same period it has ballooned out debt and share count

  • Over the past decade, annual revenues averaged around $400,000 while annual operating expenses were around $10-$15 million

  • SB 307 and other forms of roadblocks to the water mining project have put the company's main project's viability into question

  • Cadiz has $140 million in debt turning over in the next two years, including $70 million in convertibles that can be executed through March, 2020

Duade concludes that investors should "avoid Cadiz and consider a short sale opportunity."

His assessment mostly focuses on the company's debt, which Duade places in two categories: approximately $70 million in convertible debt that can be converted by March, 2020; and, approximately $70 million in senior secured debt owned by Apollo Global Management, which comes due in May, 2021. Duade notes if Cadiz was unable to pay off that debt, Apollo could take the collateral (real estate assets), and leave the company sans assets, effectively bankrupting it.

"The main problem for Cadiz is of course the timing of the debt maturity, which is a ticking time bomb for them," Duade explains. "If they can’t move the groundwater project forward in a meaningful way prior to the debt coming due, then it seems as if it would be game over for them."

But don't expect Cadiz to quit without a fight. Keep up on the latest Cadiz news here on Mojave Watch.

You can read the full Seeking Alpha interview with Duade HERE.

Learn more about James Duade HERE.

96 views0 comments

Recent Posts

See All