CHS assumes sole ownership of Provista Renewable Fuels Marketing

By Bryan Sims | March 10, 2008
Web exclusive posted April 2, 2008 at 3:28 p.m. CST

Cenex Harvest States, one of the largest grain, food and energy companies in the United States, has acquired a 50 percent interest in Provista Renewable Fuels Marketing, which is owned by U.S. BioEnergy Corp. CHS is now the sole owner of the marketing venture. The move comes two days after U.S. BioEnergy and South Dakota-based VeraSun Energy Corp., two of the nation's top ethanol producers, announced the closing of its merger agreement on March 31.

CHS, which will operate Provista under its present name and leadership, acquires an established ethanol marketing entity. Since 2006 U.S. BioEnergy has held a 50 percent joint venture agreement with Provista, which currently markets more than 550 MMgy of ethanol. Provista now combines CHS' wholesale and biodiesel marketing, spot sales, logistics, risk management and related storage and rail car transportation with U.S. BioEnergy's ethanol marketing contracts.

"As sole owner of this successful renewable fuels marketing and distribution operation, CHS looks forward to new opportunities to connect biofuels producers and blenders quickly and efficiently as the alternative fuels industry continues to grow," said Leon Westbrock, CHS executive vice president and chief operating officer of energy.

According to Westbrock, the acquisition of Provista is "a natural fit" since VeraSun intends to market its own branded "VE85" ethanol under the unified entity name. "It just made sense to buy out Provista," he said.

For almost 30 years, CHS has been a logistical facilitator for farmers and other small-scale ethanol producers looking to blend their product into "gasohol". Last year CHS acquired Minneapolis, Minn. -based dried distillers' grains marketer CSC Inc. Today, with the acquisition of Provista, CHS is now positioned as a formidable commodity service company focused on servicing the renewable fuel industries both domestically and internationally.

"We've been at this for a long time," Westbrock said, adding that CHS had been in preliminary discussions with U.S. BioEnergy about the transaction prior to the deal's announcement. "This would be the first time however that we actually helped an ethanol producer take 100 percent of its product and match it up with blenders," he said. "That's what we think we bring to the table. We've got terrific expertise with the oil industry. We've got great knowledge of rail when we deal with the railroads on the grain side as well as on the petroleum side. We can just bring to the table a natural expertise that helps these plants try to move their product."

Although financial details of the Provista transaction were not disclosed, Westbrock said CHS will continue to be involved with U.S. BioEnergy. Prior to U.S. BioEnergy and VeraSun's merger agreement, which became effective April 1, CHS "owned approximately 20 percent of U.S. BioEnergy Corp., with a carrying value of its investment of $145.6 million," according to a filing by CHS on April 1 with the U.S. Securities and Exchange Commission. The SEC filing added, that "post merger, CHS Inc. owns approximately 8 percent of the combined entity."

For more information on CHS, visit their Web site, www.chsinc.com/; for more information on VeraSun and U.S. BioEnergy's merger visit www.verasun.com/.