Hanlong haggles with hedge funds Merrill Lynch continues to seek...

Hanlong haggles with hedge funds

Merrill Lynch continues to seek support for Hanlong Mining’s 40¢ a share offer for Sundance Resources but hedge funds say they’re confident of being able to seek out a slightly higher price.

Some market sources expressed their displeasure yesterday that the private Chinese company has dropped the offer from 57¢ a share, labelling the move “opportunistic” and an embarrassment to China’s reputation as a sophisticated investor.

Many remained sceptical over whether the National Development and Reform Commission approvals had actually stipulated that the price should be cut by 30 per cent, but others maintain that the privately owned Hanlong came to the conclusion it would only secure debt financing from the China Development Bank if it agreed to cut its offer.

It is understood that Sundance was expecting something closer to 50¢ a share could eventuate in view of the conditions, and the board is now considering all of its options with respect to finding a new deal or pushing for a better outcome for its own shareholders.

Sources close to UBS-advised Sundance say they’ve canvassed their big holders, including Hong Kong-based Senrigan Capital, backed by Blackstone, which is believed to hold as much as 13 per cent of the register, JPMorgan and Orchid Capital, with only tepid interest in the 40¢ offer.

It’s understood that Hanlong believes it can have all of its financing locked up by Christmas, a development that is sure to please cash-stretched hedge funds.

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