Xstrata backs rights issue but wants board changes at Lonmin

XSTRATA yesterday called for a significant overhaul of Lonmin’s board, management and strategy, as it prepared to support its forthcoming rights issue to shore up its balance sheet in the wake of industrial action in South Africa.

Xstrata chief executive Mick Davis, in a letter to the chairman of Lonmin, said that the Swiss miner would support the proposed $817m (£515m) rights issue, but it demanded that it must be “backed by a suitable management team and business plan”.

Davis said Xstrata – a 25 per cent shareholder in Lonmin – would not passively support the rights issue and demanded that the platinum miner “strengthen the management team and overhaul the current business plan so that a realistic strategy to restore shareholder value can be developed”.

Earlier this week, Lonmin said the it recognised that governance needed to be looked at, and was “committed” to doing so after the rights issue has been completed.