PICO Holdings, Inc., has announced that its water rights and water storage subsidiary Vidler Water Company, Inc. has sold 29.7% of its interest in the Semitropic Water Banking and Exchange Program to The Newhall Land and Farming Company for approximately $3.3 million. The interest sold includes the right to store 55,000 acre-feet of water and 2,654 acre-feet of the water now stored for Vidler's account at Semitropic.
The transaction closed on May 21, 2001, and Vidler will recognize the resulting $1.6 million pre-tax gain in the second quarter of 2001.
John Hart, PICO's President and Chief Executive Officer, commented:
"The interest in Semitropic was Vidler's only asset in the state of California. Despite the need to develop an effective system to allocate and distribute water to end users, California remains a difficult marketplace for private water resource companies due to the large number of public entities involved in the water market, each with different, and sometimes conflicting, constituencies. Given the uncertainty regarding the amount of time that it could take for a more efficient system to develop, we decided to capitalize on the immediate demand for guaranteed dry year water recovery, which allowed us to meet our target rate of return today. We are in discussions to sell the remaining 70.3% of our interest in the Semitropic asset, and have received a large number of inquiries from developers, water agencies, industrial users, and others.
"The sale also enables Vidler to focus its resources on water rights and water storage assets in Nevada and Arizona, the two fastest-growing states in the nation, where the process for efficient allocation and distribution of water is more developed."