Universal Bioenergy announces expansion into coal energy market with deal valued at $264 million

Source: Universal Bioenergy Inc.

Universal Bioenergy Inc. (Pink Sheets: UBRG), an independent diversified energy company, announced that it has planned a major expansion into the coal energy market sector with the signing of a definitive agreement for the acquisition of a 40% stake in the Whitesburg Friday Branch Mine in eastern Kentucky. The Whitesburg Mine will mine and market thermal coal for sale to electric utilities for use in coal fired power plant electric generation. The transaction is projected to generate over $264 million in estimated revenues over the next 5 years. Formal notification of the transaction has been included in the Company's filings with the U.S. Securities and Exchange Commission.

Domestic and global demand for coal continues to grow. According to the American Coal Foundation, 9 out of every 10 tons of coal mined in the United States today is used to generate electricity, and more than half of the electricity used in this country is coal generated electricity. The U.S. Energy Information Administration (EIA) says coal as a fuel source for electricity generation will increase 25% by 2035 in the United States. The EIA, predicts that coal demand by non-Organization for Economic Cooperation and Development (OECD) Asian countries will rise to nearly 220 quadrillion Btu, in annual demand by 2035. China will more than double its coal fired power generation capacity in that timeframe, and India's coal generation will rise 72%.

Universal's President Vince M. Guest states, "We continue to seek new ways to increase our revenues and bring more value to our shareholders. Universal generated revenues of $49.90 million for the first nine months of this year. By adding coal to our product mix, we will have the three major energy resources to offer to our expanding customer base, which is natural gas, oil and coal. Our subsidiary, NDR Energy Group, expanded into the sales of propane earlier this year. Our expansion into coal will truly make us a diversified energy company that is well positioned to take advantage of many new opportunities in the energy marketplace. The coal mining operation is projected to generate an estimated $264 million in gross revenues over the next 5 years. This is $52.80 million annually of which $21.12 million would be attributable to Universal. Based solely on our initial due diligence, we believe that if the acquisition is completed, the potential profit to be generated from this acquisition is estimated at $5 to $8 million annually for Universal alone. According to industry valuation standards using average P/E ratios from Standard & Poor's, at a multiple of 15 times earnings, a valuation of $75 to $120 million dollars is an estimate of the potential additional value of this acquisition alone to Universal."

The completion of the transaction is subject to various customary conditions, including the final approval of the closing by Universal's Board of Directors, the obtaining of all requisite regulatory, administrative or governmental authorizations, consents and other customary closing conditions.


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