JPMorgan to Purchase Bankrupt MF Global Holdings in London Metal Exchange

JPMorgan Chase & Co. (JPM) agreed to buy the London Metal Exchange shares of MF Global U.K. Ltd., while talks on the sale of remaining assets in the U.K. continue, the special administrator said.

MF Global (MF) filed for bankruptcy protection last month after making bets that went bad on European sovereign debt. Its British unit, MF Global U.K. Ltd., one of 12 category 1 members of the LME that normally hold the right to trade on the floor, was stopped from trading on the bourse on Oct. 31. The company’s special administrator in Britain, KPMG LLP, put the unit’s stake on sale.

Following a “competitive bidding process,” JPMorgan agreed to purchase all of MF Global’s shareholding, Richard Fleming, Richard Heis and Mike Pink, the special administrators of MF Global U.K. Ltd. at KPMG, said today in an e-mailed statement.

“The sales process for various aspects of the MF Global U.K. business continues apace and we are in negotiations with several parties to this end,” Heis said in the statement.

The unit owned 600,000 ordinary shares out of 12.9 million, a 4.7 percent stake, and 25,000 non-voting B shares out of 1.36 million, according to a U.K. Companies House filing on Oct. 24. JPMorgan may pay about 25 million pounds ($38.8 million) for the stake, a person familiar with the process said yesterday. The price was not given on today’s statement.

JPMorgan, one of the category 1 LME members, has raised its holdings in the bourse over the past year. The latest purchase will make the company a holder of 1.4 million shares, or 11 percent, making it the biggest shareholder. It owned 800,000 shares according to the Oct. 24 filing, compared with 550,000 shares a year earlier, according to Companies House.

Goldman Sachs

Goldman Sachs Group Inc. raised its holdings in the past year by 330,000 ordinary shares to 1.23 million shares, or 9.5 percent, according to the Companies House filing. Metdist Trading Ltd. and Metdist Ltd. own a combined 1.21 million shares, or 9.4 percent.

The LME issues two share classes. Ordinary shares confer ownership and 330,000 of them traded at 4.925 pounds in July, according to data on the bourse’s website. B shares exchanged hands at 85.425 pounds on Sept. 27. Neither shares trade on an exchange.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net; Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.