Union Steel's (SGX:ZB9) subsidiary, Union Energy, entered into a non-binding MoU with Eneco Singapore, a unit of Eneco Energy (SGX:R14), to dispose of its entire stake in Fastweld Engineering Construction, according to a Monday filing with the Singapore Exchange.

Under the MoU, the parties have agreed on a 180-day exclusivity period, which can be expended as the two sides conduct due diligence before agreeing to a definite sale and purchase agreement.

Fastweld Engineering is involved in the business of engineering procurement and is a maintenance contractor providing engineering and construction services.

The disposal is part of the company's efforts to optimize capital allocation and long-term strategic positioning.