LONMIN on Monday secured a majority vote in favour of its $817m rights issue to pay down debt and shore up its balance sheet.
The world’s third-largest platinum miner needs at least $700m to change its debt covenants and avoid falling foul of covenants due to be tested in March next year.
At an extraordinary meeting in London on Monday, Lonmin secured a vote of 91% in favour of the heavily diluted rights issue before the end of the year from shareholders representing 77% of its issued shares.
"The board thanks its shareholders for their support and looks forward to continuing its dialogue with them," said chairman Roger Phillimore. "We can now move forward with confidence in continuing our delivery of the Lonmin renewal plan."
Xstrata boss Mick Davis had put aggressive demands to Mr Phillimore in the past week, calling on him to "refresh" the company board and management team ahead of its rights issue.
Xstrata is a 24.9% shareholder in Lonmin.
Mr Davis accused Lonmin of the "destruction" of Xstrata’s shareholder value in the group and demanded changes in Lonmin’s board and management "promptly" after the rights issue.
"We have asked Lonmin’s board to engage and co-operate with major shareholders to commence this process, refresh the board, strengthen the management team and overhaul the current business plan so that a realistic strategy to restore shareholder value can be developed," said Mr Davis.
But Lonmin spokeswoman Sue Vey said the board had complete faith in management and shareholders would decide on board composition. "We are focused on ensuring operational stability and on executing the renewal plan." A London analyst said that if Lonmin’s management refused to budge, Xstrata might have to make a bid for Lonmin.
"Once they make a bid and get the company they can, of course, do what they want," the analyst said. "But many people are likely also to point to the fact that Xstrata’s platinum operations and its track record in the platinum space are hardly any better than those of Lonmin."
Cadiz analyst Peter Major said Lonmin might still be pressured into management changes.
"I don’t think anyone will freak out if (current CEO) Ian Farmer gets replaced as he is very ill, from what I hear," he said. "Lonmin needs a tougher mining guy than the acting CEO, Simon Scott. The company needs to get back to basics and start making some money."
Lonmin has spurned an offer by Xstrata to vend its ferrochrome, platinum and vanadium assets into Lonmin in exchange for a 70% stake of the enlarged company, and to underwrite a $1bn rights issue.
With Loni Prinsloo