Lonmin PLC (LMI) - Lonmin Shareholders urged to vote for Rights Issue
RNS Number : 9653Q
13 November 2012
13 November 2012
Lonmin Urges Shareholders to Vote in Favour of the Rights Issue
The Board remains confident of the longer-term potential of Lonmin, with its
high-quality asset base and long-term mining licences, and in the long-term
fundamentals of the PGM industry. The Board's primary focus continues to be on
preserving and enhancing value for all Lonmin shareholders and its various
stakeholders, including more than 28,000 Lonmin employees, as well as the
Company's Black Economic Empowerment partners. The Board remains clear that
the interests of all Lonmin shareholders are best-served by securing the
financial future of the Company at the earliest opportunity.
Last week Xstrata wrote to the Board of Lonmin stating that it was prepared to
support the Rights Issue but on the condition that the Board publicly
committed to ceding management control to Xstrata. This proposal was rejected
by Lonmin, and in this context the Board wishes to emphasise the following
points to shareholders before they vote on the Rights Issue at the General
Meeting of the Company to be held on 19 November 2012 (the "General Meeting").
The importance of achieving financial certainty through the Rights Issue
Following the tragic Events at Marikana, the management of Lonmin negotiated
Amended Facilities Agreements with the Company's lending banks. These,
together with the fully underwritten Rights Issue, represent a comprehensive
balance sheet restructuring which the Board is confident will place Lonmin on
a sound financial footing for the future.
Achieving financial certainty for Lonmin through this process is conditional
on a majority of shareholders voting in favour of the resolution at the
General Meeting. The Board firmly believes that if the Rights Issue is not
approved it will jeopardise the substantial inherent value in Lonmin's
well-invested assets to the detriment of all stakeholders.
The urgency of completing the Rights Issue on the current timetable
The Amended Facilities Agreements are conditional, inter alia, on completion
of the Rights Issue and receipt by the Company of at least US$700 million of
net proceeds by 31 December 2012.
The Directors believe that without the Amended Facilities Agreements the Group
may breach its banking covenants when they are next tested. A breach of any of
the Group's covenants could result in events of default which would cause the
Group's borrowings to become repayable on demand. As at 31 October 2012, the
Group's net debt was approximately US$550 million (unaudited), and this number
is forecast to rise further in the coming months as the successful ramp-up to
normalised production levels continues.
In order to complete the Rights Issue by 31 December 2012, and so to ensure
that the Amended Facilities Agreements come into effect, it is imperative that
the General Meeting take place on 19 November 2012 and that the resolution
authorising the Directors to allot new shares be passed.
Management actions since August 2012
The Board commends the current management team for doing a remarkable job in
responding to the extraordinary set of circumstances which have affected
Lonmin since August 2012. In this time, the management team has successfully
managed a return to production following the Events at Marikana with the
subsequent ramp up exceeding initial expectations, at the same time as
executing a comprehensive debt and equity balance sheet restructuring to
secure Lonmin's longer-term financial future.
The current management arrangements were put in place in response to Ian
Farmer sadly having to step away from the business due to serious illness at a
time when the Company was facing a momentous period in its history. The Board
believes that the current arrangements are appropriate for the time being and
are working well to stabilise the Company and bring production back to normal.
Consistent with corporate governance best practice the Board recognises that
permanent appointments need to be made and is committed to taking the required
process forward, including consultation with shareholders, as soon as the
Rights Issue is concluded and the Company is on a secure financial footing.
As described in the Prospectus, if the Rights Issue does not proceed by 31
December 2012 and the Amended Facilities Agreements do not come into effect,
the Company may be unable to comply with its financial covenants in future
tests which may ultimately jeopardise its very future. Furthermore, the Board
believes that failure to proceed with the Rights Issue would leave the Company
in a highly vulnerable position in its discussions with its banking group and,
potentially, in relation to Xstrata if it were to make a further proposal.
The Board wishes to confirm that, as in the past, it will consider any revised
proposal that Xstrata wishes to make on its merits. In assessing any proposal
the Board will seek to protect the interests of all shareholders. In
particular the Board will continue to avoid any structure or process which
undermines the financial stability of Lonmin and it will also fight to ensure
that the economic terms of any transaction reflect the true value of the
Company and an appropriate control premium, if relevant.
The Board therefore urges all shareholders to vote in favour of the resolution
at the General Meeting. Those shareholders wishing to vote by proxy must lodge
their form of proxy with the Company's registrar by no later than 5:00 p.m.
(London time) or 7:00 p.m. (Johannesburg time) on 16 November 2012.
Investors / Analysts:
Tanya Chikanza (Head of Investor Relations) +27 11 218 8300 /
+44 20 7201 6007
Ruli Diseko (Investor Relations Manager) +27 11 218 8373
James Clark / Emma Crawshaw +44 20 7930 0777
Sue Vey +27 72 644 9777
Brunswick - Johannesburg
Cecilia de Almeida +27 11 502 7400 /
+27 83 325 9169
Capitalised terms which are not defined in this announcement have the meaning
given to them in the Prospectus published by the Company in connection with
the Rights Issue on 9 November 2012.
This announcement includes forward-looking statements within the meaning of
the securities laws of certain jurisdictions. These forward-looking statements
include, but are not limited to, statements other than statements of
historical fact including without limitation, those regarding the Company's
intentions, beliefs or current expectations concerning, among other things,
the Company's results of operations, financial condition, prospects, growth,
strategies and the industry in which the Company operates.Forward-looking
statements are typically identified by the use of forward-looking terminology
such as "believes", "expects", "may", "will", "could", "should", "intends",
"estimates", "plans", "assumes" or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties.By their nature,
forward-looking statements involve risks and uncertainties, including, without
limitation, the risks and uncertainties to be set forth in the Prospectus,
because they relate to events and depend on circumstances that may or may not
occur in the future; actual events or results may differ materiallyfrom those
expressed in or implied by these statementsas a result of risks and
uncertainties facing the Company and its subsidiaries.Many of these risks and
uncertainties relate to factors that are beyond the Company's ability to
control or estimate precisely, such as changes in future market conditions,
currency fluctuations, the behaviour of other market participants, the actions
of governmental regulators and other risk factors such as changes in the
political, social and regulatory framework in which the Company operates or in
economic or technological trends or conditions, including inflation and
consumer confidence, on a global, regional or national basis.Such risks and
uncertainties could cause actual results to vary materially from the future
results indicated, expressed or implied in such forward-looking statements.
The forward-looking statements contained in this announcement speak only as of
the date of this announcement and the Company undertakes no duty to update any
of them publicly in light of new information or future events, except to the
extent required by applicable law, the Prospectus Rules, the Listing Rules and
the Disclosure and Transparency Rules.
Notes to editors
Lonmin, which is listed on both the London Stock Exchange and the Johannesburg
Stock Exchange, is one of the world's largest primary producers of PGMs. These
metals are essential for many industrial applications, especially catalytic
converters for internal combustion engine emissions, as well as their
widespread use in jewellery.
Lonmin's operations are situated in the Bushveld Complex in South Africa,
where nearly 80% of known global PGM resources are found.
The Company creates value for shareholders through mining, refining and
marketing PGMs and has a vertically integrated operational structure - from
mine to market. Lonmin's mining operations extract ore from which the Process
Division produces refined PGMs for delivery to customers. Underpinning the
operations is the Shared Services function which provides high quality levels
of support and infrastructure across the operations.
For further information please visit our website: http://www.lonmin.com
This information is provided by RNS
The company news service from the London Stock Exchange
MSCBJBFTMBJBMAT -0- Nov/13/2012 07:01 GMT
Press spacebar to pause and continue. Press esc to stop.