TIDMLMI
RNS Number : 9653Q
Lonmin PLC
13 November 2012
REGULATORY RELEASE
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.
Conclusion
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.
ENQUIRIES
Investors / Analysts:
Lonmin
+27 11 218 8300
Tanya Chikanza (Head of Investor /
Relations) +44 20 7201 6007
Ruli Diseko (Investor Relations
Manager) +27 11 218 8373
Media:
Cardew Group
James Clark / Emma Crawshaw +44 20 7930 0777
Sue Vey +27 72 644 9777
Brunswick - Johannesburg
+27 11 502 7400
/
Cecilia de Almeida +27 83 325 9169
Notes
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 materially from those expressed
in or implied by these statements as 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
END
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