ML Macadamia Orchards LP has signed an agreement to buy the Big Island macadamia farming operations of California-based IASCO for $12.5 million.

The purchase includes 4,843 acres of land in the Kau district, including 1,100 acres planted in macadamia trees, ML Macadamia said in documents filed yesterday with the Securities and Exchange Commission. ML Macadamia bills itself as the world’s largest grower of macadamia nuts.

IASCO, a Redwood City, Calif.-based airline crew leasing and management company, had owned much of the macadamia orchard and surrounding land since buying it in phases from C. Brewer & Co. from the late 1970s to the mid-1980s.

IASCO had been looking to sell the Big Island orchard for a couple of years, and the time "seemed right," said John Lee, IASCO executive vice president and chief financial officer.

"It’s a happy day because we’re leaving the property in good hands, but it’s also a sad day because we’re walking away after more than 30 years of involvement in a good little cash generator," Lee said.

IASCO had a long-term contract to supply its macadamia nuts to Mauna Loa Macadamia Nut Corp., which is owned by The Hershey Co. ML Macadamia also has a contract to supply nuts to Mauna Loa, so there will be no disruption in the supply contracts, Lee said.

About 2,750 acres of the acreage being sold consists of "undeveloped lava rock land" that IASCO will have an option to repurchase in three years for $1 million, according to the agreement. If IASCO reacquires the land and resells it, the first $500,000 it received in excess of the $1 million option exercise price will be retained by IASCO, with any amount in excess of $1.5 million being split equally between the IASCO and ML Macadamia, under the agreement.

If IASCO sells the option, it will receive the first $500,000 from the sale, with the balance of the sale price of the option being divided equally between IASCO and ML Macadamia. The option will expire if not exercised within a three-year period.

Lee said IASCO’s interest in the property was spurred by company principals, some of whom were pilots, who became familiar with Hawaii during stopovers on flights between the mainland and Japan, Lee said.

Not including the IASCO parcel, ML Macadamia owns or leases approximately 4,190 tree acres of macadamia nut orchards within a 50-mile radius on the Big Island, according to the company’s website. It also performs farming services on approximately 2,100 tree acres for other orchard owners.

The purchase is expected to close July 15, ML Macadamia said in its filing.

Shares of ML Macadamia closed up 24 cents, or 9.6 percent, yesterday at $2.74 in over-the-counter trading.