Molycorp files for Chapter 11 under $1.7 billion restructuring plan

By Susanna Moon

Chicago, June 25 – Molycorp, Inc. said it reached a restructuring agreement with creditors holding more than 70% of its 10% senior secured notes and filed for Chapter 11 bankruptcy on Thursday.

The agreement provides for a financial restructuring of the company’s $1.7 billion of debt and provides up to $225 million of debtor-in-possession financing due Nov. 30, 2015, according to a company press release.

As part the reorganization, more than $700 million of the company’s unsecured notes will be discharged, the press release noted. The plan term sheet also calls for holders of the debtors’ $650 million 10% senior secured notes to have their debt exchanged for a majority equity stake in reorganized Molycorp.

Molycorp has obtained commitments from a group of its 10% senior secured noteholders, led by JHL Capital Group, JMB Capital Partners and QVT Financial LP, for the DIP financing, subject to court approval.

About $40 million of the amount will be available to the company after an initial court hearing, with about another $90 million available subject to court approval at another hearing at the end of the first month of the case. The remainder will be available on a delayed basis and is subject to lender conditions.

The DIP financing can be extended until Dec. 30, 2015.

The company said it expects to exit Chapter 11 before the end of the year.

After the Chapter 11 filing, Molycorp said it expects to receive notice from the New York Stock Exchange about delisting its shares from the NYSE within nine calendar days of notification. The company said it expects its shares to trade on the OTC Pink Sheets exchange.

Molycorp is being advised by the investment banking firm of Miller Buckfire & Co. and is receiving financial advice from AlixPartners, LLP. Jones Day and Young, Conaway, Stargatt & Taylor LLP is the legal counsel.

To facilitate the restructuring, Molycorp and its North American subsidiaries, along with some non-operating subsidiaries outside of North America, filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the District of Delaware. The company’s operations outside of North America, with the exception of non-operating companies in Luxembourg and Barbados, are excluded from the filings. Molycorp Rare Metals (Oklahoma), LLC, with operations in Quapaw, Okla., also is excluded from the filings as it is not 100% owned by the company.

As reported on June 1, Molycorp failed to make the $32.5 million interest payment payable June 1 on its 10% senior secured notes due 2020.

Molycorp is a Greenwood Village, Colo., producer of materials from rare earth minerals.

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