Lonmin’s share price is tanking after platinum miner warns shareholders to approve $400m rights issue or face company closure
Lonmin shares are down 14 per cent this morning, and more than 33 per cent since the start of the week, after warning that it would need to tap shareholders for $400m to help refinance or face the possibility of closure.
The business warned that it would have to stomach a $2bn writedown as low platinum prices could continue in the short-to-medium term, and has put forward a business plan that includes redundancies and other cost-cutting, lowing cap-ex "to the minimum required" and focusing on "immediately available ore reserves".
On top of this it needs to refinance $370m of debt before May 2016, which the company will do through a $400m rights issue.
Shareholders will vote on the resolutions on 19 November, and are being strongly urged to approve the entire thing:
"If all of the resolutions are not passed by shareholders, or if any of the other conditions are not satisfied, the proposed rights issue will not proceed and the expected amended facilities agreements will not come into effect.
"In those circumstances, the group may have to cease trading and shareholders could lose the entire value of their investment in the shares."