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Thursday, March 08, 2001 10:05:19 AM
Chancellor Group Inc. ( Nasdaq OTCBB, symbol : CHAG ) is an emerging energy, power, and environmental concern with strong management and a tight, focussed business model which aims to be one of the world’s top 50 companies in each of it’s core business segments by 2005.
Management is committed to a high-growth / low-risk strategy to achieve these goals, with an emphasis on :
Building a strong recurrent cash flow base
Building a strong and conservatively financed balance sheet
Being proactive, and responsive to new opportunities
Acquisition and development of high quality businesses and assets
Acquisition of low-cost, long-life oil and gas reserves and production
An aggressive cash-flow funded exploration program
Annual growth in per-share earnings, as well as per share net worth
Recruitment and ongoing education of high quality, achievement-focussed management and staff at all levels
Introduction to the market place of advanced energy technology
Maintaining TQC and Worlds Best Practice in all areas and operations
The group’s business plan calls for it to undertake a staged series of equity and debt raisings during 2000, commencing with a July private placement of $27 million in new equity securities, and a November secondary public offering to raise a further $60 million+, principally to fund acquisitions. We will also, in October / November undertake a placement to already identified and qualified investors to raise up to $400 million in new common and preferred equity capital for our proposed spin-off, Chancellor Energy, Inc. ( CEI ) . CEI will also undertake bank borrowings and or a bond issue to raise an additional $400 million in debt. All of the CEI equity and debt will finance the acquisition of a portfolio of producing North American energy properties.
The above does not include the effect of several acquisitions of other listed companies in the energy sector that are planned in the second half of 2000, using Chancellor Group stock as the acquisition currency.
2000 will see Chancellor put in place all of the building blocks that will set the stage for sustained long-term growth and industry leadership :
A separate publicly-traded energy subsidiary holding a large portfolio of principally North American producing oil and gas properties, in addition to an attractive portfolio of properties held for near-term commercial development, and further supplemented by a strong inventory of high-potential exploration sites. After vending in certain of it’s existing assets as well as those where the acquisitions are pending, Chancellor will own at least 51% of this new company, Chancellor Energy Inc.
The structure maximizes Chancellor’s leverage, whilst defraying risk, and gives Chancellor heightened liquidity and borrowing capacity, and also better positions the energy business for sustained growth. The forecast market value of this subsidiary at the end of fiscal 2001 is $2.5 billion based on earnings and other fundamentals only, with Chancellor holding a fully-diluted 50% controlling interest.
A portfolio of environmental engineering, remediation, and waste control businesses and related infrastructure service entities. These businesses will be contained and controlled within a separate publicly-held entity, to maximize our leverage, and to maximize the size of the unit and it’s growth potential. Forecast value of Chancellor’s proposed 60% of these publicly held businesses at the end of fiscal 2001 is $150 million.
Through a new venture in which Chancellor will own the majority of the equity, Chancellor is on track to literally revolutionize the power generating market, globally. During 2000, Chancellor will commercialize, and bring to the market place, an advanced heat and power generating system which in the prototype testing stage has been shown and proven to generate heat and electricity continuously at less than one fifth the cost of conventional plants and equipment. The new technology, which has simple architecture, is not reliant upon fossil fuels, and also renders the much-vaunted fuel cell an obsolete technology. The system can be scaled to any order of magnitude, and has a very wide range of applications, including replacement of all existing power generating plants; conversion of all boilers and furnaces, reducing their existing fuel costs dramatically; the Heating, Ventilation, and Air Conditioning ( HVAC ) markets; automobile engines; water desalination and remediation plants, etc.
Bringing reality to the concept of "distributed power" generation, Chancellor will produce, and market globally via the internet, low-cost single-residential sized power plants. We will also build, own, and operate networks of regional power plants, and sell cheap electrical power to the mass consumer markets, also over the internet. Chancellor assumes the market will ascribe and build into it’s stock price a minimum valuation for this business of $100 million by the end of fiscal 2001. Plug Power Inc. recently rose in value by $1.8 billion on a single day, based on an announcement concerning it’s fuel cell technology – rendered obsolete by the Chancellor / ETC technology. At the end of April 2000, Plug Power was valued at over $3.5 billion in the market .
By the end of the 2001 fiscal year, Chancellor Group anticipates a market value of some $1.5 billion and a share price of approximately $20.00 per share, based upon a market value of $2.5 billion for Chancellor Energy Inc. and a fully diluted 50% ownership position in that entity; a value of $150 million for Chancellor’s interest in it’s proposed environmental/engineering subsidiary; and ascribing a value by the market of only $100 million for the advanced power system technology. This valuation represents 19.4 times assumed direct, and equity accounted, earnings for Chancellor Group in fiscal 2001. The per share figures assume that Chancellor’s fully diluted capital will expand to 75 million shares of common stock, following a series of acquisitions, and stock offerings.
By the end of 2000, Chancellor Group Inc. expects to be publicly traded on the Nasdaq National Markets System; The Australian Stock Exchange; and the London Stock Exchange.
This document is designed to be read in conjunction with Chancellor’s financial statements and SEC reports on Forms 10-K; 10-Q, and it’s recent registration statement on Form 10-SB, dated April 5, 2000 and effective June 5, 2000.
A key differentiating point highlighted in this business plan is that Chancellor Group stands out as a viable investment destination due to it’s management group’s unique blend of experience combined with conservative entrepreneurial ability. The management group is perfectly positioned to search out and execute the opportunities that will over time drive very significant per share value and earnings into the Chancellor Group Inc. stock price. We believe on that basis that our company and it’s stock price will substantially outperform it’s industry peers over the short, medium, and long term.
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