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Fort Myers-based agribusiness company Alico is getting out of growing sugarcane.
In a recent securities filing, Alico says it signed a 10-year agreement with U.S. Sugar Corp. to lease 30,600 acres in Hendry County for a minimum of $3.5 million a year, more if the price of sugar rises above a certain threshold.
“As a result of the lease, the company will no longer be directly engaged in sugarcane farming,” Alico says in a filing with the Securities and Exchange Commission.
Besides sugarcane, Alico grows citrus and raises cattle on 130,800 acres it owns in five counties in central and Southwest Florida. “The company believes that the lease will reduce both operational and production risks while eliminating capital expenditures related to planting costs and farming equipment. The lease will increase the company's free cash flow allowing for investment in other opportunities while also allowing the company to participate in future rising sugar prices, if any,” Alico says in the securities filing.
The move is one of the latest changes to occur since a group of New York-based private-equity investors acquired a majority stake in Alico from the heir of citrus baron Ben Hill Griffin Jr. In April, Alico's board slashed the company's quarterly dividend in half to conserve cash.
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