UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

July 20, 2010
(Date of earliest event reported)

CONSOLIDATED WATER CO. LTD.
(Exact Name of Registrant as Specified in Charter)


 Cayman Islands, B.W.I.
 
  0-25248
 
   98-0619652
 (State or Other Jurisdiction of Incorporation)
 
(Commission File No.)
 
(IRS Employer Identification No.)

Regatta Office Park
Windward Three, 4 th Floor
West Bay Road, P.O. Box 1114
Grand Cayman, KY1-1102
Cayman Islands
(Address of Principal Executive Offices)

(345) 945-4277
(Registrant’s telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.        Entry into a Material Definitive Agreement.

Since July 11, 1990, Consolidated Water Co. Ltd. (the “Company”) has had the exclusive right to provide potable water to retail customers within a specified service area under a license issued by the Cayman Islands government.  The present service area is comprised of an area on Grand Cayman Island that includes the Seven Mile Beach resort area and the district of West Bay, two of the three most populated areas in the Cayman Islands.  For the year ended December 31, 2009, the Company generated approximately 40% of its consolidated revenues and 58% of its consolidated gross profits from the retail water operations conducted within the area covered by the license.

On July 20, 2010, the Company entered into a three-month extension of the license so that the Company could complete negotiating the terms of a new license with the Cayman Islands government. The license was set to expire on July 10, 2010.  No other terms of the license were modified.

During the course of the negotiations, representatives of the Cayman Islands government have indicated their intention to structure the terms of a new license to employ a “rate of return on invested capital water rate model”.  Depending upon the terms included in such new license, the Company’s water rates to customers could be reduced, thereby resulting in a corresponding reduction in the Company’s operating income as compared to operating income that the Company has historically generated under the license.

During the three-month extension of the license, the Company intends to continue negotiating a new license agreement with the Cayman Islands government.  As long as the Company is not in default of any terms of the existing license, even if a new license agreement is not concluded during the three-month extension, the Company would have a right of first refusal to renew the license on terms that are no less favorable than those that the government might offer in the future to a third party.

If the Company does not enter into a new license agreement at the conclusion of the three-month period or any agreed extension, and no other party is awarded a license, the Company expects to be permitted to continue to supply water to its service area.  However,  the terms of such continued supply may not be as favorable to the Company as the terms in the existing license.  It is possible that the government could offer a third party a license to service some or all of the Company’s present service area.  In such event, the Company may assume the license offered to the third party by exercising the Company’s right of first refusal.  The terms of the new license agreement may not be as favorable to the Company as the terms under which the Company is presently operating.
 
Item 9.01       Financial Statements and Exhibits.

(c)           Exhibits
 
Exhibit No.
Title
10
Amendment to License Agreement, dated July 20, 2010, between the Government of the Cayman Islands and Cayman Water Company Limited

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
CONSOLIDATED WATER CO. LTD.
 
       
       
 
By:
/s/ Frederick W. McTaggart  
  Name:  Frederick W. McTaggart  
  Title:    President & CEO


Date: July 22, 2010

EXHIBIT INDEX
                                 

Exhibit Description
   
10
Amendment to License Agreement, dated July 20, 2010, between the Government of the Cayman Islands and Cayman Water Company Limited
 
 
 
THE GOVERNMENT OF THE CAYMAN ISLANDS
 
 
An Amendment to a Licence dated 11 th July 1990
to Produce Potable Water from Seawater
granted to
Cayman Water Company Limited
on 20 th of      July                      2010
 
 
 
 
 
 
 
AMENDMENT TO A LICENCE DATED 11 JULY 1990 TO PRODUCE
POTABLE WATER FROM SEAWATER
 
granted to
 
CAYMAN WATER COMPANY LIMITED
 
by
 
THE GOVERNMENT OF THE CAYMAN ISLANDS
 
The Water (Production and Supply) Law 1979
 
(Law 15 of 1979)
 
THIS AMENDMENT to the Licence (as defined below) is made on the 20th of July 2010 by The Governor of the Cayman Islands (the "Governor") and Cayman Water Company Limited, a company duly incorporated under the laws of the Cayman Islands whose registered office is situated at Fourth Floor, Windward Three, Regatta Business Park, West Bay Road, PO Box 1114, Grand Cayman KY1-1102, Cayman Islands (the "Company").
 
WHEREAS
 
(1)  
On 11 July 1990 the Governor granted a licence, under Section 3 of the Water (Production and Supply) Law 1979, to the Company granting it the exclusive right within the Licence Area to process Seawater to Water for sale and to distribute and sell Water by means of pipes.
 
(2)  
The licence has been amended by four (4) amendments, dated 18 September 1990, 14 February 1991, 15 August 2001 and 1 February 2003 (the aforesaid licence, as so amended, being herein referred to as the "Licence").
 
(3)  
On 9 June 2008, the Company exercised its right to enter into negotiations for the extension of the Licence for a further period.
 
(4)  
The Term of the Licence ended on 10 July 2010 before the negotiations could be finalized.
 
NOW THIS DEED WITNESSES as follows:
 
1).
The term of the Licence, as defined by Clause 4 of the Licence, is hereby extended for an additional period from 10 July 2010 to the date upon which the Governor grants the Company a new licence, or 10 October 2010, whichever is earlier.
 
 
 
 
THE terms and definitions as contained in this Amendment and not otherwise defined shall have the same meanings as those contained within the Licence and the Licence shall hereafter be read and construed in accordance with the variations effected by this Amendment.
 
SAVE as varied by this Amendment, the Licence shall continue in full force and effect.
 
 
2
 
 
IN WITNESS WHEREOF the parties have caused this Amendment to be executed by their authorized officers.
 
The public seal of the Government of the Cayman Islands was affixed in the presence of
 
         
     /s/ Donavan Ebanks
     
     Donovan Ebanks, Acting Governor
   
 
 
 
   
 
 
         
Signed by the Water Authority in the presence of        
   
 By:
  /s/ Jonathan Piercy  
       CHAIRMAN  
         
         
     /s/ Thomas van Zanten  
By:
 /s/ Otto Watler  
     WITNESS      BOARD MEMBER  
         
         
Signed on behalf of Cayman Water Company        
Limited in the presence of  
By:
 /s/ Frederick W. McTaggart   
       DIRECTOR  
       Frederick W. McTaggart   
         
     /s/ Tracey Ebanks  
By:
 /s/ Clarence B. Flowers  
      WITNESS  Tracey Ebanks      DIRECTOR  
       Clarence B. Flowers