Chinese billionaire Liu Han was last night trying to save a $1.44 billion takeover play for Sundance Resources after his top lieutenant in Australia was accused of insider trading.
Already there are suggestions among informed sources that the Australian Securities and Investments Commission probe into insider trading allegations by Hanlong Mining managing director Steven Hui Xiao would be sufficiently embarrassing for Chinese regulators to bar Mr Liu's Hanlong Group from formalising a takeover offer for Sundance.
Hanlong is Sundance's biggest shareholder, with 18.6 per cent, and is thought to have had the blessing of China's top brass to bid for the Perth company, in the process keeping at bay other Chinese groups that wanted to become equity partners in Sundance's Mbalam iron ore project in Cameroon.
However, yesterday's revelation by ASIC that it was probing Mr Xiao's share trading in Sundance and Bannerman Resources, another Hanlong takeover target, could re-open the Sundance contest. ASIC is probing trades of 17 million Sundance contracts for difference and 1.45 million Bannerman CFDs that yielded at least $1.8 million in profits.
"This will not spark a diplomatic row (between Australia and China), this is just highly embarrassing for China," one source said last night. "They (top Chinese regulators) know about it (the insider trading allegations) and they are not impressed. They are worried about China's reputation."
Mr Xiao and fellow Sydney-based Hanlong executives Calvin Zhu and Fan Zhang, who have also been implicated in the insider trading claims, have been stood down from their positions while ASIC continues its investigations.
Mr Xiao and Mr Zhu are also due to quit their positions on the board of Moly Mines, the $196 million Perth iron ore and molybdenum company controlled by Hanlong.
Mr Liu, meanwhile, is understood to be considering travelling to Australia as early as next week to take charge of takeover talks with both Sundance and Bannerman.
His second-in-charge, vice-president Kang Huan Jun, was last night on his way to Sydney "to oversee the transitional management of Hanlong's interests in Australia", a spokesman said.
Sundance and Bannerman both released brief statements to the Australian Securities Exchange confirming they remained in takeover talks with Hanlong.
The assurance was too late for Sundance, its shares falling as much as 20 per cent to 35.5? before the company called a trading halt and released its statement. Sundance closed down 4.5? at 40? on turnover of 169.1 million shares, reflecting investor concern that Hanlong's takeover ambitions had been dealt a fatal blow.
Hanlong had offered 50? in July and since then Sundance had been pushing for a price closer to 60?.
Bannerman fell 3.5? to 31?, compared with Hanlong's 61.2? offer. ASIC has obtained orders in the NSW Supreme Court restraining travel by Mr Xiao, Mr Zhu and Mr Zhang, and orders freezing assets belonging to the men, Mr Xiao's wife Xike Hu and FanFan Chen.
SDL Price at posting:
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