JOHANNESBURG (miningweekly.com) – Diversified miner and 25% Lonmin shareholder Xstrata said it would back the troubled platinum producer’s proposed $817-million rights issue, but reaffirmed its demand for management changes.
While Xstrata would support the rights issue, which would allow Lonmin to start its recovery, the firm believed that an overhaul of the board, management team and business plan was required so that a “realistic strategy to restore shareholder value can be developed”, said Xstrata CEO Mick Davis.
“For two years we have sought to address the strategic and operational challenges that Lonmin faces. Given the dire financial position of Lonmin, we concur that a substantial recapitalisation of the business is required. However that recapitalisation must be backed by a suitable management team and business plan,” he commented in a statement.
Lonmin welcomed Xstrata’s support but earlier this week rejected its largest shareholder’s first suggestion of ceding management control.
The LSE- and JSE-listed group said in a statement to shareholders on Friday said that 86% proxy voting instructions, from other shareholders, for Monday’s general meeting indicated an approval of the rights issue.
“The board firmly believes that if the rights issue is not approved, it will jeopardise the substantial inherent value in Lonmin’s well-vested assets to the detriment of all stakeholders,” it said earlier this week.