China detains Hanlong founder
Liu Han, the founder of Sichuan Hanlong, had been in Beijing during the National Congress and was detained or under "police control" on Tuesday after the congress ended, according to the Shanghai Securities News. The report did not give a reason.
The development risks embarrassing the Foreign Investment Review Board, which waved the $1.3 billion deal through in June last year despite whispers about Mr Liu's colourful background and the concurrent court charges against his Australian executives for alleged insider trading. Hanlong's vice-president in Australia, Calvin Zhu has since been jailed, while another executive skipped town.
Sundance chairman George Jones said he was aware of the reports of Liu Han's detention, but that he hoped scheduled meetings with Hanlong and representatives of the National Development and Reform Commission would proceed as planned this week.
"Until we get an explanation, I'm a bit concerned," Mr Jones told Bloomberg. Chief executive Guilio Casello told Reuters he was not confident Hanlong would meet an interim deadline to submit a credit-approved term sheet to prove it had funding.
As Fairfax Media revealed in 2011, a former business associate ordered Mr Liu's assassination in 1997, but the assassin missed with the two shots he fired at a hotel in Sichuan. Their dispute had arisen because Mr Liu had been accused of conspiring with market regulators to strip the associate of 90 million yuan in a futures contract.
In 2008, the China Securities Regulatory Commission placed share trading bans in relation to Hanlong-related listed companies suspected of breaching trading laws. And more recently, a large dossier on the internet detailed claims about how Hanlong evaded 1.5 billion yuan in tax.
The Hanlong deal has become a highly frustrating affair for Sundance shareholders, dragging on for 20 months as Hanlong struggled to secure backing from its financier, the China Development Bank. And despite facing the ignominy of Hanlong reducing its bid halfway through negotiations, Sundance has persisted with the deal.
Shares in Sundance have been in a trading halt since Monday, last trading at 21¢ a share. Doubts over the deal have mounted, with speculation that Hanlong, if it was to remain interested, may seek to lower its offer of 45¢ a share.
Meanwhile, the combative former head of China's steel industry association, Shan Shanghua, has been arrested on corruption charges.
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According to reports, Liu Han, founder of Sichuan Hanlong, was detained or placed under police control in Beijing after the National Congress. His detention casts doubt over Hanlong's ability to complete the proposed takeover of Sundance Resources and has raised concerns about whether scheduled meetings and financing milestones for the deal will proceed.
The detention increases uncertainty around the $1.3 billion Hanlong bid for Sundance. Shareholders face delays and the risk that Hanlong may not meet funding deadlines or could try to lower its 45¢-per-share offer, which would reduce the deal's value for existing investors.
Sundance shares were placed in a trading halt amid mounting doubts about the Hanlong takeover. The stock last traded at 21¢ a share before the halt, reflecting investor uncertainty about the transaction's future.
The article says Hanlong has struggled for about 20 months to secure backing from its financier, the China Development Bank. Sundance required Hanlong to submit a credit-approved term sheet to prove funding, and company executives expressed doubt Hanlong would meet that interim deadline.
The report highlights several past controversies: alleged insider trading charges against Hanlong's Australian executives (one, Calvin Zhu, was jailed and another fled), a 2008 trading ban by the China Securities Regulatory Commission on Hanlong-related listed companies, claims of evading 1.5 billion yuan in tax, and even a reported assassination attempt tied to a business dispute.
FIRB previously approved the $1.3 billion deal in June of the prior year despite concerns about Liu Han's background and legal issues involving Hanlong's Australian executives. The recent detention risks embarrassing the board and reopening scrutiny of that approval.
Sundance chairman George Jones said he was aware of the reports but hoped scheduled meetings with Hanlong and representatives of the National Development and Reform Commission (NDRC) would go ahead as planned. However, Sundance executives also said they were not confident Hanlong would meet financing deadlines.
The article notes speculation that if Hanlong remains interested it may seek to lower its 45¢-per-share offer. Given Hanlong's ongoing financing struggles and the added uncertainty from Liu Han's detention, a reduction of the offer is presented as a realistic possibility.
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