the ozzy

Finance
Sundance punished after deal collapses
SARAH-JANE TASKER, RESOURCES
488 words
10 April 2013
The Australian
AUSTLN
1 - All-round Country
25
English
© 2013 News Limited. All rights reserved.
SUNDANCE Resources' share price plunged yesterday as investors dumped the stock following the collapse of its $1.3 billion takeover deal with China's Hanlong group.

Shares in the company resumed trading after being suspended more than two weeks ago when Hanlong missed a crucial funding deadline, leading the Sundance board to officially walk away from the agreement on Monday.

The company's shares dropped more than 50 per cent in early trading, only slightly recovering to close 47.6 per cent lower at 11c. When Hanlong first bid for the company, in July 2011, it had offered 50c a share, which was then bumped up to 57c a share to gain the backing of the target's board.

Delays to the deal saw the offer price cut last year to 45c to reflect the weaker environment for iron ore compared to when the offer was first lodged.

The market had widely been expecting the deal to collapse following repeated delays and changes to the agreement by the privately-owned Hanlong. The final doubt was cast last month when Hanlong's chairman Liu Han was detained by Beijing police for harbouring a fugitive, allegedly his brother who is being held as a major murder suspect.

The Chinese company's failure to complete the deal brings the value of China's recent failed mining deals to $US45 billion ($43bn), according to data compiled by Bloomberg. The data showed that Chinese companies attempted $US107bn worth of mining takeovers over the past five years, with about $45bn, or 42 per cent by value, of deals ending in failure. Of $562bn of deals proposed globally in the same period, $180bn, or 32 per cent, didn't proceed.

Sundance said on Monday it had terminated the agreement because Hanlong did not meet a funding condition last month and informed the junior it was unlikely to meet other required conditions to complete the deal.

Sundance remains in talks with other Chinese parties to find a new suitor for its Mbalam iron ore project that borders the Republic of Congo and Cameroon.

Hanlong, in realising the deal was dead, requested that Beijing's top economic planner, the National Development and Reform Commission, withdraw it as the approved proponent for that deal, which would allow other Chinese parties to hold serious talks with Sundance.

Sundance chairman George Jones said this week that the junior still had support from China for its project and that it was engaging with other potential Chinese strategic partners with a view to developing the project. He added that the company was also also progressing discussions with non-Chinese parties.

There is talk in the market that a consortium could look to become involved with the project, which is expected to cost more than $5bn to develop.

The China Development Bank is thought to control Hanlong's 14 per cent in Sundance.