* Lonmin seeks $400 million to survive low prices
* Priced the rights issue at 1 pence a share
* Majority of shareholders approve the share sale
* Concerns over viability of business remain (Adds Old Mutual, Investec stakes)
By Atul Prakash and Clara Denina
LONDON, Nov 19 (Reuters) - Lonmin shareholdersdecisively approved the company's deeply discounted $400 millionshare issue on Thursday as the beleaguered platinum producerseeks cash to stay afloat.
Bruised by strikes, rising costs, a weak platinum price and slowing demand for the metal, South Africa-focused Lonmin said last month it also planned to raise another $370million in loans to refinance debt currently due in May 2016.
Meanwhile, Old Mutual said in a regulatory filing onThursday its stake in Lonmin has fallen to below 1 percent. Investec Asset Management now has a "negligible"stake, down from 5 percent about three months ago, fund managerHanre Rossouw said.
Lonmin said about 88 percent of its shareholders approvedthe rights issue at a meeting in London after warning that if itcouldn't raise the cash, shares could be suspended.
"We had no choice but to vote in favour because we will bewiped out if this doesn't go through. But does that mean we willbe with the company in the next 10 or even two years? We don'tknow," said Anthony Guildford, a Lonmin investor since 1969.
The loss-making platinum producer had asked its shareholdersto vote on five proposals, which also included consolidation ofLonmin shares. Shareholders also authorised its directors toallot new shares.
The scale of Lonmin's plight was illustrated on Nov. 9 whenit priced its rights issue at just 1 pence a share - a 94percent discount to the stock's previous session closing priceof 16.25 pence on the London Stock Exchange.
Some investors, including pensioners, raised concerns aboutthe consolidation of shares.
"There had to be a better idea than consolidation. I willnever see my money (14,500 pounds in shares) back at 6 poundswhere I bought ... They were 1.70 last Christmas!," one investorsaid.
BUYING TIME
Lonmin still has to convince the wider market it can be aviable business.
"Lonmin has got its reprieve, and existing shareholders canhardly be blamed for sticking with it. But with labour costsstill high and platinum still stuck, it is hard to work outwhere the positive investment story lies," IG analystChristopher Beauchamp said.
"The company seems to be a black hole where cash isconcerned; those looking for platinum exposure will find itunappealing, given the high-cost mines that the firm operates."
Lonmin shares, which have plunged more than 90 percent thisyear, were down 2.3 percent at 10.25 pence by 1605 GMT.
Platinum prices are near seven-year lows below $850an ounce, hobbled by slowing demand in top consumer China and asthe Volkswagen's emissions-cheating scandal weighson market sentiment.
Lonmin, founded in 1909 as the London and Rhodesian Miningand Land Company, is also closing or mothballing several mineshafts and cutting 6,000 jobs, some 15 percent of its workforce.
"We put these measures in place and we are very confidentthey are the right measures," Lonmin Chief Executive Ben Magaratold Reuters after the meeting.
"Everything depends on market conditions. We have done whatwe believe would sustain the business in this low priceenvironment."
The rights issue, Lonmin's third in six years, is beingunderwritten by HSBC, JPMorgan Cazenove and Standard Bank.
South Africa's Public Investment Corporation (PIC), whichowns about 7 percent of the company, has committed to buying itsfull entitlement and has sub-underwritten a material portion ofthe issue, over and above its entitlement, Lonmin said.
"They must show us now that they can make a difference. Ifthey have to come back to us in a year, that will mean that theywere dishonest and their integrity will be brought intoquestion," PIC Chief Executive Daniel Matjila was quoted assaying in South Africa's Sunday Times newspaper.
Lonmin's other top shareholders include South Africa'sKagiso Asset Management, Capital World Investors and StandardLife Investments.
For a Reuters Breakingviews column on Lonmin click on
($1 = 14.1850 rand) (Additional reporting by TJ Strydom in Johannesburg; Writing byOlivia Kumwenda-Mtambo; Editing by Veronica Brown, Susan Fentonand David Evans)
