Sundance Resources

Hanlong mystery upsets takeover

Disappearance of chief of Chinese firm undermines bid to buy Sundance Resources

PUBLISHED : Tuesday, 26 March, 2013, 12:00am
UPDATED : Tuesday, 26 March, 2013, 3:18am


Related topics

The missing chairman of Sichuan Hanlong Group may be under investigation for harbouring his brother, a murder suspect, jeopardising the Chinese firm's agreement to buy Australia's Sundance Resources.

A man named Liu Han was being investigated for sheltering his brother, who was arrested for murder, Xinhua reported last week, without identifying him as the Hanlong chairman or giving further details.

Attempts by Sundance to contact Hanlong's chairman have failed since at least Friday, as have efforts by another Chinese firm that he leads.

Liu's disappearance increases the likelihood that the Sundance takeover will collapse, with closely held Hanlong facing a deadline today to produce a credit-approved term sheet and the deal still awaiting central government approval.

The delays highlight the lack of transparency in China, where new leaders took office this month pledging to crack down on corruption.

"Given the situation in China, frankly when foreign companies deal with Chinese businesses, especially the non-state-owned companies, there's always a risk," said Huang Jing, a political science professor at the National University of Singapore. "In the wake of such a high-profile anti-corruption campaign by the new leadership, people like Liu Han can be in trouble any time."

Hanlong, which owns about 14 per cent of Sundance and had planned to buy the rest for A$1.14 billion (HK$9.24 billion), said in December it was looking for state-owned Chinese enterprises to partner to develop an iron ore project in West Africa owned by Sundance.

Hanlong has not finalised its discussions with potential Chinese partners to complete the acquisition, as required by the National Development and Reform Commission, Sundance said last week in a statement. As such, it is unlikely that Hanlong will meet today's deadline to produce a credit-approved term sheet, according to the statement.

The deal going ahead "seems remote with the recent circumstances that have developed", said Peter Rudd, the resources and mining manager at Altitude Private Wealth in Melbourne. "The banks I don't think would find themselves in a position to do any lending."