Downtown-based water infrastructure company Cadiz Inc. has agreed to acquire Hollister-based ATEC Systems Inc., a provider of groundwater filtration systems. Financial terms of the deal, announced on Oct. 25, were not disclosed.
Separately, on Nov. 10, Cadiz announced it had entered into an agreement for the direct placement of 5 million shares in the company — equivalent to about $10 million.
Cadiz’s main project has been the attempt to transfer water stored in an aquifer under land it owns in the middle of the Mojave Desert to water districts, primarily in Southern California. That project has been tied up in litigation, environmental and permit hurdles for the last quarter century.
The latest flashpoint is Cadiz’s attempt to use an abandoned natural gas pipeline it purchased to transport water from its aquifer to a point near the California Water Project aquifer just north of the Grapevine. Earlier this year, environmental groups filed a lawsuit against the plan to use the pipeline, claiming transferring water away from the aquifer will deplete it and harm nearby wildlife. Cadiz maintains that its project will not substantially deplete the aquifer; the company has prevailed in most previous rounds of litigation.
ATEC Systems, which was founded in 1982, pioneered technology to remove iron and manganese from contaminated groundwater in a cost-effective manner and then expanded its technology to remove other contaminants, such as arsenic and nitrates. The company has built more than 450 water filtration systems for cities, water districts, investor-owned utilities and small communities and businesses in 10 U.S. states, as well as Canada and Sri Lanka, with system treatment capacities of up to 60 million gallons per day.
Cadiz had been working with ATEC Systems since 2015, using the latter’s technology on a test basis to purify water pumped out of the Cadiz Valley aquifer.
The purchase of ATEC Systems gives Cadiz a new set of capabilities. Not only can Cadiz deploy ATEC’s technology for its own water holdings, but it also has a revenue stream from ATEC System’s existing client base and the future prospect of adding more third-party water customers. This can supplement Cadiz’s current meager revenue from small citrus-growing operations on its Cadiz Valley holdings.
“We are proud to combine our expertise with ATEC in delivering innovative and affordable water solutions, particularly for small, rural and low-income communities without the financial resources to access safe, reliable water supplies,” Susan Kennedy, Cadiz’s board chair, said in the acquisition announcement.
