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Lonmin launches rights issue at 94% discount as losses widen

Mon, 09th Nov 2015 10:13

(ShareCast News) - Beleaguered platinum miner Lonmin has launched a $407m (£270m) rights issue - a 94% discount to its share price last week - as it struggles to keep afloat amid declining platinum prices and rising costs.Shareholders will be able to subscribe for 46 new shares for each Lonmin share they own at 1p per share.Lonmin had already warned that the shares would be issued at a "significant discount" and the company said on Monday that its lenders would not refinance its debt unless the rights issue was approved.Chief executive officer Ben Magara said: "I am pleased that we have secured $370 million of bank facilities from all 10 of our existing lending banks which is conditional on the $407 million rights issue."It is encouraging that our rights issue has been fully underwritten and we hope shareholders vote positively on 19 November 2015."At 1050 GMT, shares in the miner were up 11.8% at 18.17p.RBC Capital Markets, which attributed the surge in the share price to relief, said the discount was deeper than it had expected but not overly surprising given the challenging spot the company finds itself in.Also on Monday, Lonmin reported $2bn in operating losses for the year to the end of September compared with $255m a year ago. This incuded $1.8bn in asset impairments on the back of lower-than-expected production and prices.The pre-tax loss for the full year widened to $2.2bn from $326m the previous year and net debt increased to $185m at the end of September from $29m in the same period in 2014.CEO Magara said: "2015 has been a tough year for Lonmin given the adverse pricing environment and the imminent maturity of our debt facilities in mid 2016."Our priority is to run the business with a focus on cash generation and profitable ounces. We are repositioning Lonmin and aiming for the business to generate positive free cash flow after capital expenditure in this current low environment."Taking what he admitted was a "somewhat unscientific look" at share consolidations by other companies, analyst Chris Beauchamp at IG suggested Lonmin's hopes were not hugely improved by the move.Six months after their own consolidation in June 2014, Rexam's shares were down 15%; six months after a November 2014 consolidation Johnston Press was down 16%; after its reverse share split in June 2014 RBS was down 40% a half-year later; after its own in 2012, Premier Foods was down 27%; and following its reshuffle in February last year IMI's shares fell 12% by August."It's not exhaustive, but rather instructive that Lonmin might not be saved," Beauchamp said.

More News

4 Nov 2015 07:17

Lonmin says could "cease trading" if $400 mln rights issue not backed

JOHANNESBURG, Nov 4 (Reuters) - Platinum producer Lonmin could stop trading if its $400 million cash call to shareholders through a rights issue was unsuccessful, the company said. "In those circumstances, the group may have to cease trading and shareholders could lose the entire value of

3 Nov 2015 09:50

BROKER RATINGS SUMMARY: Sells On Barratt, Taylor Wimpey And Persimmon

2 Nov 2015 16:11

Earnings, Trading Statements Calendar - Week Ahead

2 Nov 2015 10:51

Lonmin expects to report full-year operating loss but record production

(ShareCast News) - Lonmin on Monday said it expects to report an annual operating loss as the miner recovers from labour strikes in South Africa, rising costs and weak platinum prices. The company, which posts its full-year results on 9 November, said it forecasts an operating loss of $207m, before

2 Nov 2015 09:39

UPDATE 1-Lonmin's annual refined platinum output at 8-year high

(Adds more details) Nov 2 (Reuters) - Lonmin said on Monday its annual refined platinum output has hit an eight-year high, as it recovers from the lengthy strike at its South African mines last year, but said it still made an operating loss. Lonmin said refined platinum output for th

2 Nov 2015 08:58

Lonmin's annual refined platinum output hits 8-year high

Nov 2 (Reuters) - Lonmin said on Monday its full-year refined platinum output hit an 8-year high as it recovers from a five-month strike last year. Lonmin said refined platinum output for the year to end-September rose 74 percent to 759,695 ounces from the previous financial year. Th

2 Nov 2015 08:49

Lonmin Says Platinum Sales Up But Low Prices Mean It Expects Big Loss

26 Oct 2015 09:36

BROKER RATINGS SUMMARY: Investec Raises Senior To Buy From Hold

22 Oct 2015 16:36

Broker tips: Pearson, Lonmin

(ShareCast News) - Education group Pearson was under the cosh for the second day in a row as JPMorgan Cazenove downgraded the stock to 'neutral' from 'overweight' and slashed the price target to 1,080p from 1,365p following the company's interim management statement on Wednesday. JPM attributed the

22 Oct 2015 10:20

Thursday broker round-up

(ShareCast News) - Centamin (di): Goldman Sachs starts new coverage with a buy, sets target price at 80.00p. Lonmin: JP Morgan Cazenove upgrades to overweight, raises target price to 35.00p. Pearson: JP Morgan Cazenove downgrades to neutral. Target price: 1080.00p. Hays: Credit Suisse upgrades to

22 Oct 2015 09:48

JPMorgan upgrades Lonmin on debt restructuring plan

(ShareCast News) - JPMorgan Cazenove upgraded Lonmin to 'overweight' from 'neutral' and lifted the price target to 35p from 30p following the company's announcement on Wednesday of a rights issue and debt restructuring. "Lonmin disclosed a revised business plan and funding strategy with its full-yea

22 Oct 2015 08:40

BROKER RATINGS SUMMARY: Merrill Lynch, JPMorgan Cut Pearson To Neutral

22 Oct 2015 07:21

LONDON BRIEFING: Shares Soft At Open Ahead Of ECB Decision

21 Oct 2015 13:54

Platinum fails to fill breach left by gold in South Africa

* Platinum's prospects now as poor as gold * Platinum price less than half 2008 peak * 70 pct of shafts in S.Africa losing money - Implats By Ed Stoddard BRITS, South Africa, Oct 21 (Reuters) - When South African miner Papi Soke went from gold to platinum, he thought he wa

21 Oct 2015 12:58

South Africa charges miners over Marikana murders - lawyer

JOHANNESBURG, Oct 21 (Reuters) - South African prosecutors have charged 17 miners with murder over the killing of 10 people during a violent wildcat strike at platinum producer Lonmin's Marikana mine, their lawyer said on Wednesday. The vortex of violence around the mine in August, 2012, c

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