The impairment charges were lower than its initial guidance of between $1.85 billion to $2.05 billion. Revenue grew 25pc to $1.3bn from $965m a year earlier. In total, if the issue sells out, there will be around 27 billion new Lonmin shares in the market, according to the company.
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The rights issue has been launched to try and stop the company, which is being crushed by the slumping price of platinum, running out of cash.
Lonmin “will get its money, but shareholders who don’t follow their rights will be virtually wiped out”, Hurbey Geldenhuys, an analyst at Vunani Securities (Pty) Ltd.in Johannesburg, said by phone.
The rights issue is being carried out by a collection of three underwriters; HSBC, JPMorgan Cazenove, and Standard Bank.
It is the third time in six years that Lonmin has gone cap in hand to shareholders.
Lonmin shares – which topped £40 in 2007 – hit a new low of 16½p last night, down more than 16 per cent from Thursday’s close. They rose 10pc in early trading.
“Our priority is to run the business with a focus on cash generation and profitable ounces”.
“I am pleased that we have secured $370m of bank facilities from all 10 of our existing lending banks which is conditional on the $407m rights Issue”.
Chief executive Ben Magara said: “It is encouraging that our rights issue has been fully underwritten and we hope shareholders vote positively on November 19”.
The company said the Public Investment Corporation has irrevocably committed to take up its entitlement in full in the Rights Issue and has sub-underwritten a material portion of the Rights Issue in excess of its entitlement. It has come up with a plan to weather this storm, which includes possible redundancies and capital expenditure reductions.
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Lonmin has urged shareholders to back the resolutions giving effect to the proposed rights issue or face losing their entire investment in the company, which employs about 38,000 people in SA.
