Allegiance's white knight falls

It took less than a day after the extraordinary share trading losses at nickel hopeful Allegiance were given a wide public airing for the takeover target to lose its would-be white knight.

Coincidence? Allegiance said last Friday that a third party was inspecting its books, but it announced on Tuesday that the un-named party had ceased its due diligence and would not be submitting an offer.

Allegiance blamed the withdrawal on the party's inability to meet its "timetable”, but it is understood that the would-be bidder had been in the data room for several weeks.

Presumably then, it would have spotted the revelation in the December quarterly report that Allegiance had lost $2.4 million in 2007 from speculative share trading and a further $5.4 million in the first three weeks of the new calendar year.

Even though those losses were given a brief mention on page three of a 27-page quarterly report released on December 31, their existence was not widely known until Monday. The would-be bidder folded its tent the very same day.

Zinifex is also seeking talks with Allegiance to clarify the extent of the trading losses, and to ascertain whether all positions are closed, as well as the relationship with Gullewa, a property investment company associated with Allegiance director David Deitz, which has cross shareholdings with Allegiance and has also suffered trading losses.

Meanwhile, Allegiance has formally presented the Takeovers Panel with the fourth application of what promises to be a highly contentious year.

It is asking for a ruling of unacceptable circumstances be made in relation to Zinifex' tactics last Friday, particularly the quoted comments of an executive and the lateness of the extension of its offer.

The dispute centres on the 5.6 per cent stake that Lion Selection passed over to Zinifex late Friday, just before the offer was extended. Lion Selection appears to want the stake back.