Default risk: Cash-strapped mining magnate Nathan Tinkler with Knights coach Wayne Bennett. Photo: Darren Pateman
Nathan Tinkler edged closer yesterday to defaulting on his commitments as Newcastle Knights owner but has not given up hope of retaining control of the club.
Tinkler has until close of business on Monday to secure a $10.52 million replacement bank guarantee, a key component in the terms and condition of his 2011 takeover.
But the latest twist in negotiations suggests this might not happen, which would entitle the Knights members club to start the process of buying back the club for $1 from the struggling tycoon.
The first step towards that will occur today, when members club chairman Nick Dan accesses the existing bank guarantee, which expires on Monday, and collects cheques of $10.3 million from Westpac and $220,000 from the Greater Newcastle Building Society.
Those cheques will be deposited in a joint-signatory account, accessible only when HSG and the members club concur.
In the meantime, Knights chairman and CEO Matt Gidley have held last-ditch negotiations with the members club and the NRL in the aim of creating a new ‘‘unified’’ business structure.
How this can be achieved remains to be seen, but if a new bank guarantee is not in place by 5pm Monday, Tinkler will have reneged on his obligations, and the members club will have the upper hand in any negotiations.
It would then appear HSG would need to produce an extraordinary proposal to persuade the members club not to activate the process of buying the club back for $1.
Alternatively, the NRL could step in to broker a ‘‘restructure’’ of Knights at management level, as the governing body has done this month with Wests Tigers.
But it is understood the NRL would be reluctant to override the rights of the members, as agreed when Tinkler privatised the Knights on March 31, 2011.
In a statement issued last night, the Knights said HSG had ‘‘allowed’’ the bank guarantee to be transferred into a joint-signatory bank account.
‘‘HSG has been in fruitful discussion with the NRL over a period of time to identify a unified business model to ensure the long-term future of the Knights,’’ the statement said.
‘‘This guarantee has been placed in a secure bank account with joint signatories being HSG and the members club while negotiations between the members club, the Knights and the NRL continue.
‘‘The current ownership model and management team will remain in place throughout the duration of these discussions.
‘‘No further comment will be provided by any parties involved during this period of negotiation.’’
In a list of key points, the statement said the Knights, members club and NRL would ‘‘undertake negotiation to identify a new model moving forward’’ and HSG remained ‘‘committed to contribute [to] and support the Knights into the future’’.