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Tuesday, December 23, 2008

Florida Attaches Condition to Big Cropland Purchase

As posted by: Wall Street Journal

Officials in Florida voted to keep alive a state plan to purchase $1.34 billion worth of environmentally sensitive cropland from U.S. Sugar Corp., but only with the condition that the deal can be canceled if the final cost to taxpayers rises too high.

The South Florida Water Management District voted on Tuesday to amend the deal with U.S. Sugar to allow the agency to abandon the purchase plan if financing for its purchase of 180,000 acres from the company proves too costly. The plan is part of an effort spearheaded by Gov. Charlie Crist to purchase the cropland from the country's biggest grower of sugar cane, and use it for the restoration of Everglades wetlands.

The amendment reflects growing concern among agency directors that the purchase could be too expensive to finance amid current economic conditions. Rivals of U.S. Sugar and local opponents of the plan, who fear it will hurt the area's agriculture-based economy, in recent weeks have increasingly spoken out against what they see as a government bailout of a company that in recent years has begun to lose money. Under the terms of the proposed agreement, U.S. Sugar could continue to farm the land for the next seven years, but then it could choose to go out of business.

Privately held U.S. Sugar, which doesn't disclose its finances, in a statement called Monday's vote a success. The company must now approve the amendment proposed by the state and consider any rival offers for the company during the next 60 days.

One suitor, a Tennessee-based farming company known as the Lawrence Group, has already proposed an outright takeover of U.S. Sugar for about $1.3 billion. U.S. Sugar directors, however, thus far have refused to discuss the proposal. Cheap Mexico Cruises and Cheap Europe Cruises Port in florida

"We believe this deal serves the best strategic, long-term objectives of the company and its stockholders," U.S. Sugar said in a statement Tuesday.

If economic conditions worsen and derail the existing agreement, the state could consider a scaled-back land acquisition that could also involve other parties, according to people familiar with the situation. The water agency, which is responsible for water supply, water quality, flood control, and environmental restoration in 16 south Florida counties, has the authority to issue bonds, the instruments through which the project would be financed.