TORONTO (miningweekly.com) – The US Bankruptcy Court for the District of Delaware has confirmed the fourth joint amended plan of reorganisation filed by bankrupt US rare earths producer Molycorp, marking one of the final steps before the company will be able to emerge from Chapter 11 protection as a newly reorganised company.
"The plan confirmation is a major step forward for the company. Throughout this nine-month process, we have made every effort to continue to run our business and service our customers and we thank them for our support and patience,” stated Molycorp president and CEO Geoff Bedford.
The confirmed plan would allow Molycorp's downstream business units, Chemicals & Oxides, Magnequench and Rare Metals to reorganise under new ownership with a significantly stronger balance sheet.
Under the confirmed plan, which entailed a settlement agreement between an affiliate of funds managed by Oaktree Capital Management, a secured creditor, and unsecured creditors, Oaktree would receive 92.5% of the equity and the unsecured creditors would receive 7.5% of the equity in the reorganised company.
Molycorp had also reached a settlement with an ad hoc group of the company's 10% secured noteholders to buy the mineral rights and certain intellectual property of Molycorp through a credit bid. The group of 10% secured noteholders was the last significant secured creditor group with which the company had not reached a settlement in a mediation process that spanned several months.
Molycorp advised that its flagship Mountain Pass mine was excluded from the plan and that the equipment and surface property rights at the mine were excluded from the sale.
When the plan becomes effective, Molycorp would emerge as a privately held company with a sustainable balance sheet and strong financial partners, the company stated.
Molycorp had been advised by the investment banking firm of Miller Buckfire & Co and received financial advice from AlixPartners. Jones Day and Young, Conaway, Stargatt & Taylor served as legal counsel to the company in this process.
Molycorp filed for bankruptcy in June with more than $1.7-billion in debt after prices for rare earths fell when China lifted export restrictions.