Each one in plain English, with the numbers worked through for a shareholder.
1 Sept 2016bankruptcy or receivership▼ BadMajor
On August 31, 2016, Molycorp, Inc. and 14 other Plan Debtors emerged from Chapter 11, and all equity in the company (common and preferred stock, options, warrants and rights to acquire equity) was cancelled with no distributions to holders. This makes the plan confirmed in April 2016 effective and ends shareholders' position. The six Molycorp Minerals Debtors (the Mountain Pass entities) did not emerge: they remain in Chapter 11 under a court-appointed trustee, Paul E. Harner (appointed May 2, 2016), who has moved to dismiss their cases, with a hearing set for September 2016.
The bankruptcy court confirmed Molycorp's Chapter 11 plan on April 8, 2016. Because the sale process drew no bids big enough, the plan is a stand-alone reorganization of the downstream businesses (Chemicals & Oxides, Magnetic Materials & Alloys, Rare Metals), and the Mountain Pass assets go to the ad hoc 10% noteholders by credit bid (sale approved April 5, 2016). Molycorp, Inc. will be dissolved, with the new parent's equity going 92.5% to Oaktree and 7.5% to general unsecured creditors (both subject to dilution by the management incentive plan). All existing shares, including the common stock, are cancelled on the effective date with no distribution to shareholders. This resolves the open question of how common stock would be treated: it gets nothing.
On July 24, 2015 the bankruptcy court's final order made effective Molycorp's debtor-in-possession loan from lenders with Wilmington Trust as agent: up to $135,416,667 (including original issue discount), of which $21,978,022 was already advanced on an interim basis and a further $113,438,645 sits in a controlled account released subject to conditions. It matures at the earlier of acceleration or January 31, 2016, bears 7% cash plus 7% paid-in-kind interest, and is secured on substantially all assets of Molycorp and its guarantors. Milestones require a limited-operations plan for Mountain Pass by August 20, 2015, implementation by September 1 and completion by October 20, 2015; on a default, Molycorp must pursue a section 363 asset sale to repay the loan in full. This funds the Chapter 11 case begun June 25, 2015.
On June 25, 2015, Molycorp and certain U.S., Canadian, Barbadian and Luxembourg subsidiaries filed for Chapter 11 in Delaware (Case No. 15-11357), while its subsidiaries in Hong Kong, China, Thailand, Japan, Korea, Germany, UK, Estonia and Singapore, plus the Sri Lanka subsidiary and the Quapaw, Oklahoma joint venture, were not included. The filing triggered acceleration of its debt, including $206.505M of 2016 notes, $650M of 10% 2020 notes, $382.986M of 2017 notes, $148.939M of 2018 notes, $1.745M of Neo debentures, the Oaktree term loans ($50.167M and $60.0M, plus PIK interest) and the $143.689M equipment lease; enforcement is stayed by the bankruptcy. The NYSE suspended trading in the stock on June 25, 2015 and will delist it; Molycorp does not plan to appeal. The filing gives no treatment for shareholders, so their position is unresolved. This ends the listing-compliance thread from December 2014.
On December 30, 2014, the NYSE told Molycorp it fell short of listing rules because its average closing share price was below $1.00 over 30 consecutive trading days. Molycorp has six months to get back above $1.00 (on the last trading day of a month, both the closing price and the 30-day average at least $1.00) or the NYSE will begin suspension and delisting steps; shares keep trading meanwhile with a .BC flag. The company says it intends to cure the deficiency.
On November 20, 2014, Molycorp agreed with one noteholder to swap $27M of its 6.00% 2017 notes and $11M of its 5.50% 2018 notes (total $38M principal) for common stock with an agreed value of $15,960,000, between 11,239,436 and 15,056,603 shares depending on a seven-day average price ending December 2, 2014. Accrued interest is paid in cash. This cuts convertible debt by $38M at the cost of issuing new shares, which dilutes existing holders.
On September 11, 2014, Molycorp signed a $185.0M term loan with an Oaktree affiliate (OCM): $50.167M funded at closing and $134.833M of delayed-draw loans available only if conditions are met (adjusted EBITDA of at least $20.0M for two consecutive quarters and Mountain Pass production of at least 4,000 metric tons for two consecutive quarters, by the quarter ending March 31, 2016). Its subsidiary Magnequench signed a separate $75.0M loan ($60.0M funded, $15.0M delayed-draw), and Molycorp Minerals sold Mountain Pass equipment (parts of the co-generation plant, chloralkali facility and water treatment plant) to OCM for $139.833M and leased it back for five years with a $1 purchase option. Interest is 7% cash plus 5% paid in kind through June 14, 2016, with large early-repayment premiums (43.8% in the first year), and the debt is secured pari passu with the 2020 notes. Oaktree also received warrants for up to 24,477,395 shares (text truncated before further detail), so existing shareholders face potential dilution. The loans can accelerate if the 2016 and 2017/2018 convertible notes are not repaid or escrowed by set dates (April 30, 2016 and March 31, 2017, to specified residual amoun
Molycorp amended its May 20, 2014 auditor-change filing to add disclosure about KPMG Canada covering 2012, 2013 and the interim period to May 16, 2014. Otherwise it repeats the earlier text, with no new developments.
Molycorp dismissed PwC Canada, appointed only two months earlier, and approved KPMG Canada as auditor from the quarter ending June 30, 2014, subject to KPMG's client acceptance process. PwC Canada had issued no audit report. The filing says the same two material weaknesses were reported in the Q1 2014 10-Q, and says there were no disagreements.
Molycorp dismissed PricewaterhouseCoopers (U.S.) as auditor on March 19, 2014 and appointed PwC Canada, starting with the quarter ending March 31, 2014. The filing says PwC U.S. gave an adverse opinion on internal controls at December 31, 2013 and that two material weaknesses were reported: too few accounting staff, and weak controls over its new ERP system. It follows the 2013 restatement, and the filing states no disagreements with the auditor.
Molycorp and Molymet amended their January 31, 2012 purchase agreement, raising the cap on Molymet's ownership of Molycorp common stock from 19.9% to 27.5%. The filing does not say whether Molymet plans to buy more shares. This extends the existing Molymet relationship.
Molycorp said its unaudited first-quarter 2013 results can no longer be relied on, due to an inventory reconciliation error and an unaccrued severance charge. Restated, the Q1 net loss is $38.2 million rather than the $46.4 million first reported, but the company says it may find a material weakness in its financial reporting controls. It also reported Q2 2013 revenue of $136.9 million, a net loss of $0.44 per share, $264.2 million of cash at June 30, and Mountain Pass demonstrating about 15,000 metric tons per year of rare earth oxide capacity. Michael F. Doolan now signs as CFO and Constantine Karayannopoulos is CEO.
Molycorp filed Amendment No. 1 to its registration statement for swapping the $650 million of 10% senior secured notes due 2020 (issued May 25, 2012) for identical SEC-registered notes. This continues the November 2012 filing: Molycorp receives no cash, the exchange is not yet complete (the expiry date is left blank), and the filing again calls Neo 'Molycorp Canada'. The cover page now lists Constantine Karayannopoulos as President and CEO, where the earlier context named Mark A. Smith.
Molycorp filed a registration statement to swap the $650 million of 10% senior secured notes due 2020 issued May 25, 2012 for identical notes registered with the SEC, as promised in the registration rights agreement. Molycorp receives no cash from the exchange and the terms are substantially the same apart from transfer restrictions, so this is a paperwork step on existing debt. The filing refers to Neo as 'Molycorp Canada' now.
On August 16, 2012 Molycorp agreed with Molymet and Resource Capital Fund V that, if Molycorp asks during the agreement's term, Molymet will buy $35 million and RCF $25 million of Molycorp common stock. It is a standby option for Molycorp, not a completed sale, so any issuance would dilute existing holders; the filing gives no price, term length or reason.
15 June 2012asset acquisition disposition● NeutralMajor
Molycorp completed the Neo acquisition on June 11, 2012, paying about CDN$927.3 million (US$945.6 million, including cash to settle currency contracts), 13,545,426 new Molycorp shares and 507,203 exchangeable shares of its Canadian subsidiary. Neo's roughly US$230 million of convertible debentures now sit in a Molycorp subsidiary and Molycorp has guaranteed them; conversion would give holders cash and Molycorp stock, up to about 2,783,476 shares. This resolves the Neo deal and adds shares to the count, diluting existing holders.
Molycorp obtained final Ontario court approval on June 8, 2012, and the Investment Canada Act approval, for the Neo acquisition, which it expected to close on or about June 11, 2012. This clears the last approvals named in the earlier thread.
Molycorp reported that Neo's shareholders approved the acquisition at their May 30, 2012 meeting, and filed Neo's audited 2011/2010/2009 financial statements, its March 2012 quarterly statements and pro forma combined statements. Neo's filed 2011 statements show revenue of $800.0 million and net income of $210.3 million (US dollars) against $337.6 million and $60.6 million in 2010. This advances the Neo deal; remaining approvals are court and regulatory.
Molycorp issued the $650 million of 10% senior secured notes due June 1, 2020 on May 25, 2012 (trustee Wells Fargo), the notes flagged in the May pro forma filing. Proceeds, plus cash on hand, are to pay the cash portion of the Neo purchase; the money sits in escrow until then, and if Neo does not close by September 4, 2012 (or Molycorp drops the deal) the notes must be redeemed at face value plus interest. The notes are secured and guaranteed by domestic subsidiaries, and carry a 101% repurchase offer on a change of control.
Molycorp published pro forma financials showing the combined company with Neo, assuming a proposed $650 million senior secured notes offering due 2020. Pro forma 2011 sales were $1,196.9 million and the total purchase price was estimated at $1,573 million, with cash funded by the notes, the Molymet share sale and existing cash. It also bought Cdn $870 million forward to limit currency risk. This continues the Neo deal and signals the notes would be used rather than the bridge, as an inference from the funding description.
Molycorp agreed to buy all of Neo Material Technologies for about $1.3 billion, paying Cdn $11.30 per Neo share, roughly 71.2% in cash and 28.8% in Molycorp stock. Closing is expected in Q2 or Q3 2012, subject to court, Neo shareholder and regulatory approvals. A committed $635 million senior secured bridge facility (Morgan Stanley and Credit Suisse) backs the cash portion, and the commitment expires September 4, 2012. This is by far the largest deal in this record, and the filing says Molycorp intends to fund most of the cash with other financing.
Molycorp agreed to sell 12.5 million new shares to Molibdenos y Metales (Molymet) at $31.218 each (a 10% premium to a 20-day average price), a total of about $390 million by calculation from the filing. Molymet gets a board nominee and registration rights, and is limited to 19.9% ownership for two years. Closing still needs regulatory approvals; the share issuance dilutes existing holders.
What it means for a shareholder
12.5m new shares at $31.22 to raise about $390m. That's 13% dilution: every existing holder's slice gets 13% smaller. If you held $1,000 of shares (32 at the issue price), your slice goes from 0.0000382% to 0.0000332% of the company. To keep it you'd need 5 more shares - about $156 at the issue price.
16 June 2011capital raising announcement● NeutralMajor
Molycorp completed a private offering of $230.0 million of 3.25% convertible senior notes due June 15, 2016, raising about $222.9 million net. The notes can be converted into cash, shares or a mix at about $71.40 per share, and the filing says the maximum initial share count is 3,221,288 (up to 4,509,794 with a make-whole change), so dilution is possible.
Molycorp bought 80% of Silmet, an Estonian rare earth metal processor, from Silmet Grupp for $80 million paid in 1,593,419 newly issued Molycorp shares (a 90-day lock-up applies). It also bought a further 10.023% of Silmet from Treibacher for $9,020,700 in cash, taking its stake to about 90%. This is Molycorp's first acquisition in this record and issues new shares to the seller.
Molycorp Minerals agreed with Quinn Process Equipment to buy additional mixers for $4,553,920 plus tax and freight, added to the December 2010 order for mixer and settler systems priced at $21,437,853. The filing ties the purchase to the ongoing modernization and expansion plan at Mountain Pass.
Molycorp used proceeds from its August 2010 IPO to set up a cash collateral account backing the surety bonds for Mountain Pass closure and reclamation obligations. This replaced the letters of credit that nine early investors (including Resource Capital Funds IV and V and TNA Moly Group) had provided, so those letters were released on September 13, 2010 and the 5% annual return Molycorp Minerals owed them ended. No early termination penalties were incurred.
