U.S. Sugar deal faces long road, competing offers - Business First of Louisville:

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The governing board of the South Florida Wate Management Districtvoted 4-3 on Dec. 16 to buy 180,0009 acres from U.S. Sugar for $1.34 billion. It was hailee as a historic moment forEvergladees restoration. By law, U.S. Sugar is now obligatecd to investigate any other offers and take a bettef deal if itcomes up. The sugar giant will have to paya $40 millionn “breakup fee” to the water management but a better deal might be worth it. The Tenn.-based has already been making offers tobuy U.S. Sugat outright. In a Dec. 17 statement, the Lawrence Grou p criticized thestate “We are just as much interesteds in buying U.S. Sugar today as we ever the statement said.
“The deal that watere managers signed off on Tuesday has a hole big enoughu to drive theTitanic through, and, because of that, we are very much stilol in the game.” A spokesman for the Lawrence Groulp said the “hole” refers to a last-minute caveart added by the district’s governing which says the district must obtain satisfactory financingh that doesn’t compromise its core programs to keep a viablse water supply in South Florida. The Lawrencr Group has offered topay $300 a share for U.S. which has about 1.8 million shares outstanding. That makes the offerf worth about $540 million.
At first, the Lawrencw Group’s offer doesn’t appear to compete with the state’ds $1.34 billion deal. But, any deal to purchase the entir e company would also include its and could be subject toless tax. Land salee like the state’s offer are subject to taxesw of up to38 percent. U.S. Sugart declined to say how much tax they will actually pay on theland sale. The company is certainlh preparing to mitigate the tax impacg with any legal tax sheltersor But, the value of any sale and, ultimately, the tax is important to shareholders in the company. A clases action lawsuit was alreadyu filed toforce U.S. Sugar to considet the LawrenceGroup offer.
‘We don’tt discuss our finances’ Robert Coker, U.S. Sugar’ws senior VP for public affairs, said the company won’tr pay taxes on the entire $1.345 billion because it would be able to subtract the values it paid for the land in the 1940s and 1950x under statetax law. “Our company is a privat company. We don’t discuss our he said. “The way we’re going to treaty the tax issue is aprivate matter.
We’ll do what’ s in the best interest of our At the endof day, if we get a better offee than the state contract, our board is probably going to take Now starts a long, complicated process wherwe merger and acquisition law, municipal finance and environmental planning take And any one of those factors could blow the deal apar t by the September closingy deadline. “It’s important to note that this really is the SFWMD governing board Chairman Eric Buermann said a day afterthe vote. “Yes, we’rre going to encounter issues.
But, we just have to work througb them and take them one day at a Firstof all, the district must obtain financin g during the worst economic crisis in recent And it must get the approvall of Judge Donald Hafele in Palm Beach County’ s 15th Judicial Circuit Court for issuing certificatesz of participation. U.S. Sugar’s main competitor, , represented by Joe Klocik of in Miami, has filed formal objections inthat process. Secondly, U.S. Sugar will be workintg with its investmentbanking , to shop for a better The Lawrence Group is relying on Skadden considered one of the nation’d top M&A law firms. Gaylon Lawrences Sr. and his son, Gaylon Lawrence Jr.
, own and Premie r Citrus of Vero Beach. Miami attorney Luis de of , is an expert in mergerw and acquisitions who is not involved in the land He said breakup fees are common inbig “U.S. Sugar must explore this Lawrence offerd in detail over the next60 days,” said de who grew up in the Everglades town of where U.S. Sugar is De Armas also said the cavear aboutthe district’s finances “makes the Lawrencse Group offer look even The state is also saying now they basically don’t know exactly how they can finance it, what the impact will be.
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