HomeInternationalLonmin plans US$457 million rights offer

Lonmin plans US$457 million rights offer

Headgear at the
Saffy shaft at Lonmin’s
Marikana mine
London, England — MININGREVIEW.COM — 12 May 2009 – Lonmin Plc – the world’s third-largest platinum producer – is planning to raise about US$457 million (R4.1 billion) in a rights offer to assist the company in re-paying its debts, in the wake of the global financial meltdown and accompanying plunge in metals prices.

In a statement issued here, the company confirmed that shareholders Xstrata Plc and M&G Investment Management Limited had agreed to take 12.6 million new shares or 36% of the total on offer. The shares fell as much as 13% on the London Stock Exchange.

CEO Ian Farmer has suspended some operations in South Africa, halted expansion, and is cutting about 7 000 jobs to stem losses. Last month Lonmin completed a US$575 million (R5.1 billion) refinancing of debt.

“Even after the recent measures to improve operational performance, Lonmin’s profitability and cash flows are under pressure,” said chairman Roger Phillimore in a statement.

Anglo Platinum and Impala Platinum have also suspended operations, cut jobs, or shelved expansion in South Africa after last year’s metal price plunge.

“Lonmin’s rights offer may dilute 2010 annual earnings per share by about 17%,” Liberum Capital said in a report. Under the terms of the offer, shareholders may buy two new shares at 900 pence each for every nine they already own.

The company also revealed that it would not pay an interim dividend after reporting an underlying loss of US$98 million (R880 million) in the six months ended 31 March, compared to a profit of US$371 million (R3.3 billion) a year earlier. It said it did not expect a significant recovery in platinum-group-metal prices in the next 12 months.