LONDON (Reuters) - Platinum miner Lonmin
Lonmin, at the center of a wave of South African mine strikes that left dozens dead, last week detailed a discounted rights issue aimed at repairing its balance sheet, meeting conditions set by its lenders as debt swells, and funding a recovery.
But it also surprised investors with news it had rejected a reverse takeover from Xstrata, which owns almost 25 percent in the world's third-largest platinum miner as a result of a failed 2008 takeover attempt.
"The board believes that failure to proceed with the rights issue would leave the company in a highly vulnerable position in its discussions with its banking group and, potentially, in relation to Xstrata if it were to make a further proposal," the miner said in Tuesday's statement.
It is not yet clear whether Xstrata, which is still considering its options, would vote in favor of the rights issue at a meeting scheduled for November 19, or indeed support it, unless conditions of its previous offers - including a change of management - are met.
Under a first proposal made last month, Xstrata would have sold its South African platinum group metals, chrome and vanadium businesses to Lonmin for shares, conditional on a $1 billion rights issue, which they would underwrite.
Xstrata - which also demanded the right to appoint the chairman, the chief executive and the chief financial officer - would have ended up with 70 percent of Lonmin.
Xstrata made a separate proposal late last week that would have seen it support the rights issue currently planned, but replace Lonmin's executives. This has also been rejected.
"The board wishes to confirm that, as in the past, it will consider any revised proposal that Xstrata wishes to make on its merits," Lonmin said in its statement.
"(The) board will continue to avoid any structure or process which undermines the financial stability of Lonmin and it will also fight to ensure that the economic terms of any transaction reflect the true value of the company and an appropriate control premium, if relevant."
(Reporting by Clara Ferreira-Marques; editing by Keith Weir)