Irrigation prospectus withdrawn

Tarras Water Ltd has withdrawn its second consecutive prospectus after failing to find a dry shareholder for its proposed $36.5 million Tarras irrigation scheme and may have to ''concede defeat''.

The company received a double setback this week when the Otago Regional Council decided against investing $3.5 million in the scheme. It had the option to take up 30% of the ''dry'' shares, covering properties which chose not to irrigate.

Because of the regional council's decision, the Central Otago District Council's support for the scheme also lapsed. It had agreed to guarantee a bank loan of up to 20% of the capital cost of the scheme, but only if the regional council invested.

The proposal was to draw water from the Clutha River to irrigate 5999ha of Tarras land. The scheme aimed to ease demand on the Lindis River. The regional council said the company had not met council-imposed conditions and the risk of not being able to on-sell the dry shares meant the investment was too risky.

Earlier this month, the company withdrew its first prospectus, after failing to meet its 70% threshold for ''wet'' shareholders. It issued another prospectus with a 65% threshold for wet shareholders. Yesterday was the closing date for the latest share offer but it withdrew the prospectus yesterday afternoon.

''Despite its best efforts, Tarras Water Ltd has been unable to secure interest from a party prepared to be a dry shareholder within the current prospectus time frame,'' a statement from the company's board said.

The company had signalled in the prospectus it needed support through a dry shareholder, applying for redeemable preference shares, ''to allow the proposed scheme to be built to optimise its potential''.

It had explored all the options in terms of dry shareholders, including considering seeking support from the Crown Irrigation Fund, but the fund would not be functional until next month, company secretary John Morrison said.

''Therefore, the TWL board wishes to advise that as at the closing date for the prospectus, no shares can be allotted as terms and conditions of this prospectus will not be met.''

Asked yesterday whether the board was ''conceding defeat'', Mr Morrison said: ''I guess we're conceding, on this particular scheme.''

The board would be meeting soon to ''take stock of where we're at'' and consider its options, he said.

The board's statement said ''mindful of its responsibilities to the Tarras district, the board will now consider its options, including any subscription cheques or deposits held by TWL being returned to their owner''.

Mr Morrison declined to elaborate on other options being considered by the board.


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