Lonmin-Xstrata deal has been vetoed by Lonmin, for want of better terms of the deal by the third-largest platinum producer. The reverse takeover proposal from its 25% shareholder Xstrata would have seen Lonmin take on Xstrata’s platinum assets. The Lonmin-Xstrata deal, which has been rejected, now jeopardises Xstrata’s intent to raise $817m (£511m) from its investors to cut its hefty debts.
Lonmin disclosed that Xstrata had suggested the two miners merge their platinum businesses, giving Xstrata a 70% stake in Lonmin while putting its own directors in top positions to run the merged entity.
Explaining the reason for rejection, Simon Scott, the acting chief executive of Lonmin, was quoted as saying to BDLive, “What we have in place is a funding plan that’s going to be for the benefit of all of our shareholders. On the basis of the proposal that Xstrata put to us that wasn’t the case. From our perspective we need to look after all our shareholders, and not just a single shareholder. With the plan we have on the table, that puts Lonmin back into a position of financial strength and ramping up the assets that we think is the right thing to do.”
Lonmin also rejected another proposal from Xstrata in which Xstrata offered to support a rights issue on condition that Lonmin’s executive directors were replaced. Under the deal, Xstrata would have provided management services to Lonmin’s operations.
Xstrata said in a statement that Lonmin had “suffered longstanding operational problems and we are concerned that the business does not have the management capabilities to ensure a sustainable future.”
Roger Phillimore, Lonmin chairman, said the proposals had “two features in common. The first one was destabilisation. The second was they sought to transfer effective control of the company without recognition of the need to pay an appropriate premium.”