Consolidated Water Files a Request for Arbitration with the International Centre for Settlement of Investment Disputes Seeking to Recover in excess of $50 Million from the Mexican Government Relating to the Company’s Cancelled Project in Rosarito, Mexico
February 09 2022 - 4:01PM
Consolidated Water Coöperatief, U.A. (“CW Coop”), the Dutch
subsidiary of Consolidated Water Co. Ltd. (NASDAQ Global Select
Market: CWCO), a leading developer and operator of advanced water
supply and treatment plants, has filed a Request for Arbitration
with the International Centre for Settlement of Investment Disputes
(“ICSID”) seeking to recover in excess of US$51 million plus
MXN$137 million from the Mexican Government (with the exact amount
to be quantified in the proceedings), plus fees, costs and pre- and
post-award interest, relating to CW Coop’s investment in a seawater
desalination project in Playas de Rosarito, Mexico.
The dispute concerns investments made by CW Coop and its Mexican
subsidiaries, N.S.C. Agua, S.A. de C.V. and Aguas de Rosarito,
S.A.P.I. de C.V. (“AdR”), in the development of a 100 million
gallon per day seawater desalination plant and accompanying
pipelines in Playas de Rosarito, Baja California, Mexico
(“Project”). The Project was designed to supply drinking water to a
region of Mexico that continues to face water shortages.
In August 2016, AdR executed a public-private partnership
agreement (“APP Contract”) with several Mexican state entities
including the State of Baja California, Mexico (“State Entities”)
for the development, financing, construction and operation of the
Project.
In June 2020, the State Entities terminated the APP Contract on
grounds disputed by CW Coop. In August 2020, AdR submitted a
request for the reimbursement of expenses and investments incurred
in connection with the Project, in accordance with the APP Contract
and Mexican law. AdR submitted proof of the Project investments and
expenses totaling approximately US$51 million plus MXN$137 million.
To date no reimbursement has been made to AdR.
“We invested almost $60 million in the Project over several
years, investments that were warranted given the State Entities’
decision to award us the APP Contract and the pressing water
shortage in Baja California, Mexico,” commented Rick McTaggart, CEO
of Consolidated Water Co. Ltd. and Director of CW Coop. “This
Project, when completed, would have secured a safe, drought-proof
water supply for the people of northwest Mexico for several
decades. However, the Project was terminated by the client in June
2020 on grounds that we believe are legally unsupported. Although
we are entitled to, at a minimum, reimbursement of our expenses and
investments, after more than 18 months we have not been paid.”
“We will continue to vigorously pursue all legal means to obtain
compensation for the benefit of our shareholders and believe that
referring this dispute to ICSID is the most effective way of doing
so,” concluded McTaggart.
CW Coop intends to pursue vigorously the relief sought in the
arbitration, in addition to pursuing all other legal remedies and
courses of action available under the operative contracts and
applicable law with respect to its rights, damages, fees and
expenses. The Company cannot provide any assurances that CW Coop
will be able to obtain the relief sought in the arbitration, and
will incur legal and other expenses related thereto that could be
material to the Company’s consolidated results of operations.
About Consolidated Water Co. Ltd.Consolidated
Water Co. Ltd. develops and operates advanced water supply and
treatment plants and water distribution systems. The company
operates water production facilities in the Cayman Islands, The
Bahamas and the British Virgin Islands and operates water treatment
facilities in the United States. The company also manufactures and
services a wide range of products and provides design, engineering,
management, operating and other services applicable to commercial
and municipal water production, supply and treatment, and
industrial water and wastewater treatment. For more information,
visit www.cwco.com.
Cautionary Note Regarding Forward-Looking
StatementsThis press release includes statements that may
constitute "forward-looking" statements, usually containing the
words "believe", "estimate", "project", "intend", "expect",
"should", "will" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include,
but are not limited to (i) continued acceptance of the company's
products and services in the marketplace; (ii) changes in its
relationships with the governments of the jurisdictions in which it
operates; (iii) the outcome of its negotiations with the Cayman
government regarding a new retail license agreement; (iv) the
collection of its delinquent accounts receivable in the Bahamas;
(v) the possible adverse impact of the COVID-19 virus on the
company’s business; and (vi) various other risks, as detailed in
the company's periodic report filings with the Securities and
Exchange Commission (“SEC”). For more information about risks and
uncertainties associated with the company’s business, please refer
to the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Risk Factors” sections of the
company’s SEC filings, including, but not limited to, its annual
report on Form 10-K and quarterly reports on Form 10-Q, copies of
which may be obtained by contacting the company’s Secretary at the
company’s executive offices or at the “Investors – SEC Filings”
page of the company’s website at http://ir.cwco.com/docs. Except as
otherwise required by law, the company undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or
otherwise.Company Contact:David W.
SasnettExecutive Vice President and CFOTel (954)
509-8200dsasnett@cwco.com
Investor Relations Contact:Ron Both or Justin
LumleyCMATel (949) 432-7566Email Contact
Media Contact:Tim RandallCMATel (949)
432-7572Email Contact
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