Lonmin set to reveal record losses as it pins hopes on rescue rights issue amid low platinum prices
Troubled mining company Lonmin is expected to reveal record losses tomorrow, when it publishes its annual results.
The firm has warned that it is facing a $2bn (£1.3bn) writedown as the price of platinum could remain low in the short-to-medium term. It has come up with a plan to weather this storm, which includes possible redundancies and capital expenditure reductions.
The firm will also unveil the prospectus for its $400m rights issue, which it is carrying out in order to refinance $370m of debt. The group’s existing debt facilities will come to an end in May next year.
Lonmin’s shares were battered down last week, dropping by more than 33 per cent over the five days of trading.
Read more: Lonmin reveals plans for cash call in the face of debt crunch
The company has strongly urged its shareholders to approve the proposed rights issue.
Lonmin warned that if the rights issue is not approved and does not proceed, “the group may have to cease trading and shareholders could lose the entire value of their investment in the shares”.
Shareholders will vote on the rights issue, and Lonmin’s other rescue plans, on 19 November.