Business Context and Reporting Period
Company: Consolidated Water Co. Ltd.
Filing Type: Form 8-K (Current Report)
Date of Report: May 25, 2005
Event: Entry into a Material Definitive Agreement (Item 1.01).
Key Financial Metrics
This filing reports a specific corporate action rather than periodic financial performance. Consequently, revenue, profit, cash flow, margins, and liquidity metrics are not provided in this document.
- Loan Commitment: Up to U.S.$3.0 million.
- Interest Rate: 90-day LIBOR plus 3.5%.
- Repayment Date: June 1, 2007.
- Subordination: Loan is subordinated to Ocean Conversion's existing bank indebtedness of approximately $500,000.
Material Changes
The Company entered into a loan agreement with Ocean Conversion (BVI) Ltd. ("Ocean Conversion") to fund the design, construction, and commissioning of a 500,000 Imperial gallon per day seawater desalination plant at Bar Bay, Tortola, British Virgin Islands.
Ownership Context: Consolidated Water Co. Ltd. owns 100% of DesalCo Limited, which in turn owns 50% of the voting stock of Ocean Conversion and 50% of certain profit sharing rights.
Outlook, Risks, and Contingencies
Terms and Conditions:
- Interest is payable quarterly (April, July, October, January).
- Prepayment of principal and interest is permitted without penalty.
- Risk Factor: The new loan is subordinated to Ocean Conversion's existing bank debt of approximately $500,000, meaning the bank's claim on assets takes precedence over this loan.
Investor Verification Checklist
- Verify the current status of Ocean Conversion's existing $500,000 bank indebtedness and its impact on the subordination of the new $3.0 million loan.
- Confirm the progress of the 500,000 Imperial gallon per day desalination plant construction in Tortola.
- Review the Company's overall liquidity position to ensure it can support the potential $3.0 million drawdown.
- Examine the profit-sharing agreement details between DesalCo Limited and Ocean Conversion.