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Second suitor woos U.S. Sugar

A Nashville company is trying to buy out U.S. Sugar before the state can get its hands on the land, but for far less than what Gov. Charlie Crist is willing to pay.

The Lawrence Group says it would be happy to sell the state whatever land it needs for restoring the Everglades — and meanwhile keep on operating U.S. Sugar for years to come.

The offer threw a new wrinkle into negotiations for the state's buyout of the nation's largest sugar company, a process that has already had more twists than a pretzel.

The Lawrence Group, which ranks among the country's largest owners of farmland, announced Thursday that it wants to buy U.S. Sugar by offering shareholders a bid of $300 per share — cash.

That translates to about $588-million, far less than the $1.34-billion that Crist announced last week that the state is prepared to pay for 181,000 acres of sugar land to use for Everglades restoration.

But in its appeal to the shareholders, the Lawrence Group contended its offer was better than the state's because it's in cash and it's immediate. The state buyout wouldn't happen for at least seven years and could be deferred longer.

Shareholders could put that $300 per share into investment-grade corporate bonds, the company contended, and it would yield more than $500 per share seven years from now. The state's offer would equal only $365 a share by 2016, the company said.

Although the Lawrence Group did not say just how much land it would resell to the state for the Everglades, a letter to state officials said, "Our offer contemplates selling you the land needed to accomplish this worthy undertaking at a huge savings to the taxpayers when compared to the current U.S. Sugar proposal."

In a carefully worded statement, U.S. Sugar vice president Bob Coker said that, technically, the Lawrence Group hasn't put an actual offer on the table, but simply expressed interest in buying the company. The sugar company's board will now "request the Lawrence Group to provide specific details to enable it to evaluate the proposal," he said.

State officials were being equally circumspect, even though they have known for a month that the Lawrence Group was interested in beating them at their own game.

The South Florida Water Management District, the state agency in charge of the buyout, met a month ago with Lawrence Group representatives, according to spokesman Gabe Margasak, but the state agency is "not involved in any discussions between U.S. Sugar and the Lawrence Group."

Sugar farming south of Lake Okeechobee has long been considered a major obstacle to the $10-billion plan for restoring the Everglades. Restoring the long-lost link between the lake and Everglades National Park seemed impossible as long as sugar cane grew there.

Then environmental groups sued to challenge the sugar companies' practice of back-pumping farm runoff containing phosphorus, pesticides and other chemicals into the lake. After a judge ruled for the environmental groups, the water district board voted in August 2007 to end the practice.

U.S. Sugar dispatched lobbyists to ask Crist for help. Instead, he proposed the state buy all the company's assets: 187,000 acres of land, plus its sugar mill, citrus operation and railroad.

When he announced the proposed buyout in June, Crist won raves from environmental groups. But his proposal ran into a wall of criticism from lawmakers concerned about the loss of jobs for the sugar company's 1,700 employees. Meanwhile, the Wall Street meltdown put the squeeze on the state's ability to borrow the $1.75-billion that had been set as the top amount the state would pay.

So last week Crist announced a new deal in which the state would pay $1.34-billion to acquire 181,000 acres, leaving the rest in operation. A day later, though, the state's financial adviser said the land alone is worth only $930-million — a judgment that sugar company officials have sharply questioned.

The Lawrence Group has tried before to buy U.S. Sugar. Headed by Gaylon Lawrence Sr. and son Gaylon Lawrence Jr., the company offered U.S. Sugar $293 a share. Both bids, one in 2005 and again in 2007, were rejected by the company's board.

So this time the company went straight to the shareholders with its offer. While its letters lacked some crucial details, the company promised it would continue operating U.S. Sugar "as a going concern for years to come."

Second suitor woos U.S. Sugar 11/20/08 [Last modified: Tuesday, November 25, 2008 3:47pm]
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