China Development Bank provides an acquisition loan to Hanlong (Africa) Mining Investment to support its $191 million AUD acquisition of a 16% ownership stake in Sundance Resources Limited (Linked to Record ID#95683 and #95684)

Project narrative

On March 18, 2011, Hanlong (Africa) Mining Investment Limited — a special purpose vehicle and wholly owned subsidiary of Chinese privately owned industrial conglomerate Sichuan Hanlong Group Co., Ltd. (汉龙集团) — acquired Talbot Group’s approximately 16% ownership stake (433,791,352 shares) in Sundance Resources Limited (SDL) for $191 million AUD ($190 million USD). To facilitate this acquisition, China Development Bank (CDB) issued a loan to Hanlong (Africa) Mining Investment Limited. This loan was secured by (i.e. collateralized) against a mortgage to CDB of the shares in Sundance Resources held by Hanlong (Africa) Mining Investment Limited. Record ID#50091 captures CDB's loan. Following the acquisition, Hanlong (Africa) Mining Investment Limited owned 18.6% of SDL. Then, on July 15, 2011, Hanlong Mining Investment Pty Ltd. made an offer to acquire remaining 81.4% stake in SDL for $1.2 billion AUD. Hanlong signed a scheme implementation agreement for the 81.4% stake on October 4, 2011 for a $1.3 billion AUD consideration. The transaction was expected to be complete on May 2, 2012. Due to difficulties to getting financing, the deadline was postponed to November 2012. Various approvals were issued throughout summer 2012, although Hanlong requested and received numerous extensions from Sundance Resources for approvals. However, the CDB commitment letter for Hanlong's acquisition was delayed; the amended scheme implementation agreement had the letter due by October 1, 2012. Sundance allowed for an extension. CDB issued the financier commitment letter (offer) on October 16, 2012 in which it stated its agreement, in principle, to issue a medium to long-term facility of up to $1.022 billion USD to Hanlong Resources Limited — a wholly owned subsidiary of Sichuan Hanlong Group — to support Hanlong's acquisition of Sundance, subject to satisfaction of CDB's conditions and its credit approval. Additionally, on October 30, 2012, China Everbright Bank Co., Ltd. issued a financier commitment letter (offer) in which it stated its agreement, in principle, to provide a facility of up to $438 million USD to Sichuan Hanlong Group Co., Limited to support Hanlong's acquisition of Sundance, subject to the satisfaction of China Everbright Bank's conditions and its credit approval. The combined amount of the CDB and Everbright facilities, $1.460 billion USD, would pay for the aggregate consideration of the takeover. Record ID#95683 captures CDB"s offer. Record ID#95684 captures China Everbright's offer. Sundance extended the deadline for the takeover on December 6, 2012, pushing it back to the end of January 2012. All Chinese regulatory approvals were slated to received by February 8, 2012, with the takeover then to be completed by February 22, 2012. However, Sundance extended the deadline for approval again to July 30, 2012; China's National Development and Reform Commission (NDRC) had attached a special requirement that Hanlong would enter into an agreement with Sundance Resources with sufficient capability to undertake the Mbalam Nabeba Project with Hanlong. Then, on March 26, 2013, Hanlong issued formal notice that the credit approved term sheets required to be provided under the scheme implementation agreement would not be delivered by the due date of March 26, 2013. CDB withdrew the offered loan in early 2013. However, Hanlong Mining Investment Pty Ltd. cancelled the acquisition of 81.4% stake in SDL on April 8, 2013. The takeover attempt, plagued by delays and halts in Chinese regulatory approvals, suffered its fatal blow when Hanlong's chairman, Liu Han, a major supporter of the acquisition, was arrested in March 2013. The investigations into Liu, prior to his arrest, reportedly induced CDB to withdraw its offered loan. Additionally, one of Hanlong Mining Investment's executives, Shanghai-born Australian citizen Calvin Zhu Boshi, pled guilty and was sentenced to 15 months in prison in February 2013 for insider trading related to the attempted acquisition of Sundance Resources and Bannerman Mining; according to Zhu, fellow executives described Zhu as a "warlord", a term used in Chinese culture for powerful business moguls with success in business, politics, and the underworld. Zhu claimed to have pled guilty out of fear for his safety from retribution from Liu. In May 2014, Liu, his younger brother Liu Wei, and three associates were sentenced to death for "leading mafia-style crime and murder"; as the leader of Sichuan-based Hanlong Group, Liu was alleged by Chinese authorities to have used his influence to received improper benefits from the local government, created illegal monopolies, and "tyrannised local people." The Chinese Government executed Liu in February 2015. The fact that Australia's Foreign Investment Review Board (FIRB) had approved Hanlong's takeover of Sundance, despite being headed by Liu, who had no experience in mining and suitability for the acquisition was questioned in Australian press, was criticized by Australian media.