Financiers lose patience with Tinkler
The move ends months of speculation about the future of Mr Tinkler's 20 per cent stake in the company, which has weighed on the Whitehaven share price.
The loss of control of the shares comes hard on the heels of his move to Singapore, where he has established a corporate base. It also comes as he has been seeking to liquidate assets such as his horse stud assets held through Patinack Farm, and property held through his Buildev company.
The Whitehaven stake was sold out from under him at $2.96 a share, well above the company's ruling share price, but significantly less than Mr Tinkler thought the shares were worth
This standoff over the share price resulted in Mr Tinkler seeking to hang onto his Whitehaven stake for as long as possible.
"His lenders lost patience with him some time ago," one source close to Mr Tinkler's financiers said. "It was only a question of when - not if - they would seize control.
"If his empire was a house of cards, as some have suggested, then removing this cornerstone support may destabilise" control of the remaining assets.
The loss of his Whitehaven stake marks the departure of Mr Tinkler from the public company sphere, although he holds a range of private assets such as Patinack Stud, a royalty stream from the Middlemount mine of $1 a tonne of coal produced, which is split with a business associate. He also holds an interest in copper exploration in central Queensland.
With the Whitehaven stake gone, the focus has shifted to whether Mr Tinkler can raise the $12 million he needs to settle litigation with Blackwood Corporation. Under a settlement, this amount is due by June 30.
Mr Tinkler is believed to have received some cash from the sale of the Whitehaven stake, which may go some way towards settling the Blackwood liability, although he also has an ongoing liability to Farallon.
In a statement to the sharemarket, Farallon said the Whitehaven deal was to "partly repay debt", with a further payment to Mr Tinkler likely if the Whitehaven share price averages more than $2.96 over the two months to mid-March 2014.
Mr Tinkler and Farallon have had dealings for many years, which continue, sources close to Mr Tinkler said. Farallon bought a 10 per cent slice of Whitehaven, giving it a 16.63 per cent stake in the coalminer, with the other 10 per cent of the Tinkler holding spread across existing shareholders.
"Selling this stake was a difficult decision," Mr Tinkler said in a statement. "However, we believe [it] will benefit all shareholders.
"Whitehaven's asset base ... provides for a strong future."
Whitehaven's share price closed on Wednesday at $2.20, up 9¢. Analysts have valuations of as much as $4 a share on Whitehaven and now that the stake has been sold the shares may be re-rated.
"This ticks one box of the issues overhanging the stock," one analyst said. "The prospect for a re-rating may depend on the coal market."
Frequently Asked Questions about this Article…
Tinkler’s financiers seized control of his 20% stake in coalminer Whitehaven and sold the holding after losing patience with his attempts to hang on to the shares. The sale ended months of speculation about the future of his holding.
The Whitehaven stake was sold at $2.96 a share, which the article says was well above the company’s ruling share price at the time but lower than what Tinkler believed the shares were worth. Whitehaven closed that day at $2.20, up 9 cents.
Yes. Farallon bought a 10% slice of the stake, which gave it a 16.63% holding in Whitehaven. The article says the other 10% of Tinkler’s holding was spread across existing shareholders.
Farallon said the deal was to “partly repay debt.” The statement indicated a further payment to Tinkler is likely if the Whitehaven share price averages more than $2.96 over the two months to mid‑March 2014.
The sale removes a major overhang on the stock and could help a re‑rating of Whitehaven shares. Analysts have valuations up to about $4 a share, though one analyst noted any re‑rating may depend on the coal market.
Tinkler retains private assets including Patinack Stud, property held through Buildev, a royalty stream from the Middlemount mine of $1 a tonne (split with a business associate), and an interest in copper exploration in central Queensland. He also faces ongoing liabilities, including an obligation to Farallon and litigation with Blackwood Corporation.
Under a settlement with Blackwood Corporation, Tinkler needs to raise $12 million to settle the litigation, with that amount due by June 30. The article notes he is believed to have received some cash from the Whitehaven sale that may help toward this liability.
Investors should watch Whitehaven’s share price and coal‑market conditions (which analysts say could determine any re‑rating), any further statements or payments tied to the $2.96 price condition, and updates on Tinkler’s legal liabilities such as the $12 million Blackwood settlement and his ongoing dealings with Farallon.
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