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State, U.S. Sugar agree to scaled-back buyout

Editor's note: This story has been corrected from versions used in print and posted earlier online. See an explanation below.

MIAMI — Florida and U.S. Sugar have agreed to a scaled-back buyout, with the state paying $1.34-billion to acquire 181,000 acres of the company's land for Everglades restoration. In return, U.S. Sugar keeps its mill, railroad and citrus processing plant, sitting on about 6,000 acres, sugar executives said Tuesday.

Sugar company officials said the new deal — revised from a total buyout first proposed in June — allows them to not only maintain jobs for their 1,700 employees, but also to move into a new business: making ethanol from sugar cane waste.

"While there is no ethanol component in this deal, we see ethanol in our future," said U.S. Sugar CEO Robert Buker, who has spent the past four years visiting ethanol companies in South America, Africa and Australia to plot his company's future.

When Gov. Charlie Crist first announced the potential buyout in June, the state planned to acquire everything U.S. Sugar owned — all 187,000 acres of its land as well as all its facilities — for $1.75-billion.

But ironing out the details for such a far-reaching deal proved too complicated, said J.M. "Mac" Stipanovich, a sugar company lobbyist who was involved in the negotiations.

"What the state really wanted was the dirt," Stipanovich said.

So the talks shifted to the state buying only the company's land, not the facilities, he said. Simplifying the deal moved it along, as well as allowing the state to save about $410-million on the purchase price, he said.

After the state buyout, U.S. Sugar will lease the land back for $50 per acre and keep farming it for at least seven years, he said.

"And since it's highly unlikely the state will need all 181,000 acres in seven years, there's every reason to believe there will be some extension of those leases," Stipanovich said.

The contracts for the purchase are all but done, he and U.S. Sugar vice president Robert Coker said, and could be ready for official approval and signing before Christmas.

Officials from the South Florida Water Management District, the state agency that would actually buy the land, declined to comment, deferring to the governor.

Crist had planned to announce the new deal Tuesday at the historic home of Florida environmentalist Marjory Stoneman Douglas, author of Everglades: River of Grass, but he rescheduled the announcement for today after his plane had to make an emergency landing in Sarasota because of mechanical problems.

"This is the governor's vision," Department of Environmental Protection Secretary Mike Sole told reporters while refusing to comment.

Crist himself had originally proposed the buyout when sugar company lobbyists complained that the company's future had been jeopardized by a lawsuit from environmental groups that blocked sugar growers from continuing to dump polluted water into Lake Okeechobee.

Over the past five months of negotiation, Stipanovich said, Crist remained closely involved and "got pretty far down in the weeds on it."

The lobbyist said that one such negotiating session occurred two weeks ago at Crist's office, where he and Sole and Crist's chief of staff, Eric Eikenberg, debated details of the buyout. Periodically, Stipanovich said, Sole and Eikenberg would ask him, "Would you step outside?"

They would call Crist, tell him what was being discussed, then invite the lobbyist back in to present a counteroffer, he said. Then Stipanovich would call sugar executives for guidance.

Crist has already endorsed the idea of building an ethanol plant at U.S. Sugar's state-of-the-art mill. The company had already spent months negotiating with Coskata, an Illinois ethanol manufacturer backed by General Motors, to build a $400-million plant next door to the company's Clewiston mill. But those talks were put on hold when the buyout idea first was announced.

"Once we get this deal done, we can work on that one," Coker said.

Even if the state only makes a small amount of the land available to be leased back for farming, Buker said, that would not prevent the company from buying sugar cane and oranges from independent farmers, even from out of state.

One third of the sugar cane the company processes already is grown on someone else's land. For instance, this year 60,000 tons of raw sugar came from Mexico, was brought by barge into the Port of Tampa, and then transported by the company railroad to its Clewiston mill. The same applied to the orange processing plant, which already uses fruit from other growers in the state.

Sugar farming south of Lake Okeechobee has long been considered a major obstacle to the $10-billion plan for restoring the Everglades. The state plans to use the sugar land to construct a network of marsh treatment areas and reservoirs to clean and store water before sending it south into Everglades National Park.

Environmental activists who had hailed Crist's original announcement in June said they like the scaled-down buyout, too. Given the price reduction, "it's probably an improvement" on the original, said David Guest of Earthjustice.

"In the end, the state will have what it needs to move forward with restoration of the Everglades, while protecting the economic integrity of the region," said David Anderson, executive director of Audubon of Florida.

Environmental activists said they were happy there was any deal at this point, given the global economic meltdown. The state had originally expected to finance the purchase by borrowing the money from nine different bankers, a list that included Morgan Stanley, Goldman Sachs and Lehman Bros. So when the news broke two months ago about all three taking a nosedive, it put an additional kink into the already complex negotiations.

Still unknown is how much land the state would actually use for restoration. Some 300,000 acres in the Everglades, or about 500 square miles, will remain in use for agriculture by other companies.

Everglades Foundation senior scientist Thomas Van Lent said his researchers calculated the restoration project required only about 130,000 acres. The new deal appeared to have "more than enough land" to handle the critical storage and treatment of water passing through the River of Grass, he said.

Times staff writers John Frank and Steve Bousquet contributed to this report, which contains information from the Associated Press.

CORRECTION: The name of Illinois ethanol company Coskata was misspelled in earlier versions of this story.

State, U.S. Sugar agree to scaled-back buyout 11/11/08 [Last modified: Wednesday, November 12, 2008 8:33pm]
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