Geneva selling water rights; creditors to benefit
Vineyard's Geneva Steel is preparing to sell its rights to about 48,500 acre feet of water - a move that should help satisfy the bankrupt company's creditors.
Geneva President Ken Johnsen said the sale will take place in two transactions.
One transaction is a "pure water rights sale" worth approximately $74 million. The other sale is part of the $19 million transfer of company real estate, water rights and emission credits to Denver's Summit Energy, which is building a $330 million natural gas-fired power plant on 62 acres of the former mill site on the eastern shore of Utah Lake.
Geneva hopes to finalize the transaction by late January. "Then we will need to get permission from the U.S. Bankruptcy Court and the Utah Division of Water Rights, which could take a couple more months."
Johnson declined to reveal the purchaser of the bulk of Geneva's water rights, although it is believed to be the Central Utah Water Conservancy District, a political subdivision of the state. It wholesales water to a number of Utah cities.
Christine Finlinson, water district spokeswoman, declined to confirm the purchase, saying the district discusses no transaction before it is completed.
The pending water rights sale, along with $40 million Geneva now has in the bank, will nearly satisfy the claims of the company's secured creditors, who are owed approximately $128 million.
Geneva's unsecured creditors, who are owed an estimated $60 million to $80 million, now must look primarily to the future sale of the company's remaining real estate to satisfy their claims.
Salt Lake City attorney J. Thomas Beckett, who represents the committee of Geneva's unsecured creditors, said it hopes to hire a financial adviser to help evaluate the land and assist in determining how the return to unsecured creditors can be maximized.
Several proposals exist for the former mill site.
Geneva Steel's board of directors earlier this year filed a Chapter 11 liquidation plan that calls for demolition of the World War II-era mill to make way for a mixed-use residential, retail and light manufacturing development.
Geneva filed for Chapter 11 in 1999, only to emerge from that filing to again seek bankruptcy court reorganization two years later. After failing to raise capital to emerge from Chapter 11 as a going concern, Geneva's managers began selling off the mill's assets.