It’s on. Nathan Tinkler, the former electrician who turned a small coal deposit in Newcastle into a billion dollar fortune, is proceeding with his most ambitious deal yet, making his $5.2 billion bid for Whitehaven Coal official on Friday night.
This comes just months after Tinkler pulled off the merger of Whitehaven with his previous coal company, Aston Resource. Under that deal, completed in April, Tinkler not only managed to merge Aston with the larger Whitehaven, but he also got Whitehaven to buy another Tinkler company called Boardwalk Resources.
Tinkler has a 21.4% stake in Whitehaven and has already got the backing of several other big Whitehaven shareholders (including ANCU, First Reserve, Farallon Capital Partners, Burlingham International and Kuok Group) who are prepared to swap their stakes in Whitehaven Coal for stakes in Tinkler’s unlisted vehicle.
At $5.20 a share, Tinkler is paying a hefty premium to the $3.45 a share that Whitehaven closed at last Friday.
That will probably tempt many shareholders to cash out, although it will be interesting to see if some investors decide to join the big shareholders and shift their shares into Tinkler’s vehicle, thereby backing the billionaire’s long-term view that better times are ahead for the coal sector.
Two men who are prepared to sell out are Whitehaven executives and Rich List members Tony Haggarty and Andy Plummer – Tinkler is about to give them their second big coal-related payday in the space of five years.
Haggarty and Plummer were partners in Excel Coal, a junior exploration company that read the minerals boom perfectly and went from a cashed-up buyer of minor coal assets to a major listed player.
In 2006, Haggarty, Plummer and their fellow investors were approached by US mining giant Peabody and eventually sold out in a $2 billion deal.
Haggarty received about $220 million for his stake, while Plummer took about $80 million off the table.
Within a year of selling Excel, Haggarty and Plummer were back in harness as investors and directors at Whitehaven Coal. In 2008, the company asked Haggarty to take the reins as managing director and Plummer took a business development role.
Excel and then Whitehaven have helped put both men on BRW’s Rich 200, part of a growing band of mining executives who joined the list after long careers in the mines. Haggarty was valued at $470 million in the May edition of the Rich 200, while Plummer’s fortune was estimated at $240 million.
Now the business partners are set for another big payday. Based on Tinkler’s $5.20 a share offer, Haggarty and Plummer will get a tick under $175 million each.
Haggarty has made it pretty clear that he won’t be staying on with Tinkler’s vehicle and has previously said that Whitehaven would be his last executive role.
And after two big paydays in five year, who could blame him.
James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
