Public Investment May Take as Much as a 25% Stake in Lonmin

  • Africa's largest money manager may raise current holding of 7%
  • Public Investment sees $38 million cost of share sale as high

South Africa’s Public Investment Corp. said it will take up as much as 25 percent of Lonmin Plc if some of the platinum producer’s investors don’t follow their rights in a proposed $407 million share sale.

The pledge from the state-owned Public Investment Corp., which already owns about 7 percent of the world’s third-largest platinum producer, comes as shareholders are due to vote this week on whether to proceed with a deeply discounted share issue that will also unlock new debt from banks. Lonmin is reeling from a plunge in metal prices that cut its profit and erased 95 percent of its market value this year.

“The rights issue is the best possible approach to re-capitalizing the company in the current circumstances,” the Public Investment Corp.’s Chief Executive Officer Daniel Matjila said by e-mail on Monday. “Not supporting Lonmin would put the company at risk and it could potentially be harmful to the industry and the communities where Lonmin operates.”

The investment manager views the estimated $38 million cost of the share sale as high, Matjila said. The costs include rolling debt with banks, advice on the rights issue and underwriting fees, he said.

Three banks, including HSBC Holdings Plc, will guarantee the share issue, Lonmin said in a Nov. 9 statement.

Before it's here, it's on the Bloomberg Terminal.