Troubled former billionaire, Nathan Tinkler has lost his $600 million stake in Whitehaven Coal (WHC) to US investment firm Farallon Funds and other creditors.
Mr Tinkler said he had also agreed to sell the rest of his remaining stake to another fund called Noonday, a hedge fund and other unnamed investors.
These shares seem to have been ‘sold’ in exchange for debt repayments.
In fact Mr Tinkler seems to have forced to exit Whitehaven by his creditors who took control of his shares in exchange for his debt. It is not known if the series of deals wipes out his debt to creditors such as Farallon and Noonday, plus Credit Suisse and Kuok Group.
Mr Tinkler reportedly missed a $200 million payment last October and has been under rising pressure since.
Media reports late last year said he owed $700 million to a group of creditors, including Farallon and Noonday.
The loss of control of the shares comes after his move to Singapore, where he has established a new corporate base.
He has been forced to liquidate some of his enormous horse breeding and racing empire at a big loss, and reached deals with other creditors, including rival mining companies and the tax office.
News of his exit from Whitehaven came early yesterday when it was announced that 101 million Whitehaven shares were sold at $2.96, a fat premium of nearly 40% to the Tuesday closing price of $2.11. They went to Farallon Funds.
In reaction to the news, Whitehaven shares jumped 10% to $2.31 in trading yesterday and then eased and closed at $2.20, up 9c for the day.
12-Month WHC – Tinkler share sale a small relief for Whitehaven
Despite the hopes of some punters that the sale could mean a takeover for Whitehaven might be on the cards, the way the shares eased in the afternoon tells us that that was a fleeting fancy.
A bid will be unlikely so long as coal mining companies are on the nose with investors. Whitehaven is among those.
That means there won’t be a takeover offer for the coal miner for the time being, if ever, unless Farallon manages to find another group willing to mount a bid using the 101 million shares (9.91%) and other shares it already held, as a starting stake.
With its existing stake, Farallon will have 14.5%. It has agreed to buy another 1.63% of Whitehaven, subject to regulatory approval. It already held a 5.1% stake in the company.
With the extra stake, the hedge fund will own around 16.1% of Whitehaven, which means it will need FIRB approval being a foreign company.
Farallon said in a statement that it "believes the current market price of Whitehaven shares does not reflect the value of the company".
"The Farallon Funds now have a sizeable investment in Whitehaven, and Farallon looks forward to growth in shareholder value over time."
But given the downturn in world coal prices, weakening sales and investment, not to mention the crash in coal company prices, a takeover is unlikely, especially as Mr Tinkler tried to bid for Whitehaven at $5.3 billion in 2012 which failed.
Farallon is now the biggest shareholder in Whitehaven.
Now the focus turns to whether Mr Tinkler can raise the $12 million he needs to settle litigation with Blackwood Corporation. Under a settlement, this amount is due by June 30.
