Lonmin workers issued ultimatum as bosses consider rights issue
A quarter of Lonmin employees have headed back to work on Monday after the troubled platinum miner handed 3,000 of its workers an ultimatum to return to work or be fired following violence which led to the deaths of 44 people.
A quarter of Lonmin employees have headed back to work on Monday after the troubled platinum miner handed 3,000 of its workers an ultimatum to return to work or be fired following violence which led to the deaths of 44 people.
Shares in the company have plummeted over 17% in the past week after serious disruption by strikers at its Marikana project in South Africa, prompting the police to intervene with gun fire.
Two trade unions have expressed their anger at the company, saying that their negotiations with employees outside of union structures had prompted the protests.
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The Sunday Times reported that the company is now considering whether to issue a billion dollar (£640m) emergency fundraiser to regain the losses over the past week, although Reuters said that a source familiar with the matter had revealed it was too soon to name a figure on any such rights issue.
Sources have also said that Lonmin's largest shareholder, Xstrata, have given their support to the move.
Nomura said on Monday that, "a $1bn rights issue, as compared to its current $2bn market cap, will be a difficult proposition, but strategically, could provide them with a longer-term benefit."
The broker added that, "however, with such an uncertain future we continue to see the share price as too high and re-iterate our 'reduce' recommendation."
Meantime, analysts at Deutsche Bank have slashed their rating on the stock from hold to sell.
Lonmin is also reportedly calling on its banks for leniency as prior to the disruption the firm was already suffering rising costs and low prices in the platinum industry as a whole.
All this while its Chief Executive Officer, Ian Farmer, is in hospital after being diagnosed with a serious illness.
Lonmin's Chairman Roger Phillimore has assumed control for the time being of Lonmin's Executive Committee (Exco), which has been augmented by Lonmin director Mohamed Seedat who, until 2010, was the Chief Operating Officer of Lonmin.
The share price fell 3.99% to 614p by 12:35. Shares are down 45%, equal to 504p, in the past year.
NR
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