Chinese miner looks set to grab Tinkler's share of Whitehaven Coal
INVESTORS reacted cautiously on Monday to renewed speculation that Chinese miner Shenhua Group could move to buy former billionaire Nathan Tinkler's stake in Whitehaven Coal.
News agency Reuters reported that Mr Tinkler's main lender, Noonday, an arm of US hedge fund Farallon Capital, was in talks with Shenhua and an unidentified Japanese firm, about the sale of Mr Tinkler's 19.4 per cent stake in Whitehaven, which was worth $675 million at yesterday's closing price of $3.43, up 4¢ or 1.2 per cent.
As reported by Fairfax Media on December 21, Mr Tinkler's debts to Farallon including principal and accumulated interest are believed to amount to about $700 million and are secured against his stake in Whitehaven.
A number of Mr Tinkler's private companies are facing wind-up actions, mainly from the Tax Office, including the entities that own the Newcastle Knights and Newcastle Jets football teams.
But corporate filings show wind-up proceedings against Mr Tinkler's Boardwalk Investments, initiated by Brisbane-based McGees Property over fees owing on a commercial property purchase that did not proceed, have been withdrawn after a settlement before Christmas.
Whitehaven shares have risen significantly since their November low of $2.74, and jumped 8 per cent in mid-December after confirmation it had held talks with Shenhua, citing "obvious potential synergies" between the two companies' assets in the Gunnedah Basin. But Whitehaven said Shenhua had not proposed to sell its assets to Whitehaven, and had not proposed to acquire Whitehaven.
Octa Phillip analyst Lawrence Grech said that with final federal approval pending for Whitehaven's key Maules Creek project, it "made sense" that Shenhua would be interested in getting involved with Whitehaven at either the asset or corporate level.
But he said Shenhua's proposed Watermark mine in the Gunnedah Basin was "undeveloped and controversial" and Whitehaven did not need new growth options as it owned the Vickery and Vickery South projects. Mr Grech said he was "a little bit surprised" at reported comments by managing director Tony Haggarty last week, that Whitehaven would be interested in selling down its 75 per cent stake in Maules Creek and perhaps offloading 5 per cent to a coal customer.
Another analyst, speaking off the record, said he was "sceptical" that Shenhua would seek to take a large stake in Whitehaven as a way of disposing of the Watermark project in New South Wales.
Any sale of Watermark to Whitehaven would be a related party transaction which Shenhua would be unable to vote on, either as a shareholder or director if it took a board seat, the analyst said.
Mr Haggarty has also said that the sale of Mr Tinkler's Whitehaven stake, perhaps to a spread of financial institutions, would be "ideal".
Neither Whitehaven nor Mr Tinkler's spokesperson would respond to the speculation.