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Everglades restoration buyout deal may not close door on U.S. Sugar

Sun Sentinel – September 29, 2008

A “Going Out of Business” sign could be premature for U.S. Sugar Corp.

Even as the state negotiates a buyout of the sugar giant in the name of Everglades restoration, new U.S. Sugar ventures are being considered and vestiges of the company could remain long after the deal gets done.

Although that could protect jobs that Glades communities are worried about losing, it also raises questions about whether a deal that accommodates business plans also can benefit the Everglades.

The buyout deal calls for the South Florida Water Management District to pay $1.75 billion for U.S. Sugar’s 187,000 acres and all of the company’s assets, making way to restore flows of water from Lake Okeechobee to the Everglades.

The deal initially envisioned U.S. Sugar ending its operations within six years, but now opportunities for the company to stay in business include:

•The state leasing land back to U.S. Sugar to generate revenue and keep property in agricultural production until Everglades restoration work begins. Construction of reservoirs and treatment areas could take 20 years to complete.

•Carving about 11,000 acres out of the deal to allow rock mines previously planned on U.S. Sugar land.

•U.S. Sugar’s Clewiston mill teaming with an Illinois ethanol production company to produce biofuel.

Representatives for the Coskata ethanol company were in Tallahassee, Clewiston and West Palm Beach on Wednesday and Thursday to continue talks with the state, U.S. Sugar and other companies about building one or more plants in South Florida, said Wes Bolsen, Coskata’s chief marketing officer.

Ethanol production could provide a new direction for U.S. Sugar and help replace sugar-related jobs that Glades communities worry about losing in the state buyout.

“This is about local farmers growing the crop that we are going to turn into fuels,” Bolsen said of the potential for a $400 million plant that could produce 100 million gallons of ethanol a year.

After the proposed buyout was announced June 24, U.S. Sugar officials said they planned to sell all the land and everything from the multimillion-dollar sugar mill down to the company’s last wrench.

Since then, the water management district has suggested changing the boundaries of the area targeted for restoration — creating flexibility to possibly dodge land planned for rock mining, leave room for ethanol production and avoid land deals with the other sugar giant, Florida Crystals.

U.S. Sugar Senior Vice President Robert Coker would not comment on the specifics of the buyout negotiations, but said a key objective is to keep the company’s assets operating to protect jobs in Glades communities.

Coker wouldn’t say whether that means U.S. Sugar or another buyer would keep them running. He has said the ethanol proposal could turn into a new venture for the company, compatible with ongoing Everglades restoration.

Negotiating guidelines agreed to in June between the state and U.S. Sugar called for the company to keep operating for up to six years after approval of the buyout. Those nonbinding guidelines, however, allowed for extending the six-year period.

The water management district would not comment on the negotiations, said agency spokesman Gabe Margasak.

Florida Crystals expressed interest in acquiring the Clewiston mill from the state, but talks remain stalled while U.S. Sugar buyout negotiations continue, said Gaston Cantens, Florida Crystals’ vice president for corporate relations.

One of the determining factors in a deal for the U.S. Sugar mill and an ethanol facility will be how much cane production continues on U.S. Sugar land to supply the mill and provide leafy leftovers to convert to fuel, Cantens said.

“You still need sugar cane. You don’t just pull ethanol out of thin air,” Cantens said. Florida Crystals has talked with Coskata and other ethanol companies, he said.

The emerging buyout proposal doesn’t match the much-lauded vision announced by Gov. Charlie Crist in June to restore the missing link between Lake Okeechobee and the Everglades, said Miccosukee Tribe attorney Dexter Lehtinen. Instead of removing U.S. Sugar as a barrier to restoration, Lehtinen said the “politically motivated” land deal threatens to prove too costly and end up stalling previously planned Everglades restoration projects.

“The 187,000 acres is going to get cut down substantially,” said Lehtinen, who filed suit challenging the U.S. Sugar deal. “This is guaranteeing that sugar cane stays in the Everglades.”

The water district says leasing land back to U.S. Sugar or other users allows property to generate revenue and taxes while waiting for construction to begin.

The district and U.S. Sugar missed a deadline to produce a sales contract in September. Instead of closing by Nov. 30, closing the deal is now expected to be in 2009.

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