Cards turn on Tinkler the gambler

HE HAS built an unparalleled reputation as the man who could pull off the most unlikely of business deals. And with it came a fortune.
Nanjing Night Net

But yesterday morning Nathan Tinkler was forced to announce his latest venture – to privatise Whitehaven Coal – was dead in the water.

The market took the news badly. Within minutes of the shares coming off a trading hold at 11am, the stock had slumped more than 18 per cent. By the close, the shares were still down 11 per cent.

For Tinkler – the former electrician who in five years turned a $500,000 loan for a coalmine into a position as the wealthiest Australian under 40 – the numbers were stark.

His Whitehaven shares – worth $1.18 billion in April – are now valued at $657 million. That equates to a losing $4 million a day.

But the situation may be worse for the former billionaire than those numbers indicate. One analyst told BusinessDay that potential equity partners were put off investing in the Whitehaven privatisation for fear they could be caught up in a corporate collapse or bankruptcy.

A spokesman for Tinkler described such suggestions as ”rubbish”, but declined to reveal why he withdrew his bid.

The questions many are raising are how much debt Tinkler is carrying and whether his financiers will call in their loans if the value of his Whitehaven holding – constituting the bulk of his wealth – continues to fall?

BusinessDay believes the combined liabilities in Mr Tinkler’s various private entities could be up to $638 million – owed mainly to Singapore-based Noonday Capital Management, an arm of long-term backers Farallon Capital, but also to GE Capital and Westpac. It is not known how far these loans have been drawn down. Mr Tinkler’s spokesman said his maximum liability was ”a mere fraction” of $638 million.

Tinkler has no fear of debt. In 2007, at the age of 30, he mortgaged everything to scrape together the deposit on the Middlemount coal deposit in Queensland, on-selling within 18 months for $442 million. In 2009 he doubled up and won, buying another coal tenement, Maules Creek, for $480 million from Rio Tinto and on-selling it within six months for $1.2 billion in the float of his private

company Aston Resources. In April, he pulled off his third major deal, engineering a three-way merger between Aston, Whitehaven and his private Boardwalk Resources – at a hefty valuation that stunned investors. In yesterday’s deal, Tinkler was the buyer not the seller but could not come up with the cash.

Tinkler – who recently moved to Singapore – has not just borrowed against his Whitehaven shares. He has also taken loans out against his private jet and land in Hawaii. Even machines on his lavish horseracing and breeding properties are leveraged.

And the recent bad news has not been quarantined to his Whitehaven interest. On Monday it emerged that Tinkler’s racing and breeding empire, Patinack Farm, was in financial straits, having failed to pay workers’ superannuation since last November.

Tinkler had tried and failed to sell the whole operation, including more than a thousand horses for $200 million – a $100 million loss on what he pumped in since 2008.

That failure to offload Patinack is costing Tinkler about $500,000 a week to run Australia’s biggest racing operation..

And on Tuesday, a string of businesses came forward to claim that Patinack and other companies linked to Tinkler owed them money.

On Wednesday, one business analyst likened him to entrepreneurs who built a fortune on the back of a boom, only for it all to end in disaster. According to John Singleton, a friend and former investor in Tinkler’s companies, the comparison to Alan Bond and Christopher Skase is bound to hurt.

”If he has one weakness, it’s that he doesn’t like criticism,” says Singleton. ”Not that any of us do, but I’ve certainly had longer to get used to it than Nathan. That’s why he moved to Singapore.”

But Singleton played down Tinkler’s debt situation. ”He’s had a tough run of it. but he’s astute. He’s a gambler … I’m sure he’ll come through this.”

This story Administrator ready to work first appeared on Nanjing Night Net.