Lonmin prices rights issue at 1 pence a share

Johannesburg - Platinum producer Lonmin [JSE:LON] on Monday priced its R5.78bn rights issue at a 94% discount as the firm fights for survival in the face of depressed commodity prices.

Lonmin said it would sell 27 billion shares at one pence each to its shareholders, compared to the stock's last trading price of 16.25 pence on the London Stock Exchange on Friday.

The company had flagged that the equity cash call would be issued at a "significant discount", underscoring a 90% tumble in its stock price this year.

Battered by strikes, rising costs and weak platinum prices, Lonmin said last month it planned to raise the money and another R5.26bn in bank loans to refinance debt due in May 2016.

Lonmin has urged shareholders to approve the equity cash call at a meeting on November 19, saying the injection is crucial to its survival.

The company said that if shareholders did not approve the rights issue, lenders would not provide the loans to push back the maturity of the 2016 debt to 2020.

Lonmin said that South Africa's Public Investment Corporation, which owns about 7% stake of the company, had committed to take up its full entitlement and has "sub-underwritten a material portion of the proposed rights issue in excess of its entitlement".

Lonmin had to rely on an R11.36bn rights issue to shore up its battered balance sheet in November 2012.

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