Farmland Sells Interest in Country Energy

ST. PAUL, Minn.

CHS Cooperatives will acquire Farmland Industries' share of Country Energy, LLC, the alliance supplying rural customers with Cenex brand convenience stores, the two cooperatives reported. Terms were not disclosed.

Farmland and CHS formed Country Energy in September 1998. The boards of directors of both co-ops approved the sale to CHS of Farmland's approximate 40 percent ownership of Country Energy earlier this week. The transaction is expected to be completed by the end of November pending legal and regulatory reviews.

"In the three years since the alliance was formed, we have worked together to create a dependable supplier of quality energy products and services to local cooperatives, agriculture and rural America," said John D. Johnson, president and CEO of CHS. "Together, we achieved synergies and savings for our customers. Obtaining full ownership will allow us to continue serving these customers through our Cenex energy operations, a core business for CHS."

Cenex brand products include gasoline, diesel and other refined fuels, such as propane, lubricants, alternative fuels, petroleum equipment, credit cards and convenience store merchandise.

Country Energy's 375 employees will become employees of CHS. As part of the agreement, Cenex will distribute the full production from Farmland's Coffeyville, Kan., refinery but will not purchase the facility. The transaction includes Farmland's Amarillo, Tex., lubricants plant, its Kansas City, Mo., grease plant and a number of fuel additive facilities located at petroleum terminals throughout the system.

"Farmland remains committed to serving the needs of our local cooperative members through our other marketing joint ventures -- Agriliance, Land O'Lakes Farmland Feed, and ADM-Farmland Grain, and to growing our Crop Nutrient manufacturing and meats businesses. However, it made sense for Farmland to exit the petroleum marketing business as we evaluate our long-term options in petroleum refining," said Farmland President and CEO Bob Honse.
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