Lonmin plunges to new record, off 38%. Investors exit ahead of rights issue.

(Bloomberg) — Lonmin Plc sank to a record-low for a second day as investors fled after the third-biggest platinum producer said it would sell billions of shares at a fraction of the market price.

The stock dropped as much as 28 percent in London to 9.5 pence, an all-time low. It fell 38 percent in Johannesburg, the largest decline ever for Lonmin's secondary listing.

The collapse has accelerated since Nov. 2, with the stock down more than 15 percent in London in each of the past four days and sinking 18 percent on Monday as Lonmin said it would offer $407 million of shares at a 94 percent discount to the prior market close. The rights offer is part of efforts to fend off an existential threat from sinking metals prices.

Lonmin has attracted many speculative buyers over the length of a 94 percent slump in its value this year and as Glencore Plc offloaded its almost quarter stake in the producer, said Rene Hochreiter, an analyst at Noah Capital Markets (Pty) Ltd. in Johannesburg.

"You can expect a lot of volatility until" the rights issue closes Dec. 10, he said. "The weak holders will be out and the guys who are going to follow their rights will be in."

Read also: Struggling Lonmin prices rights issue at 94% discount, a folly say analysts

Lonmin is cutting costs and jobs, and closing shafts to try to weather a drop by more than half in platinum prices since a high in August 2011. While shareholders are facing a deep discount to maintain their stakes in the company, three banks including HSBC Holdings Plc guaranteed the share sale that aims to unlock new financing for the metals producer.

The shares fell 25 percent to 10 pence by 9:33 a.m. in London.

"It all depends on whether the new business plan comes together," Hochreiter said. "If it doesn't, then you're going to get volatility again."