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UPDATE 2-CEO at Australia's Whitehaven stays out of Tinkler talks
April 18, 2013 / 2:55 AM / 4 years ago

UPDATE 2-CEO at Australia's Whitehaven stays out of Tinkler talks

5 Min Read

* Whitehaven not considering buyback of Tinkler stake

* Denial of sale prolongs uncertainty over miner's fate

* Options limited for selling Tinkler's 19 percent stake

* Talks between Tinkler, lenders, "not for us to meddle in"-CEO (Adds CEO comments, details on Tinkler)

By Sonali Paul

MELBOURNE, April 18 (Reuters) - The new CEO of Australia's Whitehaven Coal poured cold water on speculation of an imminent sale of struggling tycoon Nathan Tinkler's stake in the firm, one of many uncertainties that have dragged its share price to a four-year low.

Whitehaven CEO Paul Flynn told Reuters the company is not in talks with any potential suitors and is unaware of anyone waiting in the wings. That means it is unlikely any strategic player is looking to grab Tinkler's 19 percent stake as a precursor to a bid for the entire company.

"We don't have any potential proposals before us in that regard, nor discussions about those things in any ongoing fashion," Flynn said in a phone interview late on Wednesday.

Expectations of a pending sale have been fuelled by talk that Tinkler's lenders, led by Noonday Asset Management, a unit of U.S. hedge fund manager Farallon Capital Management LLC, want to call in their $600 million loan to Tinkler. Flynn's denial will only prolong the uncertainty over the miner's fate, which has been hard-hit by a 35 percent plunge in coal prices since January 2011.

Whitehaven said last December it had held talks with China's Shenhua Group Corp Ltd about a potential corporate or asset deal. Bankers familiar with the matter have said China's biggest coal producer is no longer interested.

Flynn also knocked down speculation that Whitehaven has held discussions with Noonday about ways to sort out the problem.

"The issue you're pointing to is between a borrower and a lender, and it's not for us to meddle in the affairs of a shareholder, no matter how large, between themselves and their lender group," he said. "So that's the beginning and end of our involvement in that dialogue."

Whitehaven's shares have sunk due to weak coal prices, delays on its key growth project and uncertainty over the fate of Tinkler's stake. The stock last traded down 3.5 percent at A$1.93.

Stranded

Tinkler's stake in Whitehaven, the main source of his wealth, is pledged against the $600 million loan and is now worth less than A$400 million ($412.30 million). The stake's value has plunged 63 percent over the past year.

Options for selling his holding are limited.

If Farallon Capital Management was to take over Tinkler's stake, the hedge fund would end up crossing the 20 percent threshold and would be forced under Australian rules to make a takeover offer for the whole company. Farallon already owns 5.7 percent of the company.

One option could be to sell down Tinkler's shares to other funds, including Switzerland-based AMCI and U.S.-based First Reserve Corp, which together with their founders control 16 percent of Whitehaven.

Flynn said he believes AMCI and First Reserve are not about to give up on the company, but declined to comment on whether they want Tinkler out.

"They seem to me to be very comfortable with the underlying value of the business and certainly our discussions would lead me to believe they wouldn't see the current share price as anywhere near reflective of that underlying value," he said.

Flynn played down the idea that Whitehaven could buy back Tinkler's stake, a process that would involve shareholder approval.

"We do examine all sorts of options that we think might be productive to driving value for the whole shareholder group, but certainly a buyback at this point in time is not something we're contemplating," he said.

The company is focused on reviving its value by cutting costs, fixing problems at its Narrabri mine and securing government approval for the Maules Creek project, both in the state of New South Wales, while it expects no improvement in coal prices in the near term, he said.

Tinkler has been the target of several lawsuits in Australia to recover millions of dollars in unpaid debts, the most prominent of which is an ongoing case brought by small coal explorer Blackwood Corp Ltd for A$28.4 million ($29.3 million) over an agreed share placement deal.

A number of the cases have been settled out of court, but Tinkler has put his beloved thoroughbred racing and stud empire, Australia's largest, up for sale. His private helicopter has already been seized by creditors.

($1 = 0.9702 Australian dollars)

Additional reporting by Jane Wardell in SYDNEY; Editing by Matt Driskill

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