Geneva revealed in late December it was preparing to sell its rights to more than 46,500 acre-feet of water. At that time, company President Ken Johnsen declined to reveal the potential purchaser although the water district was rumored to be the buyer.

Christine Finlinson, government affairs director for Central Utah Water, said district trustees adopted a resolution authorizing purchase of the water rights late last month. An acre-foot is enough water to satisfy the needs of a family of four for a year.

The water district is a political subdivision of the state that provides water to some of Utah's fastest growing areas, namely Salt Lake and Utah counties, but also reaches into Juab and Wasatch counties and the Uintah Basin.

"We've made our offer and it now is in the hands of the bankruptcy court, which must give it approval," Finlinson said.

The water district, however, could end up paying less for the rights and receiving less water in return.

Denver's Summit Energy LLC, which is constructing a $330 million, 534-megawatt natural-gas fired power plant on the east side of Utah Lake for PacifiCorp, is in line to acquire rights to 6,524 acre-feet of water from Geneva. That would reduce the water rights available to Central Utah Water to approximately 40,000 acre-feet.

If Summit Energy closes on its planned purchase, the water district will pay only $73.8 million for the remaining water rights, according to documents filed with U.S. Bankruptcy Court for Utah.

Regardless, the sale should benefit all of Geneva's creditors, secured and unsecured alike.

Salt Lake City attorney J. Thomas Beckett, who represents the committee of Geneva's unsecured creditors, noted the company's secured creditors are owed approximately $130 million, while unsecured creditors are owed more than $50 million.

Geneva's secured debt needs to be paid first before unsecured creditors can expect a return.

Still, Beckett said, a water rights sale will raise a significant amount of cash that will help pay off secured creditors, which will help bring unsecured creditors closer to getting paid. "It is a positive development for everyone."

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.

Currently, three proposed reor- ganization/liquidation plans are on file with U.S. Bankruptcy Court for Utah.

steve@sltrib.com