Can Tinkler fight through without Whitehaven?

In all the bad news piling up around Nathan Tinkler hangs a distinct air of desperation. And if rumours of heavy borrowing are true, the failed Whitehaven bid was his best hope of redemption.

Nathan Tinkler’s decision to step back from the Whitehaven Coal takeover is another sign that the high times in the mining sector are crashing back to earth. After all, he’s not exactly flush with cash. But the timing of the announcement couldn’t be more fitting. In a week of gloomy mining news, including the apparent death of the resources boom, Tinkler’s desperation shines through.

For any gambler, it’s tough to know when to walk away. And Tinkler is no different. After earning his fortune in coal mines, Tinkler expanded his interests to include horses, rugby and soccer. These investments may have served as a nice distraction for the mining magnate, but they haven’t exactly paid off. And now it seems his luck has run out.

Tinkler’s strategy was simple – buy a coal mine and then sell it on for a profit. His success was as much a case of timing as business sense. Buying his first coal mine in 2006, Tinkler hitched on to the tail end of the coal boom and made billions. Not bad for an electrician who started off with a $500,000 loan from the bank.

Unfortunately, Tinkler doubled down just at the end of the coal boom. Coal prices have plunged in the past year as a slowdown in China continues to threaten the resources sector. And while Tinkler is betting on an uptick in coal prices in the next few years, he may have surrounded himself with too much debt to wait it out.

And it seems that Tinkler’s empire is coming under increasingly severe stress. Just days ago, reports circulated that debt collectors are chasing over $1 million owed by companies linked to Tinkler. And a number of businesses have reportedly already taken him to court over debts at his Patinack Farm.

At the same time, Tinkler has been trying to sell the farm, but without success. Just four years ago, he invested $300 million in the Patinack. But apparently his attempt to sell it to a Qatari royal for $200 million was wishful thinking.

All of the above add up to a distinct air of desperation. The latest news on the Whitehaven Coal deal is just another piece to add to the growing list of woes. But more than anything, it highlights just how much trouble he appears to be in, because if rumours are true and he has borrowed heavily, the failed Whitehaven bid was Tinkler’s best hope.

Now that the bid has been scuppered, Tinkler’s paper wealth has taken a huge hit. At his takeover bid of $5.20 per share, his holding would be worth $1.1 billion. But at the current share price of $3.06, his stake is now worth almost half that at just $670 million.

There has been no indication from Tinkler on whether or not he will go back to Whitehaven with a reduced bid. With debt estimated by some to be at the $500 million mark, he could now face the wrath of his financial lenders. If this happens, the mining magnate may be in serious trouble.

Without the coal boom to rely on, Tinkler needs to give serious thought to his next move. Since building up his fortune he has made a series of overly risky moves, and the failed Whitehaven bid may be the tipping point. If the house comes calling, he could find himself with few hands left to play.

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