Pure Cycle Corporation Announces Sale Date for HP Collateral & Farm and Frack Water Sales
DENVER, Sept. 18, 2012 (GLOBE NEWSWIRE) -- Pure Cycle Corporation (Nasdaq:PCYO) announces date for sale of HP Collateral Interests and Revenues from Farm Operations and Frack Water Sales.
High Plains Default
High Plains A&M, LLC ("HP A&M") has failed to make balloon payments due on certain promissory notes secured by deeds of trust on properties we acquired pursuant to the Arkansas River Agreement. HP A&M pledged 1,500,000 unregistered shares of Pure Cycle common stock owned by HP A&M as security for the payment and performance of HP A&M's obligations on those notes and deeds of trust. On September 27, 2012, the Company intends to sell the pledged shares to the highest qualified bidder in a foreclosure sale conducted by Wm Smith & Co. in accordance with Article 9 of the Colorado Uniform Commercial Code This notice does not constitute an offer of any securities for sale. Any bidder will be required to meet certain qualifications in order to participate, including pre-qualifying as an accredited investor. Interested parties may contact Bill Smith at (303) 831-9696 for more information.
Pursuant to HP A&M's default, Pure Cycle has entered into contracts to sell a portion of its farm holdings in southeast Colorado and is working with HP A&M note holders to enter into agreements to purchase HP A&M's defaulted notes. The Company intends to foreclose on HP A&M's notes and seek remedies from HP A&M under the Asset Purchase Agreement.
"While it is unfortunate that HP A&M defaulted on their obligations, we had provided for such a contingency under our Asset Purchase Agreement and will pursue our default remedies and seek damages against HP A&M," said Pure Cycle CEO Mark Harding.
Farm Operations and Frack Water Sales
Additionally, Mr. Harding noted that the Company has terminated its Farm Management Agreement with HP A&M and has begun collecting farm income from leasing its farms to tenant farmers. Farm income is projected to generate approximately $1,000,000 annually of which approximately 50% remains outstanding for 2012.
The Company has also entered into an agreement to sell water for fracking new oil and gas wells in the Niobrara formation in Arapahoe County. Colorado's Niobrara oil and gas boom has been made possible through the use of horizontal well drilling and hydrologic fracturing which consume significant amounts of water. The Company has been using its extensive water holdings in Arapahoe County to deliver water to frack these new wells. In addition, the Company owns oil and gas rights to approximately 640 acres at its Sky Ranch property which it leased to Anadarko in March of 2011. "In recent weeks the Company has been working with representatives from Anadarko to identify drilling sites and access to such sites," commented Mr. Harding.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Forward-looking statements are all statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, such as statements regarding the planned foreclosure sale of the HP A&M pledged shares, the rights and remedies we intend to pursue against HP A&M, the quantity of farms which could be sold to retire the HP A&M defaulted indebtedness, and projected farm income. The words "anticipate," "likely," "may," "should," "could," "will," "believe," "estimate," "expect," "plan," "intend" and similar expressions are intended to identify forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ from projected results include, without limitation: the price offered for the pledged shares in the foreclosure sale, the interest of note holders in negotiating note purchase agreements with us, our ability to locate willing purchasers for our farms, the level of production obtained from Niobrara wells, the capital resources of oil and gas companies to purchase our water and to complete wells; the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K; and those factors discussed from time to time in our press releases, public statements and documents filed or furnished with the U.S. Securities and Exchange Commission. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated or intended. Except as required by law, we disclaim any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Company Information
Pure Cycle owns water rights, storage rights and land and mineral interests in several river basins in the State of Colorado. Pure Cycle provides water and wastewater services, including the design, construction, operation and maintenance of water and wastewater systems, to wholesale customers, which are local governmental entities who provide water and wastewater services to their end-use customers located in the greater Denver metropolitan area.
Additional information including our recent press releases and Annual Reports are available at www.purecyclewater.com, or you may contact our President, Mark W. Harding, at 303-292-3456 or at info@purecyclewater.com.
CONTACT: Pure Cycle Corporation
President, Mark W. Harding
303-292-3456
info@purecyclewater.com
Released September 18, 2012