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Xstrata backs Lonmin rights issue

Xstrata has pledged to support Lonmin’s rights issue and thereafter push for change in the management and the overhaul of Lonmin’s business plan.

Xstrata has a 25 percent shareholding in Lonmin. In a letter penned by Xstrata chief executive Mick Davis, the company notified Lonmin chairman Roger Phillimore of the decision to support Lonmin’s proposed rights issue to raise $817 million (R7.2 billion) and subscribe in full for its rights.

Davis said Xstrata was concerned about the destruction of value of its shareholding, and it was not willing to give financial support to a strategy that it believed was flawed.

“We will, therefore, be seeking change to the board and management promptly following completion of 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,” the letter read.

Xstrata said that it wanted Lonmin to begin its recovery from this difficult time as soon as possible. – Dineo Faku

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