President/CEO of U. S. Sugar Corporation, Robert H. Buker, Jr. goes on record today with this letter:
Dear Employees and Stockholders:
As you know, on December 8, 2008, your Company approved and entered into an agreement with the South Florida Water Management District (the “District”) to sell to the District for $1.34 billion substantially all of your Company’s real estate properties and to lease back such property from the District for a seven-year term. This transaction does not constitute a sale of the entire Company, and your stock ownership and our operations would continue after the closing of the transaction.
Your Company’s Board of Directors and management have spent the past several months evaluating, structuring and negotiating this transaction and also reviewed with your Company’s legal and financial advisors several alternatives. Your Board of Directors approved the agreement with the District because they believed that it represented the best financial and strategic, long-term transaction then available and that the terms and conditions of the agreement are in your best interests.
However, given the operating and financial magnitude of the transaction with the District, your Board of Directors and management insisted on preserving the right to seek a better offer for the shareholders.
Accordingly, as soon as the District signs the agreement, which is expected to occur no later than December 16, 2008, your Company’s management and legal and financial representatives will begin a 60-day process of contacting, soliciting and entering discussions with alternative bidders for the Company’s stock or assets.
As you may have read and heard, one potential purchaser-candidate, who refer to themselves as the “Lawrence Group”, have engaged in a vigorous letter writing and publicity campaign with your Company’s Board of Directors, myself, your Company’s financial advisors and our shareholders. They have submitted a “non-binding expression of interest” in exploring a potential purchase of all of the outstanding common stock. Although their letters and press releases seem to indicate that they are prepared to pay $300 per share, that number is subject to numerous uncertainties.
The Lawrence Group’s expression-of-interest is not a formal or definitive offer. In fact, the potential $300 per share price and any potential transaction is subject to, among other things: (i) a due diligence investigation of your Company’s business operations, financial results and conditions, and future prospects, both before and after any definitive agreement would be negotiated and signed; (ii) the receipt of $400 million of syndicated bank financing; (iii) a $600 million cap on your Company’s total liabilities (which, as of today, substantially exceed that amount); (iv) the ability to successfully negotiate a transaction with the District to sell to it the land it requires for Everglades restoration; and (v) a variety of other conditions customary for proposals of this type.
As your Company’s President and CEO, I want to assure you that the Company, through its legal and financial advisors, has communicated with the Lawrence Group and has requested clarification of various aspects of its expression of interest. Your Company has invited the Lawrence Group to participate fully in the 60-day auction process on precisely the same auction terms and conditions as will be made available to every other potential purchaser and business combination candidate we contact. At this time, your Company’s financial advisor has also identified a number of other potential purchasers.
The fact that the Lawrence Group accompanied their non-binding expression-of-interest with a $27 million check, presumably to evidence their strong desire to commence substantive discussions with your Company, but which was to be deposited only if we abandoned the transaction with the District, did not transform their expression-of-interest into an offer. We have returned the check and will not require them, or anyone else, to pay to be invited to participate in the auction process.
Please be assured that your Company intends to conduct a full, fair and balanced 60-day auction, in which every potential candidate will be treated equally. Your Company insisted on this 60-day auction process for the exclusive purpose of trying to identify and pursue all legitimate proposals and eventual offers, if any, that could result in the very best transaction and highest value for each shareholder.
Despite a vigorous media campaign that unfortunately mischaracterizes the terms and conditions of our agreement with the District and suggests that your Company somehow will decline to carefully review and negotiate potentially superior transactions — nothing is further from the truth.
If the various media reports have created some confusion, I ask that you please be comforted by the fact that your Board of Directors and management are committed to vigorously serve and protect the interests of the shareholders.
We look forward to commencing the 60-day auction process immediately after the District signs the December 8 agreement and commencing discussions with all bona fide interested parties that agree to participate in the process on equal terms.
As always, your Company will keep you informed of all material developments with respect to the pending transaction with the District and auction process.
Sincerely,
Robert H. Buker, Jr.
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