XSTRATA, the largest shareholder in Lonmin, has given its backing to the platinum miner’s $817m rights issue, but CEO, Mick Davis, said it was demanding changes to the board and management after the capital raising.
Shareholders vote on Monday on whether to approve the rights issue, which is heavily discounted. Xstrata, a 24.9% shareholder, is a key factor in securing the 50% support Lonmin needs to proceed with the offering.
Mr Davis said on Thursday Xstrata would back the rights issue, but wanted changes in the way the company was run.
"As a significant Lonmin shareholder, we are concerned about the destruction of value of our shareholding.
"We want to begin Lonmin’s recovery … as soon as possible and it is not our intention to bring about an unnecessary failure of the rights issue."
Mr Davis said Xstrata did not wish to contribute further uncertainty to Lonmin’s position that might further impede operational performance.
Delaying the proposed rights issue could run the risk that market conditions or other factors prevented a successful rights issue in the future.
Xstrata agreed that Lonmin needed to be recapitalised. "However, that recapitalisation must be backed by a suitable management team and business plan," Mr Davis.
"An assurance in this regard from the Lonmin board would provide shareholders with greater comfort and likely lead to greater take-up of the rights issue by core shareholders."
Lonmin chairman Roger Phillimore backed the way the company had been managed, but conceded permanent appointments had to be made in consultation with shareholders once the rights issue was completed.