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Sundance chief to press for Hanlong deal
PUBLISHED: 0 hour 19 MINUTES AGO | UPDATE: 0 hour 5 MINUTES AGO

Sundance chief to press for Hanlong deal

Sundance chairman George Jones is expected to meet Hanlong representatives in Perth.

Ayesha de Kretser and Jamie Freed
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Hong Kong | Sundance Resources chairman George Jones will try and salvage a deal after reports that the man behind the $1.3 billion takeover, Sichuan Hanlong’s chairman Liu Han, had been taken into police custody.

It is understood that Mr Jones will meet with Hanlong representatives. He had been due to meet officials from China’s peak planning body, the National Development and Reform Commission, on Thursday but has delayed after reports of the arrest emerged.

Mr Jones said he was unaware of any reason for Mr Liu’s arrest and declined to comment on what it could mean for the future of the trouble-plagued takeover. “It’s obviously concerning for me and the Sundance board,” Mr Jones said on Wednesday.

Investors said it was unlikely that Mr Jones would be able to salvage a deal with Hanlong in relation to the planned 45¢ a share takeover. The shares were suspended at Sundance’s request until April 8, after last trading at just 21¢ as the falling iron ore price and the prospect of further delays fanned fears the takeover would not be completed.

But one source said it was still possible that the NDRC would find another Chinese buyer for Sundance, which counts as its main asset an iron ore project that straddles the jungles of Cameroon and the Republic of Congo.

Mr Liu was reportedly put into police custody in Beijing after being detained at the end of China’s National People’s Congress on Sunday.

A separate source said the detention followed repeated requests by the NDRC that Mr Liu step aside and allow regulators to complete the troubled takeover.

The Australian Financial Review’s Street Talk reported on Tuesday that Mr Liu had postponed from Tuesday to Thursday a meeting with his counterpart at Sundance Resources, George Jones, that was meant to occur in Chengdu.

Hanlong is a privately held company based in the remote province of Sichuan in China’s west. Mr Liu also chairs Shenzhen-listed company Sichuan Jinlu, in which Hanlong has a 2 per cent stake. Jinlu was suspended from trading on Wednesday after revelations about Mr Liu’s arrest.

The NDRC told Hanlong to find a partner to help fund the Sundance acquisition and development of its assets in January. Chinese steel mill Wuhan Iron and Steel was seen as the most likely to strike a deal.

On Wednesday Sundance requested the share suspension, saying it was unlikely to obtain a credit approved term sheet by March 26 as planned because Hanlong had not yet finalised a partnership. It also said it was “seeking information .?.?. regarding media speculation concerning Liu Han”.

Hanlong’s planned $1.3 billion takeover of Sundance Resources has been plagued by delays and setbacks since it surfaced in July 2011.

Five members of Hanlong’s Australian office in Sydney were arrested and charged with insider trading in September 2011 after it was revealed they had purchased contracts for difference before the initial 50¢ a share bid for Sundance was announced.

An improved 57¢ bid won backing from the Sundance board in October 2011 and the parties agreed to implement a highly conditional scheme of arrangement.

But in August last year, Hanlong said the NDRC had ordered it to cut the bid price to secure approvals. It was the first time a Chinese body had sought to interfere directly in a commercial negotiation. The move infuriated Sundance investors.

There were allegations that Hanlong, advised by Merrill Lynch, was simply capitalising on the falling iron ore price and using the NDRC as an excuse to wriggle out of the scheme of arrangement. Eventually the parties agreed on a 45¢ a share offer price but dropped an exclusivity clause, leaving Sundance free to pursue talks with other interested parties.

Earlier this week Street Talk reported that Hanlong could again try to renegotiate the price down, to 30¢ a share.

But Sundance said it had not heard anything about the price being cut and confirmed it remained in confidential talks with other parties. Street Talk has reported that Glencore has run the ruler over Sundance assets, despite the London-listed miner’s aversion to greenfield, capital-intensive projects.

Hanlong first appeared on the Sundance register in March 2011 after it bought a 17 per cent stake held by the estate of former director Ken Talbot, who died in a light plane accident with the rest of the former Sundance board in late 2010.

The Chinese-language Shanghai Securities News said Mr Liu and his ex-wife were in police custody in Beijing. The newspaper also reported that Mr Liu’s current wife and other members of his family were in the custody of Sichuan police.