"He's not working in our programme at present," Peterson confirmed.
The likelihood is the two crews would disembark from the Karapiro high performance centre on their training rows and have Tonks join them in his training boat launched from a jetty further down the lake.
To agree to that as an option, Rowing NZ needs to yield on principles which dictate they are a purely centralised programme with no room for outsiders. A ladleful of flexibility must be added to a successful recipe which has delivered 68 Olympic or world championship medals since the Athens in 2004.
The choice can be encapsulated in the mantra: Athletes first.
The unwanted alternative would require the allocation of a new coach eight months from the Games. However, four others in the programme - Noel Donaldson, Calvin Ferguson, Gary Hay and Dave Thompson earned medals with their respective crews at the 2015 world championships.
"We had a fruitful conversation," Peterson said of the negotiations. "It was good progress towards resolving this as soon as possible and giving Mahe every opportunity to be coached by Dick Tonks ahead of the Olympics.
"Our non-negotiable is having an employee [Tonks] coaching Chinese and New Zealand crews simultaneously. But we're driven to work for our athletes, including an Olympic champion."
Earlier, the feud between Tonks and Peterson turned personal with the coach claiming the chief executive "couldn't run a bloody corner dairy" in a Mediaworks report. "I've been undermined at different times with no consultation at all," he added.
"I'm not interested in personal attacks," Peterson responded to NZME. "I'm more interested in supporting our athletes. When I come to work every day I'm impressed and inspired by what they do. I'm proud to be leading this organisation."
Peterson has disputed claims Tonks' desire to coach a Chinese crew was no different to what has happened before with international guests at Karapiro.
Peterson said in previous cases, the international invitations were "structured and framed up" whereas the Chinese "arrived unannounced".
"We were blindsided," he said. "It's a bit different to having other athletes come visit for a short period of time and be a training partner on the water."
Peterson said they had conducted their own homework and discovered the four Chinese rowers had competed at recent world championships.
*Additional reporting Chris Rattue