Bloomberg News

Tinkler Exits Whitehaven Stake as Magnate Battles Creditors (1)

June 19, 2013

Farallon Takes Part of Tinkler’s Whitehaven Stake, Buys More

A copy of the Whitehaven Coal Ltd. annual report is displayed at the company's annual general meeting in Sydney. Photographer: Ian Waldie/Bloomberg

Former Australian billionaire Nathan Tinkler, who’s been battling creditors, sold his shares in Whitehaven Coal Ltd. (WHC), with Farallon Capital Management LLC paying A$301 million ($285 million) for more than half his stake.

Farallon paid A$2.96 a share for the 9.91 percent stake, a 40 percent premium to yesterday’s close, Tinkler Group said today in an e-mailed statement. Farallon agreed to buy a further 1.63 percent, subject to regulatory approval. His remaining shares were sold to other members of a syndicate of his lenders, Whitehaven said in a statement, without identifying them.

Tinkler, an electrician-turned-entrepreneur, was ranked as Australia’s youngest billionaire at the age of 35 by BRW magazine in 2011 before a series of court cases and asset sales combined to reduce his wealth. The transactions mean San Francisco-based Farallon replaces Tinkler as Whitehaven’s largest shareholder, his last major listed investment.

“Nathan Tinkler’s personal and financial problems are well-documented and have also become a significant distraction to the board,” Stan Shamu, a markets strategist at IG Markets Ltd. in Melbourne, said today by phone. “Investors will be glad that uncertainty has been removed and that the distraction will no longer be seen to have any impact on the performance of the business.”

Whitehaven climbed 4.3 percent to close at A$2.20 in Sydney, valuing it at A$2.3 billion. The stock has fallen 37 percent this year as coal at the port of Newcastle, the Asian benchmark, has dropped 8 percent.

Wife’s Allowance

Tinkler, who sold his house in 2006 to buy into a coal mine, made a A$5.3 billion bid for Whitehaven last year, which collapsed in August as coal prices fell. He testified in court in March that he’s living on an allowance that he gets from his wife who controls a A$1.4 billion trust.

“Farallon believes the current market price of Whitehaven shares does not reflect the value of the company,” the U.S. firm said in the statement. “The Farallon funds now have a sizable investment in Whitehaven, and Farallon looks forward to growth in shareholder value over time.”

Tinkler owed as much as $700 million to his backers including Farallon, Credit Suisse Group AG and Kuok Group and missed a $200 million payment in October, people familiar with the matter said in November.

Farallon is an investment adviser that employs 160 people in six offices in London, Singapore, Hong Kong and Tokyo and Sao Paulo, according to its website. Farallon, which already owns 5.1 percent of Whitehaven, will end up with a 16.62 percent stake subject to approvals.

Emotional Attachment

Tinkler, who held 19.4 percent of Whitehaven , according to an October statement, said it was a difficult decision to sell the stake due to his “emotional attachment” to the assets, specifically the Maules Creek coal project in New South Wales state.

“No longer being a substantial shareholder of Whitehaven will benefit all existing shareholders,” Tinkler Group said. While happy with the price, “we feel strongly that this still significantly undervalues the company’s underlying asset base,” it said.

Tinkler agreed this month to pay A$12 million to settle a dispute with Blackwood Corp. over a failed share purchase. The Blackwood liquidators applied on May 22 to freeze his assets, including the Whitehaven stake and a family trust managed by his wife.

Mirvac Group (MGR) sued Tinkler companies Ocean Street Holdings Pty and Buildev Group Pty for failing to complete a land purchase north of Sydney. The Tinkler companies settled on Oct. 23 as a court hearing was due to begin, agreeing to pay Mirvac A$16.6 million.

Singapore Move

Tinkler, who moved to Singapore last year, in April put up for sale his Patinack Farm thoroughbred racing business, including 1,000 racehorses, stallions and broodmares. He also put his seven-bedroom Queensland mansion up for sale.

He gained his stake in Whitehaven after the coal producer took over Tinkler’s Aston Resources Ltd. and other Tinkler assets in a A$2.7 billion deal in 2011. Farallon owned 9.5 percent of Aston prior to the Whitehaven takeover, while Kuok Group owned a 5.5 percent stake, according to an Aston presentation in 2011.

Tinkler’s business journey began when he sold his house to help buy the A$30 million Middlemount coal lease in Australia, before selling it a year later to Macarthur Coal Ltd. for about A$465 million. In May 2008 he sold his Macarthur stake to ArcelorMittal (MT) and bought the Maules Creek mine from Rio Tinto Group two years later. Tinkler made an initial public offering of Aston Resources, containing Maules Creek, in August 2010.

To contact the reporter on this story: Brett Foley in Melbourne at bfoley8@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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