Embattled former billionaire Nathan Tinkler (pictured, left) has until 5pm Monday to get a $10.5 million guarantee from an Australian bank, which would enable him to hang onto his beloved rugby league club, the Newcastle Knights.
Given Tinkler’s Hunter Sports Group failed to come up with the same amount of money at the end of January as required by the 2011 privatisation agreement — instead arranging only a two-month extension of the existing $10.3 million guarantee from Westpac — signs are not encouraging.
Last week Westpac took the extraordinary step of publicly confirming that it stood ready to honour the existing bank guarantee. No doubt that was reassuring to Knights members, but it was extraordinary to see a bank effectively comment publicly on the affairs of a customer and a sign that Westpac had lost patience with Tinkler. At the same time Westpac — which has security over a number of Tinkler’s properties — wound up two private companies that own properties in Brisbane and Newcastle.
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Yesterday Tinkler failed to meet a deadline imposed by the Newcastle Knights Members Club, which will today go to Westpac and ask for the existing guarantee to be honoured, depositing $10.3 million into an account that cannot be accessed without joint signatures from both the members and HSG.
Tinkler’s story has been told again and again. Apart from the Knights, almost everything Tinkler has left has effectively been on the market since mid-2012, when a slump in coal prices put the highly geared mogul under intense financial pressure and his sprawling business empire began to unravel. That includes expensive real estate from Newcastle to Maui, Brisbane to Coffs Harbour; his Patinack Farm horse stud; the Newcastle Jets A-League club, and remaining mining interests including Aston Metals, which owns the Walford Creek prospect near Mt Isa and is in receivership.
There may yet be transactions — there are fresh rumours of a serious bid for the whole of Patinack, and one of Tinkler’s neglected properties at Merewether in Newcastle is said to be under offer — but it seems highly unlikely those could occur fast enough, or free up enough cash, to help Tinkler keep the Knights.
The year started with rumours of a possible comeback: Tinkler is believed to have a small team of loyalists working out of an office in Brisbane on potential coal plays, including an unsuccessful recent bid for Peabody’s unloved Wilkie Creek coal mine in Queensland’s Surat Basin. Tinkler, who has apparently been living between Singapore and New York, has reportedly been spending so much time in Australia, mainly trying to get up his next coal deal, that he risks endangering his non-resident staus for tax purposes.
With coal prices still depressed — thermal coal is now trading around $75 a tonne — the market headwinds are dead against Tinkler.
Worse, in any potential deal it is unclear what he might bring to the table. Tinkler has had a highly public fall from grace, particularly after undergoing public liquidator’s examinations last year after the collapse of his Mulsanne Resources, and after the loss of his major asset, a 19% stake in troubled listed miner Whitehaven Coal.
The sale of that Whitehaven stake to his main lender, US hedge fund Farallon Capital, did not even wipe Tinkler’s accumulated $700 million-plus in debt — he is believed to still owe up to $150 million.
With all that against him, it will be truly remarkable if Tinkler can fund a new guarantee for the Knights by Monday and prevent the members buying the club back for a dollar. He will no doubt try.
*Paddy Manning is the author of Boganaire: The Rise and Fall of Nathan Tinkler, published by Black Inc and available in bookstores now