| Mon 11 May 2009, 8:02 | | LON - Lonmin Plc - Rights Issue to Raise Net Proceeds of Approximately US$457 |
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LON
LOLMI
LON - Lonmin Plc - Rights Issue to Raise Net Proceeds of Approximately US$457
million
Lonmin Plc (Incorporated in England and Wales)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
JSE code: LON
Issuer Code: LOLMI & ISIN: GB0031192486 ("Lonmin")
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS
SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS
ANNOUNCEMENT EXCEPT ON THE BASIS OF THE INFORMATION IN THE PROSPECTUS TO BE
PUBLISHED BY LONMIN PLC IN CONNECTION WITH THE RIGHTS ISSUE. COPIES OF THE
PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE COMPANY`S
REGISTERED OFFICE.
Incorporated and registered in England and Wales with registered number 103002
Registered in South Africa as an external company with registered number
1969/000015/10
JSE share code: LON
Issuer code: LOLMI & ISIN: GB0031192486
11 May 2009
Lonmin Plc
Rights Issue to Raise Net Proceeds of Approximately US$457 million
The Board of Lonmin Plc ("Lonmin" or "the Company") today announces an
underwritten Rights Issue to raise net proceeds of approximately US$457
million.
Lonmin`s interim results for the six months ended 31 March 2009 have also been
released today in an accompanying announcement.
Highlights
- 2 for 9 underwritten Rights Issue of 35,072,129 New Shares at 900 pence
per New Share (or, in the case of Qualifying South African Shareholders,
ZAR 113.04 per New Share) to raise net proceeds of approximately US$457
million
- The net proceeds of the Rights Issue will be used to substantially
strengthen the Company`s overall financial position at a time of
unpredictable PGM prices and foreign exchange rates
- Xstrata and M&G, Lonmin`s major shareholders, have provided irrevocable
undertakings in respect of 12,614,729 New Shares, representing 35.97 per
cent. of the New Shares to be issued in the Rights Issue
Roger Phillimore, Chairman of Lonmin, said:
The Board remains confident of the longer term potential of Lonmin, with its
high quality asset base and low cost position, and in the fundamentals of the
PGM industry, and its primary focus continues to be on preserving and
enhancing value for all Lonmin shareholders.
However, even after the recent measures to improve operational performance,
Lonmin`s profitability and cash flows are under pressure and remain highly
geared to the PGM pricing environment and Rand/US dollar exchange rate
movements. In light of the potentially significant impact these external
factors could have on the Group`s financial performance, combined with
continuing economic uncertainty and difficulties in credit markets, the Board
believes it is appropriate to adopt a more conservative capital structure.
Against this background, the Directors have concluded that raising equity now,
by way of the Rights Issue, is in the best interests of the Company and
Shareholders as a whole.
The Directors intend that the net proceeds of the Rights Issue will be used to
reduce the Group`s drawn borrowings under the Company`s existing credit
facilities, which will remain available to be re-drawn, otherwise reduce the
Company`s indebtedness, and/or be held as cash.
The Rights Issue will substantially strengthen the Company`s overall financial
position. The Board believes the Rights Issue will result in immediate and
long-term benefits, and in particular will:
- improve Lonmin`s ability to withstand potential adverse movements in
external factors, specifically the PGM pricing environment and Rand/US
dollar exchange rate; and
- reduce the Group`s borrowings and annual interest charge, and provide
Lonmin with incremental financial headroom in respect of the financial
covenants contained in its borrowing facilities.
Furthermore, the Board believes that the Rights Issue, together with the
banking facilities which remain available to be redrawn, will provide Lonmin
with enhanced operational and financial flexibility to take advantage of
investment and growth opportunities at the appropriate time. This should
enable the Group to generate attractive returns in the future because:
- Lonmin remains one of the lower cost producers of PGMs, and has recently
implemented both productivity and cost saving initiatives designed to
ensure that the Group will move further down the industry cost curve
against the backdrop of short-term weakness in the PGM pricing
environment;
- Lonmin`s current focus for capital expenditure and development is on its
core operations at Marikana, which are expected to produce the quickest,
most profitable and cash generative PGM ounces;
- Lonmin is well-positioned to increase production at Marikana at the
appropriate time. Specifically, the Directors believe that growth can be
accessed from Hossy and Saffy shafts, which, are currently operating at
well below capacity as they ramp up, and one additional shaft, K4, which
has yet to come into production. With the support of incremental capital
investment, in the short to medium term, these shafts will provide the
basis of production growth at Marikana; and
- Lonmin`s portfolio of production and development assets may, over time,
provide with attractive investment and growth opportunities as one of the
larger and better capitalised market participants.
The Rights Issue
The Rights Issue will result in the issue of 35,072,129 million New Shares
(representing 18.2 per cent. of the enlarged issued share capital of Lonmin
Plc) at a price of 900 pence per New Share, in respect of Qualifying
Shareholders (other than Qualifying South African Shareholders) or, in the
case of Qualifying South African Shareholders, ZAR 113.04 per New Share,
payable in full on acceptance. The Rights Issue will be on the basis of:
2 New Shares for every 9 Existing Shares.
The New Shares will, when issued and fully paid, rank pari passu in all
respects with the Existing Shares, including the right to receive all future
dividends and other distributions declared, made or paid after the date of
their issue.
The UK Issue Price of 900 pence per New Share, which is payable in full by
Qualifying Shareholders other than Qualifying South African Shareholders on
acceptance by no later than 11.00 a.m. on 3 June 2009, represents, in effect:
- a 39.6 per cent. discount to the theoretical ex-rights price (calculated
by reference to the closing middle market price of 1,622 pence per Share
on the Latest Practicable Date); and
- a 44.5 per cent. discount to the closing middle market price of 1,622
pence per Share on the Latest Practicable Date.
The SA Issue Price of ZAR 113.04 per New Share, which is payable in full by
Qualifying South African Shareholders on acceptance by no later than 12.00
p.m. (Johannesburg time) on 3 June 2009, represents, in effect:
- a 39.5 per cent. discount to the theoretical ex-rights price (calculated
by reference to the closing price of ZAR 203.30 per Share on the Latest
Practicable Date); and
- a 44.4 per cent. discount to the closing price of ZAR 203.30 per Share on
the Latest Practicable Date.
The Rights Issue is being fully underwritten by Citi and J.P. Morgan
Securities, save in respect of New Shares which Xstrata, M&G or the Directors
have irrevocably undertaken to take up.
This summary should be read in conjunction with the full text of this
announcement. Further, this summary contains extracts of salient features of
the Prospectus, which extracts are qualified and/or contextualised by, and
should be read with, the Prospectus.
CONTACTS
Lonmin Tel: +44 (0)20 7201 6050
Rob Gurner, Head of Investor Relations
Citi (Joint UK Sponsor and Joint Tel: +44 (0)20 7986 4000
Bookrunner)
David Wormsley
Jan Skarbek
Citi (Joint Corporate Broker) Tel: +44 (0)20 7986 4000
Tom Reid
Andrew Forrester
Citi (JSE Transaction Sponsor) Tel: +27 (0)11 944 1000
Sean Wegerhoff
J.P. Morgan Cazenove (Joint UK Tel: +44 (0)20 7588 2828
Sponsor, Joint Bookrunner And Joint
Corporate Broker)
Michael Wentworth-Stanley
Jonathan Wilcox
Matthew Lawrence
Cardew Group Tel: +44 (0)20 7930 0777
Anthony Cardew
Rupert Pittman
Financial Dynamics Tel: +27 (0)21 487 9000
Dani Cohen
Ravin Maharaj
SHAREHOLDER ENQUIRIES
UK Shareholders: Contact the UK Shareholder Helpline on 0871 384 2211 (from
inside the United Kingdom) or +44 (0)121 415 0275 (from outside the United
Kingdom). This Shareholder Helpline is available from 8.30 a.m. to 5.30 p.m.
(London time) Monday to Friday (except bank holidays).
South African Shareholders: contact the South African Shareholder Helpline on
(011) 630 0800 (from inside South Africa) or +27 11 630 0800 (from outside
South Africa). This Shareholder Helpline is available from 8.00 a.m. to 5.00
p.m. (Johannesburg time) Monday to Friday (except public holidays).
Please note that for legal reasons, the UK Shareholder Helpline and the South
African Shareholder Helpline are only able to provide information contained in
this announcement and information relating to Lonmin`s register of members and
are unable to give advice on the merits of the Rights Issue, or provide legal,
financial, tax or investment advice.
This announcement is an advertisement and not a prospectus and investors
should not subscribe for or purchase any Nil Paid Rights, Fully Paid Rights or
New Shares referred to in this announcement except on the basis of information
in the Prospectus which is expected to be published by the Company today in
connection with the Rights Issue. Copies of the Prospectus will, following
publication, be available from the Company`s registered office. This
announcement does not constitute, or form part of any offer or invitation to
purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or
issue, or any solicitation of any offer to sell, otherwise dispose of, issue,
purchase, otherwise acquire or subscribe for, any security in the capital of
the Company in any jurisdiction. Any decision to purchase, otherwise acquire,
subscribe for, sell or otherwise dispose of any Provisional Allotment Letter,
Nil Paid Rights, Fully Paid Rights and/or New Shares should only be made on
the basis of information contained in and incorporated by reference into the
Prospectus which contains further details relating to the Company in general
as well as a summary of the risk factors to which an investment in the New
Shares is subject. Nothing in this announcement should be interpreted as a
term or condition of the Rights Issue. Subject to certain exceptions, the
Prospectus will not be available to Shareholders located in Excluded
Territories. This announcement is not directed to, or intended for
distribution or use by, any person or entity that is a citizen or resident or
located in any locality, state, country or other jurisdiction where such
distribution, publication, availability, or use would be contrary to law or
regulation which would require any registration or licensing within such
jurisdiction.
This announcement and the information contained herein is not an offer of
securities for sale in the United States. The Nil Paid Rights, the Fully Paid
Rights, the New Shares and the Provisional Allotment Letters may not be
offered or sold in the United States or to or for the account or benefit of a
person located in the United States absent registration under the US
Securities Act of 1933, as amended or an exemption from, or in a transaction
not subject to, registration. The Nil Paid Rights, the Fully Paid Rights, the
New Shares and the Provisional Allotment Letters have not been and will not be
registered under the US Securities Act of 1933, as amended, or with any
securities regulatory authority of any state or jurisdiction of the United
States and no public offering of the Nil Paid Rights, the Fully Paid Rights,
the New Shares or the Provisional Allotment Letters will be made in the United
States. No money, securities or other consideration from any person inside the
United States is being solicited and, if sent in response to the information
contained in this announcement, will not be accepted.
This announcement does not constitute an offer of Nil Paid Rights, Fully Paid
Rights, New Shares or Provisional Allotment Letters to any person with a
registered address in, or who is resident in, Australia, Canada or Japan. None
of the Nil Paid Rights, the Fully Paid Rights, the New Shares or the
Provisional Allotment Letters has been or will be registered under the
relevant laws of any state, province or territory of Australia, Canada or
Japan. Subject to certain limited exceptions, neither the Prospectus, the
Provisional Allotment Letter nor this announcement will be distributed in or
into Australia, Canada or Japan. The release, publication or distribution of
this announcement in certain jurisdictions may be restricted by law and
therefore persons in such jurisdictions into which this announcement is
released, published or distributed should inform themselves about and observe
such restrictions.
Citi, J.P. Morgan Cazenove Limited and J.P. Morgan Securities Ltd., each of
which is regulated and authorised in the United Kingdom by the FSA, are acting
exclusively for the Company and for no-one else in connection with the Rights
Issue and will not regard any other person (whether or not a recipient of this
announcement) as a client in relation to the Rights Issue and will not be
responsible to anyone other than the Company for providing the protections
afforded to their respective clients or for providing advice in relation to
the Rights Issue, the contents of this announcement and the accompanying
documents or any matters or arrangements referred to herein or therein.
Citi, J.P. Morgan Cazenove Limited and J.P. Morgan Securities Ltd. may,
subject to the terms of the Underwriting Agreement and in accordance with
applicable legal and regulatory provisions, engage in transactions in relation
to the Nil Paid Rights, the Fully Paid Rights, the New Shares and/or related
instruments for their own account for the purpose of hedging their
underwriting exposure or otherwise. Except as required by applicable law or
regulation none of Citi, J.P. Morgan Cazenove Limited and J.P. Morgan
Securities Ltd. propose to make any public disclosure in relation to such
transactions.
The statements contained in this announcement that are not historical facts
are "forward-looking" statements. These forward-looking statements are subject
to a number of substantial risks and uncertainties, many of which are beyond
the Company`s control and actual results and developments may differ
materially from those expressed or implied by these statements for a variety
of factors. These forward-looking statements are statements are based on the
Company`s current intentions, beliefs and expectations about 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. In addition, from time to time, the Company or
its representatives have made or may make forward-looking statements orally or
in writing. Furthermore, such forward-looking statements may be included in,
but are not limited to, press releases or oral statements made by or with the
approval of an authorised executive officer of the Company. No assurance can
be given that such future results will be achieved; 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 taxation and fiscal policy, future market conditions, currency
fluctuations, the behaviour of other market participants, the actions of
governmental regulators and other risk factors such as the Company`s ability
to continue to obtain financing to meet its liquidity needs, 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.
No statement in this announcement is intended as a profit forecast or a profit
estimate and no statement in this announcement should be interpreted to mean
that earnings per Ordinary Share for the current or future financial years
would necessarily match or exceed the historical published earnings per
Ordinary Share. Prices and values of, and income from, shares may go down as
well as up and an investor may not get back the amount invested. It should be
noted that past performance is no guide to future performance. Persons needing
advice should consult an independent financial adviser.
This announcement should not be considered a recommendation by Citi, J.P.
Morgan Cazenove Limited and J.P. Morgan Securities Ltd. or any of their
respective directors, officers, employees, advisers or any of their respective
affiliates in relation to any purchase of or subscription for securities. No
representation or warranty, express or implied, is given by or on behalf of
Citi, J.P. Morgan Cazenove Limited or J.P. Morgan Securities Ltd. or any of
their respective directors, officers, employees, advisers or any of their
respective affiliates or any other person as so to the accuracy, fairness,
sufficiency or completeness of the information or the opinions or the beliefs
contained in this announcement (or any part hereof). None of the information
contained in this announcement has been independently verified or approved by
Citi, J.P. Morgan Cazenove Limited or J.P. Morgan Securities Ltd. or any of
their respective directors, officers, employees, advisers or any of their
respective affiliates. Save in the case of fraud, no liability is accepted by
Citi, J.P. Morgan Cazenove Limited or J.P. Morgan Securities Ltd. or any of
their respective directors, officers, employees, advisers or any of their
respective affiliates for any errors, omissions or inaccuracies in such
information or opinions or for any loss, cost or damage suffered or incurred
howsoever arising, directly or indirectly, from any use of this announcement
or its contents or otherwise in connection with this announcement. No person
has been authorised to give any information or to make any representations
other than those contained in this announcement and, if given or made, such
information or representations must not be relied on as having been authorised
by the Company, Citi, J.P. Morgan Cazenove Limited or J.P. Morgan Securities
Ltd. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and
Transparency Rules, the issue of this announcement shall not, in any
circumstances, create any implication that there has been no change in the
affairs of the Group since the date of this announcement or that the
information in it is correct as at any subsequent date.
Neither the content of the Company`s website (or any other website) nor the
content of any website accessible from hyperlinks on the Company`s website (or
any other website) is incorporated into, or forms part of, this announcement.
This announcement has been prepared for the purposes of complying with
applicable law and regulation in the United Kingdom and the information
disclosed may not be the same as that which would have been disclosed if this
announcement had been prepared in accordance with the laws and regulations of
any jurisdiction outside of the United Kingdom.
LONMIN PLC
2 FOR 9 RIGHTS ISSUE OF 35,072,129 NEW SHARES AT 900 PENCE OR ZAR 113.04 PER
NEW SHARE
INTRODUCTION
Lonmin today announces that it proposes to raise US$457 million (net of
expenses) by way of a Rights Issue that will substantially strengthen the
Company`s overall financial position at a time of unpredictable PGM prices and
foreign exchange rates. The Rights Issue will be made to all Qualifying
Shareholders on the terms set out in the Prospectus and will be on the basis
of 2 New Shares at 900 pence per New Share or, in the case of Qualifying South
African Shareholders, ZAR 113.04 per New Share for every 9 Existing Shares.
The Rights Issue will involve the issue of 35,072,129 New Shares, representing
approximately 18.2 per cent. of the issued share capital of the Company
following the Rights Issue.
The UK Issue Price of 900 pence per New Share represents a 39.6 per cent.
discount to the theoretical ex-rights price based on the closing middle-market
price of 1,622 pence per Share, and a 44.5 per cent. discount to the closing
middle-market price, in each case on 8 May 2009, the Latest Practicable Date.
The SA Issue Price of ZAR 113.04 per New Share represents a 39.5 per cent.
discount to the theoretical ex-rights price based on the closing price of ZAR
203.30 per Share, and a 44.4 per cent. discount to the closing price on the
Latest Practicable Date.
The Rights Issue is being underwritten by Citi and J.P. Morgan Securities Ltd.
Xstrata and M&G have irrevocably undertaken to take up rights to New Shares
pursuant to the Rights Issue. In aggregate, these irrevocable undertakings are
in respect of 12,614,729 New Shares, representing approximately 35.97 per
cent. of the New Shares to be issued pursuant to the Rights Issue.
The purpose of this announcement is to explain to you the background to and
reasons for the Rights Issue and to explain why the Directors consider that
the Rights Issue is in the best interests of the Company and Shareholders as a
whole. This announcement contains extracts of salient features of the
Prospectus, which extracts are qualified and/or contextualized by, and should
be read with, the Prospectus.
BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE
(i) PGM market background
Along with other commodities, the pricing environment for PGMs has changed
significantly over the last 12 months. The platinum price peaked at US$2,276
per ounce on 4 March 2008, mainly as a result of supply side challenges
arising from power generation concerns in South Africa and a growing number of
industry safety stoppages, alongside a strong demand environment. Since then,
the platinum price declined to a low of US$756 per ounce as at 27 October
2008, but has subsequently risen to US$1,152 per ounce as at the Latest
Practicable Date. The Board believes that the fall in PGM prices was driven
initially by the worsening outlook for the global automotive industry and was
sustained by a fall in the demand for automotive vehicles and other PGM-
containing consumer goods as a consequence of the global financial crisis, as
well as a reduction in investment holdings such as those of ETFs at that time.
This effect has been exacerbated by de-stocking amongst industrial consumers
of PGMs and some sales of inventories. The Board expects the pricing
environment to continue to be unpredictable in the short term while
significant economic uncertainty prevails but are confident that the positive
balance between supply and demand in the PGM sector will return in due course.
(ii) Lonmin`s operational gearing to PGM pricing and foreign exchange
movements
Lonmin`s policy is not to hedge commodity price exposure on PGMs and therefore
any change in prices has a direct effect on the Group`s trading results. For
example, a ten per cent. movement in the average market price for platinum in
the 2008 financial year, which was US$1,655 per ounce (compared with US$1,152
per ounce as at the Latest Practicable Date) would have impacted operating
profit by approximately US$120 million in the corresponding period. A ten per
cent. movement in the average market price for rhodium in the 2008 financial
year, which was US$7,614 per ounce (compared with US$1,525 per ounce as at the
Latest Practicable Date), would have impacted operating profit by
approximately US$72 million in the corresponding period. Movements of US$100
per ounce in the average prices of platinum and rhodium would have impacted
operating profit in the 2008 financial year by approximately US$73 million and
approximately US$9 million, respectively.
In addition to Lonmin`s operational gearing to PGM commodity prices, the
Company`s trading results are sensitive to fluctuations in foreign exchange
rates, specifically between the US dollar and the Rand. The vast majority of
the Group`s revenues are in US dollars. However, most of the Group`s
operations are based in South Africa and the bulk of the Group`s operating
costs and taxes are paid in Rand. Therefore, a strengthening of the Rand
against the US dollar has an adverse effect on profits and margins. The
Group`s current policy is not to hedge currency exposures and therefore
fluctuations in the Rand to US dollar exchange rate can have a significant
impact on the Group`s results. A ten per cent. movement in the Rand to US
dollar average exchange rate in the 2008 financial year, which was 7.45
(compared with 8.3055 as at the Latest Practicable Date), would have impacted
operating profit by approximately US$125 million in the corresponding period.
(iii) Lonmin`s actions to improve operational performance
Lonmin remains one of the lower cost producers of PGMs and has recently taken
a number of significant actions to improve operational performance, achieve
cost savings and preserve cash, to help mitigate the impact of short-term
weakness in the PGM pricing environment.
These steps include a major restructuring programme at Lonmin`s core
operations at Marikana, a renewed emphasis on low cost production and an
extensive cash conservation programme across the business. Specifically:
Elimination of non-value-adding ounces
The Group has ceased production from its higher unit cost operations,
specifically at its opencast operations at Marikana and at its Baobab shaft at
Limpopo, which has been placed on care and maintenance. As part of these
actions, Lonmin has completed a significant restructuring and retrenchment
programme at its Marikana operation.
Change of mechanisation strategy
Lonmin is in the process of switching from mechanised to hybrid mining at its
Saffy shaft, with conventional stoping supported by mechanised development.
Production at the shaft continues to ramp up, and the re-engineering to enable
hybrid mining continues to progress. Lonmin`s new shaft, K4, which has yet to
come into production, is also being developed on a hybrid basis. The
productivity of Hossy, which is being utilised as a fully mechanised proof-of-
concept shaft, will be reviewed by management in or before September 2009 and
a decision on the future mining method of the shaft will be made thereafter.
Cost reduction, performance improvement and capital rationing
Lonmin reached a framework agreement in February 2009 with its recognised
unions regarding a reduction in the number of employees at the Marikana
operation. Subsequently, around 4,400 full time employees and contractors
employed at Marikana left the Company before the end of the first half of the
2009 financial year, with another 600 expected to leave during the second half
of the year. In addition, around 2,000 full time employees and contractors
previously employed at the Limpopo Baobab shaft have left the Company.
The estimated cost savings relating to this headcount reduction are expected
to be around US$90 million per annum, on an annualised basis.
Lonmin is implementing a number of programmes across its operations to improve
performance going forward. In the mining business, there is an emphasis on
improving underground ore reserve development with the aim of increasing face
availability to support future flexibility and production growth. However,
improving the performance of the Company`s operations will take time, and the
Directors do not expect the full benefits of these improvements to be realised
until 2010. At the Process Division, an optimization programme at the
concentrators is well underway, with a view to improving underground recovery
rates, whilst a re-design of the Number One Furnace was recently completed and
this should improve the availability and reliability of the vessel.
In addition, capital expenditure programmes at the Limpopo Phase 2 Project and
Akanani have been placed on care and maintenance, enabling the Group to focus
capital expenditure on development at Marikana which the Board believes will
produce the most profitable and cash generative production ounces. As part of
its restructuring programme, the Company also significantly curtailed its
exploration activities.
Simplification of organisational structure with clear accountability
Lonmin has implemented a new simplified management structure which enhances
focus and accountability, giving the operations more ownership of the
functions required to ensure efficient and effective delivery. A key change in
the new structure has been the appointment of Mahomed Seedat as Chief
Operating Officer based in South Africa with ultimate responsibility and
accountability for delivery across all of the Group`s operational activities
in both the mining and processing areas, reporting directly to Ian Farmer,
Chief Executive Officer.
Management emphasis in South Africa
The Company`s new simplified management structure places the operational
management emphasis firmly in South Africa. As part of this process, Lonmin
has reduced headcount at its London office by approximately one third since
the end of the last financial year.
(iv) Lonmin`s actions to improve financial flexibility
Lonmin`s operational gearing in the current environment of weak and
unpredictable PGM pricing has meant that profitability and cash flows are
under pressure despite the measures already taken by the Group to address its
cost base. As a result of this and the continued difficulties in the credit
market, the Board announced on 18 November 2008 that it had reviewed the final
dividend for the period ended 30 September 2008 and had taken the decision not
to pay the final dividend for 2008. The Board has also announced today that it
will not be paying an interim dividend for the period ended 31 March 2009.
In addition, in the second quarter of the 2009 financial year, Lonmin
completed the refinancing of US$575 million of existing committed facilities,
comprising, in the UK, a US$250 million revolving credit facility and a US$150
million amortising term loan (both now maturing in 2012) and, in South Africa,
a US$175 million revolving credit facility now maturing in 2010 (together the
``New Facilities``). Amounts drawn on the New Facilities have been used to
repay one of the Group`s existing bank facilities early, and the Board intends
to use additional funds available under the New Facilities to repay further
borrowings which mature in August 2009. This refinancing maintains the
aggregate quantum of the Company`s banking facilities, and significantly
lengthens their tenure.
As at 30 September 2008, Lonmin had net debt of US$303 million. At 31 March
2009, Lonmin`s net debt had increased to US$449 million, comprising US$525
million of drawn down facilities and US$76 million of cash and equivalents.
The increase in net debt during the first half of the 2009 financial year was
principally due to the impact of lower PGM prices on the Group`s
profitability. In addition, Lonmin paid one-off restructuring costs of
approximately US$39 million, paid taxes of US$48 million and spent US$106
million on capital expenditure. These factors were partially offset by a
decrease in working capital of US$146 million.
Since 31 March 2009, Lonmin`s net debt position has increased due primarily to
the timing of receipts from customers and the timing of payments made to
suppliers, including payments in relation to capital projects. The Directors
expect that (without taking into account the net proceeds from the rights
issue) Lonmin`s net debt position would be higher at 30 September 2009 than at
31 March 2009.
Lonmin has US$975 million of committed facilities in place, with US$575
million of these comprising New Facilities. The main elements of the New
Facilities can be summarised as follows:
- For the period commencing April 2009, Lonmin has agreed a new US$250
million revolving credit facility in the UK, which will mature in
November 2012;
- For the period commencing August 2009, Lonmin has agreed a new US$150
million forward-start amortising loan facility in the UK, which will
expire in November 2012. The amortisation of this facility consists of
US$20 million payable every six months starting in July 2010, with a
final repayment of US$50 million in November 2012;
- The margin over LIBOR on both these facilities is 400 basis points up to
31 March 2010, and will thereafter be determined by reference to net
debt/EBITDA and will be in the range 250 basis points to 400 basis
points;
- Key covenants for these facilities include a maximum net debt/EBITDA
ratio of 4.0 times, to be first tested in March 2010; a minimum
EBITDA/net interest ratio of 4.0 times, to be first tested in March 2010;
and a maximum net debt/tangible net worth ratio of 0.75 times, to be
tested in September 2009 and March 2010, and moving to 0.7 times on a
semi-annual basis thereafter;
- In South Africa, Lonmin has secured an extension to the maturity of the
existing US$175 million revolving credit facility to November 2010; this
facility was previously due to mature in October 2009. If funds are drawn
down in South African Rand before 30 September 2009 the margin over JIBAR
will be 141 basis points. Thereafter pricing will be reviewed, which may
result in the margin on South African Rand drawdowns after 30 September
2009 exceeding 141 basis points over JIBAR. Pricing on US dollar
drawdowns will be negotiated at the time of drawdown; and
- Key covenants for this facility, which are to be tested at the WPL/EPL
level in South Africa, include a minimum EBITDA/net interest ratio of 3.5
times, and a maximum net debt/EBITDA ratio of 2.75 times; these covenants
are to be tested on a rolling 12 month basis every six months on 31 March
and 30 September.
As part of the refinancing, Lonmin has agreed to pay an increased margin and
commitment fee to syndicate banks that have committed to participate in the
New Facilities. One-off up-front arrangement and lending fees associated with
the debt refinancing amount to US$14 million and will be amortised over the
life of the facilities they relate to. The Board expects the all-in average
cost of debt to be approximately 6 per cent. in the second half of the 2009
financial year.
(v) Incwala Resources
Lonmin was a key facilitator of the original BEE transaction with Incwala
Resources in September 2004, and was a provider of certain vendor financing,
third party loan indemnifications and related arrangements which enabled broad-
based equity participation by HDSA shareholders in Lonmin`s assets. As at 31
March 2009, Lonmin recognised contingent liabilities associated with these
arrangements of US$99 million, of which US$19 million would not become payable
until 30 September 2011, if at all.
All of the HDSA shareholders` bank funded debt and a substantial portion of
the HDSA shareholders` vendor financed debt is due to mature in September 2009
and will require refinancing. If the HDSA shareholders are unsuccessful in
their attempts to secure refinancing of their debts then it is possible that
some or all of Lonmin`s contingent liability in respect of such debts may
crystallise. However, it is also possible that alternative solutions involving
the participation of Lonmin could be found, some of which could involve an
economic cost to Lonmin in excess of the currently recognised contingent
liabilities. Such solutions will only be considered if the Board believes they
are in the interests of, and will generate value for, Lonmin shareholders.
(vi) Conclusion
The Board remains confident of the longer term potential of Lonmin, with its
high quality asset base and low cost position, and in the fundamentals of the
PGM industry, and its primary focus continues to be on preserving and
enhancing value for all Lonmin shareholders.
However, even after the recent measures to improve operational performance,
Lonmin`s profitability and cash flows are under pressure and remain highly
geared to the PGM pricing environment and Rand/US dollar exchange rate
movements. In light of the potentially significant impact these external
factors could have on the Group`s financial performance, combined with
continuing economic uncertainty and difficulties in credit markets, the Board
believes it is appropriate to adopt a more conservative capital structure.
Against this background, the Directors have concluded that raising equity now,
by way of the Rights Issue, is in the best interests of the Company and
Shareholders as a whole.
The Rights Issue is expected to raise approximately US$457 million (net of
expenses), and will substantially strengthen the Company`s overall financial
position. The Board believes the Rights Issue will result in immediate and
long-term benefits, and in particular will:
- improve Lonmin`s ability to withstand potential adverse movements in
external factors, specifically the PGM pricing environment and Rand/US
dollar exchange rate; and
- reduce the Group`s borrowings and annual interest charge, and provide
Lonmin with incremental financial headroom in respect of the financial
covenants contained in its borrowing facilities.
Furthermore, the Board believes that the Rights Issue, together with the
banking facilities which remain available to be redrawn, will provide Lonmin
with enhanced operational and financial flexibility to take advantage of
investment and growth opportunities at the appropriate time. This should
enable the Group to generate attractive returns in the future because:
- Lonmin remains one of the lower cost producers of PGMs, and has recently
implemented both productivity and cost saving initiatives designed to
ensure that the Group will move further down the industry cost curve
against the backdrop of short-term weakness in the PGM pricing
environment;
- Lonmin`s current focus for capital expenditure and development is on its
core operations at Marikana, which are expected to produce the quickest,
most profitable and cash generative PGM ounces;
- Lonmin is well-positioned to increase production at Marikana at the
appropriate time. Specifically, the Directors believe that growth can be
accessed from Hossy and Saffy shafts, which, are currently operating at
well below capacity as they ramp up, and one additional shaft, K4, which
has yet to come into production. With the support of incremental capital
investment, in the short to medium term, these shafts will provide the
basis of production growth at Marikana; and
- Lonmin`s portfolio of production and development assets may, over time,
provide with attractive investment and growth opportunities as one of the
larger and better capitalised market participants.
USE OF PROCEEDS
The Directors intend that the net proceeds of the Rights Issue will be used to
reduce the Group`s drawn borrowings under the Company`s existing credit
facilities, which will remain available to be re-drawn, otherwise reduce the
Company`s indebtedness, and/or be held as cash.
CURRENT TRADING AND PROSPECTS
The Group`s published platinum sales target for the 2009 financial year is
around 700,000 platinum ounces. Platinum sales in the first half of the 2009
financial year were approximately 45 per cent. of the full year target, which
was ahead of the Group`s initial expectations for the period. The key driver
of this was the performance of the Process Division, where inventory was
processed faster than had been expected following the Number One Furnace
rebuild during the first quarter of the 2009 financial year. Since 31 March
2009, the Group has continued to trade in line with expectations and despite
significant ongoing restructuring activity across the Group`s operations, the
Group remains on course to achieve its published platinum sales target for the
2009 financial year.
The continuing market downturn has had a major impact on pricing, resulting in
Lonmin`s average PGM basket price during the first half of the 2009 financial
year declining by 55 per cent. to US$699 per ounce, from US$1,588 per ounce in
the first half of the 2008 financial year and the average price of platinum
during the first half of the 2009 financial year declining by 40 per cent. to
US$947 per ounce from US$1,578 per ounce in the first half of the 2008
financial year. In the short term the demand outlook for PGMs is uncertain,
due principally to ongoing weakness in demand in the automotive sector. While
the Directors` believe the long term demand fundamentals of PGMs remain
strong, the Directors do not expect to see near-term relief to the current
challenging market conditions.
For the second half of the 2009 financial year, Lonmin will be focused on
minimising any potential disruption resulting from the execution of the
restructuring programme at Marikana, particularly as crews are redeployed
around the Marikana property, and on improving operational stability and
productivity in the Group`s mining business, including through the closure of
a small uneconomic decline shaft and a further five uneconomic half levels at
Marikana. In addition, the Group will continue to focus on ramping up
production at the Saffy shaft, which is expected to increase production to
80,000 tonnes per month by the end of the 2009 financial year.
Having taken a number of measures to improve cost performance, the Directors
expect the Group`s Rand-based operating costs in the second half of the
current financial year to be significantly lower than those incurred in the
equivalent period in the last financial year and, as a result, that the
Group`s Rand-based operating costs for the current financial year will be
lower than those incurred in the last financial year.
DIVIDEND POLICY
The Board`s policy remains that dividend distributions are based on the
reported earnings for the year, but take into account the projected cash
requirements of the business. Lonmin`s profitability and cash flows are highly
geared to PGM prices and Rand/US dollar exchange rate movements. Prevailing
PGM prices continue to be low and unpredictable and as a result Lonmin`s
profitability and cash flows are under pressure despite the measures already
taken by the Group to address its cost base. In addition, the credit market
remains difficult. Consequently, as announced on 18 November 2008, the Board
took the decision not to pay a final dividend for the period ended 30
September 2008. The Board has also announced today that it will not be paying
an interim dividend for the period ended 31 March 2009.
The Board remains confident in the longer term potential of Lonmin, the
quality of its assets and the fundamentals of the PGM industry. Given this,
the Board will continue to review this matter and will resume dividend
payments as soon as it is satisfied that conditions allow.
SUMMARY OF THE PRINCIPAL TERMS OF THE RIGHTS ISSUE
The Rights Issue is intended to raise net proceeds of US$457 million. The
Rights Issue is being fully underwritten (other than in respect of the New
Shares which Xstrata, M&G or the Directors have undertaken to take up) by Citi
and J.P. Morgan Securities. A summary of the material terms of the
Underwriting Agreement will be set out in the Prospectus. In the UK, Citigroup
Global Markets Limited and J.P. Morgan Cazenove are acting as Joint Sponsors
to Lonmin, and in South Africa, Citigroup Global Markets (Proprietary) Limited
is acting as SA Sponsor in relation to the Rights Issue.
Subject to the fulfilment of, amongst others, the conditions described below,
the Company will offer New Shares by way of rights at 900 pence per New Share,
in respect of Qualifying Shareholders (other than Qualifying South African
Shareholders) or, in the case of Qualifying South African Shareholders, ZAR
113.04 per New Share, payable in full on acceptance. The Rights Issue will be
on the basis of:
2 New Shares for every 9 Existing Shares
held by and registered in the names of Qualifying Shareholders (other than,
subject to certain exceptions, Qualifying Shareholders resident or with
registered addresses in the United States or any of the Excluded Territories)
on the relevant Record Date and so in proportion to the number of Existing
Shares then held and otherwise on the terms and conditions set out in the
Prospectus and, in the case of Qualifying Non-CREST Shareholders and
Qualifying South African Shareholders who hold shares in certificated form
(other than, subject to certain exceptions, such Shareholders resident or with
registered addresses in the United States or any of the Excluded Territories),
the Provisional Allotment Letter or Form of Instruction, as the case may be.
The UK Issue Price of 900 pence per New Share, which is payable in full by
Qualifying Shareholders other than Qualifying South African Shareholders on
acceptance by no later than 11.00 a.m. on 3 June 2009, represents, in effect:
- a 39.6 per cent. discount to the theoretical ex-rights price (calculated
by reference to the closing middle market price of 1,622 pence per Share
on 8 May 2009, the Latest Practicable Date); and
- a 44.5 per cent. discount to the closing middle market price of 1,622
pence per Share on the Latest Practicable Date.
The SA Issue Price of ZAR 113.04 per New Share, which is payable in full by
Qualifying South African Shareholders on acceptance by no later than 12.00
p.m. (Johannesburg time) on 3 June 2009, represents, in effect:
- a 39.5 per cent. discount to the theoretical ex-rights price (calculated
by reference to the closing price of ZAR 203.30 per Share on the Latest
Practicable Date); and
- a 44.4 per cent. discount to the closing price of ZAR 203.30 per Share on
the Latest Practicable Date.
Fractions of New Shares arising under the Rights Issue will not be allotted to
Qualifying Shareholders and, where necessary, fractional entitlements will be
rounded down to the nearest whole number of New Shares. Such fractions will be
aggregated and, if possible, placed in the market as soon as practicable after
commencement of dealings in the New Shares, nil paid. The net proceeds of such
placings (after deduction of expenses) will be retained by the Company, except
that any entitlements worth more than GBP5.00 (or the equivalent in ZAR at the
spot rate on the effective date of such placing, if any) will be remitted to
the relevant Shareholder.
Applications have been made for the New Shares to be admitted to listing on
the Official List and to trading on the London Stock Exchange`s main market
for listed securities. It is expected that Admission will become effective and
dealings will commence (nil paid) in the New Shares at 8.00 a.m. on 15 May
2009.
Application has been made to the JSE for the New Shares to be admitted to
listing and trading on the Main Board of the JSE. It is expected that South
African Admission will become effective and that dealings on the JSE in the
Letters of Allocation (on a deferred settlement basis) will commence at 9.00
a.m. (Johannesburg time) on 13 May 2009 and in the New Shares (fully paid)
will commence at 9.00 a.m. (Johannesburg time) on 4 June 2009.
Any changes to the timetable of the Rights Issue will be announced by the
Company in accordance with applicable rules in the United Kingdom and South
Africa.
The Rights Issue is conditional, amongst other things, upon:
(a) Admission on the Official List and to trading on the London Stock
Exchange`s main market for listed securities becoming effective by not
later than 8.00 a.m. on 15 May 2009 (or such later time and date as the
parties to the Underwriting Agreement may agree, but provided it does not
result in the Acceptance Date falling later than 17 June 2009);
(b) the Underwriting Agreement having become unconditional in all respects,
save for the condition relating to Admission, and not having been
terminated in accordance with its terms.
The New Shares will, when issued and fully paid, rank pari passu in all
respects with the Existing Shares, including the right to receive all future
dividends and other distributions declared, made or paid after the date of
their issue.
The Rights Issue will result in the issue of 35,072,129 New Shares, which will
form approximately 18.2 per cent. of the Shares in issue immediately following
the Rights Issue.
Further information on the Rights Issue, including the terms and conditions of
the Rights Issue and the procedure for acceptance and payment and the
procedure in respect of rights not taken up will be set out in the Prospectus
and, where relevant, will be set out in the Provisional Allotment Letter or
the Form of Instruction.
SOUTH AFRICAN REGISTRATION CONDITIONS
The Prospectus and other requisite documents will be lodged for registration
with the South African Registrar of Companies shortly. The Rights Issue will
only proceed if the Prospectus and other requisite documents are registered by
the South African Registrar of Companies. Other than registration of the
Prospectus and other requisite documents by the South African Registrar of
Companies, there are no regulatory conditions precedent to the Rights Issue in
South Africa. Following registration of the Prospectus and other requisite
documents by the South African Registrar of Companies, a simultaneous RIS and
SENS announcement will be released.
DIRECTORS` INTENTIONS
Each Director who holds Shares has undertaken to take up in full his or her
rights to subscribe for New Shares under the Rights Issue in respect of his or
her beneficial holding, which together amount to 89,869 Shares, representing
0.06 per cent. of the issued ordinary share capital of the Company as at the
date of the Prospectus.
IRREVOCABLE UNDERTAKING TO FOLLOW RIGHTS
Xstrata has irrevocably undertaken to take up all of its Nil Paid Rights
pursuant to the Rights Issue, representing 8,653,204 New Shares, and M&G has
irrevocably undertaken to take up Nil Paid Rights pursuant to the Rights Issue
representing 3,961,525 New Shares. In aggregate, these irrevocable
undertakings are in respect of 12,614,729 New Shares, representing
approximately 35.97 per cent. of the New Shares to be issued pursuant to the
Rights Issue.
In addition the Directors have given irrevocable undertakings to take up Nil
Paid Rights in respect of 19,970 New Shares.
Further details of the irrevocable undertakings will be set out in the
Prospectus.
EXPECTED TIMETABLE OF PRINCIPLE EVENTS IN THE UNITED KINGDOM
Each of the times and dates in the table below is indicative only and may be
subject to change.
Announcement 11 May 2009
Approval of prospectus by UKLA 11 May 2009
Record date for entitlement under the Rights 5.00 p.m. on 11 May
Issue for Qualifying CREST Shareholders and 2009
Qualifying Non-CREST Shareholders
Restrictions on transfers between UK Register 5.00 p.m. on 11 May
and SA Register begin 2009
Despatch of Provisional Allotment Letters (to 14 May 2009
Qualifying Non-CREST Shareholders only)(1)
Start of subscription period 15 May 2009
Dealings in New Shares, nil paid, commence on 8.00 a.m. on 15 May
the London Stock Exchange 2009
Existing Shares marked ``ex`` by the London 8.00 a.m. on 15 May
Stock Exchange 2009
Nil Paid Rights credited to stock accounts in 8.00 a.m. on 15 May
CREST (Qualifying CREST Shareholders only)(1) 2009
Nil Paid Rights and Fully Paid Rights enabled 8.00 a.m. on 15 May
in CREST 2009
Recommended latest time for requesting 3.00 p.m. on 26 May
withdrawal of Nil Paid Rights and Fully Paid 2009
Rights from CREST (i.e. if your Nil Paid Rights
and Fully Paid Rights are in CREST and you wish
to convert them to certificated form)
Latest time for depositing renounced 3.00 p.m. on 29 May
Provisional Allotment Letters, nil or fully 2009
paid, into CREST or for dematerialising Nil
Paid Rights or Fully Paid Rights into a CREST
stock account (i.e. if your Nil Paid Rights and
Fully Paid Rights are represented by a
Provisional Allotment Letter and you wish to
convert them to uncertificated form)
Latest time and date for splitting Provisional 3.00 p.m. on 1 June
Allotment Letters, nil or fully paid 2009
Latest time and date for acceptance, payment in 11.00 a.m. on 3 June
full and registration of Provisional Allotment 2009
Letters
Results of the Rights Issue announced(2) 8.00 a.m. on 4 June
2009
Dealings in New Shares, fully paid, commence on 8.00 a.m. on 4 June
the London Stock Exchange 2009
New Shares credited to CREST stock accounts 8.00 a.m. on 4 June
2009
Restriction on transfers between UK Register 8.00 a.m. on 4 June
and SA Register ends 2009
Despatch of definitive share certificates for By no later than 11
the New Shares in certificated form June 2009
Notes:
(1) The Rights Issue is subject to certain restrictions relating to
Shareholders with registered addresses in the United States or the
Excluded Territories, details of which are set out in the Prospectus.
(2) The results of the Rights Issue will be announced by way of a
simultaneous RIS and SENS announcement at 8.00 a.m. (London time) on 4
June 2009.
(3) The times and dates set out in the expected timetable of principal events
above and mentioned throughout the Prospectus may be adjusted by Lonmin
in consultation with the Underwriters, in which event details of the new
times and dates will be notified to the UK Listing Authority, the London
Stock Exchange and, where appropriate, Qualifying Shareholders by way of
a simultaneous RIS and SENS announcement.
(4) References to times in this timetable are to London time.
(5) If you have any queries on the procedure for acceptance and payment, you
should contact the UK Shareholder Helpline on 0871 384 2211 (from inside
the United Kingdom) or +44 121 415 0275 (from outside the United
Kingdom). This Shareholder Helpline is available from 8.30 a.m. to 5.30
p.m. (London time) Monday to Friday (except bank holidays). Please note
that for legal reasons, the UK Shareholder Helpline is only able to
provide information contained in the Prospectus and information relating
to Lonmin`s register of members and is unable to give advice on the
merits of the Rights Issue, or provide legal, financial, tax or
investment advice.
EXPECTED TIMETABLE OF PRINCIPLE EVENTS IN SOUTH AFRICA
Each of the times and dates in the table below is indicative only and may be
subject to change.
Rights Issue announcement 11 May 2009
Restrictions on transfers between UK Register 6.00 p.m. on 11 May
and SA Register begins 2009
Last day to trade Existing Shares on the JSE to 12 May 2009
qualify to participate in the Rights Issue (cum
rights)
In respect of certificated shareholders, Close of business on
commencement of period during which the SA 12 May 2009
Registrar will not register the transfer of
Existing Shares by Qualifying South African
Shareholders
Listing and trading in Letters of Allocation on 9.00 a.m. on 13 May
the JSE on a deferred settlement basis begins 2009
Existing Shares marked ``ex`` by the JSE 9.00 a.m. on 13 May
2009
Despatch of the Prospectus to Qualifying South 5.00 p.m. on 13 May
African Shareholders and Forms of Instruction 2009
to Qualifying South African Shareholders who
hold their Shares in certificated form(1)
Record date for entitlements under the Rights 19 May 2009
Issue for Qualifying South African Shareholders
In respect of certificated shareholders, end of Close of business on
period during which the SA Registrar will not 19 May 2009
register the transfer of Existing Shares by
Qualifying South African Shareholders
Qualifying South African Shareholders who hold 9.00 a.m. on 20 May
their Shares in uncertificated form will have 2009
their accounts at their CSDP or broker
automatically credited with their Letters of
Allocation (Rights Issue opens)(1)
Qualifying South African Shareholders who hold 9.00 a.m. on 20 May
their Shares in certificated form will have 2009
their Letters of Allocation credited to a
register at the SA Registrar (Rights Issue
opens)(1)
In respect of certificated shareholders wishing 12.00 p.m. on 27 May
to sell all or part of their Nil Paid Rights, 2009
latest time and date for submission of Form of
Instruction to SA Registrar
Last day to trade Letters of Allocation on the 5.00 p.m. on 27 May
JSE to participate in the Rights Issue 2009
Dealings in New Shares on a deferred settlement 9.00 a.m. on 28 May
basis commences on the JSE 2009
In respect of certificated shareholders, latest 12.00 p.m. on 3 June
time and date for submission of completed Form 2009
of Instruction (with payment in full) to the SA
Registrar (Rights Issue closes)
Record Date for Letters of Allocation Close of business on
3 June 2009
CSDP/broker accounts credited with New Shares 9.00 a.m. on 4 June
and debited with any payments due in respect of 2009
uncertificated shares
Results of Rights Issue announced and dealings 9.00 a.m. on 4 June
in New Shares, fully paid, commence on the 2009
JSE(2)
Restrictions on transfers between UK Register 9.00 a.m. on 4 June
and SA Register ends 2009
Despatch of definitive share certificates for By no later than 11
the New Shares in certificated form June 2009
Notes:
(1) The Rights Issue is subject to certain restrictions relating to
Shareholders with registered addresses in the United States or the
Excluded Territories, details of which are set out in the Prospectus.
(2) The results of the Rights Issue will be announced by way of a
simultaneous RIS and SENS announcement at 9.00 a.m. (Johannesburg time)
on 4 June 2009.
(3) The times and dates set out in the expected timetable of principal events
above and in the Prospectus may be adjusted by Lonmin in consultation
with the Underwriters, in which event details of the new times and dates
will be notified to the JSE and, where appropriate, Qualifying South
African Shareholders and announced by way of a simultaneous RIS and SENS
announcement.
(4) References to times in this timetable are to Johannesburg time.
(5) Qualifying South African Shareholders who hold their Shares in
uncertificated form are required to inform their CSDP or broker of their
instructions in terms of the Rights Issue in the manner and time
stipulated in the agreement governing the relationship between the
shareholder and their CSDP or broker.
(6) Share certificates may not be dematerialised or rematerialised between 13
May 2009 and 19 May 2009, both days inclusive. Qualifying South African
Shareholders who hold their Shares in uncertificated form will have their
accounts at their CSDP automatically credited with their Letters of
Allocation and Qualifying South African Shareholders who hold their
Existing Shares in certificated form will have their Letters of
Allocation credited to an account with the SA Registrar.
(7) CSDPs effect delivery in respect of Qualifying South African Shareholders
who hold their shares in uncertificated form on a delivery versus payment
method.
(8) If you have any queries on the procedure for acceptance and payment, you
should contact the South African Shareholder Helpline on (011) 630 0800
(from inside South Africa) or +27 11 630 0800 (from outside South
Africa). This Shareholder Helpline is available from 8.00 a.m. to 5.00
p.m. (Johannesburg time) Monday to Friday (except public holidays).
Please note that for legal reasons, the South African Shareholder
Helpline is only able to provide information contained in the Prospectus
and information relating to Lonmin`s register of members and is unable to
give advice on the merits of the Rights Issue, or provide legal,
financial, tax or investment advice.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
This announcement is not for distribution directly or indirectly in or into
the United States or, in or into any of the Excluded Territories. This
announcement does not constitute or form part of an offer or solicitation in
respect of the Nil Paid Rights, the Fully Paid Rights, the New Shares or the
Forms of Instruction in the United States or any of the Excluded Territories.
In particular, the Nil Paid Rights, the Fully Paid Rights, the New Shares and
the Form of Instruction referred to in this announcement -
- have not been and will not be registered under the US Securities Act of
1933, as amended (the "US Securities Act") or the securities legislation
of any other any state of the United States and may not be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered,
directly or indirectly, within the United States except pursuant to an
applicable exemption from the registration requirements of the US
Securities Act and in compliance with any applicable securities laws of
any state or other jurisdiction of the United States
- have not been or will not be qualified by prospectus for offer or sale to
the public in Canada under applicable Canadian securities laws and
accordingly, no offer or sale of Nil Paid Rights or Fully Paid Rights, or
New Shares will be made in Canada
- have not been and will not be registered under the Financial Instruments
and Exchange Law of Japan, as amended (the ``FIEL``) and this
announcement does not constitute an offer of securities for sale,
directly or indirectly, in Japan or to, or for the benefit of, any
resident of Japan or to other for reoffer or resale, directly or
indirectly, in Japan or to, or for the benefit of, any resident in Japan,
except pursuant to an exemption from the registration requirements under
the FIEL and otherwise in compliance with such law and such other
applicable laws, regulations and ministerial guidelines in Japan.
This announcement does not constitute an invitation or offer to sell or the
solicitation of an invitation or an offer to buy New Shares or to take up
entitlements to Nil Paid Rights or Fully Paid Rights in any jurisdiction in
which such offer or solicitation is unlawful and accordingly persons who come
into possession of this announcement should inform themselves about and
observe any such restrictions. Any failure to comply with these restrictions
may constitute a violation of the securities law of any such jurisdiction.
The statements contained in this announcement that are not historical facts
are "forward-looking" statements. These forward-looking statements are subject
to a number of substantial risks and uncertainties, many of which are beyond
the Company`s control and actual results and developments may differ
materially from those expressed or implied by these statements for a variety
of factors. These forward-looking statements are statements are based on the
Company`s current intentions, beliefs and expectations about 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. In addition, from time to time, the Company or
its representatives have made or may make forward-looking statements orally or
in writing. Furthermore, such forward-looking statements may be included in,
but are not limited to, press releases or oral statements made by or with the
approval of an authorised executive officer of the Company. No assurance can
be given that such future results will be achieved; 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 taxation and fiscal policy, future market conditions, currency
fluctuations, the behaviour of other market participants, the actions of
governmental regulators and other risk factors such as the Company`s ability
to continue to obtain financing to meet its liquidity needs, 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.
ISIN CODES
The ISIN code for the New Shares will be the same as that of the Existing
Shares being GB0031192486.
The ISIN code for the Nil Paid Rights is GB00B3Z9Y881 and for the Fully Paid
Rights is GB00B3ZYB12.
DEFINITIONS
The following definitions shall apply throughout this announcement unless the
context requires otherwise:
``Admission`` admission of the New Shares to the Official
List and to trading on the London Stock
Exchange`s main market for listed
securities;
``ADR holders`` the holders of any ADRs from time to time
and ``ADR Holder`` means any one of them;
``ADRs`` American Depositary Receipts evidencing
American Depositary Shares issued by the
Depositary pursuant to the Deposit
Agreement;
``BEE`` Black Economic Empowerment;
``Board`` or ``Directors`` the board of Directors of the Company;
``certificated form`` in relation to a share or other security, a
share or other security which is not in
uncertificated form (that is, not in CREST
or Strate);
``Citi`` Citigroup Global Markets U.K. Equity
Limited, Citigroup Global Markets Limited
and/or Citigroup Global Markets
(Proprietary) Limited, as the context may
require;
``Company`` or ``Lonmin`` Lonmin plc, a company registered in England
and Wales with registered number 103002 and
registered as an external company in South
Africa under registration number
1969/000015/10;
``CREST`` the computerised system for the paperless
settlement of sales and purchases of
securities and the holding of
uncertificated securities operated by
Euroclear UK & Ireland in accordance with
the CREST Regulations;
``CREST Regulations`` the Uncertificated Securities Regulations
2001 (SI 2001 No. 3755), as from time to
time amended;
``CSDP`` Central Securities Depository Participant;
``Deposit Agreement`` the amended and restated deposit agreement
dated 25 February 2002 between the Company,
the Bank of New York and holders from time
to time of ADRs;
``EBITDA`` earnings before interest, tax, depreciation
and amortisation;
``EPL`` Eastern Platinum Limited, a subsidiary of
the Group in which Lonmin has an 82 per
cent. interest;
``ETF`` Exchange Traded Fund. In the context of
this announcement, references to ETFs are
references to platinum or palladium ETFs,
funds backed by physical metal, the
performance of which replicates the
performance of the relevant metal`s price;
``Euroclear UK & Ireland`` Euroclear UK & Ireland Limited, the
operator of CREST;
``Exchange Control Regulations`` the Exchange Control Regulations of South
Africa issued under the Currency and
Exchanges Act 1933 (Act 9 of 1933);
``Excluded Territories`` the Commonwealth of Australia, its
territories and possessions, Canada, and
Japan and ``Excluded Territory`` means any
one of them;
``Existing Shares`` the Shares in issue at the Record Date;
``Form of Instruction`` each of the forms of instruction which are
to be posted to Qualifying South African
Shareholders who hold their Existing Shares
in certificated form, in respect of a
Letter of Allocation reflecting the
entitlement of that Qualifying Shareholder
to take up Nil Paid Rights;
``FSA`` the Financial Services Authority acting in
its capacity as the competent authority for
listing in the UK for the purposes of Part
VI of the FSMA;
``FSMA`` the Financial Services and Markets Act 2000
(as amended);
``Fully Paid Rights`` rights to acquire the New Shares fully
paid;
``Group`` Lonmin and its subsidiary undertakings (as
defined in the Companies Acts);
``HDSA`` Historically Disadvantaged South Africans,
as defined in the Charter;
``HDSA shareholders`` companies owned by HDSAs which are
shareholders in Incwala Resources;
``Incwala`` or ``Incwala Resources`` Incwala Resources (Proprietary)
Limited;
``ISIN`` International Security Identification
Number;
``Issue Price`` the UK Issue Price or the SA Issue Price,
as appropriate;
``Joint Sponsors`` Citigroup Global Markets Limited and J.P.
Morgan Cazenove Limited;
``J.P. Morgan Cazenove`` J.P. Morgan Cazenove Limited;
``J.P. Morgan Securities`` J.P. Morgan Securities Ltd.;
``JSE`` JSE Limited, a securities exchange licensed
in terms of the Securities Services Act;
``Latest Practicable Date`` 8 May 2009 (being the latest practicable
date prior to the publication of the
Prospectus);
``Letter of Allocation the renounceable Letter of Allocation
issued by the Company in electronic form
conferring the right to Qualifying South
African Shareholders on the SA Register to
subscribe for New Shares pursuant to the
Rights Issue;
``Limpopo`` Limpopo Platinum mine;
``Limpopo Phase 2 Project`` the expansion project at Limpopo, which
entails the development of mining
operations and construction of a treatment
plant at the properties of Doornvlei and
Dwaalkop;
``London Stock Exchange`` London Stock Exchange plc;
``Marikana`` Marikana Platinum mine;
"M&G" M&G Investment Management Limited
``New Shares`` the new Shares of US$1 each to be issued
pursuant to the Rights Issue;
``Nil Paid Rights`` New Shares in nil paid form provisionally
allotted to all Qualifying CREST and Non-
CREST Shareholders pursuant to the Rights
Issue and, in the case of Qualifying South
African Shareholders, their right to
subscribe for, sell or renounce, as the
case may be, New Shares in nil paid form,
as represented by Letters of Allocation
automatically credited to their CSDP or
broker accounts and/or by their Form of
Instruction, as the case may be;
``Non-CREST Shareholders`` Shareholders whose Shares are on the UK
Register and are held in certificated form;
``Official List`` the Official List of the FSA;
``pound sterling`` or ``GBP`` or ``pence`` the lawful currency of the United
Kingdom;
or "p"
``Process Division`` The division of the Company responsible for
isolating and refining individual PGMs for
sale into the market place;
``Prospectus`` the document setting out the details of the
Rights Issue, which document is a
prospectus for purposes of the UKLA but is
a circular as defined in the JSE Listings
Requirements (and is not a prospectus
within the meaning of the South African
Companies Act);
``Provisional Allotment Letters`` the renounceable provisional allotment
letters relating to the Rights Issue,
expected to be dispatched to Qualifying Non-
CREST Shareholders (other than, subject to
certain exceptions, Qualifying Non-CREST
Shareholders with registered addresses in
the United States or any of the Excluded
Territories);
``Qualifying CREST Shareholder`` Shareholders whose Shares are on the UK
Register at the UK Record Date and which
are in uncertificated form and held through
CREST;
``Qualifying Non-CREST Shareholders whose Shares are on the UK
Register at the UK
Shareholder`` Record Date and which are in certificated
form;
``Qualifying Shareholder`` A Qualifying Non-CREST Shareholder,
Qualifying CREST Shareholder and/or
Qualifying South African Shareholder, as
the case may be (which, for the avoidance
of doubt, does not include ADR holders);
``Qualifying South African Shareholders on the SA Register at the SA
Record Date;
Shareholders``
``Rand`` or ``ZAR`` or ``R`` the lawful currency of the Republic of
South Africa;
or ``Rand and cents``
``Record Date`` the UK Record Date and/or the SA Record
Date, as the context so requires;
``Rights Issue`` the 2 for 9 rights issue announced by the
Company on 11 May 2009;
``SA Issue Price`` the price at which Shares will be issued to
Qualifying South African Shareholders
pursuant to the Rights Issue, being
ZAR113.04;
``SA Record Date`` close of business on 19 May 2009;
``SA Register`` the branch of the register of members of
the Company in South Africa;
``SA Registrar`` Link Market Services South Africa
(Proprietary) Limited of PO Box 4844,
Johannesburg, 2000, South Africa;
``SA Sponsor`` Citigroup Global Markets (Proprietary)
Limited;
``Securities Services Act`` the Securities Services Act 36 of 2004;
``SENS`` the Securities Exchange News Service of the
JSE;
``Shareholders`` the holders of any Shares from time to time
and ``Shareholder`` means any one of them;
``Shares`` the ordinary shares of US$1 each in the
capital of the Company (which, for the
avoidance of doubt, do not include ADRs);
``South Africa`` the Republic of South Africa;
``South African Admission`` admission of the New Shares to trading on
the JSE`s Main Board for listed securities;
``South African Companies Act`` the South African Companies Act 61 of 1973;
``South African Registrar of Companies`` the Registrar of Companies in
South Africa;
``Strate`` Strate Limited, a central securities
depository licensed in terms of the
Securities Services Act, and the electronic
clearing and settlement system used by the
JSE to settle trades;
``Uncertificated Securities Regulations`` the Uncertificated Securities
Regulations 2001 (SI 2001/3755);
``UK Issue Price`` the price at which Shares will be issued to
Qualifying Shareholders (other than
Qualifying South African Shareholders)
pursuant to the Rights Issue, being 900
pence;
``UK Listing Authority`` or ``UKLA`` the UK Listing Authority, being the
FSA acting as the competent authority for
the purposes of Part VI of the FSMA;
``UK Record Date`` close of business on 11 May 2009;
``UK Register`` the register of members of the Company in
the United Kingdom;
``UK Registrar`` Equiniti Limited of Aspect House, Spencer
Road, Lancing, BN99 6DA;
``uncertificated form`` in respect of a Qualifying Shareholder
other than a Qualifying South African
Shareholder, describes the form of a share
held by such person in CREST; and in
respect of a Qualifying South African
Shareholder describes the form of a share
held by such person trading on the JSE not
evidenced by a certificate or written
instrument, incorporated into Strate and
entered and recorded into the Company`s sub-
register in electronic form in terms of the
Securities Services Act 36 of 2004;
``Underwriters`` Citigroup Global Markets U.K. Equity
Limited and J.P. Morgan Securities Ltd.;
``Underwriting Agreement`` the underwriting agreement dated 11 May
2009 entered into between the Company, the
Underwriters, the Joint Sponsors and the SA
Sponsor relating to the Rights Issue and
more fully;
``United Kingdom`` or ``UK`` the United Kingdom of Great Britain and
Northern Ireland;
``United States`` or ``US`` the United States of America, its
territories and possessions, any state of
the United States of America, the District
of Columbia;
``US dollar`` or ``US$`` the lawful currency of the United States;
``US Shareholders`` Shareholders with registered addresses in
the United States, its territories and
possessions;
``VAT`` or ``Value Added Tax`` value added tax;
``WPL`` Western Platinum Limited, a subsidiary of
the Group in which Lonmin has an 82 per
cent. Interest; and
"Xstrata" Xstrata Zinc B.V.
GLOSSARY
``average PGM basket price`` the weighted average price achieved by the
Group for PGMs in a given period;
``care and maintenance`` the state of a mine or other facility that
is not in current use, although it is
maintained in good condition to enable it
to be brought back into service;
``concentrate`` material that has been processed to
increase the content of contained material
or mineral relative to the contained waste;
``cost curve`` a graphic representation in which the total
production volume of a given commodity
across the relevant industry is arranged on
the basis of average unit costs of
production from lowest to highest to permit
comparisons of the relevant cost positions
of particular production sites, individual
producer groups or producers across the
world or in any given country or region;
``grade`` the quality of an ore, alloy or metal,
expressed as a percentage of the primary
element or as a ratio of grammes per tonne;
``matte`` the homogonous metallic sulphide produced
by the process of matte smelting, formed by
a combination of metallic sulphides which
comprise the metallic charge in the
smelting process;
``Number One Furnace`` the main smelter belonging to the Company,
which is situated at Marikana;
``ore`` a mineral or mineral aggregate containing
precious or useful minerals in such
quantities, grade and chemical combination
to make extraction commercially viable;
``ore reserve development`` the process of developing a known reserve
in order to facilitate the mining of PGMs;
``ounce`` a troy ounce, being 31.1g;
``PGM`` Platinum Group Metals, being platinum,
palladium, rhodium, ruthenium, iridium and,
in respect of Lonmin, gold but not Osmium;
``reef`` a layer, vein or lode containing
potentially economic mineralisation;
``slag`` the waste material left after metal has
been smelted;
``smelter`` a plant in which concentrates are processed
into an upgraded product by melting the
concentrate to separate matte from slag;
``stoping`` the main method of ore extraction used once
the ore block has been developed and
prepared for production. Ore faces are
drilled and blasted using explosives and
the ore is moved from the stope face to the
shaft hoisting system using conventional or
mechanised rock transportation systems; and
``tailings`` the waste residue from the concentrating
process, containing finely ground rock and
minor quantities of mineralisation which is
generally subeconomic to recover.
Date: 11/05/2009 08:02:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
