Lonmin's rights issue flops leaving underwriters on the hook

Struggling platinum miner Lonmin’s deep-discounted $400 million (£264 million) rescue cash-call has flopped, leaving underwriters on the hook for almost a third of the new shares.

Lonmin — which has been battered by a tumbling platinum price and a five-month miners’ strike over pay last year — said that only 71% of the new shares on offer were sold, leaving HSBC, JP Morgan Cazenove and Standard Bank to find buyers for the rest or stump up themselves.

The shares were offered at just 1p — a 94% discount.

“The sizeable proportion of shareholders not following the majorly dilutive issue is saying something,” broker Investec said.

The crisis brought the company close to collapse this year before its third rights issue in six years.