Maui Land & Pineapple Co. completed a deal Thursday to shore up its underfunded employee pension plan by selling the state 244 acres zoned for agriculture fronting Honolua Bay for $19.8 million.

The sale was prompted by a bill passed by the state Legislature and signed by Gov. Neil Abercrombie last year at the urging of Maui Land, and resolves what the company called one of its most significant legacy commitments and long-term financial obligations.

The scenic stretch of coastal land commonly referred to as Lipoa Point had been pledged via a mortgage to the Pension Benefit Guaranty Corp., a federal agency, as security for Maui Land’s pension obligations, which are underfunded by about $20 million. Proceeds from the sale will benefit the pension plan, Maui Land said.

Warren Haruki, Maui Land chairman and CEO, said in a statement Friday that the sale benefits shareholders, the state and the public by helping the company and preserving land that had been eyed for development.

"Today marks the culmination of a unique and extraordinary opportunity to preserve one of Maui’s most treasured natural resources, while at the same time securing the hard-earned pensions of our 1,600 retirees," he said.

The land at Lipoa Point was once included as part of a larger area development plan in 2007 by Maui Land that involved 40 home sites and an 18-hole golf course tied to improving Honolua Bay with recreational amenities including picnic areas, a canoe hale, restrooms, parking and an educational facility dedicated to perpetuating Hawaiian language and traditions.

The plan was roundly opposed by community groups, and the company abandoned the idea, though some preservationists remained fearful that up to 20 homes could still be developed at Lipoa Point under lax state and county rules governing development on agricultural land.

Meanwhile, Maui Land has struggled to endure financial challenges that included net losses totaling $200 million over 2008 and 2009 that have only been partly recovered primarily by land sales in more recent years.

Substantially all of the roughly 23,000 acres owned by Maui Land has been pledged as collateral for debt obligations.

Haruki said the company is "extremely grateful" for the support and collaboration on the Lipoa Point sale by the state along with Maui County, the Hawaiian Islands Land Trust, the pension guaranty agency, residents, pensioners and the International Longshore and Warehouse Union, representing employees.