Molycorp Inc. won bankruptcy court approval to take out a short-term loan it needs to keep operating while it reorganizes and decides whether to close its only mine.
The $22 million financing from affiliates of Oaktree Capital Management would give the producer of rare earth minerals enough money to prepare to shut down its California mine and arrange a bigger, longer-term loan it can use to operate while in bankruptcy.
The judge’s approval temporarily ended a confrontation between Oaktree, which is Molycorp’s senior lender, and noteholders who hold lower-priority debt. Oaktree is pushing for a quick sale of Molycorp’s profitable business and the closing of its money-losing mine. The noteholders have said the Greenwood Village, Colorado-based company should consider staying together.
U.S. Bankruptcy Judge Christopher Sontchi said Thursday at a hearing in Wilmington, Delaware, that the company didn’t have the time to choose between Oaktree and the other creditors, who also wanted to provide short-term financing.
Molycorp and its units “simply don’t have time to get the cash they need to survive,” the judge said.
Company officials testified that without immediate access to the $22 million, Molycorp can’t pay employees or critical suppliers.
In the coming weeks, Molycorp will try to arrange the bigger, longer-term loan by negotiating with both Oaktree and the noteholders to see which group can offer better terms.
Sontchi said he will approve the short-term Oaktree loan after the parties work out final details. The judge also said he wants Molycorp to answer some technical questions before he signs a loan order.
The case is In re Molycorp Inc., 15-bk-11357, U.S. Bankruptcy Court, District of Delaware (Wilmington).