Tinkler says his backers let him down
Mr Tinkler's appearance in the witness box marks the culmination of a period of intense speculation about his deteriorating financial position, fanned by a series of wind-up and other legal proceedings, which the former billionaire has so far managed to settle before substantive court hearings began.
In the lead-up to Thursday's examination, Mr Tinkler tried to settle the dispute between Mulsanne and its major creditor, Blackwood Corporation - including proposing an unfunded, $55 million takeover of the company. He also tried to stay the proceedings with an "abuse of process" claim that was dismissed as "tenuous" by judge Paul Brereton on Tuesday.
On Thursday Mr Tinkler, who risked arrest if he did not appear in the NSW Supreme Court, said a verbal arrangement with Noble fell through last year and he was "left holding the can with this share subscription".
Mulsanne had agreed to pay $28.4 million under a share place agreement, effectively to take a one-third stake in listed Blackwood, but Mr Tinkler conceded that when shareholders voted on July 12, he had "no definitive plan" on where he would find the money, due five days later.
Mr Tinkler said he had expected Singapore-based Noble would pay $25 million to $30 million for his share of a royalty stream from the Middlemount coal mine in Queensland, allowing Mulsanne to complete the purchase of shares in Blackwood. The royalty, of $1 per tonne produced from Middlemount, is owned by private company Oceltip, 75 per cent owned by Mr Tinkler's wife and 25 per cent by Mr Tinkler's former business partner Matthew Higgins - now suing over alleged improper accounting of the income.
Mr Tinkler conceded he could not deliver Mr Higgins' share of the royalty but he believed Noble, if it could not secure 100 per cent, would still have bought his own share. "It was always two separate transactions," Mr Tinkler said. "Ideally they would have happened simultaneously."
As the due date for payment loomed, Mr Tinkler said he was "still hopeful that something could be worked out with Noble".
Mr Tinkler said the deal was based on numerous conversations, particularly with Noble director and head of its coal division Will Randall. The deal was not documented, although in hindsight "I certainly I wish I had done that".
In the affidavit of Mulsanne's liquidator Robyn Duggan, Mr Randall is quoted emailing Blackwood chairman Barry Bolitho in September to say he had met Mr Tinkler but "talk is cheap" and "no solution will be forthcoming until full legal due process is fully exhausted". Mulsanne was placed into liquidation by Blackwood, which is majority-owned by Noble, in November.
Mr Tinkler said he had "trusted" his relationship with Noble and never doubted Mr Randall's authority to do the Oceltip deal. "I put my faith in the wrong people."
Counsel Robert Newlinds, SC, for the liquidator, questioned why, in written answers to a questionnaire on the Mulsanne failure which was provided to the liquidator in December, Mr Tinkler had blamed only "unexpected adverse market conditions" and mentioned nothing about the Oceltip royalty.
"I think it falls under the market conditions," Mr Tinkler said.
Mr Newlinds put to Mr Tinkler that "you never really expected a sale of the Middlemount royalty [to complete before the Blackwood payment was due because] there just wasn't going to be time".
"I disagree," Mr Tinkler said.
Frequently Asked Questions about this Article…
Nathan Tinkler, the former coal magnate, appeared in the NSW Supreme Court as a witness in the winding-up of his shelf company Mulsanne Resources. He said a verbal arrangement with commodities trader Noble Group fell through and that he was "left holding the can" over a share subscription, blaming his long-time backers for letting him down.
Mulsanne Resources was Tinkler's shelf company involved in a share place agreement with listed Blackwood Corporation. Blackwood, which is majority‑owned by Noble Group, moved to place Mulsanne into liquidation after disputes over unpaid obligations tied to a $28.4 million share placement and related funding issues.
Mulsanne had agreed to pay $28.4 million under a share placement to take about a one‑third stake in Blackwood, with payment due five days after shareholders voted. Tinkler conceded he had "no definitive plan" to find the money when shareholders approved the deal and had been relying on an expected payment from Noble for a separate royalty interest to complete the purchase.
Tinkler said he expected Singapore‑based Noble Group to pay $25–$30 million for his share of a royalty stream from the Middlemount coal mine, which would have funded the Blackwood payment. He said that verbal understandings with Noble — notably discussions with Noble coal head Will Randall — were not honoured, leaving Mulsanne unable to meet its obligations.
The royalty is a $1 per tonne royalty on production from the Middlemount coal mine, held by private company Oceltip. According to the article, Oceltip is 75% owned by Tinkler's wife and 25% by Tinkler's former business partner Matthew Higgins, who is now suing over alleged improper accounting of the income.
No. The deal with Noble was apparently based on numerous conversations and was not documented. Tinkler told the court he "certainly" wished he had documented the agreement and said he had "trusted" his relationship with Noble and put faith in the wrong people.
The article notes that a judge, Paul Brereton, dismissed Tinkler's attempt to stay proceedings with an "abuse of process" claim as "tenuous." The liquidator Robyn Duggan included an affidavit quoting Noble's Will Randall saying "talk is cheap" and that no solution would be forthcoming until full legal due process was exhausted. Blackwood placed Mulsanne into liquidation in November.
Based on the article, the episode highlights risks of relying on informal verbal arrangements and on a single backer to fund major transactions. Tinkler's comments — that he had no definitive funding plan and later wished he had documented the deal — underline the importance of clear, documented funding arrangements and not assuming a backer will complete an expected payment.
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