Lonmin’s $770mn rescue plan: Cuts 6,000 jobs, $400mn in new shares

(Bloomberg) — Lonmin Plc, the world's third-largest platinum miner, seeks to raise $400 million selling new shares to existing holders as it moves to stave off concerns its debt is unmanageable amid a slump in prices for the precious metal.

The company, down 84 percent in London trading this year, also agreed to new debt facilities totaling $370 million that mature in 2020, it said in a statement. The terms of the share sale will be announced Nov. 9.

Read also: More job losses in platinum as Lonmin peers in crystal ball 

The two measures "will strengthen the business and provide the group with sufficient resources for working capital and capital expenditure to sustain the business in an ongoing low platinum-group metals pricing environment," the company said.

Lonmin took the action following a business review designed to help it combat weak prices. South Africa's Public Investment Corp., which holds about 7 percent of the stock, will support the sale and — subject to approvals — may underwrite a "material portion" beyond its entitlement, Lonmin said.

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The company today confirmed its July estimate that 6,000 jobs will be cut as part of the restructuring, which is expected to be completed by September next year at a cost of 800 million rand ($60 million).