Zug Switzerland — 16 November 2012 – Global miner Xstrata plc has written to the chairman of platinum producer Lonmin plc to notify him of the company’s decision to support Lonmin’s proposed rights issue and subscribe in full for its rights.
The letter also set out Xstrata’s requirement for changes to be made to the board and management of Lonmin promptly after completion of the rights issue.
Xstrata plc CEO Mick Davis said: “As a significant Lonmin shareholder, we are concerned about the destruction of value of our shareholding. For two years we have sought to address the strategic and operational challenges that Lonmin faces. Given the dire financial position of Lonmin, we concur that a substantial recapitalisation of the business is required. However that recapitalisation must be backed by a suitable management team and business plan,” he added.
“While it was open to Xstrata to vote against the rights issue at the forthcoming Lonmin general meeting, such a vote by Lonmin’s largest shareholder would, in all likelihood, have prevented the rights issue from proceeding,” Davis declared. “As a responsible shareholder, we want Lonmin to begin its recovery from this difficult time as soon as possible and it is not our intention to bring about an unnecessary failure of the rights issue,” he explained.
“However, we also have a duty to our shareholders and we cannot passively lend our financial support to a strategy that we believe is flawed,” Davis continued. “We will, therefore, be seeking change to the Board and management promptly following completion of the rights issue.
“An assurance in this regard from the Lonmin Board would provide shareholders with greater comfort and likely lead to greater take-up of the rights issue by core shareholders. This would also obviate the need for us to call a further general meeting of shareholders to make the changes we believe necessary,” he concluded.
Source: Xstrata plc. For more information, click here.