Lonmin Said to Draw $400 Million Facility During Debt Talks

Updated on
  • Platinum miner locked in talks to try to restructure the debt
  • Company said to seek to strengthen position in negotiations

Lonmin Plc drew down a $400 million revolving credit facility as the third-biggest platinum producer is locked in talks with bankers to restructure the debt, due to expire next year, two people familiar with the matter said.

The company withdrew funds as it needs cash to continue operating amid falling platinum prices and to strengthen its position in negotiations with lenders over the facility, scheduled to mature in May, said the people, declining to be identified as they aren’t authorized to talk about the action.

The metals producer hired Greenhill & Co. to advise on the refinancing or restructuring of its debt, people familiar with the matter said in August.

Lonmin declined to comment, said James Clark, a spokesman for the company at Cardew Group in London. Jeffrey Taufield, a spokesman for Greenhill employed by Kekst & Co. in New York, declined to comment on Lonmin’s strategy.

Lonmin is burning through cash and needs to refinance or restructure debt because of losses it’s suffering after a 45 percent plunge in platinum prices since 2011. It already plans as many as 6,000 job cuts and delays in capital spending to preserve cash. Shares of the South African miner, which had $282 million of net debt as of March 31, have tumbled 87 percent this year, the worst performance on the London Stock Exchange’s broadest gauge of equities.

The stock fell 1.2 percent to 22.52 pence as of 2:31 p.m. in London.

The company also holds three facilities from South African banks of 660 million rand ($49 million) each that mature in June. Lonmin had meetings with these lenders last week and is due to talk to offshore credit providers, the people said. The continuing drop in the company’s market value is making it more difficult to arrange new terms with the financiers, the people said.