After Molycorp Inc (NYSE:MCP) officially announced that it may find it difficult to continue as a ‘going concern’, its creditors have decided to bring in Blackstone Group LP and law firm to engage in restructuring talks. The junior bondholders group headed by Apollo Global Management LLC would take advice from Blackstone and Paul Weiss Rifkind Wharton & Garrison LLP to discuss restructuring plans with Molycorp Inc (NYSE:MCP).
According to a Bloomberg report, Apollo Global Management owned by Leon Black holds nearly $132.4 million convertible bonds of Molycorp Inc (NYSE:MCP), which is due June 2016. The objective of entering into a discussion with Molycorp is to address the maturity of these securities and to find the possibility if the same could be exchanged for equity. If Molycorp Inc (NYSE:MCP) fails to honor these convertible notes by the deadline then it will trigger an early repayment of its debt arranged under a $400 million credit line from Oaktree Capital Management LP. Molycorp has already drawn $250 million out of the said $400 million credit line, the debt of which is due in 2019.
Two financial targets
Molycorp Inc (NYSE:MCP) came under pressure after reporting a loss for 12 straight quarters. The miner accepted that cost overruns, sluggish demand for its products and delays in its Mountain Pass facility could be blamed for its huge losses. Molycorp Inc (NYSE:MCP) needs to ramp up its production at Mountain Pass in order to access the remaining $150 million from the credit line of Oaktree loans.
The company has to attain to financial targets that of production of minimum 4,000 metric tons per quarter for two straight period within the first quarter of 2016. However, the yearly production of 4,769 metric tons in 2014 raises doubt if Molycorp Inc (NYSE:MCP) will be able to touch the target.
The stock of Molycorp Inc (NYSE:MCP) tanked by 24% to close at $0.365 on Thursday.
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