WSP11224

• File Number: 8149.100
• Description: Miscellaneous Small Projects and Project Studies - NRCS-Ft Lyon Canal Co Limestone Graveyard Creeks
• State: CO
• Basin: Arkansas
• Water Division: 2
• Date: 2/1/1994
• Author: Gronning Engineering
• Title: Ft Lyon Canal Company Water Transfer Alternatives Study Final Report
• Water Supply Pro - Doc Type: Report/Study

2-4

I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I

0'217

interest and failed. This attempt to sell may have set the stage for the 1991 offer by the Colorado
Water Supply Company.

In December 1991, Colorado Water Supply Companyi(CWS), submitted an offer to shareholders
of the Ft. Lyon Canal Company for the purchase o~ their shares. CWS is a sister company to
Colorado Interstate Gas Company and a subsidiary of Goastal Corporation of Houston, Texas, CWS
desired to purchase at least a control\ing Sl % intere~t in the company. The offer was a 43 page
contract accompanied by 118 pages of exhibits, including escrow instructions, easements, deeds and
assignments, covenants, proxies and lienholder's corJents. In February, 1992, CWS tendered 19
pages of modifications to the contract and exhibits. :

The deadline for shareholders acceptance was January 13, 1992; after the request of Colorado
Governor Roy Romer for additional time to consider the impacts of the proposal, the deadline was
extended to March 6,1992.. On March 13, 1992, CWS announced that this plan to acquire the water
was being suspended. CWS never announced what ~rcentage of the shares had been acquired;
however, the number was clearly less than the Sl % sought. The CWS plan was controversial,
spawning statewide press coverage, intervention by the Colorado Governor, legislative proposals,
local government task forces, and state administrative agency studies.3

The offer documents were difficult for the potential sfllers and their representatives to understand
and evaluate. The apparent purchase price was $22211 per share (Master Contract, 1991, Section 3)
with closing within 90 days (Section 28) of cotnple~ion of certain conditions (Section 26). In
summary, the conditions and requirements included: I

c.

A reliable yield of 1.1 acre feet after water court transfer and water treatment
processes
A water court decree without conditions that would delay the project or increase the
project costs I
Receipt of all necessary government rrmits, and
Completion of 90 percent of any reve~etation.

a.

b.

d.

,
(A more complete explanation of the conditions is included in Appendix 2.1):

Ft. Lyon shareholders voiced a number of concerns ~th the CWS contract. These included loss of
control of the management of the company, lack of eonsideration of well rights (dealt with in the
proposed contract amendment), long term encunlbrance of the shares during the contract,
I
:
3 Refer to newspaper articles: Denver Post, February 23, 19p2. c.1; Pueblo Cbieftain, February 27, 1992; Westword
15(26) 10; Arkansas VaDey lournal. Marcb 3, 1992; Colorado Springs Gazetle Telegrapb. February 24, 1992; Rocky
Mountain News, Marcb 14, 1992.