* Tinkler was A$900 mln short on equity for bid - source
* Latest sign of Australia's mining boom losing steam
* Whitehaven open to other offers
* Shares sink 19 pct to three-year low
(Adds Whitehaven CEO, analyst comments)
By Sonali Paul and Narayanan Somasundaram
MELBOURNE/SYDNEY, Aug 24 Australian
electrician-turned-mining magnate Nathan Tinkler has walked away
from a $5.5 billion bid to take Whitehaven Coal
private, Whitehaven said on Friday, with a source saying the
businessman was unable to line up enough funds.
The decision knocked Whitehaven's share price down as much
as 19 percent to a three-year low and marked the latest sign of
a cooling in Australia's mining boom, dented by slowing growth
Doubts had grown over the fate of the Whitehaven deal over
the past two weeks after Tinkler failed to come up with a A$28
million payment to take a major stake in coal explorer Blackwood
Resources and amid reports that he had tried to sell
his horse farm.
"He possibly bit off more than he was able to chew in the
current environment," said Wilson HTM analyst Andrew Pedler.
Tinkler, who made his fortune selling a coal tenement in
2007 and also owns the Newcastle Knights rugby league team and a
horse racing and breeding operation, had offered A$5.20 a share
for Whitehaven, well above its recent share price.
It is the second time in 16 months that Whitehaven has
failed to sell itself. It scrapped an auction in May last year
after offers from six suitors fell short of its expectations.
Tinkler was about A$900 million ($944 million) short on
equity funding for the bid, said a source familiar with the deal
who declined to be named as the talks were confidential.
Tinkler had lined up some other key shareholders in
Whitehaven to roll over their stakes into an unlisted vehicle,
but was unable to drum up support from others as he could not
convince them there would be an exit route in a year or two.
Lenders who had agreed to provide A$2.0-A$2.5 billion were
unwilling to cough up more amid a deteriorating coal market,
warning that debt above that level would make Whitehaven
unviable and unable to service its debt from cash flows.
"It suggests that the lenders or those providing the equity,
someone, was nervous enough about market conditions not to go
ahead," Wilson HTM's Pedler said.
Tinkler was not immediately available to comment.
Takeover activity in Australia's resources sector has shrunk
64 percent in the year to date to $28.6 billion, according to
Thomson Reuters data, following a 20 percent slide in coal
prices this year and a drop in iron ore prices to their lowest
level since December 2009.
One of the few deals to go ahead was Whitehaven's takeover
of Tinkler's Aston Resources and Boardwalk, which gave Tinkler a
21 percent stake in Whitehaven, making him the company's biggest
Following the Whitehaven deal in May, Tinkler moved to
Singapore and had been expected to sell down his stake. But
instead, as Whitehaven's shares sank in line with sliding
thermal coal prices, he decided to pounce on the company.
In July he was given a month to look over the books with a
deadline of Aug. 23.
Tinkler had lined up debt of up to A$2.5 billion from
Barclays, JPMorgan and UBS, according
Whitehaven's shares sank to a low of A$2.83 on Friday and
last traded down 11 percent at A$3.09. The slide meant the value
of Tinkler's stake in the company has plunged 40 percent since
Whitehaven took over Aston.
Whitehaven wants to expand production to 25 million tonnes a
year by 2016 but is under pressure as thermal coal prices
have slumped 20 percent this year to around $92 a
Adding to its woes, the group reported a 21 percent fall in
underlying profit to A$57.8 million on Friday, hurt by slowing
demand in China, supply competition from U.S. and Colombian
exports, and rising costs due to heavy rain.
The result was well below analysts' forecasts at A$67
million, according to Thomson Reuters I/B/E/S.
($1 = 0.9576 Australian dollars)
(Reporting by Sonali Paul; Editing by Richard Pullin)