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<br />water was being suspeflded. 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 government 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ultimately withdrawn from parts of laterals, or parts of the canal in injurious fashion, The concerns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 interpretatipn 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.
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