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Investment group sweetens bid for U.S. Sugar

Sun Sentinel – December 2, 2008

An investment group competing with the state to buy sugar cane fields standing in the way of Everglades restoration sweetened its bid to U.S. Sugar Corp. over the weekend with a $27.5 million check.

The Lawrence Group, which manages farmland in the South and Midwest, in November emerged as a rival buyer for more than 180,000 acres the state intends to purchase and use to reconnect Lake Okeechobee to the Everglades.

On Saturday, The Lawrence Group submitted its formal proposal to U.S. Sugar and included the down payment on a $50 million deposit that U.S. Sugar could keep if it drops its proposed deal with the state.

However, U.S. Sugar contends that the latest proposal from The Lawrence Group still lacks specifics and so far fails to derail a deal with the state.

“They are trying to blow the deal with the [state] and it is unfortunate,” U.S. Sugar Senior Vice President Robert Coker said about the offer from The Lawrence Group, which had two previous bids to buyout U.S. Sugar rejected.

After five months of closed door negotiations, the state and U.S. Sugar last week agreed to a proposed contract that would pay the sugar giant $1.34 billion and allow the state to acquire land to build reservoirs and water treatment areas to restore water flows to the remaining Everglades.

The South Florida Water Management District, charged with buying the land for the state, has until Dec. 16 to approve the deal. The district’s board meets tomorrow to discuss the deal.

Unlike the state’s deal that would pay U.S. Sugar a lump sum that could be used to pay off company debts and then reimburse shareholders, The Lawrence Group proposes to buyout shareholders and then take on all the company’s debts and liabilities.

The Lawrence Group would pay $300 per share, for more than $500 million, and take on U.S. Sugar’s debts and other liabilities up to $600 million. The group proposes to close on the deal in early 2009.

The group maintains that it would sell the state land needed for Everglades restoration, but keep the rest of the property in agricultural production.

“There is no question that our formal offer and commitment to operate U.S. Sugar for years to come will save jobs and avoid the devastation of local Glades economies, home values and tax bases that would likely occur under U.S. Sugar management’s proposal,” Gaylon Lawrence, Jr. wrote in a statement the company released today.

The Nashville, Tenn.-based group had two previous offers for U.S. Sugar rejected and this time made its pitch directly to company stockholders.

Under the proposed deal with the state, U.S. Sugar would keep its sugar mill, citrus plant and other assets needed to stay in business. U.S. Sugar would lease its land back from the state for seven years, paying $50 per acre per year for the first six years. Beyond seven years, the company could pursue a new lease deal for land not needed for Everglades restoration.

The district plans to borrow most of the money to pay for the deal, with taxpayers in the 16-county region from Orlando to the Keys paying off the debt over 30 years.

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