Not only did Tinkler fail to attract the support of many other shareholders at the Whitehaven annual general meeting yesterday but he left himself isolated and without a significant say in the running of a company in which he has the bulk of his fortune invested.
In other words, the Whitehaven directors Tinkler criticised are the same people who will decide the fate of the $500 million he has tied up in Whitehaven shares.
The reality of that point, which seems to have escaped most comments on yesterday’s AGM, is perhaps the most important development from what has been a bruising week of claim and counter claim.
Tinkler kicked off proceedings with his public letter of demand that Whitehaven dramatically improve its performance by adopting a series of his suggestions that range from cost cutting to smarter marketing.
Some of the points raised by Tinkler are valid. Work on the Narrabri and Maules Creek projects has been slow and costs are too high in a climate of low coal prices.
However, even if Tinkler has scored a few points he is doing it from the outside while his money is inside.
Options open to Tinkler today seem very limited. He can:
- Push on with his campaign of shouting criticism from the street outside the Whitehaven boardroom
- Fade away and hope that the people managing his money will do better in the future; or
- Sell and reinvest his cash elsewhere.
None of those three possibilities will be very appealing for a man who is increasingly angry and isolated.
To continue shouting at the Whitehaven board seems rather pointless after so few fellow Whitehaven shareholders joined his campaign.
Undoubtedly everyone invested in the company would like to see fatter profits – or any profits for that matter given the parlous state of the world coal market – and a higher share price. That is stating the obvious.
However, the voting numbers at yesterday’s meeting appear to indicate Tinkler’s full-frontal attack on Whitehaven’s directors was a dismal failure and he has achieved little except losing a year in his attempt to cause fresh elections for the full board.
If the vote on the company’s remuneration report is a guide investors representing less than 6% of the company joined the Tinkler campaign.
It means that even with his 19.4% stake only 24.98% of the votes went against the board.
That vote represents a “miss” because it requires a 25% vote against a company’s remuneration report to achieve a total “spill” of the board and then only after two successive years of a negative vote of more than 25% of shareholders.
To fade away is just not Tinkler’s style.
He is a man who needs to do things and be seen to be doing them and in the case of his shares in Whitehaven there is a question over the funding arrangement.
That leads to the third option and the one least palatable to Tinkler.
That is the sale of his stake in Whitehaven because it could leave him with very little after dealing with his bankers.
It would be a very brave man to say that Tinkler has painted himself into a corner but that is what it looks like from the outside.
He is obviously unhappy with the Whitehaven share price, which has fallen from $5.60 earlier in the year to around $3 today.
Tinkler also says he is unhappy with the performance of the board, though that seems to be a view not shared by most of his fellow Whitehaven shareholders.
It is such an unhappy picture from Tinkler’s position that the best option would seem to be the sale of his stake in Whitehaven and finding something else to do.
That is where the ultimate problem exists and raises a question that The Hog cannot answer – what are Tinkler’s private arrangements with his banks and how much of his debt is attached to his Whitehaven shares?
The next few months should throw more light on Tinkler’s position but right now he would be unwise to put a for sale sign on his Whitehaven shares because that might further depress the price, while retaining his 19.4% stake means permitting the same people he has criticised to remain in control of his money.
So, what now Nathan?
