The speculation continues around the financial health of self-made rich list member Nathan Tinkler and his many private companies, including Cayenne Coal and Mulsanne Resources, with court proceedings regarding a failed share placement by Blackwood Corp (ASX: BWD) to Mulsanne underway in the NSW Supreme Court. The situation is not looking good for Tinkler, who appears to have substantial debts and liquidators knocking at his door.
Tinkler also holds a 20% shareholding in coal miner Whitehaven Coal (ASX: WHC). With the share price of Whitehaven now languishing at four-year lows, Tinkler has taken a huge hit to his wealth. The drop in Whitehaven's share price has also raised questions surrounding margin loans which may or may not be held by Tinkler and other senior members.
Whitehaven meanwhile continues to bounce between good and bad news leaving investors no doubt shaking their heads. The January hoax press-release sent the share price down nearly 9%, this was followed by the February announcement of CEO Tony Haggarty's retirement, then there has been speculation surrounding possible takeover offers, the purchase of remaining interests in the South Vickery Project and the recent federal government approval for the Tarrawonga mine expansion which will see production increase from 2 million to 3 million tonnes per year and extend the mine life from 2017 to 2030.
Fellow coal miners New Hope Corp (ASX: NHC) and Yancoal Australia (ASX: YAL) are also pure-play coal mining businesses, which like Whitehaven and Blackwood are trading well off their recent 12-month highs. Given coal prices are not far from multi-year lows this is not surprising, as company profits are closely correlated to prices.
Foolish takeaway
With a cloudy outlook surrounding bulk commodities such as coal and iron ore, largely due to a slowing Chinese economy, Foolish investors who wish to invest in commodities may be wise to focus their attention where the outlook is perhaps clearer.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
