Whitehaven Coal Faces Legal Proceedings – What Investors Need to Know

On Friday 21 December 2018, Whitehaven Coal Limited (ASX: WHC) has received legal notice with a statement of Claim commencing representative proceedings against the company and the hearing is in the Supreme Court of Queensland.

Whitehaven Coal Limited (ASX: WHC) is a mid-cap stock with the market capitalization of $4.45 Bn as of December 27, 2018. The company develops and operates coal mines. The overall workforce is more than 1,700 strong, with around 75 percent of their employees living in the local communities around where their operations are based. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

The company mines have some of the best quality coal in the world, which is high in energy and low in ash, Sulphur, and other impurities. Their coal assists key customers such as the Governments of Japan and Korea and they have reduced their carbon emissions by up to 30 Percent.

Mr. Nathan Tinkler, the trustee of the Boardwalk Resources Trust started the Proceedings. it was specifically brought on behalf of Tinkler and a few parties who have issued Milestone Shares in Whitehaven in May 2012.

In the proceedings, Mr. Nathan Tinkler has argued that he holds certain Milestone Shares, but the company believes that Milestone Shares are owned by Boardwalk Resources Investments Pty Ltd. The company denies the ownership of Mr. Nathan and currently, Boardwalk is under the liquidation process.

Mr. Nathan had charged various allegations against Whitehaven regarding an alleged breach of contract and try to mislead or apply deceptive conduct in connection with the Milestone Shares. Whitehaven Coal Limited denies any wrongdoing, and they seek to dismiss the case at an early stage.

Quarterly Financial Performances: At the end of September, the company has maintained strong safety performance with Group TRIFR of 7.29. The company has also successfully completed the full longwall changeout at Narrabri by mid-September and production at Narrabri is currently ramping up on schedule. In September quarter they have managed saleable coal production of 4.0Mt. In early September, the company paid a final dividend of 27 cents per share to shareholders.

FY18 Financial Performances: The company generated revenues of $2,257.4 million in 2018, representing an upside of 27.3% over the $1773.2 million recorded in the corresponding period in 2017. Underlying EBITDA for the year is $940 million, an increase of 31.62% over the $714.2 million recorded in the corresponding period in 2017. The Group’s net profit for the year stood at $525.6 million, representing an upside of 29.65% over the prior year which was $405.4 million.

On Balance Sheet front, Net Assets has increased by 6% to $3,489.8 million in FY18 over the $3,292.3 million in the corresponding period in 2017. Net debt has decreased by 13% to $270.4 million in FY18 over the $311.1 million in the corresponding period in 2017.

On December 12, 2018, Whitehaven Coal Limited has become a substantial holder in Vinva Investment Management.

In the last six months, the share price of the company decreased by 21.32 percent as on 24 December 2018. WHC’s shares traded at $4.370 with a PE multiple of 8.160x as on 27 December 2018 (AEST 04:00 PM).


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