SINGAPORE (Dec 24): Lloyds Energy, which is selling half its stake in a Russian gas field to Singapore Exchange-listed MMP Resources, has emerged as a substantial shareholder of the latter. On Dec 17, MMP Resources announced that Lloyds Energy had bought 34.5 million of its shares from the open market on Dec 14 at an average price of 0.7 cent per share, raising the latter’s total stake from 5.95% to 7.42%, or 173.9 million shares.
Lloyds Energy first emerged as a substantial shareholder when MMP Resources announced on Dec 14 that the company had bought nearly 61.6 million shares from the open market for $430,864.70 on Dec 12. The shares were also bought at an average price of 0.7 cent each. Before that, Lloyds Energy, which is focused on liquefied natural gas, held 77.8 million shares, or 3.32%, of MMP Resources.
Further changes in MMP Resources are likely. On Oct 25, the company announced that its substantial shareholders were in talks to sell shares to Lloyds Energy, which is incorporated in Bermuda but headquartered in Dubai.
On Dec 5, MMP Resources announced it would pay Lloyds Energy an estimated $25 million for a 50% stake in Asia One, as the Russian gas field is called. The field is located within the Nenets Autonomous District, in northwest Russia. The actual price will be finalised following a valuation to be done by Gaffney, Cline & Associates, an indirect subsidiary of General Electric Co.
MMP Resources will be paying for its share in Asia One in two tranches. The first, US$500,000 ($686,000) in cash, is to be paid upon completion of the deal. The balance, an amount to be finalised, is to be paid 120 days after the completion date. Instead of cash, there is also an option for MMP Resources to pay Lloyds Energy in new shares. If so, the parties will seek an exemption for Lloyds Energy from making a general offer for the remaining MMP Resources shares, which suggests that Lloyds Energy will almost certainly end up holding more than 30% in MMP Resources. None of its directors have existing stakes in the entities involved, say MMP Resources.
Year to date, shares in MMP Resources have gained 75% to close at 0.7 cent on Dec 17, which puts the company’s valuation at $15.5 million.
According to Bloomberg data, its three largest shareholders are Maiora Asian Structured Finance Segregated Portfolio, Blue Pegasus Capital and an individual named Koh Yew Choo. They own 20.64%, 8.72% and 8.66% of MMP Resources respectively.
With the impending acquisition of Asia One, MMP Resources will sell its current key operating asset: a clutch of properties in Niseko, a winter resort town in Japan. According to the company, this move into energy is “part of the corporate strategy of the Group to provide shareholders with better returns and long-term growth”.
Since May, MMP Resources has been taking out a series of loans from an entity called Solar Founders. The most recent, for $120,000, was made on Dec 10 and carries an interest of 18% per year. The terms are similar: If MMP Resources cannot pay back the loans in cash, it can do so by issuing shares to the lenders at a 10% discount.
Jason N Block, an MMP Resources director, holds 25% of Solar Founders. Block also owns 25% of Maiora Asset Management, which manages the Maiora Asian Structured Finance Segregated Portfolio, MMP Resources’ largest shareholder.
For the three months ended 3QFY2018, MMP Resources narrowed its losses by 22% y-o-y to $458,000. Revenue in the same period increased 206% to $55,000. As at Sept 30, it had a negative net asset value of 0.22 cent and $75,000 in cash and bank balances.
