Battle to Keep Lonmin Platinum Deal Alive Hinges on the Rand – by Felix Njini (Bloomberg News – March 9, 2018)

(Bloomberg) — When Lonmin Plc Chief Executive Officer Ben Magara announced in December that Sibanye Gold Ltd. had agreed to buy the platinum miner, he was visibly relieved. He can’t relax just yet.

To keep the deal alive, Lonmin should avoid burning cash by the time of shareholder votes on the purchase later this year, according to Sibanye.

That may be a tough ask for a company that’s been forced to seek covenant waivers from lenders and has struggled through years of losses, especially as a recently strengthened rand adds further pressure.

“Lonmin has cash flow problems, it’s a difficult position for them to be in,” said Ben Davis, an analyst at Liberum Capital Ltd. “Unless things dramatically change in the market it’s going to be tricky.”

Lonmin intends to remain at least cash neutral and “has adequate liquidity to see it to the completion of the transaction,” spokeswoman Wendy Tlou said. The company had net cash of $63 million at the end of December and a covenant waiver until February 2019.

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