Cracking the Palmer code

Clive Palmer last week launched a blistering attack on the Australian media, in the midst of an admitting an embarrassing error that may well have damaged his relations with Chinese investors in his mining company Resourcehouse. And while there's no doubt the Australian media have been relentless in their pursuit of Palmer, that's what journalists do when a story doesn't add up.

And the story around Resourcehouse is far from clear – the supposedly planned listing in Hong Kong, which according to Palmer is not planned at all, and the nature of contracts signed with powerful Chinese state-owned enterprises.

Some media have suggested that no paperwork had been lodged at all with the Hong Kong Exchanges and Clearing Ltd (HKEx), the stockmarket operator, indicating that the IPO was never a possibility. But there are several factors that suggest that scenario is unlikely.

Firstly, a trip to the HKEx news website and its 'advanced search' section reveals that Resourcehouse does, in fact, have a ticker code and that code is 00844. This in itself suggests at least some form of communication between Resourcehouse and the Hong Kong exchange.

The second indication lies in two statements, issued by a Chinese, Hong Kong dual-listed company, Metallurgical Corporation of China Ltd. The first statement was issued to the Shanghai Stock Exchange and relates to its $200 million share purchase in Resourcehouse. In referring to Resourcehouse, the release states: "Australia-based Resourcehouse Limited (RL, which plans to list on the main board of the Stock Exchange of Hong Kong Limited [SEHK] and the plan has been approved by the hearing for listing on the SEHK).” A second statement about the share purchase was also released to the HKEx and when translated reads: "Resourcehouse Ltd (An Australian company with intent to be listed on the Hong Kong stock market)...”.

If Clive Palmer never had intent to list on the Hong Kong exchange, then MCC may have unintentionally misled its own shareholders and made two stock exchange statements that are incorrect – this is not likely.

However, if the status quo has changed and Palmer no longer intends to list, then he'd be well-advised to let one of his key cornerstone investors in on his new plan. His relations with China, already hurt by the press release error naming the wrong company in a $60 billion coal export deal, sparking a swift rebuke from state-owned Chinese media, already seem to have taken a bit of a lashing.

When researching a particular company that is planning to list on the HKEx, the bourse usually refers users to a search for a web proof information pack (WPIP). A WPIP is a very early stage form of prospectus that companies planning to list on the exchange must release. In Resourcehouse's case, a simple query on the HKEx homepage in the WPIP section reveals nothing, suggesting no documents were ever filed. But this is because the WPIP is usually released after the first listings committee hearing.

On the available facts, Clive Palmer at least appears to have had his hearing for a listing approved, after submitting the first form in the process, an A1. Certainly this is the view given to Business Spectator by numerous market sources. The stock exchange does not release dates of hearing information, but the details are usually leaked to the Hong Kong media ahead of time and in October last year reports were indicating a tentative date of October 22. We now know that the plans for the listing were delayed, and it seems, later cancelled.

During his press conference Palmer said: "I've announced no IPO in Hong Kong ever. There is no proposal before the stock exchange in Hong Kong that's current for us to have an IPO.” On the face of it, this appears to be true, but note the words 'that's current'. An A1 form has only six months of validity and the one filed by Resourcehouse has likely lapsed.

But the inference that Palmer has never considered an IPO, nor indeed embarked on the path, as he has appeared to suggest is extremely unlikely. Highly respected, independent mergers and acquisitions intelligence service Mergermarket advises much of the investment banking community in upcoming IPOs. It provided Business Spectator with a timeline of the potential deal's evolution. The last on-the-record comment from Mr Palmer about a potential Hong Kong listing before he last week confirmed the IPO was off, appears to have come from Chinese-language newspaper Ming Pao, which quoted Mr Palmer in August last year talking about his aspirations to spin-off and list the mining assets of Resource Developments International in Hong Kong. Clive Palmer has had more than enough opportunity to set the record straight, if the media was dancing to the wrong tune.

Also confirmed by market sources to Business Spectator was the engagement of Macquarie, UBS and Citi as joint book-runners – none of these banks are thought to have been informed that the relationship has been severed. As far as they know, they are still engaged to work on an IPO, should the right timing present itself.

There are other reports adding to the uncertainty of Resourcehouse and its future. A Courier Mail report quotes a Department of Employment, Economic Development and Innovation spokesman as saying that Clive Palmer has only obtained exploration permits for the Galilee Basin mine in central Queensland and that no lease to mine on the site has been approved.

So the question remains: what are Mr Palmer's intentions? He's burning a lot of bridges in the investment banking community, especially in Hong Kong, where there is great bewilderment as to his motivations and intent.

He says that as a private citizen, it's his money and he can do what he wants with it. But he's playing a high stakes and very public game, with not only his own reputation at risk, but also the wider Australian resources sector and its relationship with its most important resources customer – China.

Inquiries to Clive Palmer's office received no response.