LONDON (Alliance News) - Lonmin PLC Monday launched a rights issue that will almost double its issued share capital and allow the company to amend its debt facilities as it tries to bolster its balance sheet and mitigate current low platinum prices.
In the latter half of October, Lonmin announced plans to launch a USD400.0 million rights issue, which if approved by shareholders, would also allow the company to increase and amend its debt facilities.
On Monday, Lonmin said the fully underwritten rights issue will now raise gross proceeds of USD407.0 million and net proceeds of USD369.0 million.
Those proceeds will be generated from a 46 for one rights issue of just under 27.0 million new shares in the company at 1.0 pence per new share. Those shares represent a staggering 98% of the company's enlarged issued share capital, with the price being a 94% discount to the closing price on Friday.
Shareholders have until December 10 to take up their rights.
The Public Investment Corp, which currently holds a 7% stake in Lonmin, has agreed to take up its full entitlement and has underwritten a "material portion" of the rights issue in excess of its entitlement.
"The net proceeds of the rights issue will be used to fund the implementation of the business plan, thereby improving the group's ability to withstand potential adverse movements in external factors, specifically a continuation of the weak platinum group metal pricing environment, and repositioning the group on the South African platinum group metal industry cost curve; and for general corporate purposes, including as additional working capital, strengthening the balance sheet and allowing the group to meet its obligations and commitments as they fall due and reducing the group's borrowings," it said in a statement.
Once the underwriting agreement for the rights issue has been declared wholly unconditional, Lonmin will be able to amend its debt facilities with its existing lenders.
Lonmin will extend its dollar facility to expire in May 2020 from the current expiration in May 2016 and reduce the facility to USD225.0 million from the current USD360.0 million.
It will also extend the maturity of its Rand facility to May 2020 from June 2016.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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