Sundance poised to pull plug on Hanlong
Sundance executives met Hanlong representatives in Perth late on Thursday to find out more details after revelations on Wednesday that billionaire Liu Han had been detained by Chinese police for unconfirmed reasons. A report by respected Chinese financial newspaper 21st Century Business Herald suggested Mr Liu had been embroiled in investigations relating to money laundering in Macau's gaming industry.
The confusion is shared by other companies worldwide with links to Hanlong. Colorado-based General Moly said talks about a $665 million loan to finance its new mine project in Nevada were suspended until more information emerges. Australian-listed molybdenum minnow Moly Mines said it was seeking clarification from Hanlong as to "whether this event has any consequences for the company and Mr Liu's position as a director". Molybdenum is used to harden steel.
It is believed Mr Liu's right-hand man, Kang Huan Jun, dialled in via teleconference from China.
Mr Kang was also front and centre of Hanlong's response to an insider trading scandal implicating its Australian staff, which broke in 2011.
Hanlong's protracted takeover of Sundance has dragged on for 20 months, initially because of delays in obtaining regulatory approvals in Australia and China, but more substantially by Hanlong's inability to secure financial backing, including from its main backer, China Development Bank.
After repeated extensions to the deal timetable, Hanlong is now required to produce a financial credit terms sheet by next Tuesday, under the scheme implementation agreement. But Sundance says Hanlong has not yet finalised discussions with large Chinese partners as requested by China's National Development and Reform Commission.
"I don't have any definite proof, but it's unlikely they'll meet those timelines," Mr Jones said on Thursday.
In the absence of an agreed extension, failure by Hanlong to provide the term sheet by Tuesday will trigger a five-day, good-faith consultation period followed by a 10-day period in which either party can terminate the deal.
Sundance requested a trading halt on Tuesday and its shares have since been suspended until April 8.
Reflecting scepticism over the deal's likely success, shares in Sundance last traded at 21¢, well below Hanlong's offer price of 45¢.
Frequently Asked Questions about this Article…
Sundance Resources’ drawn-out $1.4 billion takeover by Sichuan Hanlong is in doubt. Sundance chair George Jones said he will decide after an emergency board meeting, amid indications Hanlong may not meet a key financial deadline required under the takeover agreement.
Concerns grew after reports that billionaire Liu Han had been detained by Chinese police for unconfirmed reasons. A Chinese financial newspaper suggested Liu may be involved in investigations linked to alleged money laundering in Macau’s gaming industry, which has unsettled companies with ties to Hanlong.
Hanlong is required to produce a financial credit terms sheet by next Tuesday under the scheme implementation agreement. If it fails to provide that term sheet and there is no agreed extension, the deal enters a five-day good-faith consultation followed by a 10-day period in which either party can terminate the takeover.
If Hanlong fails to meet the deadline and the parties don’t agree to extend, the consultation and termination windows could lead to the takeover being ended. Sundance shares have already been weak — last trading at about 21¢, well below Hanlong’s 45¢ offer — and the company has been placed in a trading halt until April 8.
Yes. The confusion has affected other firms with links to Hanlong. Colorado-based General Moly suspended talks about a $665 million loan, and Australian-listed Moly Mines is seeking clarification from Hanlong about any consequences for the company and Liu Han’s role as a director.
Mr Kang Huan Jun, described as Liu Han’s right-hand man, reportedly joined discussions via teleconference from China. Kang was also prominent in Hanlong’s response to an insider trading scandal involving its Australian staff in 2011.
The takeover has been delayed for around 20 months, initially due to regulatory approval delays in Australia and China and more substantively because Hanlong has struggled to secure financial backing, including support from its main backer, China Development Bank.
Sundance requested a trading halt and its shares have been suspended until April 8. The company held talks with Hanlong representatives in Perth to get more details and is awaiting board decisions following an emergency meeting to determine whether to end the takeover process.
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