BREAKFAST DEALS: Tick tock Tinkler

Time is of the essence for Nathan Tinkler, while Alan Joyce and Geoff Dixon duke it out over Qantas.

Is Nathan Tinker a day or two away from losing control of his Whitehaven Coal stake? News that the coal tycoon is apparently facing a $US200 million deadline tomorrow is everywhere. Tourism Australia has thrown its support behind chairman and former Qantas boss Geoff Dixon as successor Alan Joyce takes issue with his apparent mischief. Meanwhile, fellow Qantas antagonist Mark Carnegie is thought to be thinking about Fairfax Media and fellow struggling media player Ten Network will get some relief from Canberra. Elsewhere, oil and gas is giving investment bankers something to cheer about.

Nathan Tinkler, Whitehaven Coal, Farallon Capital

The word on the street is that Nathan Tinkler is $700 million in debt, his Whitehaven Coal stake is worth just $560 million, and by Friday his lenders will have had enough.

There’s intense market speculation and widely scattered media reports pointing to a $US200 million ($191 million) deadline that could land as soon as tomorrow with key lender Farallon Capital. If the former electrician can’t make it he risks losing control of his primary asset, a 19.4 per cent stake in Whitehaven Coal.

Until this morning, all we had to go on was a report from a few months ago saying that Tinkler’s personal debts, held between Farallon, Credit Suisse and Kuok Group, totalled almost $700 million.

That figure was refuted by a Tinkler spokesperson. Now it’s being widely reported from a number of sources and no one’s returning calls from The Tinkler Group, which holds the Whitehaven stake.

This "liquidity event,” as it’s been dubbed, which will take some effort to escape, might help explain quite a bit.

Most recently, Tinkler demanded access to some rather rudimentary company figures with the threat that he’d try to kick out the Whitehaven board. Despite delivering the numbers, he voted against their re-election anyway, but found effectively no support on the register. Not even Farallon sided with him.

This followed an unsuccessful attempt earlier in the year to take Whitehaven private for $5.3 billion. Ultimately, there wasn’t enough support from creditors and the company’s overall value has since sunk to $2.8 billion.

Both events felt like attempts to protect his stake as the Whitehaven stock price fell, which has been exacerbated to some degree by short sellers prodding for a margin call or liquidity crunch.

A not-so-small number of private Tinkler vehicles have been showing outward signs of liquidity problems since July. Mulsanne Resources, Patinack Farm, Ocean Street Resources and Buildev Group have all been dragged into court proceedings, reportedly failed to meet employee obligations or been put in the chopping block in the last few months.

Tinkler was debt-heavy when the Whitehaven merger with his previous vehicle, Aston Resources, went through in April. But Whitehaven was worth north of $5 billion when the transaction went through, giving Tinkler a headline value of more than $1 billion.

Since then coal prices have taken a dive, bringing the value of Whitehaven as a company and Tinkler as an individual down with it.

Tinkler can’t make another play to take Whitehaven private until January, thanks to a deal he signed with Whitehaven to get access to the data room.

He’s got to come up with $US200 million, convince Farallon to hold out until January or find someone to refinance the debt with a longer-term coal play in mind.

While Whitehaven is his primary asset, Patinack Farm has reportedly had $300 million pumped into it. While Tinkler reportedly couldn’t offload it for $200 million to Sheikh Fahad al-Thani – a member of the Qatari royal family and owner of Dunaden, last year’s Melbourne Cup winner – there’s still got to be some serious value in there.

Qantas Airways, Tourism Australia

It’s safe to say that this morning that former Qantas boss Geoff Dixon would really wish that he’d anointed John Borghetti as his successor instead of Alan Joyce.

Joyce is taking on Dixon, who is widely reported to be campaigning against his successor’s strategy, by cancelling a $44 million contract with Tourism Australia, where his former mentor holds the chair. The Qantas boss claims Dixon has a conflict of interest.

Tourism Australia called an emergency meeting last night at the behest of Tourism Minister Martin Ferguson, where the board backed Dixon. Qantas is the body’s largest contributor and its proposed alliance partner Emirates comes in second with $18 million.

Officially speaking, Dixon hasn’t yet confirmed reports that he’s in tow with venture capitalist Mark Carnegie, ad kingpin John Singleton and Leighton chief financial officer Peter Gregg in a campaign against the direction Joyce is taking Qantas in.

Joyce’s move is the best indication yet that the reports are correct. In this morning’s edition of The Distillery, some argue that Joyce is overreacting with this latest move. If the Dixon reports were incorrect this move by Joyce would be shamefully reckless.

Dixon must be thinking that if Borghetti, now doing barrel rolls Virgin Australia, had been Qantas boss instead of Joyce the airline would be in a very different place. Even if it wasn’t, and the 10-year Emirates alliance was on the table with Dixon agitating, Borghetti probably wouldn’t have taken on the old boss via Tourism Australia.

So is Joyce overreacting? Business Spectator’s Stephen Bartholomeusz says he’s certainly running the risk of creating that perception, but the current support of the register for his strategy in on shaky ground. That ground is the always unpredictable airline industry.

"He wants to burst their bubble before it has a chance to swell and create some pressure on them to put up or shut up rather than have to live with them sniping from the sidelines over a protracted period during which, given the nature of the airlines industry, something could happen to make Qantas more vulnerable to the activists than it is today, where it has broad shareholder support for its strategies.”

Fairfax Media, Ten Network

While we’re speaking of plays venture capitalist Mark Carnegie is attached to, The Australian Financial Review understands this morning that a run at its publisher, Fairfax Media, has been discussed.

Now steady on speculators, this shouldn’t be surprising and is anything but conclusive. The newspaper says that the conversation has taken place between Carnegie, fellow Qantas antagonist John Singleton and former Fairfax chairman Ron Walker.

These players have previous circled Fairfax at various times for various plays. At the moment, this just looks like some hypothesising.

Staying with media for a moment, the AFR also reports that the federal government is close to granting Ten Network an extension to its commercial television licence fee rebate.

The struggling network will be enormously grateful for the gesture, which comes amid terrible advertising conditions, poor program selection, a troublesome asset sale and perceived balance sheet pressure.

Oil & gas guzzling

The oil and gas industry is continuing to generate a greater proportion of revenue for investment banks, according to the latest numbers from Dealogic.

According to the data collector, oil and gas have driven 9 per cent of global investment banking revenue for the 2012 so far. This is up for 5 per cent at the same time in 2007.

Credit Suisse leads with 6.92 per cent of the total oil and gas "wallet share”, followed by JPMorgan with 6.89 per cent and RBC Capital Markets with 6.4 per cent.

This is important news because if offers the investment banks some encouragement on where the growth is coming in a deals market that’s been dour since the post-GFC ‘pop’ faded.

Given the consolidation that’s due to occur in the US shale gas industry, where BHP Billiton leads a number of Australian companies, and the domestic shale industry is showing tentative signs of life, it’s a positive signal all round.

Wrapping up

The Australian Financial Review has three scoops this morning that are worth taking a look at.

Boart Longyear is understood to be considering offloading its underperforming environmental drilling business, China’s State Grid Corp is set to pick up a $500 million stake in South Australia’s ElectraNet power supplier and Ridley Corporation has offloaded its salt business Cheetham to Hong Kong’s CK Life Securities for up to $150 million.

Meanwhile, The Australian reports that one of Queensland’s largest strawberry farms, Gowinta Farms, has been put on the chopping block by administrators after its collapse last year.

And finally, New Zealand Oil & Gas has agreed to put up three offshore Taranaki permits from Australia’s Octanex for $US12.5 million.


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