Denver financier Philip Anschutz, a veteran investor in energy, telecommunications and entertainment, is launching a foray into a more basic commodity: water.
Anschutz and other west Texas farm owners are negotiating to supply water to the city of El Paso in a deal that could be worth nearly $100 million a year.
Anschutz, in partnership with El Paso developer Woody Hunt and other landowners, agreed earlier this month to a 90-day exclusive negotiation period with El Paso Water Utilities. If a deal comes out of the negotiations, the water-rights owners could send 70,000 acre-feet of water to El Paso, enough to accommodate the city’s growth for decades. One acre-foot is about 326,000 gallons, representing the volume of water to cover 1 acre to a depth of 1 foot.
Anschutz has owned farmland near Dell City in Hudspeth County since 1977. The parcel is about 85 miles east of El Paso. The farm produces alfalfa, corn, chiles and wine grapes.
The deal would tap water from the Bone Spring-Victorio Peak aquifer. Anschutz spokesman Jim Monaghan said the proposed deal is structured so that water sales to El Paso would still leave enough water in the aquifer to supply farmers who choose not to participate in the venture.
“That area really isn’t prime farmland,” Monaghan said. “The higher and better use clearly is water.”
El Paso officials have estimated that the cost of acquiring, treating and shipping water from Dell City could reach about $1,400 an acre-foot, or a total of $98 million a year for 70,000 acre-feet.
The new water represents about 60 percent of El Paso’s current use. City officials said that the new source, combined with existing supplies, would serve the city for the next 100 years.
In a separate deal announced Monday, Anschutz’s investment company and Dresdner Kleinwort Wasserstein, the securities unit of Germany’s Allianz AG, will form a joint venture to provide so-called mezzanine debt to companies.
The new Luxembourg-based unit, dubbed Dresdner Anschutz Mezzinvestsarl, will draw on Dresdner Kleinwort Wasserstein’s debt-underwriting abilities and the Anschutz Investment Co.’s knowledge of principal investments, the companies said.
The joint venture aims to make $605 million in transactions in the first year. Mezzanine loans are a form of debt that ranks behind others in repayment in case of bankruptcy and typically gives lenders the right to take an equity stake in a company.
The loans are often part of a financing package used in leveraged buyouts.
Anschutz’s European projects have included redeveloping London’s Millennium Dome, the National Arena in Berlin, and purchasing of the Manchester (England) Evening News Arena, Europe’s largest indoor entertainment venue.
Anschutz, the 64-year-old founder of Qwest Communications International Inc. and the Regal Entertainment Group of movie theaters, was ranked the world’s 80th richest person by Forbes magazine last month, with a fortune totaling $5.2 billion.
Bloomberg News contributed to this report.
