London - Strike-hit South African miner Lonmin [JSE:LON]
said it planned to raise $800m in a rights issue and had signed amendments to
its debt facilities to help it avoid a possible covenant breach next year.
Lonmin, the world’s third-largest platinum miner, which has
one of the most pressured balance sheets in the sector, had warned that it may
need to issue new shares to help shore up its finances after a deadly strike
The company said that the proposed rights issue was
underpinned by a standby underwriting agreement and that it had also amended a
deal with its lenders to remove earnings-related covenants.
Analysts had raised concerns that the company could breach
such covenants at the latest test but Lonmin said on Tuesday that it did not
expect to do so, although it warned had it not taken action there was a danger
over the March test.
“With the standby underwriting and amended debt facilities
signed we have taken two decisive steps on our way to delivering that and we
are confident about our financial security,” chaiperson Roger Phillimore said in
Lonmin’s Johannesburg-listed shares were down 1.8% at 07:39
GMT, paring earlier gains of as much as 4%.
The company said that production slumped 45.7% in the three
months to September 30. It had already warned that it would miss its 2012
output target after a strike left 44 dead in August.
South African mines have been hit by months of labour unrest
which have threatened growth in Africa’s biggest economy and drawn criticism of
President Jacob Zuma for his handling of the most damaging strikes since the
end of apartheid in 1994.
Lonmin’s miners have since returned to work and the company
said that the ramp up in production was going better than expected.
Lonmin shares fell more than 5% in early trade following
news of the rights issue.
At 07:08 GMT, Lonmin shares were down 4.76% to R64, after
earlier hitting a record low of R63.