Lonmin's warning on key debt covenant hits shares
The warning prompts KPMG to flag a 'material uncertainty' over the platinum miner's 'ability to continue as a going concern'
Lonmin’s share price plummeted nearly 12% to close at R17.91 after it warned on Monday of a narrow margin it had left to avoid breaching one of its key debt covenants. The world’s third-largest platinum miner incurred a $146m impairment in a difficult first half of its financial year. The warning on its tangible net-value covenant prompted KPMG to flag a "material uncertainty" over Lonmin’s "ability to continue as a going concern" if it recorded another sizable impairment. The covenants governing Lonmin’s debt demand its tangible net worth does not fall below $1.1bn. At the end of March, the net worth of the group was $1.434bn after the $146m impairment. "Should a further impairment in the future result in the tangible net worth falling below $1.1bn this debt covenant would be breached, which could reduce the liquidity of the group," Lonmin said. Analysts flagged the potential breach of the covenant as a concern, as well as the losses incurred in the first half of the year in which ...
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