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Xstrata to raise 5 billion pounds for Lonmin bid: paper

LONDON (Reuters) - Swiss-based miner Xstrata <XTA.L> is looking to raise more than 5 billion pounds in order to forge ahead with its hostile $10 billion bid for South African rival Lonmin, the Sunday Telegraph reported.
/ Source: Reuters

LONDON (Reuters) - Swiss-based miner Xstrata is looking to raise more than 5 billion pounds in order to forge ahead with its hostile $10 billion bid for South African rival Lonmin, the Sunday Telegraph reported.

The report said Xstrata is in talks with Royal Bank of Scotland , Barclays , Santander , and Deutsche Bank about raising the cash for a bid and the facility is likely to be put in place in the next two weeks.

Xstrata is planning a 33-pounds-a-share bid for Lonmin, the world's No.3 platinum producer, to diversify its business away from industrial metals such as copper.

Lonmin said the bid undervalued the business despite it being pitched at a 42 percent premium to its share price the day before the approach was announced.

Xstrata declined to comment on the report.

Separately, The Observer reported that Lonmin Chief Executive Brad Mills faces a boardroom revolt.

Lonmin's Chief Strategic Officer Ian Farmer is believed to have told Mills he and other executives would want him to stand down should he fail to deliver two consecutive quarters of "good performance."

Last week, Lonmin further cut its forecast for full-year refined platinum sales by 6.5 percent to 725,000 ounces.

Lonmin, which has been grappling with operational problems and power cuts in South Africa, had already cut its sales target twice to 775,000 ounces for its fiscal year to the end of September from an initial forecast of 900,000 ounces.

(Reporting by Matthew Scuffham; Editing by Jason Neely)