Construction firm MMP Resources buying 50% stake in natural gas joint venture company

SINGAPORE - Construction company MMP Resources is acquiring a 50 per cent stake in a joint venture company that owns an operating gas field in Russia for $25 million. It will also be deemed a "mineral, oil and gas company" post-acquisition.

According to an exchange filing on Wednesday (Dec 5), MMP entered into a binding term sheet to purchase the stake in the joint venture company from Lloyds Energy, a "gas to wire" liquefied natural gas (LNG) player which produces, stores and sells LNG.

The joint venture company owns the Asia One gas field in Russia's North-West region, valued at $50 million by MMP-appointed independent valuer Gaffney, Cline & Associates.

MMP will pay Lloyds cash - in a first tranche of $250,000, and the remaining sum in a second tranche. But Lloyds can opt to be paid the second tranche fully or partially with shares in MMP.

On Oct 25, MMP announced that a number of its substantial shareholders entered into a non-binding term sheet to potentially sell their shares to Lloyds, which could result in Lloyds acquiring more than 30 per cent of the company's shares, triggering a mandatory general offer.

Mainboard-listed MMP said it is looking to diversify into the natural gas and energy business to provide shareholders with better returns and long-term growth. Following the acquisition, the company will be a "mineral, oil and gas company". In addition, the company intends to dispose its existing Japanese assets after the acquisition.

MMP did not name the joint venture company, incorporated in Russia, but said it mainly supplies natural gas.