Molycorp Chops Rare-Earth Initial Public Offering by 18% to $394 Million

Molycorp Inc., owner of the world’s largest non-Chinese deposit of rare-earth metals, chopped the price of its planned initial public offering by as much as 18 percent to $394 million.

The Greenwood Village, Colorado-based company will try to sell 28.13 million shares at $14 after its underwriters failed to attract enough buyers at $15 to $17 apiece, according to its filing with the Securities and Exchange Commission today. Molycorp will use the proceeds to refurbish equipment and facilities at its open-pit mine, located 60 miles southwest of Las Vegas in the Mojave Desert.

Molycorp is using the share sale to fund its half-billion dollar plan to restart mining at a site that once met almost all the world’s demand for rare-earth ores and compete with Chinese producers that now supply 97 percent of the metals. Molycorp reduced its IPO after two companies postponed or delayed their sales yesterday and one company, Envestnet Inc., slashed its deal by 42 percent to attract enough buyers.

“Companies need the combination of a good story at a good price,” said Timothy Cunningham, who helps oversee $57 billion at Thornburg Investment Management in Santa Fe, New Mexico. “We haven’t really seen that. A lot of these deals are not great quality, and the pricing of the deals is too aggressive.”

Of the five U.S. companies that scheduled IPOs this week, only Chesapeake Midstream Partners LP, the pipeline operator owned by the second-largest U.S. natural gas producer, has raised as much as it sought in its $446 million offering.

Morgan Stanley and JPMorgan Chase & Co. in New York are leading the Molycorp’s offering. The stock will trade on the New York Stock Exchange under the ticker MCP.

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Kristen Scholer in New York at kscholer@bloomberg.net.

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