WaterVault America signs agreement to acquire HCIC Holdings

Two Rivers Water & Farming Company has signed a definitive agreement to sell its 94.7% interest in HCIC Holdings, a firm that holds water infrastructure assets, to WaterVault America.

HCIC Holdings owns 5,062 shares of the 132-year-old Huerfano-Cucharas Irrigation Company (HCIC), an irrigation company and owner of water infrastructure assets and infrastructure rights in Huerfano County, including the Cucharas Dam.

In 2016, the board of Two Rivers had voted to divest Dam Construction Rights to a separate firm Water Redevelopment, and in July 2019, the board voted in favour of selling the controlling interest of HCIC ownership to WaterVault.

The deal is slated to close by end of this month.

Located 13 miles northeast of Walsenburg, Colorado, the Cucharas Dam is on the Cucharas River. HCIC holds 22 miles of potential shoreline, water rights of 31,958 acre-feet decreed, 34,404 acre-feet conditional, and 41,200 acre-feet of storage rights.

As per the deal, WaterVault will pay $500,000 cash to Two Rivers. The deal includes issuance of a $1m line of credit, six million shares of common stock and $58.96m worth of preferred stock in WaterVault.

WaterVault will assume $10m debt from Two Rivers. It will also secure an estimated $400m financing for future Cucharas Dam construction obligations.

In January 2019, the structure of Cucharas Dam was razed by the Colorado State Office of Engineers due to insufficient capital required to comply with reconstruction.

Two Rivers CEO Greg Harrington said: “Since I joined Two Rivers just over six months ago, we have been evaluating strategic repositioning of assets and means of securing financing to rebuild the Cucharas Dam and the Orlando reservoirs in Huerfano County, along with the additional infrastructure to be able to maximise those assets and provide storage on both the Cucharas and Huerfano rivers.

“I feel that this transaction with WaterVault offers a strong solution to infrastructure needs, strengthens the overall financial condition of Two Rivers, and simultaneously gives our shareholders a level of continued participation in the Cucharas through WaterVault shares.”

WaterVault CEO Steve Polyakov said: “The CWP clearly states that Colorado must address projected gaps between future water needs and available water provisions from both the supply side and the demand side. We strongly feel that this agreement with Two Rivers will position our Company to potentially be a major player in helping Colorado reach their objective.”