Directors tap pre-float bonanza

The managing director, Tony Haggarty, and the executive director of business development, Andy Plummer, said last week they would exercise options to buy 7,326,266 Whitehaven shares each for $1 a share. This compares with Whitehaven's last closing price of $4.65.

The options will deliver paper gains of more than $26 million to each director at current share prices and are the result of an agreement signed before the company was floated in 2007.

Mr Haggarty, the former managing director of Excel Coal, also received more than $95 million in 2006 after selling the company to the US group Peabody Energy for $2.04 billion.

To help fund the option purchases, trust companies linked to the two director sold on Thursday a combined 8.7 million Whitehaven shares that were already held at $4.66, one day after the miner reported a fall in half-year profit, to $83.5 million.

Mr Haggarty sold 5 million shares for $23.3 million, leaving him $16 million in net cash from the sale, as well as the paper profit from the options deal. Mr Plummer sold 3.7 million shares for $17.2 million, for almost $10 million in net cash.

According to a company announcement, the options were the final two tranches from an equity participation and options deed between the company and Mr Haggarty and Mr Plummer. The options vested in January after price performance hurdles were cleared.

A company spokeswoman said Mr Haggarty and Mr Plummer had each invested more than $30 million in Whitehaven shares and options under the deed.

On Friday Whitehaven shares slumped 4.7 per cent after the news was revealed to the market.

Whitehaven's tightly held register includes other big names that have made a fortune from the Australian coal industry, such as the AMCI founder Hans Mende, a 15 per cent shareholder and director. Mr Mende sold 37 million shares in Felix Resources for $660 million into a bid from China's Yanzhou Coal last year.

Tipped as the next takeover target in the rapidly consolidating coal sector, Whitehaven has reaped the benefits from surging demand for the fuel.