<PAGE> 1
As filed with the Securities and Exchange Commission on January 10, 1997
Securities Act File No. 333-_____ Exchange Act File No. 0-18756
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
WESTERN WATER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 33-0085833
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4660 La Jolla Village Drive, Suite 825
San Diego, California 92122
(619) 535-9282
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Peter L. Jensen, President
Western Water Company
4660 La Jolla Village Drive, Suite 825
San Diego, California 92122
(619) 535-9282
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
Istvan Benko, Esq.
Troy & Gould Professional Corporation
1801 Century Park East, Suite 1600
Los Angeles, California 90067
(310) 553-4441
Approximate date of commencement of proposed sale to public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under he Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount To Be Offering Price Aggregate Offering Amount of
To Be Registered Registered Per Share(1) Price(1) Registration Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.001 par value........ 60,000 shares $13.5 $810,000 $245.45
==============================================================================================================
</TABLE>
(1)Estimated pursuant to Rule 457(c), solely for the purpose of calculating the
registration fee, based on the average of the high and low sale prices per
share of Common Stock, as reported on the Nasdaq National Market, on January
7, 1997.
--------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
SUBJECT TO COMPLETION, JANUARY ___, 1997
PROSPECTUS
WESTERN WATER COMPANY
_____ SHARES OF COMMON STOCK
This Prospectus relates to the offer by the securityholder named herein
("Selling Securityholder") for sale from time to time of up to ____ shares (the
"Shares") of common Stock, $.001 par value (the "Common Stock"), of Western
Water Company, a Delaware corporation (the "Company"). The Company will not
receive any proceeds from the sale of the Shares offered hereby.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"WWTR." The closing price of the Common Stock reported on the Nasdaq National
Market on January __, 1997 was $_____ per share.
The Selling Securityholder has advised the Company that it may sell,
directly or through brokers, all or a portion of the securities offered hereby
in negotiated transactions or in one or more transactions in the market at the
price prevailing at the time of sale. In connection with such sales, the Selling
Securityholder and any participating broker may be deemed to be "underwriters"
of the Common Stock within the meaning of the Securities Act of 1933, as
amended. It is anticipated that usual and customary brokerage fees will be paid
by the Selling Securityholder in all open market transactions. The Company will
pay all other expenses of this offering. See "Plan of Distribution."
The Company has informed the Selling Securityholder that the
anti-manipulation provisions of Rules 10b-6 and 10b-7 under the Securities
Exchange Act of 1934 may apply to its sales of the shares offered hereby. The
Company also has advised the Selling Securityholder of the requirement for
delivery of this Prospectus in connection with any sale of the shares offered
hereby.
--------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
PAGES 5 THROUGH 7 OF THE PROSPECTUS.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January __, 1997
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy or information statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the following regional
offices: Seven World Trade Center, New York, New York 10048, and Citicorp
Center, 500 W. Madison Street, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Additional information regarding the Company and the securities offered
hereby is contained in the Registration Statement of which this Prospectus is a
part, and the exhibits thereto, filed with the Commission under the Securities
Act of 1933, as amended (the "Securities Act"). For further information
pertaining to the Company and the securities offered hereby, reference is made
to the Registration Statement and the exhibits thereto, which may be inspected
without charge at, and copies thereof may be obtained at prescribed rates from,
the office of the Commission at Judiciary Plaza, 450 Fifth Street, Washington,
D.C. 20549. Statements contained herein concerning the provisions of any
document are not necessarily complete and in each instance reference is made to
the copy of the document filed as an exhibit or schedule to the Registration
Statement. Each such statement is qualified in its entirety by reference to the
copy of the applicable documents filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under the
Exchange Act are incorporated in this Prospectus by reference: (a) the Company's
Annual Report on Form 10-K for the year ended March 31, 1996; (b) the Company's
quarterly report on Form 10-Q for the quarter ended June 30, 1996, filed with
the Commission on August 14, 1996; (c) the Company's quarterly report on Form
10-Q for the quarter ended September 30, 1996, filed with the Commission on
November 14, 1996; (d) all other reports filed with the Commission pursuant to
Section 13 and 15(d) of the Exchange Act since November 14, 1996; and (e) the
description of the Common Stock set forth in the Company's Registration
Statement on Form 8-B under the Exchange Act, including any amendment or report
subsequently filed by the Company for the purpose of updating that description.
The file number of each of the foregoing documents is 0-18756.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference (other than
exhibits to such documents that are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to
Edward A. Beeman, Chief Financial Officer, Western Water Company, 4660 La Jolla
Village Drive, Suite 825, San Diego, California 92122. Telephone requests may be
directed to Mr. Beeman at (619) 535-9282.
2.
<PAGE> 4
THE COMPANY
Western Water Company (the "Company") is engaged in (i) a broad range of
activities related to the identification, acquisition, ownership, development,
transfer and sale of water and water rights primarily in the Western United
States and (ii) in the sale of real estate properties acquired in connection
with the Company's water supply business activities. The Company, directly and
indirectly, owns a diverse portfolio of water rights and real estate interests
in California, Colorado and Nevada. The Company's plan is to develop and package
its own water and water rights for sale to municipalities and other water users
and to provide a variety of water-related services to unaffiliated owners of
water rights. Such services include identifying, developing, marketing,
transporting, distributing and selling water or water rights that are owned by
the unaffiliated owners. In addition, the Company's plan is to resell the real
estate interests that it owns and occasionally acquires in connection with its
acquisition of water interests.
The principal California water interests owned by the Company consist of
(i) certain riparian and appropriative water rights, together with certain
groundwater rights, associated with approximately 9,055 acres of real property
(the "Yuba Property") located along the Yuba River in California, (ii) the water
rights associated with 2,236 acres of California rice farms and ranches, (iii)
interests owned in various California mutual water companies, and (iv) an
allowed annual pumping allocation comprising 300 acre feet of water in Los
Angeles County, California.
The principal Colorado water interests owned by the Company consist of the
water rights associated with an aggregate of 4,559 acres of undeveloped land and
certain other water rights in the Cherry Creek basin. The Cherry Creek basin is
the drainage area of Cherry Creek south of Denver, Colorado. The Cherry Creek
assets were acquired primarily for the purpose of developing, processing,
packaging and selling water and water rights in the Cherry Creek basin (the
"Cherry Creek Project"). The Company has filed a plan of augmentation with the
Colorado Water Court in order to obtain the right to sell packages of long-term,
reliable water resources. In February 1996, the Company entered into an
agreement in principle with United Infrastructure Company, a company owned by
Bechtel Enterprises, Inc. and Peter Kiewit & Sons, to establish a joint venture
company for the purpose of designing, constructing, operating and maintaining
the infrastructure that will facilitate delivery of Cherry Creek water to retail
as well as wholesale purchasers of the Company's water. The Company believes
that this arrangement with United Infrastructure Company will broaden the market
for the Company's water by enabling the Company to offer fully integrated water
services in Cherry Creek.
The Company's water interests in Nevada consists of its indirect 35.3%
interest in approximately 1.38 million acres of land and related water interests
located in the State of Nevada (the "Nevada Property"). As an owner of a 35.3%
interest in the Nevada Land and Resource Company LLC (the "Nevada LLC"), the
Delaware limited liability company that owns the Nevada Property, the Company
also owns an interest in the real estate and water interests owned by the Nevada
LLC. In addition to its indirect ownership of the foregoing water interests, the
Company also has been retained by the Nevada LLC to develop and market the
Nevada LLC's water interests.
On October 18, 1995, the Company contributed $12,000,000 to the capital of
the Nevada LLC and thereby acquired a 35.3% initial percentage interest in the
Nevada LLC. Accordingly, the Company will be entitled to a 35.3% interest in all
distributions made by the Nevada LLC, which percentage interest is subject to
future increase if and when the Nevada LLC has made aggregate distributions to
its members equal to 100% of all capital contributions plus certain specified
cumulative annual returns on investment. The other member of the Nevada LLC, a
joint venture comprised of The Morgan Stanley Real Estate Fund II, L.P. and two
affiliates of that real estate partnership, contributed $22,000,000 for its
64.7% percentage interest in the Nevada LLC. The Company and the Morgan Stanley
affiliated joint venture jointly manage the Nevada LLC. The Nevada LLC was
formed for the sole purpose of acquiring, financing, managing, developing,
leasing, selling and otherwise disposing of the real estate and water interests
that comprise the Nevada Property. In order to fund the foregoing capital
contribution, the Company in September 1995 issued and sold $15,000,000
principal amount of debentures. The purchase price paid by the LLC for the
Nevada Property was $44,743,000.
The principal real estate interests owned by the Company consist of (i)
2,170 acres of undeveloped land located in the Cherry Creek basin, Colorado,
(ii) a total of approximately 1,602 acres located in Northern California, and
(iii) the Company's interest in the approximately 1.38 million acres of Nevada
real estate owned by the Nevada
3.
<PAGE> 5
LLC. The real estate owned by the Company in California consists of four rice
farms and ranches (adjacent 455- acre and 744-acre farms, and 225-acre and
136-acre farms and ranches) and a total of 42 acres of the 9,055-acre Yuba
Property. The Company also owns certain mineral interests and other property
rights in a total of 3,018 acres located in California. The Company has sold or
exchanged 2,389 acres of the 4,559 acres it owned in the Cherry Creek basin and
currently is marketing approximately 1,900 additional acres of its Cherry Creek,
Colorado, real estate.
The Company is currently engaged by The Atchison, Topeka and Santa Fe
Railway Company and by Burlington Northern Railroad Company (collectively,
"Burlington Santa Fe") to act as Burlington Santa Fe's exclusive agent in
California, Arizona, New Mexico, Colorado, Washington and Montana in connection
with identifying, developing and marketing water assets owned by Burlington
Santa Fe, and to identify and assist in marketing Burlington Santa Fe's Texas
water rights, and to advise Burlington Santa Fe in connection with such matters.
The Company is also involved in the business of effecting water transfers.
The Company recently entered into its first agreements to transfer water from
Northern California to Southern California. In addition, in November 1996 the
Company entered into an agreement with J.P. Morgan Securities, Inc. pursuant to
which J.P. Morgan has agreed to serve as the Company's financial advisor and
agent for the creation of a special purpose financing entity. The purpose of the
entity, which has not yet been formed, will be to raise non-recourse debt
financing, the proceeds of which would be used to fund the acquisition costs of
water purchased by the Company pursuant to its water transfer activities.
On March 28, 1996, the Company issued a 100% stock dividend whereby the
Company issued one share of Common Stock for each share of Common Stock then
outstanding (the "Stock Dividend"). A 100% stock dividend effectively is the
equivalent of a 2-for-1 stock split. All share, per share and other information
contained in this Prospectus has been adjusted to reflect the 2-for-1 stock
adjustment.
The Company's principal executive office is located at 4660 La Jolla
Village Drive, Suite 825, San Diego, California 92122. Its telephone number is
(619) 535-9282. Unless the context requires otherwise, references to the
"Company" in this report include YG Procyon Corporation, its wholly-owned
subsidiary, and YG Rice Farms, L.P., a California limited partnership directly
and indirectly wholly owned and controlled by the Company. On September 18,
1992, the Company changed its name from "YG Development Company" to "Western
Water Company," and on March 23, 1994, the Company changed its state of
incorporation from California to Delaware.
4.
<PAGE> 6
RISK FACTORS
The securities offered hereby are speculative in nature, involve a high
degree of risk, and should not be purchased by any investor who cannot afford
the loss of his entire investment. Prior to making an investment decision with
respect to the securities offered hereby, prospective investors should carefully
consider, along with the other matters discussed in this Prospectus, the
following risk factors:
LIMITED HISTORY OF OPERATIONS IN PRINCIPAL BUSINESS. To date, the
Company's activities have primarily consisted of (i) acquiring its various water
rights and related assets, (ii) raising capital to fund both the cost of such
acquisitions and its working capital needs, and (iii) developing its water
rights. Although the Company operates in two business segments (water rights
activities and its real estate development and disposition activities), the
Company anticipates that a majority of its revenues in the future will be
derived from its water rights activities. However, the Company only generated
$974,000 and $207,000 of revenues from its water rights activities during the
fiscal years ended March 31, 1996 and March 31, 1995, respectively, and only
generated a total of $123,000 of revenues from its water rights activities
during the six-month period ended September 30, 1996. Accordingly, the Company
does not have an established record of water rights transactions. To date, the
Company's administrative and interest expenses have exceeded its on-going
revenues from its water and water rights development and disposition business,
and the majority of its operating revenues have been derived from the sale of
the Company's real estate assets. No assurance can be given that the Company
will continue to be able to profitably resell its remaining real estate holdings
in the future or that it will be able to successfully develop, package and sell
water rights.
UNCERTAINTY OF FUTURE REAL ESTATE REVENUES. During the past two fiscal
years, revenues from the disposition of real estate have constituted
approximately 80% and 92%, respectively, of the Company's total revenues.
Accordingly, until the Company completes its water development activities and
derives revenues from the sale or other disposition of its water resources, the
Company's ability to generate revenues will continue to be dependent primarily
on its ability to sell its real estate holdings. To date, the Company's real
estate sales efforts in Colorado have benefitted from a strong demand for real
estate in the Cherry Creek basin. No assurance can, however, be given that the
current market conditions in the Cherry Creek market will continue or that the
Company will be able to profitably resell its real estate assets in the future.
During the six-month period ended September 30, 1996, the Company consummated
only one sale of its Cherry Creek real estate holdings and, accordingly,
generated only a total of $150,000 of revenues from its real estate activities
during the six-month period. The Company's ability to sell its Colorado and
California real estate properties will also be dependent on general economic
conditions, on interest rates, and on the location and particular
characteristics of the properties offered for sale. The Company also has a
significant economic interest in the Nevada LLC and in that company's real
estate holdings. Revenues derived from the development and sales of the Nevada
Properties will, to a large extent, be dependent upon the ability of the Nevada
LLC to successfully develop, market and sell the Nevada LLC's real estate
holdings. To date, the Nevada LLC has not yet consummated a material sale of its
real estate holdings.
UNCERTAINTY OF FUTURE WATER REVENUES. The Company's business plan is
twofold: to engage in various water acquisition, transfer, development and sale
activities, and to develop and dispose of the real estate that it acquires in
connection with the acquisition of water rights. While the Company's current
operating revenues have been primarily derived from real estate sales, the
Company's long-term future profitability will be primarily dependent on (i) the
ability of the Nevada LLC to develop and sell water and water rights, (ii) the
Company's ability to sell significant quantities of water from the Yuba
Property, (iii) the Company's ability to develop and sell water or water rights
packages as part of the Cherry Creek Project, and (iv) the Company's ability to
successfully consummate water transfer transactions. The Company is currently
unable to accurately estimate the amount of developable water contained within
the Nevada Property. The Nevada LLC has not, to date, developed or sold any of
its water or water rights, and no assurance can be given that the Nevada LLC
will be able to develop or sell any water or water rights in the future. Until
May 1996, the Company's plan was to permit the Yuba County Water Agency to
integrate the Company's Yuba Property water into the Water Agency's conjunctive
use plans for developing and marketing water to third parties. The Company's
agreement with the Yuba County Water Agency regarding the joint development and
marketing of water expired in May 1996, and the Company has not yet finally
determined how it plans to commercially exploit its Yuba Property water rights.
The Colorado Water Court has rejected the Company's initial Cherry Creek plan of
augmentation based on objections that were filed with the court by the third
parties. Although the Company has since received the consent of all but one of
the objectors, no assurance can be given that the Colorado Water Court will
approve the Company's plan of augmentation in the near future, or ever. The
Company's ability to consummate any water transfers is dependent upon the
Company's ability to obtain all necessary regulatory and other approvals, and
no assurance can be given that the Company will be able to obtain all necessary
approvals.
5.
<PAGE> 7
Furthermore, while the Company believes that its agreement with United
Infrastructure Company will broaden the market for the Company's Cherry Creek
water, the Company has not yet sold a material amount of water or water rights
from its Cherry Creek Project, and no assurance can be given that the Company
will be able to profitably dispose of its Cherry Creek water rights in the
future.
YUBA PROPERTY TITLE ISSUES. It is possible that owners of adjoining land
or land located downstream from the Yuba Property could assert claims to the
groundwater adverse to the Company due to possible uncertainties as to the
source of water located on or under the Yuba Property and the complexities of
water laws. Although the Company believes that its claims would be held to be
superior to any claims by other property owners, no assurance can be given that
adverse claims, if asserted, would not be sustained.
ENVIRONMENTAL REGULATION AND RISK. Water leased or sold by the Company may
be subject to regulation as to quality by the United States Environmental
Protection Agency (the "EPA") acting pursuant to the Federal Safe Drinking Water
Act (the "US Act"). In California, the responsibility for enforcing the US Act
is delegated to the California Department of Health Services (the "Health
Department") and to the Resources Board acting pursuant to the California Safe
Drinking Water Act (the "Cal Act"). The US Act provides for the establishment of
uniform minimum national water quality standards, as well as governmental
authority to specify the type of treatment processes to be used for public
drinking water. Moreover, the EPA has an ongoing directive to issue regulations
under the US Act and to require disinfection of drinking water, specification of
maximum contaminant levels ("MCLS") and filtration of surface water supplies.
The Cal Act and the mandate of the Health Department are similar to the US Act
and the mandate of the EPA, and in many instances MCLS and other requirements of
the Health Department are more restrictive than those promulgated by the EPA.
Both the EPA and the Health Department have promulgated regulations and
other pronouncements which require various testing and sampling of water and
inspections by producers which set MCLS for numerous contaminants. Since the
Company does not intend to sell water directly to the consumers, these standards
only affect the water agencies that may buy or lease the Company's water. While
environmental regulations do not directly affect the Company, the regulations
regarding the quality of water distributed affects the Company's intended
customers and may, therefore, depending on the quality of the Company's water,
impact the price and terms upon which the Company may in future sell its water
or water rights.
Under various federal, state and local laws, regulations and ordinances
(collectively, "Environmental Laws"), an owner or operator of real estate
interests may be liable for the costs of cleaning up, as well as certain damages
resulting from, past or present spills, disposals or other releases of hazardous
or toxic substances or wastes on, in or from a property. Certain Environmental
Laws including the federal Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") and Resource Conservation and Recovery Act ("RCRA"),
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of hazardous or toxic substances or wastes at or
from the property. The presence of such substances or wastes, or the failure to
properly remediate any resulting contamination, also may adversely affect the
owner's or operator's ability to sell, lease, or operate its property or to
borrow using its property as collateral. Although the Company is not aware of
any such environmental contamination on any of its real estate holdings or on
any locations adjacent to its holdings, there can be no assurance that such
environmental contamination does not exist.
VOLATILE MARKET FOR COMMON STOCK. There has been significant volatility in
the market for the Company's Common Stock. Since April 1, 1995 (the beginning of
the fiscal year ended March 31, 1996), the daily closing sales prices of the
Common Stock have ranged from $10.125 to $23.25 per share. The trading price of
the Common Stock has fluctuated widely, and it may be subject to similar future
fluctuations in response to quarter-to-quarter variations in the Company's
operating results, Company announcements regarding acquisitions or dispositions
of properties, and variations in the stock market indices in general.
ANTI-TAKEOVER EFFECT OF CHARTER AND BYLAW PROVISIONS. The Company's
Certificate of Incorporation and Bylaws contain certain provisions that may
discourage attempts to acquire control of the Company that are not negotiated
with the Company's Board of Directors. These provisions may have the effect of
discouraging takeover attempts that some stockholders might deem to be in their
best interests, including takeover proposals in which stockholders might receive
a premium for their shares over the then current market price, as well as making
it more difficult for individual stockholders or a group of stockholders to
elect directors. The Board of Directors believes,
6.
<PAGE> 8
however, that these provisions are in the best interests of the Company and its
stockholders because such provisions may encourage potential acquirors to
negotiate directly with the Board of Directors which is in the best position to
act on behalf of all stockholders. The Certificate of Incorporation provides
that the affirmative vote of the holders of at least 66-2/3% of the total voting
power of all outstanding securities of the Company then entitled to vote
generally in the election of directors, voting together as a single class, is
required to amend certain provisions of the Certificate of Incorporation,
including among others, those provisions relating to the number, election and
term of directors; the removal of directors and the filling of vacancies; and
the supermajority voting requirements of the Certificate of Incorporation. These
voting requirements will have the effect of making more difficult any
amendments, even if a majority of the Company's stockholders believes that such
amendment would be in their best interest.
DIVIDENDS UNLIKELY. The Company has never paid cash dividends on its
Common Stock (other than the "Stock Dividend") and anticipates that for the
foreseeable future all earnings, if any, will be retained for operations and for
the development of the Company's assets and business. The Company's ability to
pay any dividends is dependent on its financial condition and on Delaware law.
Under Delaware law, a corporation is permitted to pay dividends only out of
surplus (including paid-in and earned surplus) or out of net profits for the
current and immediately preceding fiscal years. Although the Company currently
is permitted by Delaware law to make dividend payments, no assurance can be
given that the Company will in the future be permitted under Delaware law to pay
dividends.
DEPENDENCE ON KEY PERSONNEL. The success of the Company is largely
dependent upon the knowledge, efforts and active participation of Mr. Peter L.
Jensen, its President, and Messrs. John H. Huston and Eric R. Robbins, its Vice
Presidents. The Company's employment agreements with Messrs. Jensen, Huston and
Robbins expire in January, February and November, 1997, respectively. The loss
of the services of either Messrs. Jensen, Huston or Robbins could have a
material adverse effect on the Company.
AUTHORIZATION OF PREFERRED STOCK; PROVISIONS AFFECTING CHANGES IN CONTROL.
The Company's Certificate of Incorporation authorizes the issuance of "blank
check" preferred stock with such designation, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without stockholder approval, to issue a new series
of preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock. In the event of issuance, the new series
of preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company.
Although the Company has no present intention to issue any additional shares of
its preferred stock, there can be no assurance that the Company will not do so
in the future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Securityholder of any of the Shares offered hereby. The Company will pay
all of the costs of this offering.
7.
<PAGE> 9
SELLING SECURITYHOLDER
On July 25, 1996, the Company entered into that certain Agreement for Sale
of Water Rights and Option to Sell Water Rights (the "Agreement") with Golden
West Refining Company, a California corporation (the "Selling Securityholder").
Pursuant to the Agreement, the Company agreed from time to time to purchase from
the Selling Securityholder, and the Selling Securityholder agreed from time to
time to sell to the Company the rights to water located in the Central Water
Basin, Los Angeles County, California, for a purchase price of $3,200 per acre
foot. The Agreement grants the Selling Securityholder the option, but not the
obligation, to sell to the Company the water rights to up to a total of 1,078
acre feet per year of water. The option expires on September 27, 1997, although
the Selling Securityholder, in its discretion, may terminate the option at any
time during the last nine months of the option term. The Company has previously
purchased the rights to 100 acre feet of water. On December 6, 1996, the option
for the purchase of an additional 200 acre feet of water was exercised. The
purchase price paid by the Company for the 200 acre feet was paid in the Shares
included in this Prospectus. The purchase price for any future sales of water
under the Agreement will likewise be paid in shares of Common Stock. The amount
of shares to be issued to the Selling Securityholder was determined in
connection with the foregoing purchase, and in the event that the option is
exercised in the future by the Selling Securityholder will in the future be
determined, by the average last trading price of the Common Stock as reported by
The Nasdaq Stock Market during the 20 trading days immediately preceding the
closing date of each sale. The Agreement also contained registration rights
provisions that require the Company to register the shares of Common Stock to be
issued to the Selling Securityholder. The Shares have been registered pursuant
to such registration rights provisions.
The terms of the foregoing transaction were determined by arm's-length
negotiations between the Company and the Selling Securityholder. Neither the
Selling Securityholder nor its affiliates had or has any material relationship
with the Company or its officers, directors or affiliates except as described
above.
The following table sets forth as of the date of this Prospectus the
number and percent of shares of Common Stock owned by the Selling
Securityholder, the number of shares of Common Stock offered hereby by the
Selling Securityholder, and the number and percent of shares of Common Stock to
be held by the Selling Securityholder after the conclusion of this offering.
<TABLE>
<CAPTION>
Before Offering After Offering
---------------------- --------------------------
Number of Number of
Shares Number of Shares
Selling Beneficially Shares Beneficially
Securityholder Owned(1) Percent Being Offered Owned(1) Percent
-------------- ------------ ------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C>
Golden West Refining Company ________ *% ______ -0- 0%
</TABLE>
- --------------
* less than 1%.
(1) Pursuant to the rules promulgated under the Exchange Act, a person is
deemed to be the beneficial owner of a security if that person has the
right to acquire ownership of such security within 60 days. The Selling
Securityholder may, at any time prior to September 27, 1997, exercise its
option to sell to the Company rights to an additional 778 acre feet of
water at a price of $3,200 per acre foot. The purchase price to be paid
for such water rights is required to be paid in shares of Common Stock.
The number of shares to be issued upon any such future option exercise
will be based upon the then current trading price of the Common Stock.
Since the future trading price of the Common Stock is not currently known,
the Company is unable to determine the number of shares of Common Stock
that could be issued to the Selling Securityholder. Accordingly, the
amounts set forth in this table do not include any shares that could be
issued in the future under the Agreement.
8.
<PAGE> 10
PLAN OF DISTRIBUTION
The Selling Securityholder may sell, directly or through brokers, the
shares of Common Stock in negotiated transactions or in one or more transactions
in the market at the price prevailing at the time of sale. In connection with
such sales, the Selling Securityholder and any participating broker may be
deemed to be "underwriters" of the shares of Common Stock within the meaning of
the Securities Act, although the offering of these securities will not be
underwritten by a broker-dealer firm. Sales in the market may be made to
broker-dealers making a market in the Common Stock or other broker-dealers, and
such broker-dealers, upon their resale of such securities, may be deemed to be
"selling securityholders" in this offering. The NASD member firms who make a
market in the Company's Common Stock, as most recently reported to the Company
by The Nasdaq Stock Market, are Bear Stearns & Co.; L.H. Friend, Weinress &
Frankson, Inc.; Aegis Capital Corp.; Neuberger & Berman; Herzog, Heine, Geduld,
Inc.; Troster Singer Corp.; Mayer & Schweitzer, Inc.; Sherwood Securities Corp.;
Fahnestock & Co., Inc.; Everen Securities, Inc.; and Knight Securities L.P. The
Company will not receive any of the proceeds from the sale of the Shares by the
Selling Securityholder. Pursuant to the terms under which the Shares were sold,
the Company has agreed to indemnify the Selling Securityholder against such
liabilities as it may incur as a result of any untrue statement of a material
fact in the Registration Statement of which this Prospectus forms a part, or any
omission herein or therein to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they were
made, not misleading. Such indemnification includes liabilities that the Selling
Securityholder may incur under the Securities Act.
The Company will bear all costs and expenses of the registration under the
Securities Act and certain state securities laws of the Common Stock, other than
fees of counsel (if any) for the Selling Securityholder and any discounts or
commissions payable with respect to sales of such securities.
From time to time this Prospectus will be supplemented and amended as
required by the Securities Act. During any time when a supplement or amendment
is so required, the Selling Securityholder is required to cease sales until the
Prospectus has been supplemented or amended.
The Company has informed the Selling Securityholder that the
antimanipulation provisions of Rules 10b-6 and 10b-7 under the Securities
Exchange Act of 1934 may apply to its sales of the Shares and has furnished the
Selling Securityholder with a copy of these rules, as well as a copy of certain
interpretations thereof by the Commission. The Company also has advised the
Selling Securityholder of the requirement for delivery of this Prospectus in
connection with any sale of the Shares.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon by Troy
& Gould Professional Corporation, Los Angeles, California. Troy & Gould
Professional Corporation owns 43,686 shares of Common Stock.
EXPERTS
The audited consolidated financial statements contained in the Annual
Report on Form 10-K of Western Water Company for the year ended March 31, 1996
and incorporated in this Prospectus by reference, have been so incorporated in
reliance on the reports of Harlan & Boettger, independent public accountants,
given on the authority of said firm as experts in auditing and accounting.
9.
<PAGE> 11
No dealer, salesman or other person has been authorized to give any
information or make any representations, other than those contained in this
Prospectus, in connection with the offering hereby, and, if given or made, such
information and representations must not be relied upon as having been
authorized by the Company or the Selling Securityholder. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, any
securities to any person in any State or other jurisdiction in which such offer
or solicitation is unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company or the facts herein set
forth since the date hereof.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information....... 2
Incorporation of Certain
Documents by Reference.... 2
The Company................. 3
Risk Factors................ 5
Use of Proceeds.............. 7
Selling Securityholder....... 8
Plan of Distribution......... 9
Legal Matters................ 9
Experts...................... 9
</TABLE>
_______ Shares of Common Stock
WESTERN WATER COMPANY
_____________
PROSPECTUS
_____________
December ___,1996
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company estimates that expenses in connection with the distribution
described in this Registration Statement will be as follows. All expenses
incurred with respect to the distribution will be paid by the Company.
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 245.45
Accounting fees and expenses.................................. 1,000.00
Legal fees and expenses....................................... 3,000.00
Miscellaneous................................................. 754.55
---------
Total...................................................... $5,000.00
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Section 102(b)(7) of the General Corporation Law of the State
of Delaware (the "GCL"), the Certificate of Incorporation of the Company
eliminates the liability of the Company's directors to the Company or its
stockholders, except for liabilities related to breach of duty of loyalty,
actions not in good faith, and certain other liabilities.
The Certificate of Incorporation, and the Bylaws of the Company provide
for the indemnification of directors and officers to the fullest extent
permitted by the GCL.
Section 145 of the GCL authorizes indemnification when a person is made a
party to any proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation or was serving as a
director, officer, employee or agent of another enterprise, at the request of
the corporation, and if such person acted in good faith and in a manner
reasonably believed by him or her to be in, or not opposed to, the best
interests of the corporation. With respect to any criminal proceeding, such
person must have had no reasonable cause to believe that his or her conduct was
unlawful. If it is determined that the conduct of such person meets these
standards, he or she may be indemnified for expenses incurred and amounts paid
in such proceeding if actually and reasonably incurred by him or her in
connection therewith.
If such a proceeding is brought by or on behalf of the corporation (i.e.,
a derivative suit), such person may be indemnified against expenses actually and
reasonably incurred if he or she acted in good faith and in a manner reasonably
believed by him or her to be in, or not opposed to, the best interests of the
corporation. There can be no indemnification with respect to any manner as to
which such person is adjudged to be liable to the corporation; however, a court
may, even in such case, allow such indemnification to such person for such
expenses as the court deems proper. Where such person is successful in any such
proceeding, he or she is entitled to be indemnified against expenses actually
and reasonably incurred by him or her. In all other cases, indemnification is
made by the corporation upon determination by it that indemnification of such
person is proper because such person has met the applicable standard of conduct.
The registration rights agreement between the Company and the Selling
Securityholder provides that the Company shall indemnify the Selling
Securityholder, and the Selling Securityholder shall indemnify the Company and
the officers and directors of the Company, for certain liabilities, including
certain liabilities under the Securities Act.
(i)
<PAGE> 13
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
4.1 Form of Common Stock certificate.(1)
5.1 Opinion of Troy & Gould Professional Corporation.
23.1 Consent of Harlan & Boettger.
23.2 Consent of Troy & Gould Professional Corporation (contained in Exhibit 5.1).
99 Agreement for Sale of Water Rights and Option to Sell Water Rights, dated July 25,
1996, between the Company and Golden West.(2)
</TABLE>
- --------------
(1) Previously filed as Exhibit 4.1 to the Company's Form 10 filed on August 9,
1990, which exhibit is hereby incorporated herein by reference.
(2) Previously filed as Exhibit 99 to the Company's Registration Statement (File
No. 333-10367) on Form S-3 filed on August 16, 1996, which exhibit is hereby
incorporated herein by reference.
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(ii)
<PAGE> 14
(c) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
Registration Statement.
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that (i) and (ii) do not apply if the Registration Statement
is on Form S-3, and the information required to be included in a post-effective
amendment is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(iii)
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Diego, State of California, on January 9, 1997.
WESTERN WATER COMPANY
By /s/ PETER L. JENSEN
-----------------------------
Peter L. Jensen, President
POWER OF ATTORNEY
The officers and directors of Western Water Company, whose signatures
appear below, hereby constitute and appoint Peter L. Jensen and Edward A.
Beeman, and each of them, their true and lawful attorneys and agents, each with
power to act alone, to sign, execute and cause to be filed on behalf of the
undersigned any amendment or amendments, including post-effective amendments, to
this Registration Statement of Western Water Company on Form S-3. Each of the
undersigned does hereby ratify and confirm all that said attorneys and agents
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following person in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ PETER L. JENSEN Director, President and Chief January 9, 1997
- ---------------------------
Peter L. Jensen Executive Officer (Principal)
Executive Officer)
/s/ EDWARD A. BEEMAN Chief Financial Officer January 9, 1997
- ---------------------------
Edward A. Beeman (Principal Financial
and Accounting Officer)
/s/ JOHN H. HUSTON Director, Vice President January 9, 1997
- ---------------------------
John H. Huston
/s/ JAY B. ABRAMSON Director January 9, 1997
- ---------------------------
Jay B. Abramson
/s/ WILLIAM D. WATT Director January 9, 1997
- ---------------------------
William D. Watt
</TABLE>
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
No. Description Page
------- ----------- ------------
<S> <C> <C>
4.1 Form of Common Stock certificate.(1)
5.1 Opinion of Troy & Gould Professional Corporation.
23.1 Consent of Harlan & Boettger.
23.2 Consent of Troy & Gould Professional Corporation (contained in Exhibit 5.1).
99 Agreement for Sale of Water Rights and Option to Sell Water Rights, dated July 25,
1996, between the Company and Golden West.(2)
</TABLE>
- --------------
(1) Previously filed as Exhibit 4.1 to the Company's Form 10 filed on August 9,
1990, which exhibit is hereby incorporated herein by reference.
(2) Previously filed as Exhibit 99 to the Company's Registration Statement (File
No. 333-10367) on Form S-3 filed on August 16, 1996, which exhibit is hereby
incorporated herein by reference.
<PAGE> 1
January 9, 1997
Western Water Company
4660 La Jolla Village Drive
Suite 825
San Diego, California 92122
Gentlemen:
We have acted as counsel for Western Water Company (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a Registration
Statement on Form S-3, as amended (the "Registration Statement"). The
Registration Statement relates to the offer and sale by the selling
securityholder named therein (the "Selling Securityholder") of up to 60,000
shares (collectively, the "Shares") of Common Stock, $.001 par value, of the
Company.
In acting as counsel to the Company, we have examined originals or copies,
certified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary, and we are familiar with the
proceedings heretofore taken by the Company in connection with the authorization
issue and sale by the Company to the Selling Securityholder of the Shares. In
addition, we have examined such books and records of the Company as in our
judgment is necessary or appropriate to enable us to render the opinions
expressed below.
Based upon the foregoing, it is our opinion that the Shares, when sold by
the Selling Securityholder in the manner contemplated in the Prospectus made
part of the Registration Statement, will be legally and validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and the use of our name in the Registration Statement and Prospectus
of the Company made part of thereof. By giving you this opinion and consent, we
do not
<PAGE> 2
admit that we are experts with respect to any part of the Registration Statement
or Prospectus within the meaning of the term "expert" as used in Section 11 of
the Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder, nor do we admit that we are in the category of persons whose consent
is required under Section 7 of said Act.
Very truly yours,
/s/ TROY & GOULD
---------------------------
TROY & GOULD
Professional Corporation
EXHIBIT 5.1
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Western Water Company:
We consent to the use of our report incorporated herein by reference and to the
reference of our firm under the heading "Experts" in the Prospectus.
Harlan & Boettger
San Diego, California
January 9, 1997
EXHIBIT 23.1
