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Terms of U.S. Sugar deal up for vote

By Craig Pittman, Time staff writer
In print: Wednesday, November 26, 2008

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Negotiators have finally agreed to the terms of a state buyout of U.S. Sugar, state officials announced Tuesday.

Now the decision whether to sign the $1.34-billion contract rests with the company's board and the state agency in charge of Everglades restoration, both of which are scheduled to make a decision within two weeks — or else.

"The vote is yay or nay —there's no sending it back," said Eric Buermann, chairman of the South Florida Water Management District, the agency buying the land.

However, he said he hopes that if the contract fails to pass by the Dec. 16 deadline in the contract, there will be a chance to renegotiate.

Sugar executives, in a statement, said they "look forward to being in successful partnership" with the state. But a Tennessee company that is vying with the state for the sugar land, the Lawrence Group, said it will continue pursuing its own buyout plans.

"We believe our offer provides shareholders with much more value than they would ultimately receive by selling all of the land to the state, while at the same time, preserving critical jobs in communities surrounding Lake Okeechobee," the Lawrence Group's spokesman, Todd Templin, said in a written statement.

The 60-page contract calls for the water district to pay U.S. Sugar $1.34-billion at closing and, in exchange, get title to more than 180,000 acres of land — but not the company's mill, railroad, buildings or other facilities, which were originally supposed to be part of the buyout.

The water district will borrow the money and pay off the debt with money from a special property tax that applies only in its South Florida region.

In return, U.S. Sugar will lease that land back at $50 an acre and continue farming it until the state needs it for restoring the flow of water from Lake Okeechobee south to Everglades National Park. The lease is for seven years but could be renewed.

At this point, no one knows how much land the state might need for its $10-billion Everglades project, but state Department of Environmental Protection Secretary Mike Sole promised, "A significant amount of the acreage will be used for restoration."

The lease-back is expected to bring in more than $50-million in revenue for the state and save it another $40-million in costs to hire someone else to manage the property, Sole said. U.S. Sugar has agreed to pay more than $21-million to clean up any pollution left behind on its property.

Sole defended the price tag of $1.34-billion for the sugar land. An opinion from the water district's New York financial adviser, Dunn & Phelps, said the land alone would be worth just $930-million, but Sole pointed out that subsequent appraisals put the value of the land at the price in the contract.