South Africa’s Public Investment Corporation (PIC) upped its stake in embattled platinum producer Lonmin, after shareholders snubbed a crucial rights issue.
The PIC, which manages South African government employee retirement funds, increased its stake from seven to 29.9 per cent, after shareholders bought just 71 per cent of its share sale.
The shares had been priced at a deep discount of 94 per cent from the closing price of 16.25p per share on the day. Analysts had said investors were effectively being forced to take part in the rights issue, or else risk a massive dilution of their holdings.
Lonmin will use the cash to refinance its heavy debt burden and embark up a business restructuring in light of a prolonged platinum price rout.
The company also wants to secure a new $370m loan that will mature in May 2020, replacing $543m, which matures next year.
The underwriters, HSBC, JP Morgan Cazenove and Standard Bank took up the remaining shares, Lonmin said on Friday.
Weakening platinum spot prices, rising costs and disruption from industrial action have helped send Lonmin shares down around 99 per cent this year. Its shares were last down about 16.7 per cent at 0.81 p per share.
Platinum is trading at levels not seen since the height of the financial crisis, hobbled by slowing demand in top consumer China.