Coal miner Whitehaven rebuffs takeover proposal

Whitehaven Coal has received a buyout proposal from its biggest shareholder just two months after completing a complex three-way merger that made it Australia’s largest publicly listed coal producer by market capitalisation.

The company said it had rebuffed the indicative approach from Australian businessman Nathan Tinkler, describing it “as highly conditional and incomplete”. But the A$4bn company left the door open to a revised offer saying it had set up an independent committee of directors to “consider any further developments”.

The 36-year-old Mr Tinkler had been expected to sell down his 21 per cent stake in Whitehaven, which last year agreed to buy two companies controlled by the former electrician, Aston Resources and Boardwalk Resources, for A$2.6bn in stock.

But people familiar with the situation said Mr Tinkler, who recently moved his primary residence to Singapore from Newcastle in New South Wales, believed he could help speed up development of Whitehaven’s projects by providing the company with better access to funding.

Analysts described the timing of his move as opportunistic and said it was not clear how Mr Tinkler would finance any deal. Investment bank Moelis & Co said any offer would have to be pitched at a premium of 25 per cent to Wednesday’s closing price of A$4.18.

Craig Lang, an analyst with Moelis, said Whitehaven was trading on a ratio of enterprise value to tonne of resource of A$1.72 a share, significantly less than A$2.79 paid for Australian coal companies since 2007.

Since the Aston/Boardwalk merger was approved by shareholders in mid-April shares in Whitehaven have lost a quarter of their value because of slowing economic growth in China, weakening coal prices and concern about escalating cost pressures in the Australia resources industry.

Thermal coal prices fell to a two-year low on Monday as surging exports from Indonesia, the world’s largest producer of the commodity used to fire power stations, and the US continued to overwhelm demand from Asian countries.

Whitehaven is developing three of Australian’s most significant new coal projects in the Gunnedah Basin in New South Wales. Last week, it sold a 10 per cent stake in its prized Maules Creek coal project, to Japan’s J-Power for A$370m.

Mr Tinkler, who owns Newcastle Knights rugby league team and Patinack Farm, the largest Australian-owned racing stable, has a fortune estimated at A$915m in the latest BRW Rich List.

He made his money by selling the Middlemount coal reserve in Queensland to Macarthur Coal in a deal worth more than A$440m in 2007. Mr Tinkler sold his family home to pay to pay for the A$1m deposit on the mine.