Singapore's L&M acquires stake in W. Java gas pipeline project

Singapore listed firm L&M Group Investments Ltd announced Thurday that its wholly owned subsidiary, L&M Petromas Pte Ltd on November 22, 2001 had entered into Heads of Agreement to acquire 60 percent of the shares in PT. Moeditha Lanthika Indonesia (MLI) from PT. Petroimpex Nuansa Corporindo and PT. Moeladi.

The company said the acquisition would give L&M a 60 percent stake in a gas processing and transmission facility in West Java.

According to the company, the gas processing and transmission facility includes a pipeline of 94 km (49 km of 29" diameter pipe and 45 km of 32" diameter pipe) that extends from Subang through Pasirjadi and Citarik to Tegalgede in West Java, built and completed under a Build, Operate and Transfer ("the BOT") agreement with state oil, gas firm Pertamina

The tenure for the BOT agreement is 10 years during which gas will be processed and transmitted through the facility from the West Java gas fields. The cumulative income for the 10-year period for the facility is US$203 million and the corresponding forecast profit is US$86 million.

The company said the construction of the facility had been completed and was currently undergoing testing and commissioning and was scheduled to be operational by the first quarter of year 2002.

The purchase consideration for 60 percent of the shares in MLI is US$15.171 million payable in full by way of a cash payment of US$1 million and an issuance of 185,000,000 new shares of L&M at the price of S$0.14 per share. The aggregate value of the consideration was derived based on an agreed discounted rate of 30 percent for the cumulative forecast profit of US$86 million to be received by MLI over the next 10 years.

The company said the agreement is the second gas pipeline project following an earlier acquisition of a stake in the 60 km Build-Operate-Transfer ("BOT") 18-inch looping gas pipeline project from SK-Kandang Haur Timur to SK-Cilamaya in West Java, Indonesia. (alex/Robert)