FinanceSun to set on Sundance takeover MINER EXPECTED TO ABANDON...

Finance
Sun to set on Sundance takeover MINER EXPECTED TO ABANDON $1.3BN HANLONG DEAL
SARAH-JANE TASKER, TAKEOVERS
628 words
8 April 2013
The Australian
AUSTLN
1 - All-round Country
17
English
© 2013 News Limited. All rights reserved.

SUNDANCE Resources is set to officially axe its $1.3 billion deal with Hanlong as early as today after almost two years of struggling to complete a takeover by the Chinese company, in a dramatic saga that saw the offer price cut, executives of the suitor fined for insider trading and its chairman detained in prison.

Sundance is widely expected to announce to the Australian market today that the parties have failed to agree to again extend the deal deadline following a five-day ``good faith'' period that ended on Friday.

Hanlong and Sundance now enter a 10-day termination period, in which either company can terminate the deal.

A move by the target to end the takeover is thought to be imminent and an announcement is expected in the coming days.

The market will now be looking for ``Plan B'' from Sundance.

It has been widely suggested that there are other parties, both Chinese and non-Chinese, in the background ready to move once the Hanlong deal is abandoned.

Since Hanlong launched its offer in July 2011, the market has not been convinced it would complete the deal.

It has been repeatedly hit with delays and renegotiations and rocked by drama inside the privately owned Chinese suitor.

Two months after the deal was launched, the Australian Securities & Investments Commission revealed it was investigating three of Hanlong's Australia-based executives for insider trading in relations to companies including Sundance. The final blow came last month when it was revealed that Hanlong chairman Liu Han was detained by Beijing police.

Reports from China have suggested he was under investigation for harbouring a fugitive.

Chinese police also announced the capture of his brother, a ``major murder suspect''.

Sundance moved into damage control following those reports, as Hanlong also missed a crucial deadline around the time of Mr Liu's detainment.

It failed to produce a credit-approved term sheet from its financiers, triggering the clause that allowed either party to walk away from the deal.

The bid was originally 50c a share, but the Sundance board accepted the offer when it was increased to 57c.

It was then cut to 45c a share almost a year later when Beijing's top economic planner offered provisional approval, on the condition that the price was reviewed. Although it is privately owned, Hanlong required approval from the National Development and Reform Commission to proceed with the Sundance takeover.

Trading in Sundance shares was halted late last month when Hanlong missed the financing deadline. The shares last traded at 21c.

Trading is expected to resume tomorrow. The stock is likely to take a hit while the market waits for a white knight to step in.

Hanlong has a stake of about 14 per cent stake in the company after buying in at 44c a share in early 2011, so it will also be watching closely for an alternative offer that allows it to recover its investment.

It is understood that other Chinese parties are interested in the junior's $5bn Mbalam iron ore project in central West Africa and the Sundance board has been working on alternative plans.

Any new deal is unlikely to involve the previous scheme of implementation agreement, which was highly conditional and allowed Hanlong to repeatedly move the goalposts.

The company had been hoping that Hanlong would be its saviour after struggling to stay afloat when its entire board was killed in a plane crash in June 2010 during a visit to the project.

Those killed included mining billionaire Ken Talbot, chief executive Don Lewis, company secretary John Carr-Gregg and directors Geoff Wedlock, John Jones and Craig Oliver.