With the Trump administration likely to approve Cadiz Inc.’s long-sought desert water storage and transmission project, the company has arranged a capital infusion from private equity firm Apollo Global Management.

Apollo will provide up to $255 million in construction financing and $45 million to restructure debt, Cadiz said last week. The company signed agreements with several funds managed by Apollo affiliates that will provide an immediate injection of $60 million, including $45 million to refinance senior secured mortgage debt and $15 million for initial construction expenditures.

Apollo-affiliated funds have also conditionally committed $240 million in construction financing to complete the first phase of the Cadiz project, though in the announcement, the company warned investors that this commitment is highly conditional and not guaranteed to close.

Nonetheless, the financing package represents a significant milestone for Cadiz, the downtown water company that for the past 25 years has been trying to develop a water storage and sales project for an aquifer under its 45,000-acre holdings in the Cadiz Valley east of the Twentynine Palms Marine Corps Air Ground Combat Center in the Mojave Desert.

“Apollo is a leading sponsor of private project financing with a long track record of success,” said Cadiz Chief Executive Scott Slater in a statement.

Cadiz has signed agreements with six California water agencies to pump up to 50,000 acre-feet of water a year out of its aquifer and send the water via pipeline to the Colorado River Aqueduct and then on to 400,000 customers of those agencies. The plan received environmental approvals four years ago and survived numerous legal challenges from environmental groups, which argued pumping out groundwater would impact the desert ecosystem. The last of those challenges was exhausted last year when the state Supreme Court denied an appeal.

Environmental groups saw a new chance to challenge the project, however, when the federal Bureau of Land Management in October 2015 unexpectedly blocked Cadiz from receiving a ministerial approval for its pipeline, thus requiring another complete environmental review and several more years of waiting for a final bureau determination.

But within days of taking office, President Donald Trump’s administration placed the Cadiz project on its priority list of infrastructure projects. Then last month, the bureau rescinded its decision to block the project, clearing the way for final government approval.

That move spurred the construction finance agreement with Apollo.

“As active infrastructure investors, we believe innovative projects, like Cadiz, can solve many of the important issues facing municipalities today,” said Antoine Munfakh, a partner at Apollo, in a statement.

For reprint and licensing requests for this article, CLICK HERE.