Tinkler down but still at the table

Published 27 September 2012 04:32, Updated 07 December 2012 18:07

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Tinkler down but still at the table

Fighter ... anyone who rules out Tinkler does so at their own peril. He has faced cynics for most of his career and has continued to prove them wrong. The big question is whether he can do so for what would be a fourth time – a considerable amount for a corporate veteran, let alone a 36 year old. Louie Douvis

Nathan Tinkler is still one of the richest young people in the country but his wealth is in freefall. A high-risk investor with a love of debt, Tinkler has always skated close to the edge and his strategy may be catching up with him.

Whether he can get on top of his problems remains to be seen. But if he doesn’t, Tinkler is bound to fall further down the
BRW Young Rich.

This time last year, Tinkler was riding high. His valuation of $1.13 billion was the highest ever for a self-made Australian entrepreneur aged 40 and under.

Then, shares in Aston Resources – in which Tinkler was the biggest shareholder – were surging and Tinkler was only months away from announcing a deal to merge Aston with Whitehaven Coal.

Little has gone right for Tinkler since. Whitehaven shares have fallen heavily and an audacious bid by Tinkler to privatise the company has so far failed. His mounting debts have caused cash flow problems and there have been several unpaid creditors in recent months, which have led to numerous lawsuits and some serious blows to Tinkler’s business reputation.

Then there are the asset sales, such as the 350 horses that Gerry Harvey’s Magic Millions will help sell for Tinkler’s Patinack Farm breeding and racing operation in October.

That comes after reports that Tinkler had tried unsuccessfully to sell all of his racing business to Sheikh Fahad Al Thani of Qatar for $200 million earlier this year. Tinkler has also been selling property and other personal assets such as sports cars and motorbikes.

Other reports suggest Tinkler’s debts are almost equal to the full value of his Whitehaven shares, his biggest asset, worth about $600 million.

BRW understands Tinkler’s debts are less than that: about $300 million to $400 million. His other assets, including Patinack Farm, property holdings in Australia, his new home base of Singapore and the Newcastle Knights rugby league and Newcastle Jets soccer teams take Tinkler’s value on this year’s Young Rich down to $400 million.

Yet anyone who rules out Tinkler does so at their own peril. He has faced cynics for most of his career and has continued to prove them wrong. The big question is whether he can do so for what would be a fourth time – a considerable amount for a corporate veteran, let alone a 36 year old.

Retailer Harvey Norman’s billionaire executive chairman, Gerry Harvey, is one who believes it is too early to write off Tinkler.

“He’s obviously got a lot of business acumen, there’s no doubt about that,” Harvey tells BRW. “He wouldn’t have got as rich as he has and done the deals he has without having business acumen.

“But do I have an insight into how he will go financially? No, I don’t. I would need to go through his profit and loss statements for that. Now, he’s never confided in me but I will say I’ve never had a problem with him at all and I’ve been dealing with him for five or six years.”

That period of time has been a roller-coaster ride for Tinkler, where his full gambling skills have been on display.

It all began in late 2006 when Tinkler borrowed about $1 million against his mining maintenance business Custom Mining for the down payment on the Middlemount coal deposit in Central Queensland. Tinkler was given another three months to come up with the rest of the $30 million price tag, which he did just in time with the help of Asian investors.

A year later, the listed Macarthur Coal paid $275 million in cash and shares for Custom, essentially to gain control of Middlemount. Then in 2008 Tinkler offloaded his Macarthur shares, by then slightly more than 10 per cent of the company at about $20 a share. “I thought it was pretty good value,” Tinkler said at the time. “It wasn’t too many months earlier that the [Macarthur] board had been happy to give me my shares at $8.”

Some of that huge gain went towards Patinack Farm, in which Tinkler invested up to $200 million in an attempt to quickly build a horse racing empire. Other funds were spent on luxury houses and sporting teams.

And some went on Tinkler’s next great deal, the purchase of the Maules Creek coal deposit outside Gunnedah in NSW by his then investment company Aston Resources from Rio Tinto for $480 million in November 2009. Tinkler had put down $25 million in equity and borrowed the remaining $455 million at an interest rate of 15 per cent for the first year to pull off the deal.

Six months later, Aston floated on the Australian Securities Exchange, worth $1.2 billion. Tinkler had once again confounded the critics.

And he did it again when he was able to successfully negotiate a three-way $2.25 billion merger between Aston, Whitehaven and his private outfit Boardwalk Resources, which was finalised in May.

But a subsequent $5.2 billion deal to privatise Whitehaven, which has suffered a large share price fall since the merger, has so far not come to fruition for Tinkler. And it is costing him serious money every day.

If Tinkler is to eventually pull off a deal to privatise Whitehaven, he will do so at a considerable cost, for he is already down more than $500 million from when the May merger between it and Aston Resources was finalised.

Privatising Whitehaven would help keep Tinkler, who moved to Singapore in February, out of the spotlight: something he would no doubt enjoy. But history, even as short as his is, shows he is unlikely to stay quiet for long.