Lonmin Plc’s largest shareholder, South Africa’s Public Investment Corp., said the platinum producer should find alternatives to a share sale as a way of refinancing debt amid a rout in metal prices.
The world’s third-biggest platinum miner is reviewing its capital structure and looking for ways to renegotiate about $563 million in debt facilities that will expire in the first half of next year. It’s operating at a loss as prices for platinum, used to clean the emissions of gasoline-fueled vehicles and for jewelry, plunged to a six-year low this month.
While the market may be factoring in a rights offer, “the Public Investment Corp. is of the view that Lonmin should look at other ways of addressing their balance-sheet challenges,” Daniel Matjila, chief executive officer of the Pretoria-based state pension-fund manager, said in an e-mailed response to questions Thursday. The PIC holds a 9.9 percent stake in the metal producer.
Lonmin fell 3.2 percent to 53.80 pence at close of trading in London, extending the decline this year to 70 percent. It’s 2015’s worst performer on the broadest stocks gauge in Johannesburg, where the company has fallen 66 percent.
Lonmin declined to comment in response to e-mailed questions. The company “is considering the full range of options available to secure long-term capital” and expects to provide an update on its plans by November, it said July 24. The producer’s net debt at March 31 was $282 million.
The possibility of a share sale shouldn’t be a surprise to the market, Neill Young, a money manager at Coronation Asset Management (Pty) Ltd., Lonmin’s fifth-largest shareholder, according to data compiled by Bloomberg.
“It was always quite a real risk -- they’ve got some debt that is maturing,” Young said by phone from Cape Town. “There is going to be some overhang on the share” until Lonmin announces how it will refinance the debt, he said.