11th Dec 2015 08:33
LONDON (Alliance News) - Lonmin PLC Friday said over 70% of the shares made available under its significant rights issue have been taken up, suggesting appetite for the stock was not as strong as the miner thought despite offering shares at a huge discount.
Shareholders in the platinum miner approved Lonmin's massive rights issue in November, which was aiming to raise USD407.0 million in gross proceeds and USD369.0 million after expenses. However, the uptake seems to have come in lower than expected.
Lonmin Friday said it has received acceptances for 19.15 billion new shares under the rights issue, representing just under 71% of the 26.99 billion shares that were available. The issue was launched at 1.0 pence per share - which was a 94% discount to the closing price the day before the rights issue was announced on November 9.
However, Lonmin shares adjusted Thursday morning by falling below the 1.0p mark, and were trading down 5.7% to 0.971p Friday morning after closing at 1.03p on Thursday.
If the full rights issue had been taken up, it would have almost doubled Lonmin's share capital.
Lonmin said HSBC, JP Morgan Cazenove and Standard Bank will "use their respective reasonable endeavours" to find subscribers for the 7.84 billion shares not taken up, setting a deadline of Monday. Any shares still left after the deadline will be taken up by those three agents as they have underwritten the issue.
Lonmin launched the rights issue after being heavily hit by falling platinum prices, with the company reporting a huge USD2.26 billion loss in the last financial year.
Once the underwriting agreement for the rights issue has been declared wholly unconditional, Lonmin will be able to amend its debt facilities with its existing lenders.
Lonmin will extend its dollar facility to expire in May 2020 from the current expiration in May 2016 and reduce the facility to USD225.0 million from the current USD360.0 million.
It will also extend the maturity of its Rand facility to May 2020 from June 2016.
By Joshua Warner; [email protected]; @JoshAlliance
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