BREAKFAST DEALS: Tinkler's lost haven

The bell finally tolled for Nathan Tinkler and his stake in Whitehaven Coal. The timing of the Farrallon Capital call and the prospects for Whitehaven are the hot topic of the morning. NBN Co has handed some more work to Transfield Services, and Huawei jostles for future deals as the Coalition inches closer to September.

Meanwhile, Virgin Australia’s Brisbane Airport deal could irk rival Qantas Airways, a Nine Network executive has underlined how much influence $450 million gets you with Cricket Australia and Commonwealth Bank is reportedly plotting to exit its commercial property platform for up to $1.2 billion.

Nathan Tinkler, Whitehaven Coal

No sooner had Nathan Tinkler lost his Whitehaven Coal stake after a turbulent 18 months as its largest shareholder, the now Singaporean-based former coal tycoon is staring at an imminent $12 million deadline.

The thinking this morning is that the two events are linked.

Yesterday, Tinkler handed over his primary asset, a 19.4 per cent stake in Whitehaven Coal, to primary lender Farallon Capital Management.

The $2.96 per share floor price that the transfer was conducted at implies that Farrallon took a haircut on its loans to Tinkler. Tinkler reportedly had liabilities totalling $700 million up until yesterday, of which Farrallon is thought to speak for most of it.

At $2.96, a 40 per cent premium to the previous trading price, Tinkler’s stake carries a value of around $580 million. Tinkler still appears to owe Farrallon some coin, but has been left with some change from the Whitehaven deal.

Fast-forward 10 days from now and Tinkler has a date set with Blackwood Corporation. The Queensland coal explorer was supposed to receive $28.4 million from the Newcastle Knights and Newcastle Jets owner for a 30 per cent placement to his private vehicle Mulsanne Resources last year. Blackwood was left wanting.

The coal explorer tried to have Tinkler’s assets frozen in May, but came to a settlement that required him to come up with $12 million by the end of June. Tinkler would be fronting up half the cash of the original agreement, but wouldn’t get his 30 per cent stake.

From here you can see the thinking behind the speculation. Tinkler gets Blackwood to back off for a moment, Farrallon pulls the trigger on the stake, Tinkler collects some change and Blackwood gets half the promised money without having to issue shares. At least, that’s the theory.

The sale means Tinkler will no longer be attached in any meaningful way to an Australian listed company, having only completed an astonishing rise to paper billionaire status at the end of 2011 with the merger of Whitehaven with his own Aston Resources.

“Many will be aware of the emotional attachment that Mr Tinkler has to the assets of the company, specifically Maules Creek, and that selling this stake was a difficult decision,” said The Tinkler Group in a statement.

“However we believe that no longer being a substantial shareholder of Whitehaven will benefit all existing shareholders.”

While it’s impossible to doubt Tinkler’s attachment to Maules Creek, that last bit is a little too much. The notion that this was done in any way for the benefit of other shareholders is obvious folly.

Whitehaven shares spiked 4.3 per cent to $2.20 yesterday. With a number of analysts rating the stock as high as $4 a share and the weight of Tinkler’s inevitable sale now lifted – some short sellers have had a hell of a time with this one – there’s potential for the shares to track upward again.

Holding the bulls back will be questions about Farrallon. How long do they want to hang around? Does their floor price of $2.95 a share with Tinkler reflect a marker of sorts that they might sell out at?

The story of Whitehaven will remain in the headlines. But after the Blackwood matter is settled – that’s if it’s settled on June 30 – the story of Tinkler will become far less visible without an attachment to a listed company, especially that he now calls Singapore home.

Perhaps we’ll spot him at an NRL or A-League game sometime.

NBN Co, Transfield Services, Huawei

Engineering firm Transfield Services has picked up $366 million in new work on the National Broadband Network at a critical time for the government-owned infrastructure project.

The company is already doing some work for NBN Co in Sydney and this gig has been extended by another two years, which could deliver an extra $300 million.

On top of that, Transfield has been tapped to connect some fibre cables to Victorian homes as part of a new $66 million contract.

The deals come at an odd time for NBN Co, with reports indicating that the government-owned company is making some minor preparations for a Coalition victory in September.

It seems unlikely that NBN Co chief Mike Quigley could continue as boss of the network with the presumptive next communications minister Malcolm Turnbull having smashed the respected telecommunications executive several times.

Interestingly though, one party that hasn’t been invited to the NBN party could finally gain entry if Tony Abbott takes the lodge in a few months. We’re talking about Chinese telecommunications giant Huawei.

According to The Australian Financial Review, Huawei is making a “fresh pitch” to the Coalition to have the Labor ban on its involvement in the fibre network lifted in the event that Labor is ousted.

Huawei chairman John Lord told the newspaper that the company is now getting a better hearing in Canberra, including with the boffins at the Australian Security and Intelligence Organisation.

“Malcolm Turnbull is making positive statements about us and that is a good position for us to be in compared to 18 months ago,” Lord said, according to the AFR.

Virgin Australia, Brisbane Airport Corporation, Qantas Airways

Virgin Australia has come to an infrastructure agreement with Brisbane Airport Corporation that could see tensions emerge with rival Qantas Airways over the future of a second runway for the Queensland airport.

The 10-year deal guarantees Virgin runway access along with a number of upgrades to the domestic terminal.

BAC chief executive officer Julieanne Alroe was keen to put Virgin front-and-centre as an example that is worth replicating. Given that we live under an airline duopoly, it’s not difficult to figure out to whom the comments were implicitly directed at.

“The agreement proves the commitment of both BAC and Virgin Australia to the growth of aviation services in Brisbane, Queensland and Australia,” Alroe said.

“BAC is committed to building Brisbane's new runway. The project is on track and on schedule and our investment so far, along with today's announcement, demonstrates this commitment and is an important step forward.”

Everyone’s in agreement that Brisbane needs a second runway – Virgin Australia's John Borghetti spoke about it just last week. It isn’t a big deal – Sydney needs a second airport too.

The question is, how will the $1.3 billion project be funded?

BAC is trying to push the airlines to up their landing fees. Qantas, the dominant customer at Brisbane airport, is happy to pay for the runway, but will only do so when the thing is completed.

Virgin was more or less in step with Qantas’ thinking – until yesterday.

Nine Entertainment, Cricket Australia

Fresh from securing $450 million from Nine Entertainment and $100 million from Ten Network, Cricket Australia is reeling from the revelation that broadcasting executives think it should have some say over player selection.

Yesterday, Nine Network managing director Jeffery Browne told a business lunch for Sydney FC A-League club that the ‘rotation policy’ that rests players, mostly fast bowlers, was a real concern for the Network, which has had a relationship with cricket for over 30 years.

“I understand why sports want to do that but people at home want to see the best players playing and we urge Cricket Australia to pick the best players every time,” Browne said. 

Given that Nine is paying the salaries of these cricketers – many of which are dishing up performances and behaviours that don’t justify a pay hike – the comments sound outlandish to sports fans but make a lot of business sense. The players, for better or worse, are assets and Nine is putting forward the money and its opinion on how best to generate the best returns.

It’s also hardly the first piece of meddling that the networks have done in domestic sport. Friday night games for both AFL and NRL are scheduled on the basis of which will generate the highest ratings. Unpopular clubs and poorly performing teams have to lobby for spots.

Recently, the Brisbane Lions were flogged by Collingwood at the GABBA on a Friday night and the whispers were that they won’t be quickly scheduled there again until they can offer up a compelling spectacle on the big stage.

While the comments from Browne are on face value bemusing, the rotation policy (a stalwart of baseball) is fairly new to cricket. It’ll take a while for the networks and the game’s administrators to come to peace with each other over it.

It should also be said that the relationship between Nine Network and Cricket Australia is easily the best between any broadcaster and headline sport in this country. 

Wrapping up

Commonwealth Bank of Australia could flog its commercial property platform as part of a “radical overhaul of its asset management arm”, according to The Australian Financial Review.

The newspaper understands that CBA has already tapped financial advisors to plot the exit from a series of property holdings held by its unlisted subsidiary Colonial First State Global Asset Management that could generate $1.2 billion.

Meanwhile, listed property trust Charter Hall has done a deal with a local super fund and a Canadian pension fund to purchase Bankwest Place and the associated Raine Square shopping centre in Perth for $458 million.

As the name implies, the site is the headquarters of Bankwest, which is owned by Commonwealth Bank.

In mining, Rio Tinto has secured a crucial indigenous land use deal with the Yindjibarndi people of the Pilbara that includes benefits and royalties for its mining in the region. Fortescue Metals Group chairman Andrew Forrest can only look on and wish.

Speaking of Fortescue, it’s worth noting that the June 30 target – the same day Tinkler has to pay up Blackwood – that the iron ore miner set for a minority stake sale of its port and rail infrastructure is coming up awfully quickly.

Expectations are growing that the deal will take a while longer.