SYDNEY (Reuters) - Australian coal magnate Nathan Tinkler, who has offered to buy out Whitehaven Coal (WHC.AX), is trying to line up at least $2.5 billion in debt from banks including UBS UBSN.VX and JPMorgan (JPM.N), two sources said on Thursday.
The 36-year-old ex-electrician is also looking to attract equity partners to put in a binding offer to Whitehaven, Australia’s No. 2 independent coal producer, the sources with direct knowledge of the deal said.
Tinkler is looking to get the backing of some Asian investors for equity to put in a bid with a “healthy premium”, said the sources, who declined to be identified as talks are confidential.
A spokesman for Tinkler declined to comment on Thursday.
On Wednesday, Whitehaven said Tinkler, the largest shareholder in the company with a 21.4 percent stake, had approached it with a buyout proposal that was too incomplete to be considered, but left the door open to a bid.
Media reports have said Tinkler, who recently moved to Singapore, is seeking equity support from Farallon Capital, which has worked with him in the past, and Japan’s Electric Power Development Co (J-Power) (9513.T), which owns 10 percent of one of Whitehaven’s key projects. The reports could not immediately be confirmed.
Whitehaven’s shares rose 0.2 percent to A$4.19 a share on Thursday, valuing the company at A$4.2 billion ($4.2 billion).
Tinkler’s move has taken the market by surprise as he had been widely expected to sell down his stake in Whitehaven, which he acquired when Whitehaven took over his Aston Resources and exploration company Boardwalk Resources for about $2.7 billion.
Instead he has leapt on the company, driven by a 23 percent slide in its share price since the takeover and plans to speed up development of Whitehaven’s projects, a source with knowledge of the deal said.
On its current plan, Whitehaven’s output is expected to rise from 6 million tonnes a year in 2012 to 25 million tonnes by 2016, when about 60 percent of its output will be coking coal for steel mills.
Tinkler, with a taste for fast cars, made his fortune selling a coal tenement to Macarthur Coal in 2007 and now owns the Newcastle Knights rugby league team, the Newcastle Jets Australian soccer team and a horse racing and breeding operation, snared when the industry was hit by equine flu.
The company put itself up for sale last year but scrapped the auction. At least half of the companies that bid for Whitehaven last year are unlikely to compete with Tinkler, including U.S. coal miner Peabody Energy (BTU.N), which has since taken over Macarthur Coal, and China’s Yanzhou Coal (1171.HK), which is set to take over Gloucester Coal GCL.AX.
Forbes estimated Tinkler’s wealth at $825 million in February, before the Whitehaven/Aston deal was finalized.
Additional reporting by Sonali Paul in MELBOURNE and Saeed Azhar in SINGAPORE; Editing by Lincoln Feast & Jean Yoon