Molycorp offers ‘dual track’ proposal
Molycorp Inc., which filed for Chapter 11 bankruptcy protection earlier this year, filed a “dual track” reorganization plan Wednesday that proposes to successfully emerge from Chapter 11 through either a standalone reorganization that would substantially deleverage its balance sheet or a sale of all of its assets.
The company said in a news release the plan envisions a process in which its assets would be actively marketed for sale, either as a whole or through the separate sale of its four business units, which are chemicals and oxides; magnetic materials & alloys; rare metals; and resources, which consists primarily of its rare earth mine at Mountain Pass, Calif.
Molycorp said if the bids received for the units do not exceed threshold values, the company would be reorganized with Oaktree Capital Management as its shareholder around its chemicals & oxides, magnetic materials & alloys, and rare metals units, while its Mountain Pass assets would be sold.
The company said it has begun to contact prospective buyers. The first round of non-binding indications of interest are due Dec. 1.
“If approved, the plan would help to significantly reduce our $1.9 billion of debt and cut our interest expense, putting us on a more solid financial and operational footing going forward,” said Geoff Bedford, president and CEO.
The Chapter 11 filing in June came following several financial setbacks for the company, which included missed loan and interest payments.
Molycorp has been challenged by a severe downturn in prices for rare earth elements that are used in industrial and military applications.
In August, the company suspended operations at the Mountain Pass mine.