Ann: Sundance Terminates Hanlong Agreement , page-8

http://www.businessweek.com/news/2013-04-08/sundance-scraps-hanlong-s-1-dot-18-billion-iron-ore-takeover

Bloomberg News
Sundance Scraps Hanlong’s $1.18 Billion Iron Ore Takeover
By Elisabeth Behrmann and Michelle Yun on April 08, 2013 Tweet Facebook LinkedIn Google Plus 0 Comments

Sundance Resources Ltd. (SDL) terminated an agreement with Sichuan Hanlong Group after the Chinese company failed to secure funding for its A$1.14 billion ($1.18 billion) bid to buy the rest of the Australian company.

Hanlong was also unlikely to meet other required conditions, Perth-based Sundance said in a statement. The company is in talks with other parties about their interest in the Mbalam-Nabeba iron ore project, Sundance said, without naming them.

The collapse of the deal, first agreed in October 2011, comes after Hanlong’s billionaire Chairman Liu Han, 47, was reported to have been detained last month by police in China. Buying Sundance would have given the Chinese company control of the $4.7 billion Mbalam iron ore project that straddles the Republic of Congo and Cameroon.

“It’s going to take a while for the dust to settle in terms of what are the additional potential bidders out there,” said Matt Fernley, an analyst at GMP Securities Ltd. in London. “For certain, the stock is going to be under pressure.”

Shares of Sundance last traded on March 19 at 21 Australian cents, 53 percent lower than Hanlong’s revised offer of 45 cents a share, indicating some investors didn’t expect the deal to succeed. The shares will resume trading tomorrow, Sundance said.

More Valuable
“The board of Sundance believes it is in its shareholders’ best interests to terminate the agreement,” Chairman George Jones said in the statement. “Sundance’s Mbalam-Nabeba project is significantly more valuable today than when the Hanlong bid was first made.”

The company is in talks with both Chinese and non-Chinese other parties, Sundance said.

Liu is being held for helping his brother Liu Yong evade capture over a 2009 triple murder, state media reported last month. Liu and his ex-wife were detained in Beijing at the end of the annual meeting of China’s legislature, according to a March 20 report in Shanghai Securities News that cited unidentified people familiar with the matter.

Closely held Hanlong, which owns about 14 percent of Sundance, according to data compiled by Bloomberg, advised Sundance it wouldn’t meet a March 26 deadline to deliver a term sheet from Chinese banks to buy the company, the Australian company said that day. An earlier deadline for a term sheet was extended in December.

Offer Cut
Sundance said on April 5 it had concluded talks with Hanlong. The outcome of the good faith consultation period with the Chinese company is being documented and an announcement is expected before the market opens on April 9, it said that day.

Hanlong, an investor in highways and power projects, cut its offer to 45 cents in August, from the 57 cents agreed in October 2011. It had made an initial offer of 50 cents in July 2011.

A probe of Liu Han could lead to the highest-profile case against a Chinese businessman since Xi Jinping and Li Keqiang took control of the Communist Party in November as part of a once-a-decade leadership transition. Xi and Li were named president and premier last month, both promising to get tough on corruption.

“Interestingly, I don’t think the deal has fallen over because there’s anything wrong with the project,” GMP Securities’s Fernley said.

Liu Han was ranked the 230th richest person in China with wealth of 6.3 billion yuan ($1 billion), according a list of the 1,000 richest people in China published September 2012 by the Shanghai-based Hurun Report. That was up 26 percent from 2011, Hurun said. Liu Han was a member of the Sichuan province’s political consultative conference, a government advisory body, according to a notice in 2009.

To contact the reporters on this story: Elisabeth Behrmann in Sydney at [email protected]; Michelle Yun in Hong Kong at [email protected]

To contact the editor responsible for this story: Jason Rogers at [email protected]

Regards,
Juhhee