[miningmx.com] – THE struggle for control of Lonmin ahead of a crucial shareholder vote on November 19 kicked off today with the platinum miner saying failure to support a $800m refinancing plan would imperil the company.
It urged shareholders to support the rights issue which requires 50% support, adding that it would review its management structure once the funds had been raised.
Interestingly, Lonmin also kept the door open to Xstrata which the platinum miner disclosed on November 9 had offered a reverse takeover, and had then pledged support for the rights issue provided Lonmin’s executive team resign.
“[I]f the rights issue does not proceed by 31 December 2012 and the amended facilities agreements do not come into effect, the company may be unable to comply with its financial covenants in future tests which may ultimately jeopardise its very future,” the company said in a statement to the JSE.
Lonmin said it would issue 365.5 million new shares for £1.40p/share (R19,48/share) representing a 69.1% discount to the existing share and a 44.4% discount to the theoretical ex-rights price of an existing share. Shares issued would be equal to 64.3% of Lonmin’s currently issued share capital.
Commenting on Xstrata, which owns 24.5% of Lonmin, it added: “It [Lonmin] will consider any revised proposal that Xstrata wishes to make on its merits,” it said. The reverse takeover was declined owing to the absence of a control premium.
Analysts have criticised Lonmin for the vacuum in management after Ian Farmer, CEO of the company, was taken seriously ill. Interim CEO, Simon Scott, said the existing executive team was adequate for the time being. However, the board would engage on potential changes.
“Consistent with corporate governance best practice the board recognises that permanent appointments need to be made and is committed to taking the required process forward, including consultation with shareholders, as soon as the Rights Issue is concluded and the Company is on a secure financial footing,” Lonmin said.
