A group led by Nathan Tinkler is considering lowering the price of its A$5.3 billion ($5.6 billion) offer for Whitehaven Coal Ltd. after the Australian coal producer’s shares slumped and coal prices weakened, according to two people with knowledge of the matter.
Tinkler Group Pty is studying whether the deal is still viable at the original cash offer of A$5.20 a share, now a 42 percent premium to the last closing price, the people said, declining to be identified because the talks are private. The group is continuing talks with investors who may help fund the transaction, said one of the people.
Tinkler, who is Whitehaven’s largest shareholder with about 21 percent of the Sydney-based company, led the group that offered to buy the rest of the company on July 13. An independent committee agreed to allow the group access to Whitehaven’s financial data for four weeks. About 48.3 percent of shareholders expressed interest in becoming stakeholders in the new company and another 16.7 percent of shareholders may also join, according to Whitehaven.
Kate Kerrison, a spokeswoman for Whitehaven, didn’t return a call today. Calls to Tinkler Group’s offices in Newcastle and Brisbane weren’t answered.
Tinkler, 36, an electrician-turned-miner who took his stake in Whitehaven when the company bought his Aston Resources Ltd. in May, is taking advantage of a 31 percent slump in the coal producer’s shares this year. Whitehaven said June 13 it had received an initial offer from Tinkler.
Coal prices have buckled because of weaker demand in India and China as economic growth slows. U.S. producers boosting exports of thermal coal as cheap domestic gas supplies prompt substitutions have also weighed prices down. About 69 percent of Whitehaven’s production was thermal coal, used to generate electricity, during fiscal 2012. Prices have dropped 20 percent since the start of the year.
Tinkler’s group has conditional letters of support from UBS AG, JPMorgan Chase & Co. and Barclays Plc. They have agreed in principle to provide about A$2.5 billion in loans to help fund the deal, people familiar with the matter said June 18.
Whitehaven’s seven mine assets in New South Wales include the coking coal Maules Creek mine, the thermal coal Rocglen operations, as well as Sunnyside, Vickery, Werris Creek, and Tarrawonga, according to its website.