Lonmin's $200m refinancing deal won't save job cuts - CEO Magara
JOHANNESBURG - Platinum producer Lonmin Plc said on Monday it had agreed to enter into a U.S.$200 million metal purchase agreement with Pangaea Investments Management Limited (PIM) which would be paid over three years.
But Lonmin said the deal, expected to close within the week and to enhance its liquidity, would however not address the fundamental business challenges facing the company and would not avert planned job cuts.
The deal aims to provide Lonmin with improved liquidity and removes restrictive current lender conditions, notably the tangible net worth covenants contained in existing debt facilities which were waived by the existing lenders subject to the anticipated successful completion of Sibanye-Stillwater's R5 billion all share offer for Lonmin.
In May, the mining company announced that it would cut more than 3,000 jobs in the current financial year as part of its plans to release 12,600 workers in the next three years.
"Regrettably, the new facilities do not address the fundamental business challenges facing Lonmin and do not offer an opportunity to avoid the announced retrenchments and shaft closures," Lonmin CEO Ben Magara said on Monday.
"Accordingly, the Board of Lonmin remains focused on completing the Sibanye-Stillwater all share transaction, which we firmly believe provides a sustainable solution and is in the best interest of all our stakeholders."
Sibanye-Stillwater chief executive Neal Froneman said the company recognised Lonmin’s requirement to complete this financing transaction.
"We remain focused on completing the acquisition of Lonmin,and delivering on our strategy of creating value for all stakeholders," he said.
Lonmin said it would settle its pre-existing term loan of U.S.$150 million and cancel all its other pre-existing undrawn facilities with both its South African rand and US dollar existing lender groups.
As with the existing debt facilities, the U.S$200 million facility is secured over Lonmin's assets.
Pangaea Investments Management Limited is an associate company of Jiangxi Copper Company, the largest copper producer in mainland China.
- African News Agency (ANA)