USA-based rare earths producer Molycorp has filed voluntary petitions under Chapter 11 of the US bankruptcy code, and entered into a financial restructuring agreement with creditors.
The agreement provides $225 million in financial commitments to support operations while Molycorp negotiates the financial restructuring of its $1.7 billion debt with creditors, the company said on Thursday June 25.
The commitments come from a group of about 70% of Molycorp’s 10% senior secured noteholders – led by JHL Capital Group, JMB Capital Partners and QVT Financial LP – for up to $225 million in gross proceeds of debtor-in-possession financing, subject to court approval, which will be used to support Molycorp’s operations during the Chapter 11 period.
“The actions we have taken today are important steps toward achieving a restructuring of our $1.7 billion debt with our major creditor constituencies,” Geoff Bedford, Molycorp’s president and ceo, said. “In doing so, the company expects to exit Chapter 11 with an appropriate financing framework to support our business going forward.”
A sum of $40 million will be available to the company immediately after an initial court hearing, with about $90 million available subject to approval at a further hearing. The remainder will be available on a delayed basis and subject to lender conditions.
Molycorp and its North American subsidiaries filed the petitions with the bankruptcy court for the District of Delaware. Its operations outside North America are not part of the filings.
“Our operations in Europe and Asia are not a part of today’s filings, and these businesses are cash-flow positive […] All of the company’s facilities in North America and around the world will continue operating as usual,” Bedford said.
Yesterday, Molycorp postponed its annual shareholders’ meeting until the latter half of the year, and the New York Stock Exchange is expected to de-list Molycorp’s shares within the next nine days.
To see a timeline of the events leading up to the Chapter 11 filing, click here.
James Heywood firstname.lastname@example.org Twitter: @jamesheywood_MB