Nathan Tinkler's reputation for brinkmanship faces its ultimate test after the Newcastle Knights owner failed to meet a deadline on Tuesday to secure a multi-million dollar bank guarantee.
After Tinkler's Hunter Sports Group was unable to produce a new bank guarantee by 5pm, Knights members club chairman Nick Dan will today visit Westpac Bank to access the $10.3 million surety already in place, which expires on March 31.
That will leave Tinkler with five days, until close of business on Monday, to prevent the members club directors from launching the process that will enable them to oust the struggling tycoon and buy the Knights back for $1.
After liaising with his four fellow directors – Trevor Crow, Steve Doran, Alan McKeown and Peter Corcoran yesterday – Dan told the Newcastle Herald: ''Once five o'clock came we contacted the bank and they told us what they want.
''We will adhere to that tomorrow.
''That's all I can really say at this point.''
The members club will instruct Westpac to place the $10.3 million into a joint signatory account – accessible only when HSG and the members club concur – for safekeeping.
If Tinkler defaults on Monday, the members will then lay claim to the cash and approach Tinkler to relinquish control of the club.
Asked if he had heard from HSG, Dan said ''communications have continued today'' but he could not elaborate on those discussions.
HSG chief executive Troy Palmer and chairman Paul Harragon did not reply to text messages on Tuesday, but a Knights spokesperson said that ''the Knights have been given no indication that the bank guarantee would not be in place by the 31st''.
Tinkler is renowned for settling financial wrangles at the 11th hour but even by his standards, this time he is cutting it fine.
Under the terms and condition's of Tinkler's 2011 takeover, if he was found at any point to have reneged on the terms and conditions, the members become entitled to buy the club back for $1.
A key component of the privatisation deal was the bank guarantee ''safety net'', initially valued at $20 million for two years then $10 million, plus Consumer Price Index inflation, for the next eight years.
A bank guarantee worth $10.3 million expired on January 31 this year.
It was supposed to have been replaced by one worth $10.52 million for the next 12 months.
Instead HSG negotiated a two-month interim extension, assuring the members club that this would save $500,000 in bank fees.
HSG promised to have a new bank guarantee, valid until January 31, 2015, in place by March 31.
The extra $220,000 for CPI was secured through another lender.
Palmer did not reply to messages on Tuesday but on Monday he told the Herald ''the bank guarantee will be sorted this week, not a problem.''
It is understood that Palmer emailed the members club last week to say that he ''anticipated'' the new guarantee would be secured by this Friday.
If that proves to be the case, Tinkler's ownership would continue.
In the meantime, the members club will today take the first tangible step towards overthrowing the controversial former billionaire.
Tinkler's already-strained financial position was further highlighted last week by reports that Knights players received their monthly wages four days late and Westpac Bank had appointed receivers to sell two of his properties in Newcastle and Brisbane.
Newcastle Herald
