Corporate & Commercial

Complex rights issue for Lonmin PLC

CDH advised Lonmin PLC on its contentious, 94% discounted rights issue, together with full underwriting agreements and an irrevocable undertaking by the Public Investment Corporation to take up its rights.

Valued at USD 407 million, the rights issue was complex given the extensive mining titles due diligence and prospectus verification process that accompanied the underwriting by HSBC, JP Morgan Casenove and the Standard Bank of South Africa. Additionally, the rights issue was preceded by a share split and a post rights issue share consolidation. The rights issue also necessitated a special dispensation for the Bapo ba Mogale Tribe under a share placing agreement in order to maintain the level of black economic empowerment required for maintaining Lonmin's mining and prospecting rights.

Lonmin PLC, listed on the LSE and the JSE and a member of the FTSE 250, the British producer of platinum group metals operating in South Africa, was facing a financial crisis due to declining resource prices, pressing union demands and existing debt obligations. The rights issue was critical to the client's continued operations and had to be achieved on an extremely short time-table, notwithstanding the complexities involved. The expertise and commitment of our Mining team contributed significantly to the success of the rights issue and related transactions.

The complexity and intricacies of this matter demanded a wide net of expertise, calling on specialists from a number of CDH's core practice areas including: Partner and Mining Sector Head, Allan Reid; Partner, Giada Masina (Mining); Partner, Lilia Franca ( Corporate & Commercial); Tax and Control Exchange team; Partner and Practice Head, Deon Wilken (Finance and Banking); Partner, Sandra Gore (Mining) and Partner, Fiona Leppan (Employment).