The process of removing Nathan Tinkler as Newcastle Knights owner appears certain to kick off early next week, but it could be a long and bitter coup. A number of informed sources have told Fairfax Media Tinkler’s Hunter Sports Group executives haveacknowledged the much-publicised $10.52 million bank guarantee will not be in place by the deadline of 5pm Monday.
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‘‘It’s over,’’ one source said.
But another source warned: ‘‘This could take two weeks. Or it could take months, maybe more.’’
Barring an 11th-hour miracle, Tinkler will be in breach of the terms and conditions of his 2011 takeover agreement by close of business Monday, coincidentally on the third anniversary of the historic ballot at which 97 per cent of the club’s members voted in favour of privatisation.
If he defaults on this fundamental commitment, Tinkler would entitle the Knights Members Club to buy the city’s NRL franchise back for$1, which they feel is an obligation rather than an option.
The only question now seems to be how the process will unfold. Once the members club announces its intention to take up the $1 buyback, which may happen as soon as Tuesday, a period of negotiation will follow with HSG. These talks are unlikely to be amicable, judging by past events. This is shaping as a protracted wrangle and the NRL may need to referee.
Attention is then expected to turn to the state of the Knights’ finances.
Fairfax Media has been told there is growing concern that a multimillion-dollar debt may be uncovered.
‘‘The first step in any transition will be to get HSG to open the books,’’ one source said. ‘‘You need to shine a torch in there and get an understanding of the magnitude of any liabilities.’’
The members club has already accessed the existing $10.52 million bank guarantee, a two-month interim agreement that expires on Monday, and had it converted into cheques, which were deposited in a joint-signatory account with HSG on Friday.
The bank guarantee was written into the original deed of sale as a ‘‘safety net’’. It was supposed to ensure the members club had a nest egg with which to pay any Knights’ creditors and establish a new entity.
Given that these funds can be withdrawn only when HSG and the members club both agree, there are concerns that disputes will arise. ‘‘If HSG has liabilities and bills to pay, you can imagine they will put pressure on the members club to release some of that cash,’’ a source said.
It is understood Tinkler believes he should be entitled to retain a stake in the Knights.
Informed on Friday that Fairfax Media intended to report that HSG would not comply with the bank guarantee stipulation on Monday, HSG chief executive Troy Palmer replied: ‘‘No comment.’’
