Setbacks for Tinkler and Rinehart

There’s an interesting report doing the rounds today that $200 billion worth of mining projects in Australia could be delayed due to a combination of falling commodity prices, concerns about the global economy and rising costs.

That could well be bad news for Australia’s rich list, which has come to be dominated by the mining sector in the last few years, with Gina Rinehart’s incredible rise and Nathan Tinkler’s sudden wealth explosion two of the better stories.

Concerns about the state of the mining boom will be unwelcome for Rinehart and Tinkler, but they’ve got more pressing matters on their minds right now.

Tinkler, you will remember, is in the middle of a $5.2 billion takeover of Whitehaven Coal, a business in which he already owns a 21.4% stake.

He’s got 48.3% of the investors in Whitehaven (including his stake) to support the takeover, but he needs to get another 16.7% of shareholders to back him, or he faces the prospect of having to raise $900 million in equity funding to get the deal over the line.

The market has been sceptical about Tinkler’s ability to get the deal completed since it was announced in mid-July, as shown by the fact that Whitehaven’s shares have been stuck below the $4.30 mark, well under the $5.20 a share that he has offered in his takeover bid.

The doubts will grow further today as investors digest the news that another coal company, Blackwood Corp, has been forced to enter a trading halt after Tinkler failed to pay $28.4 million he had promised to take a stake in the coal explorer.

Tinkler’s people say the delay has been caused by a third-party funder and the payment would be made in the next few weeks.

And while Tinkler’s camp says the Blackwood deal has nothing to do with Whitehaven, there will be some wondering what it says about his financial position right now.

His argument that Blackwood and Whitehaven are separate matters does have merit and it’s clear that with a big chunk of his fortune locked up inside Whitehaven right now, finding free cash would probably be a challenge.

But with the Whitehaven share price down around $3.60, it’s also clear that investors simply don’t believe this deal will get done.  Stay tuned.

Gina Rinehart also had something of a setback yesterday, with a court ruling that she must pay the legal costs of her children and several media outlets, incurred as she fought to have details of the legal fight with her kids suppressed.

It’s a small issue in what promises to be a long war, but it will be significant for Gina’s children John Hancock, Bianca Rinehart and Hope Welker.

The three children have made it clear that running a legal case against Gina is proving extremely expensive – every little bit of money they can recoup will keep them in the fight that much longer.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.