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<br />[ <br /> <br />"'-,:'r}.:" <br /> <br />water was bei~Gu7~ded. CWS never announced what percentage of the shares had been <br />acquired; however, the number was clearly less than the 51% sought. The CWS plan was <br />controversial, spawning statewide press coverage, intervention by the Colorado Governor, <br />legislative proposals, local goverttment task forces, and state administrative agency studies.2 <br /> <br />The offer documents were difficult for the potential sellers and their representatives to understand <br />and evaluate. The apparent purchase price was $2228 per share (Master Contract, 1991, Section <br />3) with closing within 90 days (Section 28) of completion of certain conditions (Section 26). In <br />summary, the conditions and requirements included: <br /> <br />a. A reliable yield of 1.1 acre feet after water court transfer and water treatment <br />processes <br />b. A water court decree without conditions that would delay the project or increase <br />the project costs <br />c. Receipt of all necessary government permits, and <br />d. Completion of 90 percent of any revegetation. <br /> <br />(A more complete explanation of the conditions is included in Appendix 2.1): <br /> <br />Ft. Lyon shareholders voiced a number of concerns with the CWS contract. These included loss <br />of control of the management of the company, lack of consideration of well rights (dealt with in <br />the proposed contract amendment), long term encumbrance of the shares during the contract, <br />uncertainties about revegetation, the numerous reasons CWS could escape from the contract, the <br />long time until final payment, and lack of protection for themselves and neighbors if water was <br />ultimately withdrawn from parts of laterals, or parts of the canal in injurious fashion. The concerns <br />were expressed at a Ft. Lyon special shareholders' meeting in February, 1992. <br /> <br />The $2228 per share may have been considered adequate by shareholders, absent the other <br />questions about the offer terms. However, assuming 8 to 9 years to complete the transfer and <br />establish revegetation, a net discount rate of 7 percent and an assumed "reliable yield" as stated <br />in the offer, rough computations place the net present value of the offer at about $500 to $1000 <br />per share, depending on interpretation of certain terms in the document offer. This estimate is not <br />to be considered authoritative due to the uncertainties in definitions contained in the CWS offer. <br /> <br />In March 1992, shareholders of approximately 28,600 shares formed a group to respond to the CWS <br />proposal called Fort Lyon Ownership of Water, Inc. (FLOW). The purpose of FLOW is <br /> <br />2 Refer to newspaper articles: Denver Post, February 23,1992, c-1; Pueblo Chieftain, February <br />27,1992; Westward 15(26) 10; Arkansas Valley Journal, March 3,1992; Colorado Springs Gazette <br />Telegraph, February 24, 1992; Rocky Mountain News, March 14, 1992_ <br /> <br />2-4 <br />