Sugar on Top: Christopher Milito on the Fight Over The Domino Sugar Factory

If you get the preliminary injunctions, what do you want to do? Break up the sale to Two Trees and do a better deal?
That’s exactly right.

What are the chances of that happening? Of you being successful in this suit?
The law is good for us on the injunction side. There is a body of case law that says when a company is selling some or all of its assets, the directors need to engage a process to get the most value, which is common sense—you want the most money possible. What CPCR did was not [to] have a process; they identified Two Trees early on and they offered $160 million, and CPCR came to us and said we’re going to take this offer.

They later came back and said they’d offer $180 million. Is that indicative of the way CPCR did not conduct a competitive process?
I think it’s one of the best pieces of evidence we have. Just a few days later—this is in our motion—CPCR said we’ll take $160 million on Friday, but on Monday Katan brought in a check from Joe Chetrit for another $20 million higher than that. Weeks went by, and there was back and forth, and eventually Two Trees raised it. What is really indicative, they raised it in the late afternoon, and in the early evening they signed a contract, and we said, “Look, if Two Trees raises, give us a window to let Chetrit or others do better and push this thing even higher.”

If what you’re alleging is true, that they didn’t conduct a competitive and proper auction for the Domino site, what would be their motive? After it all, you’ll both share in the money.
I can’t speculate. I can look at the facts and say that something went wrong, but I can’t speculate what is going through their minds.

There have been reports that CPC has been hurt financially by overextending itself in real estate development and lending. Could it be they are under pressure to strike a deal quickly?
That has occurred to me. We found out that CPC, the parent company, took some really sizable loans from a consortium of banks, and they were forced to put up all of this collateral for it, so there’s no question they’re under the financial gun. But the logical conclusion to me is then, well, you get the most money from what you’re trying to sell so you can pay back your lenders. We’ve gotten offers up to $210 million. There were even higher offers out there, so CPCR is literally leaving tens of millions on the table. Why would you do that if you’re under such duress? And they are. I won’t imply any ulterior motives or any ulterior deal between them and Two Trees, but I don’t know what to think. Thankfully, as a lawyer, I don’t have to prove a motive, I just have to show that they conducted this sale the wrong way, and they did, and that under the law we should get relief, and we should.